National Vision Reports Operating Results for 2004 Fiscal First
Quarter LAWRENCEVILLE, Ga., May 17 /PRNewswire-FirstCall/ --
National Vision, Inc. today announced operating results for its
fiscal first quarter ended April 3, 2004. Total net revenue from
continuing operations for the first quarter of 2004 was $64.0
million, a 12% increase over total net revenue from continuing
operations of $57.2 million in the prior year's first quarter. The
Company achieved a year-over-year comparable store sales increase
of +11%. Net income for 2004's first quarter was $3.1 million, or
$0.56 per share on a diluted basis, in comparison with a net loss
of $2.0 million, or -$0.41 per share, in the first quarter of 2003.
The prior year's first quarter net loss included a charge of
$564,000, or -$0.11 per share, representing the cumulative effect
of a change in accounting principle. "NVI delivered a very strong
quarter," stated Reade Fahs, CEO and President. "In spite of having
50 fewer stores, we made large strides in overall profitability --
with net income up over +$5 million and EBITDA up approximately
+$3.8 million versus a year ago. We did this via double-digit
comparable sales, significant margin improvements and cost controls
-- all of which were accomplished via the tremendous efforts of the
talented team of optical retailers who are dedicated to making NVI
successful." Fahs further commented, "While our first quarter
performance was highly encouraging, the current retailing
environment has become more challenging, as consumers cope with
rapidly rising gasoline prices and the consequent pressures on
disposable incomes. Further, we are now beginning to comp against
the stronger sales results that commenced in the second quarter of
2003 as a result of last year's re-engineering of our store
operations." The Company also announced that, on May 13, 2004, its
Board of Directors authorized management to expend up to $12
million to repurchase outstanding Senior Subordinated Notes,
subject to compliance with applicable debt covenants. The Board
also engaged TM Capital Corp. as its financial advisor to review
the Company's strategic alternatives, which may include a possible
recapitalization or refinancing of debt, sale of the Company or
sale of a controlling interest in the Company. Any sale of the
Company could possibly include equity participation by current
members of senior management. There is no assurance that any such
transaction will be effected or even pursued by the Company. The
Company will hold an Investor Relations Conference Call on Tuesday,
May 18, 2004, at 11:00 a.m. EDST to discuss its first quarter
results. The general public can access this conference call via the
Company's website at http://www.nationalvision.com/ . Following the
conclusion of the prepared remarks by management, the Company will
accept and address questions from institutional investors. The
Company's financial disclosures refer to EBITDA because it is the
basis for calculating excess cash flow principal repayments
required under the Company's Senior Subordinated Notes, and it is a
widely accepted financial indicator of a company's ability to
service or incur indebtedness. EBITDA is calculated as net earnings
before interest, taxes, depreciation, amortization, the cumulative
effect of a change in accounting principle, non-cash items and
reorganization items as defined under the Senior Subordinated Debt
Indenture. A reconciliation of net earnings (loss) to EBITDA is
presented in the attached financial tables. National Vision, Inc.
is a retail optical company that operates vision centers within
host environments in the United States and Mexico. Our vision
centers sell a wide range of optical products including eyeglasses,
contact lenses and sunglasses. As of May 17, 2004, the Company
operated a total of 442 vision centers, of which 333 were located
inside domestic Wal-Mart stores, 37 were located within Wal-Mart de
Mexico stores, 47 were located inside Fred Meyer stores and 25 were
located on military bases within the United States. In 2004,
through May 17, the Company has closed 28 stores (including 26
domestic Wal-Mart stores) and opened two stores on military bases.
As of May 17, 2004, the Company also operated two home medical
equipment stores inside domestic Wal-Mart stores. The Company
depends on its domestic Wal-Mart vision centers for substantially
all of its revenues and cash flow. The Company's agreement with
Wal-Mart gave it the right to open 400 vision centers, the last of
which opened in 2001. The Company does not currently expect
Wal-Mart to renew any of the Company's vision center leases upon
their expirations (other than automatic renewals occurring upon
relocation of current Company locations in connection with
conversions to supercenters). For the remainder of 2004, the
Company expects an additional 32 leases for vision centers within
Wal-Mart to expire. Investments in the debt and equity securities
of National Vision, Inc. are subject to substantial risks as
described in the Company's public filings with the Securities and
Exchange Commission. This release includes statements concerning
the Company's plans, beliefs and expectations for future periods.
These "forward-looking statements" may be identified by the use of
words such as "intends," "contemplates," "believes," "anticipates,"
"expects," "should," "could," "would" and words of similar import.
These forward-looking statements involve known and unknown risks
and uncertainties that could cause actual results to differ
materially from the expectations expressed or implied in such
statements. With respect to such forward-looking statements and
others that may be made by, or on behalf of, the Company, the
factors described as "Risk Factors" in the Company's Reports filed
with the SEC, could materially affect the Company's actual results.
These risks and uncertainties include, among others, impaired
relationships with the Company's vendors or customers as a result
of the Company's high leverage and its potential inability to repay
its debt, an adverse change in the Company's relationship with
Wal-Mart, changes in economic conditions (including an increase in
interest rates), financial markets or customer demand, the level of
competition in the retail eyecare industry, federal and state
regulation of the healthcare and insurance industries (particularly
in California), the Company's financial condition and other risks
and uncertainties set forth in the Company's filings with the
Securities and Exchange Commission. All forward-looking statements
included in this release are based upon management's present
expectations and the information available at this time. The
Company does not undertake any obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or other factors. NATIONAL VISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands
except per share information) (Unaudited) Three months Three months
ended ended April 3, 2004 March 29, 2003 Retail sales, net $61,713
$55,591 Premium revenue 1,896 1,343 Other revenue 427 219 Total net
revenue 64,036 57,153 Cost of goods sold 26,647 25,341 Gross profit
37,389 31,812 Selling, general & administrative expense 31,229
29,972 Operating income 6,160 1,840 Other expense, net (2,871)
(3,305) Earnings (loss) before taxes, discontinued operations and
cumulative effect of a change in accounting principle 3,289 (1,465)
Income tax expense (185) Net earnings (loss) before discontinued
operations and cumulative effect of a change in accounting
principle 3,104 (1,465) Discontinued operations: Operating income
(loss) from discontinued operations (35) 28 Gain (loss) on disposal
22 (47) Loss from discontinued operations (13) (19) Earnings (loss)
before cumulative effect of a change in accounting principle 3,091
(1,484) Cumulative effect of a change in accounting principle (564)
Net earnings (loss) $3,091 $(2,048) Earnings (loss) per common
share: Basic $0.61 $(0.41) Diluted $0.56 $(0.41) NATIONAL VISION,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS April 3, 2004 and
January 3, 2004 (In thousands) April 3, 2004 January 3, (unaudited)
2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $9,091 $3,545
Accounts receivable (net of allowance: 2004 - $678; 2003 - $769)
3,963 3,078 Inventories 16,774 17,387 Other current assets 1,331
1,278 Deferred income tax asset 7,630 7,305 Total current assets
38,789 32,593 PROPERTY AND EQUIPMENT, net 12,659 13,619 INTANGIBLE
VALUE OF CONTRACTUAL RIGHTS (net of accumulated amortization: 2004
- $21,342; 2003 - $19,466) 91,403 93,279 OTHER ASSETS AND DEFERRED
COSTS (net of accumulated amortization: 2004 - $1,021; 2003 - $964)
772 806 $143,623 $140,297 LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES: Accounts payable $4,587 $3,506 Accrued
expenses and other current liabilities 24,440 25,132 Current
portion of long-term debt 545 Total current liabilities 29,027
29,183 DEFERRED INCOME TAX LIABILITY 7,630 7,305 SENIOR
SUBORDINATED NOTES 94,939 94,939 SHAREHOLDERS' EQUITY: Common stock
$0.01 par value; 10,000,000 shares authorized, 5,239,359 and
5,243,047 shares issued and outstanding at April 3, 2004, and
January 3, 2004, respectively 52 52 Additional paid-in capital
25,138 25,129 Deferred stock compensation (74) (108) Retained
deficit (12,841) (15,932) Accumulated other comprehensive loss
(248) (271) Total shareholders' equity 12,027 8,870 $143,623
$140,297 NATIONAL VISION, INC. COMPUTATION OF CONSOLIDATED EBITDA
Three Months Ended April 3, 2004 and March 29, 2003 (In thousands)
First Quarter 2004 2003 Net earnings (loss) $3,091 $(2,048)
Adjustment to net earnings (loss): Interest expense, net 2,871
3,305 Income tax expense 185 Cumulative effect of a change in
accounting principle 564 Depreciation and amortization 3,540 4,086
EBITDA $9,687 $5,907 DATASOURCE: National Vision, Inc. CONTACT:
Paul A. Criscillis, Jr., Senior Vice President and CFO of National
Vision, Inc., +1-770-822-4262 Web site:
http://www.nationalvision.com/
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