NVI National Vision

National Vision Reports Third Quarter and Nine Month Results for the Period Ended September 27, 2003 LAWRENCEVILLE, Ga., Nov. 18 /PRNewswire-FirstCall/ -- National Vision, Inc. , a national retail optical company, today announced results for the third quarter and nine months ended September 27, 2003. For the quarter, the Company recorded net sales of $65.1 million and gross profit of $34.6 million, versus net sales of $57.9 million and gross profit of $32.3 million, recorded in the comparable period last year from the Company's continuing operations. Comparable store sales for the domestic businesses that are part of continuing operations increased 11.0% from levels recorded in the comparable period last year. The Company recorded a net income of $356,000 in the current period versus a net loss of $753,000 in the comparable period last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the current period were $7.4 million versus EBITDA of $7.0 million achieved in the comparable period last year. For the nine months ended September 27, 2003, the Company recorded net sales of $185.6 million and gross profit of $100.6 million, versus net sales of $173.2 million and gross profit of $97.2 million, recorded in the comparable period last year from the Company's continuing operations. Sales from domestic stores that are part of continuing operations increased 4.5% from levels recorded in the comparable period last year. The Company recorded a net loss of $4.4 million in the current period versus a $3.7 million net loss in the comparable period last year. The current nine-month period includes a net loss of $564,000 relating to a cumulative effect of a change in accounting principle. Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the current nine-month period were $17.9 million, versus EBITDA of $21.0 million achieved in the comparable period last year. At the end of the third quarter, the Company operated 481 vision centers, versus 518 vision centers at the end of the third quarter a year ago. Of the Company's vision centers open and operating at September 27, 2003, 373 are in domestic Wal-Mart stores, 37 are in Wal-Mart de Mexico stores, 47 are located in Fred Meyer stores, and 24 are in military bases throughout the United States. In conjunction with the third quarter results, the Company will hold an Investor Relations Conference Call on November 19, 2003 at 11:00 a.m. EDT. The general public can access this conference call via the Company's web site at http://www.nationalvision.com/ . At the conclusion of the prepared remarks by management, the Company will accept and address questions from institutional investors. The general public can access the Company's 10-Q for the period ended September 27, 2003 and the Company's 10-K financial reports and press releases via the Company's web site. Additionally, the general public can access all of the Company's public documents filed with the Securities and Exchange Commission ("SEC") via their web site at http://www.sec.gov/ . The Company's common stock and senior notes are listed on the American Stock Exchange. The common stock of the Company trades under the symbol "NVI" and the senior notes trade under the symbol "NVI.A". In addition, on November 7, 2003 the Company resolved the final outstanding claim in its Chapter 11 proceeding. Pursuant to its plan of reorganization, the Company had deposited common stock and senior secured notes in a disputed claim reserve. As of November 10, 2003, approximately 325,000 shares of common stock and $12.2 million in notes remained in the reserve. The plan of reorganization provides that, upon resolution of all outstanding claims, these securities will be distributed on a pro rata basis to the holders of claims in the Chapter 11 case. The Company is in the process of calculating the distribution amounts and expects that the final distribution will take place later in the fourth quarter. The distribution of these securities could have an adverse impact on the trading prices of the securities of the Company. We frequently refer to EBITDA because it is the basis for the calculation of the excess cash flow principal repayment under our senior 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 and amortization, extraordinary items, and cumulative effect of a change in accounting principle, as defined in the terms of our Senior Subordinated Debt agreement. A reconciliation of net earnings to EBITDA is presented in the attached financial tables. 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 previously 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 recent emergence from bankruptcy, 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 (unaudited) Three Months Ended Nine Months Ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, 2003 2002 2003 2002 Retail sales, net $63,434 $57,254 $180,919 $171,903 Premium revenue 1,681 637 4,670 1,290 Total net sales 65,115 57,891 185,589 173,193 Cost of goods sold 30,479 25,548 84,997 75,978 Total gross profit 34,636 32,343 100,592 97,215 Selling, general & administrative expense 30,535 30,415 93,683 91,893 Restructuring expense 484 - 484 - Operating income 3,617 1,928 6,425 5,322 Interest expense, net (a) 3,199 2,992 9,745 10,136 Income / (loss) from continuing operations before income taxes 418 (1,064) (3,320) (4,814) Income tax expense - - - - Income / (loss) from continuing operations 418 (1,064) (3,320) (4,814) Discontinued operations: Operating income / (loss) from discontinued operations (98) 311 (479) 1,085 Gain / (loss) on disposal 36 - (50) - Income / (loss) from discontinued operations, net of income taxes (62) 311 (529) 1,085 Income / (loss) before cumulative effect 356 (753) (3,849) (3,729) Cumulative effect of a change in accounting principle - - (564) - Net income / (loss) $356 $(753) $(4,413) $(3,729) Reconciliation of Net Income/(loss) to EBITDA Addback: Interest expense, net $3,199 $2,992 $9,745 $10,136 Income taxes - - - - Cumulative effect of a change in accounting principle - - 564 - Depreciation and amortization expense - continuing operations 3,861 4,685 11,725 14,322 Depreciation and amortization expense - discontinued operations 27 106 268 290 EBITDA (b) $7,443 $7,030 $17,888 $21,019 Capital expenditures $834 $825 $2,425 $2,978 (a) As a result of the adoption of Financial Accounting Standards Board Statement No. 145, the Company has reclassified the prior period gain on the repurchase of debt from extraordinary income to income from continuing operations as a component of the "Interest expense" line item included in the Condensed Consolidated Statement of Operations. The Company realized a gain of $547,000 during the third quarter of 2002 related to the repurchase of bonds. (b) EBITDA is calculated as net earnings before interest, taxes, depreciation and amortization, extraordinary items, cumulative effect of a change in accounting principle, and reorganization items as defined in the terms of our Senior Subordinated Debt agreement. We refer to EBITDA because: - it is the basis for the calculation of the excess cash flow principal repayment under our senior notes; and - it is a widely accepted financial indicator of a company's ability to service or incur indebtedness. EBITDA does not represent cash flow from operations as defined by generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs, should not be considered an alternative to net income or to cash flow from operations (as determined in accordance with GAAP) and should not be considered an indication of our operating performance or as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures for other companies. National Vision, Inc. Condensed Consolidated Balance Sheets (in thousands) As of As of Sept. 28, 2003 Dec. 28, 2002 (unaudited) Assets: Cash $4,750 $9,020 Accounts receivable, net 2,711 2,164 Inventories 18,544 17,928 Other current assets 727 979 Current deferred income tax asset - 975 Net property and equipment 13,982 17,992 Other assets and deferred costs, net 761 1,004 Intangible value of contractual rights, net 95,425 100,960 $136,900 $151,022 Liabilities and Shareholders' Equity: Accounts payable $5,994 $3,445 Accrued expenses and other current liabilities 21,093 24,067 Current portion of long-term debt - 3,824 Deferred income tax liability - 975 Senior subordinated notes 101,546 105,882 Total shareholders' equity 8,267 12,829 $136,900 $151,022 DATASOURCE: National Vision, Inc. CONTACT: Angus Morrison, Sr. VP & Chief Financial Officer of National Vision, Inc., +1-770-822-4295 Web site: http://www.nationalvision.com/

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