NVI National Vision

National Vision Reports Operating Results for the Fourth Quarter and Fiscal Year Ended January 3, 2004 LAWRENCEVILLE, Ga., April 1 /PRNewswire-FirstCall/ -- National Vision, Inc. today announced operating results for its fourth quarter and fiscal year ended January 3, 2004 ("fiscal 2003"). Fiscal 2003 was a 53-week fiscal year, with the additional week being contained in the fourth quarter. Fiscal 2002 was a more traditional 52-week year. Current year fourth quarter total net revenue from continuing operations of $62.6 million yielded gross profit of $34.1 million. The prior year's fourth quarter total net revenue from continuing operations of $55.8 million yielded gross profit of $28.5 million. Year-over-year domestic comparable store sales growth was +5.1% for the quarter, excluding sales generated in the fourteenth week of the current year quarter. Net income for the quarter was $539,000 compared with a loss of $2.5 million in the comparable period last year. The current year's fourth quarter results include a gain on Note repurchases of $2.3 million, offset by additional expense of $550,000 resulting from the impairment of long-lived assets. Last year's fourth quarter results included $1.0 million in gains on Note repurchases. EBITDA, as defined in the Company's bond indenture, was $6.1 million in the current year quarter versus $3.8 million in the comparable period last year. Fiscal 2003 total net revenue from continuing operations was $243.3 million, yielding gross profit of $132.4 million. Prior year total net revenue from continuing operations was $224.2 million, yielding gross profit of $123.5 million. Domestic comparable store sales growth for the year was +5.0%, excluding sales generated in the 53rd week of the current fiscal year. The Company's net loss for 2003 was $3.9 million, a $2.3 million improvement in comparison to last year's $6.2 million net loss. Current year results include a gain on Note repurchases of $2.3 million, offset by additional expense of $564,000 relating to the cumulative effect of a change in accounting principle, $550,000 in impairment losses and $484,000 in restructuring charges. In the prior fiscal year, gains of $1.6 million were realized from Note repurchases. Current year EBITDA was $23.9 million versus EBITDA of $24.9 million achieved in the prior year. "We are quite proud of what the NVI team was able to accomplish in such a transitional year. Last year we changed almost every aspect of our operational mix--including product selection and display, store scheduling, training and incentives. In addition, we tested two new business concepts and laid the groundwork for several other new tests," commented Reade Fahs, CEO and President. "It is pretty remarkable in a year of so much operational change and new product development (not to mention the closure of 40 strong Wal-Mart stores) that the team managed to deliver such healthy sales growth and bottom line improvement." At the end of the fiscal year, the Company operated 468 vision centers, versus 518 vision centers at the end of fiscal 2002. Of the Company's vision centers open and operating at January 3, 2004, 359 were in domestic Wal-Mart stores, 37 were in Wal-Mart de Mexico stores, 47 were located in Fred Meyer stores, and 25 were on military bases throughout the United States. The Company will hold an Investor Relations Conference Call on Friday, April 2, 2004, at 11:00 a.m. EST to discuss these quarterly and annual results. The general public can access this conference call via the Company's website at http://www.nationalvision.com/ . At the conclusion of the prepared remarks by management, the Company will accept and address questions from institutional investors. 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, amortization, cumulative effect of a change in accounting principle, non-cash items and reorganization items as defined under our 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 April 1, 2004, the Company operated 451 vision centers, including 341 located inside domestic Wal-Mart stores. In 2004, through April 1, the Company has closed 19 stores (including 18 domestic Wal- Mart stores) and opened two stores on military bases. We depend on our domestic Wal-Mart locations for substantially all of our revenues and cash flow. 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" maybe 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, 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 includedin 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. Summarized Consolidated Statements of Operations (in thousands, except per share information) QUARTER ENDED FISCAL YEAR ENDED Jan. 3, Dec. 28, Jan. 3, Dec. 28, 2004 2002 2004 2002 (14 weeks)(13 weeks)(53 weeks)(52 weeks) Revenue: Retail sales, net $60,630 $55,070 $236,125 $222,156 Premium revenue 1,677 757 6,347 2,041 Other revenue 247 877 Total net revenue 62,554 55,827 243,349 224,197 Cost of goods sold 28,478 27,365 110,907 100,699 Gross profit 34,076 28,462 132,442 123,498 Operating expenses: Selling, general and administrative expense 32,038 29,416 123,713 119,451 Impairment of long-lived assets 550 550 Restructuring expense 484 Total operating expense 32,588 29,416 124,747 119,451 Operating income 1,488 (954) 7,695 4,047 Other income (expense): Interest expense (3,111) (3,277) (12,913) (14,099) Gain on note repurchases 2,321 1,019 2,321 1,566 Other, net (8) 331 50 470 Pre-tax income (loss) from continuing operations * 690 (2,881) (2,847) (8,016) Income taxes 198 198 Income (loss) from continuing operations * 492 (2,881) (3,045) (8,016) Income (loss) from discontinued operations 47 406 (259) 1,812 Income (loss) * 539 (2,475) (3,304) (6,204) Cumulative effect of a change in accounting principle (564) Net income (loss) $539 $(2,475) $(3,868) $(6,204) Earnings (loss) per basic share: Earnings (loss) from continuing operations * $0.10 $(0.58) $(0.61) $(1.60) Earnings (loss) from discontinued operations 0.01 0.07 (0.05) 0.36 Cumulative effect of a change in accounting principle (0.11) Net earnings (loss) per basic share $0.11 $(0.51) $(0.77) $(1.24) Earnings (loss) per diluted share: Earnings (loss) from continuing operations * $0.09 $(0.58) $(0.61) $(1.60) Earnings (loss) from discontinued operations 0.01 0.07 (0.05) 0.36 Cumulative effect of a change in accounting principle (0.11) Net earnings (loss) per diluted share $0.10 $(0.51) $(0.77) $(1.24) * Excluding the cumulative effect of a change in accounting principle. National Vision, Inc. Reconciliation of Net Earnings (Loss) to EBITDA (in thousands) QUARTER ENDED FISCAL YEAR ENDED Jan. 3, Dec. 28, Jan. 3 Dec. 28, 2004 2002 2004 2002 (14 weeks)(13 weeks)(53 weeks)(52 weeks) Net earnings (loss) $539 $(2,475) $(3,868) $(6,204) Adjustments: Interest expense, net of interest income 3,119 2,946 12,863 13,952 Income taxes 198 198 Depreciation and amortization 3,969 4,387 15,962 18,999 Cumulative effect of a change in accounting principle 564 Non-cash items(1,771) (1,019) (1,771) (1,889) EBITDA $6,054 $3,839 $23,948 $24,858 National Vision, Inc. Summarized Balance Sheets (in thousands) AS OF January 3, December 28, 2004 2002 ASSETS Current Assets: Cash and cash equivalents $3,545 $9,020 Accounts receivable, net 3,078 2,164 Inventories 17,387 17,928 Other current assets 1,278 1,305 Deferred income tax asset 7,305 3,428 Total current assets 32,593 33,845 Property and equipment, net 13,619 17,992 Other assets and deferred costs 806 1,004 Intangible value of contractual rights 93,279 100,960 Total Assets $140,297 $153,801 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $3,506 $3,445 Accrued expenses and other current liabilities 25,132 24,393 Current portion of long-term debt 545 3,824 Total current liabilities 29,183 31,662 Deferred income tax liability 7,305 3,428 Senior subordinated notes 94,939 105,882 Shareholders' equity 8,870 12,829 Total Liabilities and Shareholders' Equity $140,297 $153,801 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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