EX-99.1 2 l21510aexv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

Exhibit 99.1
(LCA-VISION LETTERHEAD)
News Release
LCA-Vision Increases Earnings Per Share 42% and Grows Revenues 35%
Procedure Volume Increases 31% and Same-Store Revenue Grows 21%
Company Raises Full-Year 2006 Earnings Guidance to $1.80 — $1.90
Cincinnati, July 25, 2006 — LCA-Vision Inc. (Nasdaq: LCAV), a leading provider of laser vision correction services under the LasikPlus brand, today announced financial and operational results for the three months and six months ended June 30, 2006.
Second Quarter 2006 Highlights
•   Earnings per share increased 42% to $0.51 from $0.36.
 
•   Revenues grew 35% to approximately $65.5 million from approximately $48.4 million.
 
•   Procedure volume rose 31% to 47,308 from 36,010.
 
•   Same-store revenues in the U.S. grew 21%, which includes 40 vision centers.
 
•   Successfully opened three new LasikPlus vision centers in Paramus, New Jersey; Grand Rapids, Michigan; and Seattle, Washington. LasikPlus vision centers are now located in 40 markets in 27 states.
“We are pleased with our second quarter and year-to-date financial and operational results,” said Craig Joffe, LCA-Vision’s Interim Chief Executive Officer and Chief Operating Officer. “We continue to deliver industry-leading growth based on strong performance from both new and existing LasikPlus vision centers.”
“Our operational and financial results demonstrate the soundness of our business model and our ability to consistently execute our strategy to capture market share and grow at a rate significantly faster than the industry. In the second quarter of 2006 we grew earnings per share 42% and revenues 35%, with same-store revenues increasing 21%.”
“We successfully opened three new LasikPlus vision centers during the second quarter, and last week announced the opening of a second location in the Houston market. Year-to-date, we have opened four new vision centers and now own and operate 53 LasikPlus vision centers in the United States. We remain on track to meet our goal of opening a total of 10 to 12 vision centers this year.”
“Laser vision correction is one of the nation’s most widely performed elective surgical procedures. Growing positive consumer acceptance of this life-enhancing procedure coupled with strong word-of-mouth referrals and our ability to satisfy our patients with the right combination of advanced technology, experience, and exceptional quality of care at an affordable price continues to fuel our business and grow our market share in both new and existing markets.”

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(LCA-VISION LETTERHEAD)
Net Income & Earnings Per Share
Second quarter 2006 net income increased 39% to approximately $10.9 million from approximately $7.8 million in the second quarter of 2005. Second quarter 2006 earnings per diluted share increased 42% to $0.51 from $0.36 in the second quarter of 2005. Included in net income for the second quarter of 2006 was the after-tax cost of approximately $1,251,000, or $0.06 per diluted share, for the expensing of equity-based compensation as a result of the adoption of FAS 123(R) that became effective January 1, 2006.
Revenues & Operating Income
Revenues grew 35% to approximately $65.5 million in 2006’s second quarter from approximately $48.4 million in 2005’s second quarter. Procedure volume increased 31% in 2006’s second quarter to 47,308 from 36,010 procedures performed in 2005’s second quarter. Operating income increased 32% to approximately $17.0 million in 2006’s second quarter from approximately $12.9 million in 2005’s second quarter. Second quarter 2006 operating income was reduced by approximately $1,603,000 as a result of the expensing of equity-based compensation.
Cash Position
Cash provided by operations grew 37% to approximately $32.9 million for the six months ended June 30, 2006 from approximately $24.1 million for the six months ended June 30, 2005. Cash and cash equivalents increased to approximately $131.1 million as of June 30, 2006 from approximately $111.0 million as of December 31, 2005.
Year-to-Date Results
For the six months ended June 30, 2006, net income increased 40% to approximately $24.0 million from approximately $17.1 million for the six months ended June 30, 2005, and earnings per diluted share increased 40% to $1.12 from $0.80. Included in net income for the first six months of 2006 was the after-tax cost of approximately $2,287,000, or $0.11 per diluted share, for the expensing of equity-based compensation.
For the six months ended June 30, 2006, revenues grew 41% to approximately $138.8 million from approximately $98.6 million for the six months ended June 30, 2005. Procedure volume increased 37% to 100,680 procedures from 73,588 procedures. Operating income increased 33% to approximately $37.7 million from approximately $28.3 million. Operating income in the first six months of 2006 was reduced by approximately $2,852,000 as a result of the expensing of equity-based compensation.
Outlook
LCA-Vision is increasing earnings guidance for the full-year of 2006. Earnings per diluted share are now expected to be in the range of $1.80 to $1.90, compared with prior guidance of $1.75 to $1.85. The company continues to expect revenue growth of at least 30% to 40% for the balance of 2006. Guidance reflects an effective tax rate of approximately 41% to 42% for all periods, and also includes the expected full-year impact of approximately $0.20 to $0.22 per diluted share for the expensing of stock options and other share-based compensation that became effective January 1, 2006.

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(LCA-VISION LETTERHEAD)
Conference Call & Webcast
As previously announced, a conference call and webcast will be held today, Tuesday, July 25, 2006 at 10:00 a.m. (ET). To access the conference call, dial 866-322-1352 (within the United States and Canada), or 706-758-1564 (international callers). The webcast and presentation will be available at the investor relations section of LCA-Vision’s website. A replay of the call and webcast will begin approximately two hours after the live call has ended. To access the replay, dial 800-642-1687 (within the United States and Canada), or 706-645-9291 (international callers) and enter the conference ID number: 233 81 22.
Forward-Looking Statements
This news release contains forward-looking statements based on current expectations, forecasts and assumptions of LCA-Vision that are subject to risks and uncertainties. Forward-looking statements in this release, including statements regarding our belief that revenues and earnings will exhibit healthy year-over-year growth for fiscal 2006, among others, are based on information available to us as of the date hereof. Actual results could differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with our business, including, without limitation, those concerning economic, political and sociological conditions; market acceptance of our services; the successful execution of marketing strategies to cost effectively drive patients to our vision centers; competition in the laser vision correction industry; an inability to attract new patients; the possibility of long-term side effects and adverse publicity regarding laser vision correction; operational and management instability; regulatory action against us or others in the laser vision correction industry; and the relatively high fixed cost structure of our business. For a further discussion of the factors that may cause actual results to differ materially from current expectations, please review our filings with the Securities and Exchange Commission, including but not limited to our Forms 10-K and 10-Q. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, we assume no obligation to update the information included in this news release, whether as a result of new information, future events, or circumstances, or otherwise.
About LCA-Vision Inc./LasikPlus
LCA-Vision Inc. is a leading provider of laser vision correction services under the LasikPlus brand. We own and operate 53 LasikPlus fixed-site laser vision correction centers in the United States and a joint venture in Canada. Additional information is available at our corporate websites: www.lca-vision.com and www.lasikplus.com. It’s Not Just LASIK. It’s LasikPlus!
For Additional Information
Patricia Forsythe
V.P. Investor Relations
513-792-5629
pforsythe@lca.com
(LCA-VISION)
Corporate Websites: http://www.lca-vision.com • http://www.lasikplus.com
Corporate Headquarters: 7840 Montgomery Road • Cincinnati OH 45236

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(LCA-VISION LETTERHEAD)
LCA-Vision Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands except per share data)
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2006     2005     2006     2005  
Revenues — Laser refractive surgery
   $ 65,453     $ 48,391     $ 138,849     $ 98,581  
 
                                
Operating costs and expenses
Medical professional and license fees
     11,312       8,745       24,890       18,264  
Direct costs of services
     18,259       13,577       39,174       26,924  
General and administrative expenses
     5,312       3,111       10,241       6,563  
Marketing and advertising
     11,421       8,030       22,768       14,803  
Depreciation
     2,107       2,006       4,042       3,756  
 
                        
 
                                
Operating income
     17,042       12,922       37,734       28,271  
 
                                
Equity in earnings from unconsolidated businesses
     185       —       323       24  
Minority equity interest
     (7 )     (237 )     (15 )     (411 )
Interest expense
     (64 )     (36 )     (125 )     (49 )
Interest income
     1,403       779       2,841       1,289  
Dividend income
     75       23       140       42  
 
                        
 
                                
Income before taxes on income
     18,634       13,451       40,898       29,166  
 
                                
Income tax expense
     7,757       5,623       16,929       12,028  
 
                        
 
                                
Net income
   $ 10,877     $ 7,828     $ 23,969     $ 17,138  
 
                        
 
                                
Income per common share
                                
Basic
   $ 0.52     $ 0.38     $ 1.15     $ 0.84  
Diluted
   $ 0.51     $ 0.36     $ 1.12     $ 0.80  
 
                                
Dividends declared per share
   $ 0.12     $ 0.08     $ 0.24     $ 0.16  
 
                                
Weighted average shares outstanding
                                
Basic
     20,836       20,429       20,791       20,333  
Diluted
     21,474       21,548       21,469       21,390  

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(LCA-VISION LETTERHEAD)
LCA-Vision Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
                 
    June 30, 2006     December 31, 2005  
Assets
                
Current assets
                
Cash and cash equivalents
   $ 131,051     $ 111,031  
Accounts receivable, net of allowance for doubtful accounts of $2,600 and $2,641
     11,387       10,520  
Receivables from vendors
     3,795       3,207  
Prepaid expenses, inventory and other
     10,097       4,031  
Income taxes receivable
     —       2,875  
Deferred tax assets
     3,561       3,542  
 
            
Total current assets
     159,891       135,206  
Property and equipment
     68,641       63,026  
Accumulated depreciation and amortization
     (42,428 )     (38,342 )
 
            
Property and equipment, net
     26,213       24,684  
Accounts receivable, net of allowance for doubtful accounts of $508 and $504
     1,296       1,132  
Deferred compensation plan assets
     3,230       2,569  
Investment in unconsolidated businesses
     481       158  
Deferred tax assets
     2,064       2,064  
Other assets
     1,066       1,039  
 
            
Total Assets
   $ 194,241     $ 166,852  
 
            
Liabilities and Stockholders’ Investment
                
Current liabilities
                
Accounts payable
   $ 2,920     $ 3,800  
Accrued liabilities and other
     11,419       8,910  
Debt maturing in one year
     2,581       2,122  
 
            
Total current liabilities
     16,920       14,832  
Capital lease obligations
     1,457       1,434  
Deferred compensation liability
     3,230       2,569  
Insurance reserve
     5,402       3,840  
Minority equity interest
     37       41  
Stockholders’ investment
                
Common stock ($0.001 par value; 24,685,172 and 24,368,992 shares and 20,937,878 and 20,768,198 shares issued and outstanding, respectively)
     25       24  
Contributed capital
     155,619       145,262  
Common stock in treasury, at cost (3,747,294 shares and 3,600,794 shares)
     (23,919 )     (17,671 )
Retained earnings
     35,449       16,514  
Accumulated other comprehensive income
     21       7  
 
            
Total stockholders’ investment
     167,195       144,136  
 
            
Total Liabilities and Stockholders’ Investment
   $ 194,241     $ 166,852  
 
            

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(LCA-VISION LETTERHEAD)
LCA-Vision Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
                 
    Six Months Ended June 30,  
    2006     2005  
Cash flow from operating activities:
                
Net income
   $ 23,969     $ 17,138  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     4,042       3,756  
Provision for loss on doubtful accounts
     (37 )     626  
Deferred income taxes
     (19 )     3,517  
Tax benefit on disqualified disposition of stock option
     3,303       —  
Stock-based compensation
     2,852       —  
Deferred compensation
     661       527  
Insurance reserve
     1,562       1,038  
Equity in earnings of unconsolidated affiliates
     (323 )     (24 )
Changes in working capital:
                
Accounts receivable
     (994 )     (3,421 )
Receivables from vendors
     (588 )     (503 )
Prepaid expenses, inventory and other
     (6,066 )     182  
Income taxes receivable
     2,875       —  
Accounts payable
     (880 )     (3,059 )
Income taxes payable
     —       3,616  
Accrued liabilities and other
     2,502       727  
 
            
Net cash provided by operations
   $ 32,859     $ 24,120  
Cash flow from investing activities:
                
Purchase of property and equipment
     (3,856 )     (4,667 )
Distribution from minority equity investees
     —       187  
Deferred compensation plan
     (661 )     (555 )
Other, net
     (17 )     414  
 
            
Net cash used in investing activities
   $ (4,534 )   $ (4,621 )
Cash flow from financing activities:
                
Principal payments of long-term notes, debt and capital lease obligations
     (1,226 )     (424 )
Shares repurchased for treasury stock
     (6,248 )     —  
Exercise of stock options
     4,203       4,870  
Dividends paid to stockholders
     (5,034 )     (3,256 )
 
            
Net cash (used in) provided by financing activities
     (8,305 )     1,190  
 
            
Increase in cash and cash equivalents
     20,020       20,689  
Cash and cash equivalents at beginning of period
     111,031       86,588  
 
            
Cash and cash equivalents at end of period
   $ 131,051     $ 107,277  
 
            

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