NVI National Vision

LAWRENCEVILLE, Ga., Aug. 15 /PRNewswire-FirstCall/ -- National Vision, Inc. (AMEX:NVI) today announced operating results for its fiscal second quarter and the year-to-date period ended July 2, 2005. Total net revenue from continuing operations for the second quarter of 2005 was $58.7 million, a 4% increase from total net revenue of $56.3 million in last year's second quarter. The quarter's comparable store sales growth was +3%. Current year second quarter net income was $864,000 versus net income of $4.8 million in the 2004 second quarter. Two matters significantly affected the year-over-year comparisons. The 2005 second quarter results include pre- tax gains of $17,000 from the Company's repurchases of its 12% Senior Subordinated Notes whereas pre-tax gains of $2.9 million from such repurchases were included in the second quarter of 2004. Further, the effective income tax rate that was applied to pre-tax earnings for the 2005 quarter was 50% whereas the comparable rate applied to 2004 pre-tax earnings was 4.65%. The higher effective income tax rate in the current year period is the result of accruals for deferred income taxes and does not represent an increase in the Company's expected cash payments for income taxes, which are expected to approximate 4% of 2005 full year taxable income. Diluted earnings per share were $0.15 in the current year second quarter versus $0.86 in the prior year period. For the six-month year-to-date period, total net revenue from continuing operations of $118.8 million was 4% higher than the prior year's net revenue from continuing operations of $113.9 million. The year-over-year comparable store sales increase was +3%. Net income for the first half of 2005 was $3.7 million versus net income of $7.9 million during the first six months of 2004. Fully diluted earnings per share were $0.66 in the first six months of the current year versus $1.42 in the first half of 2004. On July 28, 2005, Berkshire Partners commenced a cash tender offer to acquire all outstanding shares of National Vision common stock at a price of $7.25 per share. The tender offer is still in process and will remain open until midnight on August 31, 2005. Accordingly, the Company has not scheduled an investor relations conference call to discuss its second quarter operating results. National Vision, Inc. is a retail optical company that operates vision centers primarily within host environments in the United States and Mexico. Its vision centers sell a wide range of optical products including eyeglasses, contact lenses and sunglasses. As of the end of the most recent fiscal quarter on July 2, 2005, the Company operated 412 vision centers, including 290 located inside domestic Wal-Mart stores. National Vision depends on its domestic Wal-Mart locations for substantially all of its 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. NATIONAL VISION, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share information) (Unaudited) Three Months Ended Six Months Ended July 2, July 3, July 2, July 3, 2005 2004 2005 2004 Sales of optical products and services $56,128 $54,421 $113,677 $110,025 Fees from managed vision care services 2,601 1,909 5,101 3,836 Total net revenue 58,729 56,330 118,778 113,861 Cost of goods sold, including occupancy costs 26,880 25,409 52,730 49,244 Gross profit 31,849 30,921 66,048 64,617 Selling, general & administrative expense 28,040 27,000 55,497 55,891 Operating income from continuing operations 3,809 3,921 10,551 8,726 Other income (expense): Interest expense (2,180) (2,842) (4,553) (5,754) Gain on repurchase of Senior Subordinated Notes 17 2,902 23 2,902 Other income, net 50 30 252 70 Earnings before taxes and discontinued operations 1,696 4,011 6,273 5,944 Income tax expense 848 187 2,659 300 Net earnings before discontinued operations 848 3,824 3,614 5,644 Discontinued operations: Operating income from discontinued operations 70 1,043 196 2,417 Loss on disposal (38) (43) (58) (74) Income tax expense (16) (46) (59) (118) Earnings from discontinued operations 16 954 79 2,225 Net earnings $864 $4,778 $3,693 $7,869 Earnings per common share: Basic $0.16 $0.94 $0.71 $1.55 Diluted $0.15 $0.86 $0.66 $1.42 NATIONAL VISION, INC. CONDENSED CONSOLIDATED BALANCE SHEETS July 2, 2005 and January 1, 2005 (In thousands) July 2, 2005 (Unaudited) January 1, 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $6,009 $7,858 Accounts receivable (net of allowance: 2005 - $469; 2004 - $423) 3,412 2,561 Inventories, net 13,914 14,065 Deferred income tax asset 7,517 9,394 Other current assets 1,303 2,405 Total current assets 32,155 36,283 PROPERTY AND EQUIPMENT, net 13,355 12,271 INTANGIBLE VALUE OF CONTRACTUAL RIGHTS (net of accumulated amortization: 2005 - $30,729; 2004 - $26,974) 82,016 85,771 OTHER ASSETS AND DEFERRED COSTS (net of accumulated amortization: 2005 - $1,282; 2004 - $1,193) 1,002 785 $128,528 $135,110 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $3,677 $3,446 Accrued expenses and other current liabilities 23,052 23,772 Senior Subordinated Notes - current portion 3,009 4,858 Total current liabilities 29,738 32,076 DEFERRED INCOME TAX LIABILITY 8,807 8,191 OTHER LONG TERM LIABILITIES 568 491 SENIOR SUBORDINATED NOTES 63,902 72,930 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, $1 par value; 5,000,000 shares authorized, none issued Common stock, $0.01 par value; 10,000,000 shares authorized, 5,460,668 and 5,390,679 shares issued and outstanding at July 2, 2005 and January 1, 2005. 54 54 Additional paid-in capital 25,910 25,592 Deferred stock compensation (339) (407) Retained earnings (deficit) 136 (3,557) Accumulated other comprehensive loss (248) (260) Total shareholders' equity 25,513 21,422 $128,528 $135,110 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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