National Vision Reports Second Quarter Operating Results

National Vision Reports Second Quarter Operating Results 


LAWRENCEVILLE, Ga., Aug. 16  /PRNewswire-FirstCall/ -- National Vision, Inc.
(AMEX:NVI) today announced operating results for its fiscal second quarter and
the year-to-date period ended July 3, 2004.

Total net revenue from continuing operations for the second quarter of 2004 was
$61.3 million versus $55.1 million in last year's second quarter. This reflects
a comparable store sales increase of +10%.  Current year net revenues included
sales generated during the Company's annual summer contact lens promotional
event.  Revenues from last year's corresponding event were recorded in the
third fiscal quarter.  This year's event was responsible for $4.4 million of
the quarter's $6.2 million year-over-year sales gain; if these sales were
excluded from 2004 revenue, comparable store sales increased +2% in the second
quarter.

Current year second quarter net income was $4.8 million versus a net loss of
$2.7 million in the second quarter last year.  This year's net income included
an after-tax gain of $2.8 million on repurchases of the Company's Senior
Subordinated Notes at prices below par value.  Excluding the impact of the bond
repurchases, net income rose $4.7 million for the quarter in spite of a decline
in store count of more than 50 stores versus Q2 last year.

Fully diluted earnings per share were $0.86 in the current year second quarter
versus a loss of $0.54 in the prior year period.  EBITDA for the current year
quarter was $8.2 million compared to EBITDA of $4.5 million in the prior year
quarter.

"Our stores delivered another strong quarter," stated Reade Fahs, CEO and
President.  "The programs we put in place last year are continuing to work well
for us as we continue to make significantly more money on fewer stores. Because
of this, we were able to significantly reduce the balance of our Senior
Subordinated Notes.  By the end of August our debt will have declined $16.7
million since the beginning of the year to $78.8 million.  Additionally, our
Board has approved ongoing repurchases of the Notes based on availability of
cash and compliance with the requirements of our credit agreement with Fleet
Retail Group.  This approval will allow us to continue to opportunistically
reduce our debt even further over time."

For the six-month year-to-date period, total net revenue from continuing
operations of $123.9 million was 12% higher than the prior year's net revenue
from continuing operations of $110.8 million.  The actual year-over-year
comparable store sales increase was +11%. The comparable store sales increase
would have been +7% excluding the sales from the June contact lens promotional
event.  Net income for the first half of 2004 was $7.9 million (including the
$2.8 million after-tax gain on Note repurchases) versus a net loss of $4.8
million (including a $564,000 charge against earnings from the cumulative
effect of a change in accounting principle) during the first six months of
2003.

"We've had a great first half, with EBITDA climbing to $17.9 million versus
$10.4 million a year ago," Mr. Fahs commented.  "We continue to be encouraged
by the progress of the business and impressed with what our store teams are
able to achieve."

The Company will hold an Investor Relations Conference Call on Tuesday, August
17, 2004, at 11:00 a.m. EDT to discuss its second 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.

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 and other non-cash 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 August 16, 2004, the Company operated a total of 437 vision
centers, of which 326 were located inside domestic Wal-Mart stores, 37 were
located within Wal-Mart de Mexico stores, 47 were located inside Fred Meyer
stores and 27 were located on military bases within the United States. In 2004,
through August 16, the Company has closed 35 stores (including 33 domestic
Wal-Mart stores) and opened four stores on military bases.  As of August 16,
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 22 leases for domestic Wal-Mart vision centers to
expire.  In addition, the Company expects to close six underperforming Mexican
Wal-Mart vision centers.  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 Ended  Six Months Ended
                                       July 3, June 28,  July 3,   June 28,
                                        2004     2003      2004      2003

  Retail sales, net                    $59,049  $53,047  $119,276  $107,223
  Premium revenue                        1,824    1,639     3,720     2,986
  Other revenue                            448      397       874       615

  Total net revenue                     61,321   55,083   123,870   110,824
  Cost of goods sold                    27,725   24,758    53,699    49,346

  Gross profit                          33,596   30,325    70,171    61,478
  Selling, general & administrative
   expense                              28,757   29,547    59,308    58,915
  Operating income                       4,839      778    10,863     2,563
  Other income (expense), net:
    Interest expense                    (2,842)  (3,280)   (5,748)   (6,623)
    Gain on repurchase of
      Senior Subordinated Notes          2,902              2,902
    Other income, net                       30       41        64        78

  Earnings (loss) before taxes,
   discontinued operations and
   cumulative effect of a
   change in accounting principle        4,929   (2,461)    8,081    (3,982)
  Income tax expense                       233                418

  Net earnings (loss) before
   discontinued operations and cumulative
   effect of a change in accounting
   principle                             4,696   (2,461)    7,663    (3,982)

  Discontinued operations:
       Operating income (loss) from
        discontinued operations             68     (182)      220       (97)
       Gain (loss) on disposal              14      (78)      (14)     (126)
  Earning (loss) from discontinued
   operations                               82     (260)      206      (223)

  Earnings (loss) before cumulative
   effect of a change in accounting
   principle                             4,778   (2,721)    7,869    (4,205)
  Cumulative effect of a change in
   accounting principle                                                (564)

  Net earnings (loss)                   $4,778  $(2,721)   $7,869   $(4,769)

  Earnings (loss) per common share:

       Basic                             $0.94   $(0.54)    $1.55    $(0.94)

       Diluted                           $0.86   $(0.54)    $1.42    $(0.94)


                            NATIONAL VISION, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                      July 3, 2004 and January 3, 2004
                               (In thousands)

                                            July 3, 2004
                                            (unaudited)     January 3, 2004
  ASSETS
  CURRENT ASSETS:
       Cash and cash equivalents                  $5,006            $3,545
       Accounts receivable
         (net of allowance: 2004 -
          $554; 2003 - $769)                       3,274             3,078
       Inventories                                15,781            17,387
       Other current assets                        1,441             1,278
       Deferred income tax asset                   8,031             7,305
            Total current assets                  33,533            32,593
  PROPERTY AND EQUIPMENT, net                     12,146            13,619
  INTANGIBLE VALUE OF CONTRACTUAL
   RIGHTS
       (net of accumulated
        amortization: 2004 - $23,220;
        2003 - $19,466)                           89,525            93,279
  OTHER ASSETS AND DEFERRED COSTS
       (net of accumulated
        amortization: 2004 - $1,077;
        2003 - $964)                                 724               806
                                                $135,928          $140,297

  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES:
       Accounts payable                           $3,286            $3,506
       Accrued expenses and other
        current liabilities                       27,012            25,132
       Senior Subordinated Notes - current
        portion                                    2,006               545
            Total current liabilities             32,304            29,183
  DEFERRED INCOME TAX LIABILITY                    8,031             7,305
  SENIOR SUBORDINATED NOTES                       78,816            94,939
  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,
        5,347,341 and 5,243,047
        shares issued and outstanding
        at July 3, 2004 and January
        3, 2004, respectively                         53                52
       Additional paid-in capital                 25,385            25,129
       Deferred stock compensation                  (300)             (108)
       Retained deficit                           (8,063)          (15,932)
       Accumulated other comprehensive
        loss                                        (298)             (271)
            Total shareholders' equity            16,777             8,870
                                                $135,928          $140,297


                            NATIONAL VISION, INC.
                      COMPUTATION OF CONSOLIDATED EBITDA
       Three and Six Month Periods Ended July 3, 2004 and June 28, 2003
                                (In thousands)

                                 Three Months       Six Months
                                     Ended            Ended
                                July 3, June 28,  July 3, June 28,
                                  2004    2003     2004     2003

  Net earnings (loss)           $4,778  $(2,721)  $7,869  $(4,769)
  Adjustment to net earnings
   (loss):
       Interest expense, net     2,812    3,241    5,682    6,545
       Income tax expense          233               418
       Gain on repurchase of
        Notes                   (2,902)           (2,902)
       Cumulative effect of a
        change in accounting
        principle                                             564
       Depreciation and
        amortization             3,309    4,019    6,850    8,105

   EBITDA                       $8,230   $4,539  $17,917  $10,445


DATASOURCE: National Vision, Inc.



CONTACT:  Paul A. Criscillis, Jr., Senior Vice President and CFO of

National Vision, Inc., [phone]



Web site:  http://www.nationalvision.com/

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