LCA-Vision to Restate Financial Statements to Increase Deferred Revenues for Separately Priced Extended Warranties

  
    
  
  
    
      LCA-Vision Inc. (Nasdaq: LCAV), 
      a leading provider of laser vision correction services under the LasikPlus 
      brand, today announced it will restate financial results for 2004, 2005 
      and 2006 to reflect a change in revenue recognition for the Company’s 
      separately priced extended warranties.
    
    
      This change is expected to reduce 2006 revenues and net income by 
      approximately $18 million and $10 million, respectively. This reflects a 
      reduction in revenues of approximately 7 percent for the year. The 
      proposed accounting also is expected to reduce shareholders’ 
      equity as of December 31, 2006 by approximately $30 million, of which 
      approximately $9 million relates to periods prior to 2004. The proposed 
      adjustment in revenue recognition is expected to increase revenues and 
      earnings in future periods as deferred revenues are amortized back into 
      income. There will be no change to cash provided by operating activities 
      or to cash and cash equivalents on the balance sheet for any period 
      affected. Management is analyzing the restatement adjustments and the 
      estimated changes outlined above are preliminary and are subject to 
      further review and audit.
    
    
      This action resulted from analysis performed following the Company’s 
      receipt of a comment letter from the Securities and Exchange Commission 
      (SEC) pursuant to their review of our 2006 10-K. The single issue raised 
      in this letter addressed the Company’s revenue 
      recognition policy. The Company’s historical 
      policy has been to defer revenues for separately priced extended 
      warranties for those patients expected to receive treatment under the 
      warranty. Historical data indicates that only 7% of patients elected to 
      receive treatment under the warranty.
    
    
      Because LCA-Vision has offered separately priced extended warranties, it 
      is subject to FASB Technical Bulletin 90-1. Under this Bulletin 100 
      percent of revenues from extended warranties are to be deferred and 
      these deferred revenues are to be amortized back into income on a 
      straight-line basis unless the Company has sufficient experience to 
      indicate that the costs to provide the service will be incurred other 
      than on a straight-line basis. The Company believes it has sufficient 
      experience to show that future enhancements are not expected to be 
      performed on a straight-line basis and should be amortized over seven 
      years.
    
    
      “We have provided the SEC with a response to 
      its comment letter and we look forward to resolving this issue as soon 
      as is practical,” said Steven C. Straus, 
      LCA-Vision's Chief Executive Officer. “Since 
      we started offering separately priced extended vision acuity plans, we 
      have consistently applied our interpretation of the relevant accounting 
      rules and deferred a portion of the revenue from acuity plans consistent 
      with the percentage of patients who return to LasikPlus vision 
      centers for enhancement procedures.
    
    
      “We plan to limit or eliminate the use of 
      separately priced extended warranties in the near future,” 
      added Mr. Straus. “Therefore, we expect the 
      impact of the restated financial statements will be to increase revenues 
      and pretax income in future periods as the deferred revenue is amortized 
      back into income. At present, we are comfortable with our 2007 revenue 
      guidance growth of 20 to 25 percent compared with 2006, and our 2007 
      earnings per share guidance of $2.05 to $2.15.”
    
    
      The Company’s decision to restate 
      prior-period financial statements was made by LCA-Vision management with 
      the concurrence of the Audit Committee of its Board of Directors and its 
      independent auditors, Ernst & Young LLP.
    
    
      In light of the restatement, investors should rely on LCA-Vision’s 
      forthcoming restated financial statements and other financial 
      information rather than the previously filed financial statements and 
      other financial information.
    
    
      Conference Call & Webcast
    
    
      A conference call and webcast will be held today, Wednesday, April 18, 
      2007 at 8:30 a.m. Eastern time to answer analyst and investor questions. 
      To access the conference call, dial 888-803-7404 (within the United 
      States and Canada), or 706-634-1308 (international callers). 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: 
      6321144. A replay of the conference call will be available at the 
      investor relations section of LCA-Vision's website.
    
    
      First Quarter 2007 Financial Results
    
    
      The Company will file its Form 10-Q for the first quarter of 2007 with 
      finalized first quarter 2007 financial results as well as its restated 
      financial statements in amendments to prior reports with the Securities 
      and Exchange Commission as soon as it is practical. The final changes to 
      deferred revenues, net income, and earnings per share will be available 
      in these filings.
    
    
      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 
      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, which recent results 
      would indicate are no longer as effective as they have been in prior 
      periods; 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, which we have recently 
      experienced including at the executive management level; 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 63 LasikPlus 
      fixed-site laser vision correction centers in the United States and 
      participate in a joint venture in Canada. LasikPlus vision 
      centers are located in 48 markets in 29 states. Additional information 
      is available at our corporate websites: www.lca-vision.com 
      and www.lasikplus.com.
    
    
      It's Not Just LASIK. It's LasikPlus!