EYE CARE CENTERS OF AMERICA INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

ý		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended September 25, 2004.

OR

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 33 - 70572

EYE CARE CENTERS OF AMERICA, INC.

(Exact name of registrant as specified in its charter)

TEXAS		74-2337775
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification number)

11103 WEST AVENUE SAN ANTONIO, TEXAS 78213
(Address of principal executive offices, including zip code)

(210) 340-3531
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

Class		Outstanding at November 9, 2004
Common Stock, $.01 par value		7,397,689 shares

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

	December 27, 2003			September 25, 2004
				(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,809		$	3,485
Accounts and notes receivable, net	11,117			11,281
Inventory	25,120			25,990
Deferred income taxes, net	570			570
Prepaid expenses and other	3,696			2,493
Total current assets	44,312			43,819

PROPERTY & EQUIPMENT, net	51,715			48,465
GOODWILL	107,423			107,423
OTHER ASSETS	8,631			6,202
DEFERRED INCOME TAXES, net	13,445			13,149
Total assets	$	225,526		$	219,058
LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	21,360		$	18,783
Current maturities of long-term debt	18,980			19,604
Deferred revenue	5,743			5,510
Accrued payroll expense	5,429			5,378
Accrued interest	3,213			4,905
Other accrued expenses	8,334			8,875
Total current liabilities	63,059			63,055
LONG TERM DEBT, less current maturities	219,845			200,378
DEFERRED RENT	4,719			4,615
DEFERRED GAIN	1,532			1,356
Total liabilities	289,155			269,404
SHAREHOLDERS’ DEFICIT:
Common stock	74			74
Preferred stock	62,169			68,430
Additional paid-in capital	28,259			21,131
Accumulated deficit	(154,131		)	(139,981		)
Total shareholders’ deficit	(63,629		)	(50,346		)
	$	225,526		$	219,058

See Notes to Condensed Consolidated Financial Statements.

EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands)

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	Sept. 27, 2003		Sept. 25, 2004		Sept. 27, 2003		Sept. 25, 2004
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
REVENUES:
Optical sales	$	95,510	$	97,978	$	285,682	$	302,416
Management fees	786		692		2,616		2,452
Net revenues	96,296		98,670		288,298		304,868

OPERATING COSTS AND EXPENSES:
Cost of goods sold	29,895		31,457		88,199		94,876
Selling, general and administrative expenses	57,179		58,503		166,705		174,746
Amortization of intangibles	55		—		165		—
Total operating costs and expenses	87,129		89,960		255,069		269,622
									&nb

Part I - Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets at December 27, 2003 and September 25, 2004 (Unaudited)	3

Condensed Consolidated Statements of Operations for the Thirteen Weeks and Thirty-Nine Weeks Ended September 27, 2003 (Unaudited) and September 25, 2004 (Unaudited)	4

Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended September 27, 2003 (Unaudited) and September 25, 2004 (Unaudited)	5

Notes to Condensed Consolidated Financial Statements	6-13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	22-23

Item 4. Controls and Procedures	23

Part II - Other Information	23

Item 1. Legal Proceedings	23

Item 6. Exhibits	24