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National Vision Holdings, Inc. (EYE)

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Advanced Medical Optics, Inc. (EYE)

Q1 2008 Earnings Call

May 1, 2008 10:00 am ET

Executives

Sheree Aronson – Investor Relations

Jim Mazzo – Chairman & CEO

Michael Lambert - CFO

Analysts

Peter Bye – Jefferies & Co.

Chris Cooley – FTN Midwest Securities

Joanne Wuensch – BMO Capital Markets

Larry Biegelsen – Wachovia Capital Markets

Steve Willoughby – Cleveland Research Company

Mark Mullikin – Piper Jaffray

Bob Hopkins – Lehman Brothers

Gerry Hope – Bear Stearns
Larry Keusch – Goldman Sachs

Presentation

Operator

Welcome to AMO’s first quarter 2008 earnings conference call. For a copy of the press release issued this morning, call 714-247-8455 or visit www.amo-inc.com. (Operator Instructions) I am pleased to introduce Sheree Aronson, Corporate Vice President of Corporate Communications and Investor Relations.

Sheree Aronson

Good morning. Joining me today are Chairman and CEO Jim Mazzo and CFO, Michael Lambert who will take your questions after some prepared remarks.

During the call certain statements such as forecast of financial information, guidance, financial targets and goals, strategies for growth, expected product performance, technology adoption and market share, expectations for expectations for market and procedures, and the impact of a potential US economic downturn, projected regulatory approvals, benefits and launch dates of new products, expectations for the multipurpose solution re-launch and for initiatives to reduce cost and any other statements that refer to AMO's plans or estimated future results are forwarding looking statements. As such they reflect our current analysis of existing trends and information and represent our judgment only as the date of this call. Actual result may differ based on various factors affecting our businesses.

Review today’s press release and our recent SEC filings, for more information about these risk factors, specifically the discussion under the heading "Risk Factors" and our 2007 Form 10-K. You'll find these and other documents in the Investors section at www.amo-inc.com or by calling us at 714-247-8455.

Please note that year ago sales comparisons and the tables in today’s release do not include any IntraLase sales since we completed this acquisition on April 2, 2007. The pro forma sales growth rates reflect comparisons that include the IntraLase performance as is this acquisition had occurred at the beginning of all periods presented.

In addition I’d like to draw your attention to some changes to the sales breakdown in the global sales table that accompanies the news release. We have made these changes to first quarter 2007 and 2008 sales as slide three explains. This new presentation is more consistent with the way we currently manage our business and compares more closely to the way competitors present their sales data. Beginning this quarter and moving forward our geographic breakdown will provide sales by business for the US and for all other international markets in aggregate.

Also beginning this quarter and moving forward our product sales will be broken down by our three businesses; cataract, refractive and eye care. Within the cataract segment intraocular lenses now include only monofocal IOLs and Viscoelastics and Phacomulsification products are combined into one category. In the refractive segment the procedures, implant and related sales category includes all femtosecond patient interface device and eximer treatment card procedure sales as well as refractive IOL sales. There are no changes to the way system sales are presented. However we have collapsed the mechanical microkeratomes sales which are quite small, into refractive service, parts and other. There are no changes to the eye care segment breakdown.

To assist you with modeling you’ll find a quarterly global sales table that breaks down 2007 sales according to this new method on our website in the Investor section under the historical financials tab. Finally please note that our adjusted EPS and adjusted operating margin guidance are provided on a non-GAAP basis and exclude the impact of charges and write-offs related to acquisitions, reorganizations, restructurings and recapitalizations, unrealized gains or losses on derivative instruments and other periodic or one-time charges or gains. Refer to the Investors section of our website under historical financial for more information on our use of non-GAAP measures.

Unless we identify a number as adjusted in our remarks or the accompanying slides, you can assume that it is a GAAP number. With that, I’ll pass the call to Jim.

Jim Mazzo

Thanks Sheree and good morning to everyone. Michael and I are very pleased to present AMO’s first quarter results which demonstrated meaningful progress against the four key 2008 priorities we laid out during last quarter’s conference call. I’d like to begin the call by briefly reviewing each of these and highlighting key accomplishments towards their achievement.

First leveraging our global refractive leadership and unique growth levers to mitigate the domestic LASIK softness and advance our complete refractive solution business model. In the first quarter our refractive business delivered 3% growth on pro forma basis despite declines in US LASIK market volumes. We leveraged our unique dual laser platform to drive pro forma laser sales up 19% and to continue moving our proprietary LASIK procedure on a path to becoming the standard of care.

Number two, achieving on time delivery of critical pipeline products across all three businesses. To date we’ve introduced four new products. In February we launched our first ever dry eye product, blink Tears. We now have extensive US retail shelf presence and are actively sampling practitioners across all of our businesses. We followed that up month with the introduction of our new iDesign Advanced WaveScan Studio at the American Society of Cataract and Refractive Surgery meeting. In addition we are awaiting FDA clearance on the iFS Advanced Ferntosecond Laser which we also unveiled at the ASCRS. We believe these two refractive technologies will further distance us from the competition and grow our sales and share. During the quarter European surgeons began trialing our new Tecnis one-piece IOL marking our entry into the single piece IOL category.

Number three, growing our multi purpose solution market share and returning our eye care business to sustain profitability and growth. Market shares for our complete branded multi purpose solution hit new post recall highs. Moreover we delivered sequential quarterly multi purpose growth of 27% as more eye care practitioners began actively recommending our Easy Rub Formula and rub and rinse regimen. Just as important we took the eye care business back to profit contribution levels as measured by sales minus direct costs that compares to early 2007. Note that it was hovering around breakeven to slightly positive levels in the fourth quarter of 2007 and was in negative territory much of 2007 due to the recall.

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