UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
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(Name
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STEPHEN
N. JOFFE
CRAIG
P.R. JOFFE
ALAN
H. BUCKEY
JASON
T. MOGEL
ROBERT
PROBST
EDWARD
J. VONDERBRINK
ROBERT
H. WEISMAN
THE
LCA-VISION FULL VALUE COMMITTEE
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Registrant)
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On
January 16, 2009, The LCA-Vision Full Value Committee (the “Committee”) made a
preliminary filing with the Securities and Exchange Commission (“SEC”) of a
consent solicitation statement relating to the solicitation of written consents
from stockholders of LCA-Vision Inc., a Delaware corporation (the “Company”), in
connection with seeking to remove and replace the current members of the Board
of Directors of the Company.
Item 1:
On January 25, 2009, the following news story ran in the Cincinnati
Enquirer:
January
25, 2009
LCA-Vision
managers try to hold off takeover
Executives
get blame, but economy a factor
By
John Eckberg
jeckberg@enquirer.com
By June
2008, Alan Buckey, then the executive vice president of finance and chief
financial officer of LCA-Vision, had seen enough. The company, a pioneer in the
use of lasers to correct vision, had lost market share, was performing fewer
procedures and imposed multiple rounds of layoffs.
Management
blamed the economy for the slide. Then a “no confidence” letter came from 40
physicians, more than 90 percent of the company’s medical staff. So when asked
by the board to pick a side, Buckey picked the doctors.
“I knew I
couldn’t stay any longer after going on record against my boss,” Buckey recalled
in a recent interview. On that June day, as Buckey walked past the huge violet
eye that stares west down Montgomery Road from the company’s Kenwood
headquarters to his car, he suspected that conditions at the company founded by
his former boss, Dr. Stephen N. Joffe, would go from bad to worse.
But
Buckey was not done with LCA-Vision, which has 77 LasikPlus Centers in 33
states. He, Joffe and Joffe’s son, Craig, now are in the midst of a hostile
takeover and doing it under the guise of the LCA-Vision Full Value Committee.
They hope to unseat the company’s existing board and seat a new board by this
spring.
On the
other side, the board and executive team have closed the door to the return of
the Joffes. The board and executives declined to talk about the situation for
this story.
Late
Friday, the company did file a document with the Securities and Exchange
Commission detailing six reasons why it opposes the Full Value Committee’s
bid.
The
objections included the company’s belief that the group “is acting out of
self-interest, rather than the best interest of the shareholders.” Another
reason was that the committee “has not laid out a clear plan on how he (Stephen
Joffe) will do things differently, excepting that he will replace management and
board members with individuals of his group’s choosing, many of whom were
removed from their posts at the company prior.”
On Nov.
5, the same day that the Joffes and Buckey announced their joint efforts,
another group of investors led by Eduardo Baviera Sabater of Madrid and the
Inversiones Telesan Investment Ballo Holding BV of the Netherlands - one of the
largest vision-correction companies in Europe - took a 765,000 share stake in
LCA-Vision, according to SEC documents.
“Together
it’s an attempt at a hostile takeover,” said medical technology analyst Anthony
Petrone of the Maxim Group in New York City. Petrone says the two groups of
outsiders control 18 percent of LCA-Vision’s outstanding shares.
The
insurgents, who say they are not working together, see mismanagement as the root
of the company’s problems. “No ‘smokescreen’ can conceal the plain truth about
the company’s disastrous performance,” reads a recent SEC filing from the
foreign investors’ group. “(It) is primarily attributable to a lack of strategic
direction, poor decision-making and poor executive by the board and management
team.”
Yet
independent experts say LCA’s management cannot be totally blamed for the
company’s slump in performance. Nor is the company without significant revenues.
From January 2006 through December 2007, sales went from $238.93 million to
$292.63 million - a 23 percent jump. And as recently as March 2007, the company
delivered a quarterly profit of nearly $7 million.
LCA-Vision,
which is due to report its fourth quarter earnings on Feb. 9, has seen profits
turn into losses in 2008 as a recession that began in December 2007
deepened.
“Whenever
we’re in a recession or a down financial cycle, problems in some industries
quickly arise,” said Stephen Moehrle, associate professor of accounting at the
University of Missouri in St. Louis. “This is a classic example.”
Clearly
the recession took a bite from the company’s revenues in 2007-08. Affluent
Americans weary of wearing glasses - the sweet-spot demographic for the company
- increasingly decided that after the stock market cratered in 2008, maybe
glasses or contact lenses were not such a bad idea after all.
“There
has to be concerns that Lasik procedures may be more adversely affected by the
current economic downturn than other forms of eye-care,” said George Van Horn,
senior analyst at IBISWorld, a research and consulting company in Los Angeles.
“It is truly an elective procedure and not normally covered by
insurance.”
Van Horn
said that during the last economic downturn from 2001 through 2002, laser
refractive surgeries declined for three years in a row at annual rates ranging
from 5 percent to 10 percent a year.
Surgeries
at LCA-Vision cost about $3,600 per person, depending upon the procedure, and in
the recession, that was just too much to pay for too many people.
Multiple
problems
The
company faced challenges on all fronts at the time Buckey departed.
Already
the share price had tanked - dropping from $40.70 after Joffe’s departure in
2006 to $4.77 in June 2008, as $752.21 million in market capitalization
disappeared in just over two years. That was $27 million in value lost every
month - more than $1.3 million lost every business day.
Other
problems:
LCA-Vision
doctors were doing 25 percent fewer procedures than the previous year - a
decline that was more than double the 11 percent swoon faced by peer groups,
Buckey claims.
Same-store
revenues compared to the previous year, another measure of fiscal health, lagged
by a crippling 21 percent.
To stem
the share price decline in 2007, the board spent about $43.97 million to
purchase 1.6 million shares at an average price of $27.53 a share in the second
half of the year. Today those shares are under water, an investment worth about
$7 million, assuming shares valued at $4.41. The company purchased no shares in
the first half of 2008.
By
mid-May last year, the company had slashed its dividend from 18 cents a share to
six cents a share and then to zero. The paring of the dividend was only one sign
of hard times at LCA-Vision. Within months, the company’s marketing staff would
be slashed, advertising reined in and full-time jobs would give way to part
time.
Late last
year, the board approved a poison pill to thwart a takeover by flooding the
company with cheap shares should a takeover group exceed 20 percent ownership,
thereby making it too costly for dissidents to gain control.
‘The
final bullet’
The fight
has moved to its final stages as the Joffes now have about three months to seat
their board.
Whatever
the result, it will take time and great effort for LCA-Vision to find its
footing again, said Peter S. Sealey, a management expert and professor of
marketing at the Peter Drucker School at Claremont Graduate University in
Claremont, Calif.
“A proxy
fight is the ultimate form of democracy on the corporate level. But it is also
the corporate version of impeachment - the final bullet you can fire - and real
damage is usually done to the brand,” Sealey said.
Additional
Facts
What’s
next
LCA-Vision
is expected to release its fourth-quarter financial results on Feb. 11. The
company has posted losses totaling more than $4 million in the two previous
quarters.
CERTAIN
INFORMATION CONCERNING PARTICIPANTS
On
January 16, 2009, The LCA-Vision Full Value Committee made a preliminary filing
with the Securities and Exchange Commission (“SEC”) of a consent solicitation
statement relating to the solicitation of written consents from stockholders of
the Company in connection with seeking to remove and replace the current members
of the Board of Directors of the Company.
THE
LCA-VISION FULL VALUE COMMITTEE ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PRELIMINARY CONSENT SOLICITATION STATEMENT AND ANY OTHER SOLICITATION
MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH SOLICITATION MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE
SEC’S WEB SITE AT
HTTP://WWW.SEC.GOV
.
IN ADDITION, THE PARTICIPANTS IN THIS SOLICITATION WILL PROVIDE COPIES OF THE
CONSENT SOLICITATION STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES
SHOULD BE DIRECTED TO THE PARTICIPANTS’ SOLICITOR BY CALLING, TOLL-FREE, (888)
750-5834.
The
participants in the consent solicitation are Dr. Stephen N. Joffe, Craig P.R.
Joffe, Alan H. Buckey, Jason T. Mogel, Robert Probst, Robert H. Weisman and
Edward J. VonderBrink.
As of the
date of this filing, Dr. Joffe directly beneficially owns 1,171,952 shares of
Common Stock of the Company, Craig P.R. Joffe directly beneficially owns 865,468
shares of Common Stock of the Company, and Alan H. Buckey directly beneficially
owns 77,900 shares of Common Stock of the Company.
For the
purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended,
each of the participants in this solicitation is deemed to beneficially own the
shares of Common Stock of the Company beneficially owned in the aggregate by the
other participants. Each of the participants in this proxy solicitation
disclaims beneficial ownership of such shares of Common Stock except to the
extent of his or its pecuniary interest therein.
Contact:
For The
LCA-Vision Full Value Committee
and
Stephen N. Joffe
Lisa
Blaker, 513-600-1867
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