##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 FOR THE YEAR ENDED DECEMBER 31, 2009
 COMMISSION FILE NUMBER: 0-29302
 
 TLC VISION CORPORATION
 (Exact name of registrant as specified in its charter)
  NEW BRUNSWICK, CANADA
    
    980151150(State or jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 16305 SWINGLEY RIDGE ROAD, SUITE 300
    
    63017CHESTERFIELD, MO
    
    (Zip Code)(Address of principal executive offices)
 Registrants telephone, including area code:
       o þ
 o þ
 þ o
 o o
 o
  o Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
(Do not check if a smaller reporting company)
    
    þ Smaller Reporting Company
 o þ




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##### 



TABLE OF CONTENTS
  
 PART IITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    20ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    30ITEM 2. PROPERTIES
    
    
    30ITEM 3. LEGAL PROCEEDINGS
    
    
    30ITEM 4. [REMOVED AND RESERVED]PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    31ITEM 6. SELECTED FINANCIAL DATA
    
    
    31ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    31ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    42ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    42ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    75ITEM 9A. CONTROLS AND PROCEDURES
    
    
    75ITEM 9B. OTHER INFORMATION
    
    
    76PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    76ITEM 11. EXECUTIVE COMPENSATION
    
    
    78ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    78ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    79ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    79PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    79SIGNATURES
    
    
    80EX-10.17EX-10.20EX-21EX-23EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3
  2




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##### Table of Contents



Risk Factors Vision
 
 PART I
 
 ITEM 1.
    
    BUSINESS
 General
 ®
 Bankruptcy Proceedings
 Chapter 11 Bankruptcy Filings
 In re TLC Vision (USA) Corporation, et al.,
    3




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Debtor-In-Possession (DIP) Financing
  Debt Financial Statements and Supplementary Data
  Subsequent Events Financial Statements and Supplementary Data
 4




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Reorganization Process
          5




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Reorganizations
   Going Concern Matters
  Stock Market Compliance
  Refractive Disorders
  6




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
    
    Myopia (nearsightedness) means the eye is longer than normal resulting in
difficulty seeing distant objects as clearly as near objects.
 
    
    Hyperopia (farsightedness) means the eye is shorter than normal resulting in
difficulty seeing near objects as clearly as distant objects.
 
    
    Astigmatism means the cornea is oval-shaped resulting in blurred vision.
 
    
    Presbyopia is the loss of lens and eye muscle flexibility due to the natural
aging process, causing difficulty in focusing on near objects and usually corrected by
reading glasses. Because vision correction surgery cannot reverse the aging process,
presbyopia cannot be corrected surgically. However, there are surgical and non-surgical
techniques available that can effectively manage presbyopia.
 Treatment for Refractive Disorders
 Eyeglasses.
 Contact Lenses.
 Surgical Procedures. Vision
 
    
    LASIK (Laser In Situ Keratomileusis). LASIK corrects nearsightedness, farsightedness and
astigmatism by using an excimer laser to reshape the cornea. Because LASIK creates a
corneal flap to reshape the cornea and does not disrupt the front surface of the cornea, it
generally is less painful, has a quicker recovery period and shorter post-operative need
for steroid eye drops than other surgical procedures. LASIK is currently the most common
laser refractive procedure and may be the treatment of choice for patients desiring a more
rapid visual recovery.
 
    
    CustomLASIK. Widely introduced in 2003, CustomLASIK is a technologically supported
advancement to LASIK. CustomLASIK involves increased pre-operative diagnostic capabilities
that measure the eye from front to back using wavefront technology to create a three
dimensional corneal map. The information from that map guides the laser in customizing the
laser ablation to an individuals visual irregularities, beyond myopia and hyperopia.
CustomLASIK using wavefront technology has the potential to improve not only how much a
person can see, in terms of visual acuity measured by the standard 20/20 eye chart, but
also how well an individual can see in terms of contrast sensitivity and fine detail. This
translates to a reduced occurrence of night vision disturbances post-LASIK.
 
    
    PRK (Photorefractive Keratectomy). PRK corrects nearsightedness, farsightedness and
astigmatism by using an excimer laser to reshape the cornea without making a flap. During
PRK, the protective surface layer of the cornea (the epithelium) is removed prior to the
laser refractive treatment to reshape the cornea. This protective layer regenerates during
the first week after surgery. The risk of pain, infection and corneal scarring is higher
with PRK than with LASIK; however, the intra-operative risks are lessened with PRK because
no corneal flap is created.
 
    
    LASEK (Laser Assisted Sub-Epithelial Keratectomy). LASEK corrects nearsightedness,
farsightedness and astigmatism by using an excimer laser to reshape the cornea. Unlike
LASIK that creates a corneal flap, LASEK loosens and folds the protective outer layer of
the cornea (the epithelium) to the side prior to the laser refractive treatment. At the
completion of the laser refractive treatment the epithelium is put back in its original
position. This combines the advantages of LASIK with the safety of PRK. The risk of pain,
infection and corneal scarring is higher with LASEK than with LASIK; however, the
intra-operative risks are lessened with LASEK because the flap which is created is only in
the epithelium. The United States Food and Drug Administration (FDA) has not yet approved
use of the excimer laser for LASEK.
 7




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
    
    AK (Astigmatic Keratotomy). AK corrects astigmatism by making microscopic incisions in
the cornea to relax and change the shape of the cornea.
 
    
    INTACS. INTACS corrects very low levels of nearsightedness (1.00 diopters to 3.00
diopters) by implanting rings in the cornea to reshape it rather than surgically altering
the cornea. INTACS may also be used to correct irregularities in the shape of the cornea
caused by some corneal dystrophies.
 
    
    CK (Conductive Keratoplasty). For patients age 40 and older, CK is designed for the
temporary reduction of farsightedness (+.75 to +3.25 diopters) or to treat presbyopia. CK
uses radio frequency instead of a laser to reshape the cornea.
 
    
    PTK (Phototherapeutic Keratectomy). PTK treats abrasions, scars or other abnormalities
of the cornea caused by injury, disease or previous surgery. PTK uses an excimer laser to
remove superficial opacities and irregularities of the cornea to improve vision or reduce
symptoms of pain or discomfort due to an underlying eye condition.
 
    
    Refractive IOL Procedures. Intraocular lenses (IOLs) are permanent or semi-permanent
artificial lenses that are implanted to replace or supplement the eyes natural crystalline
lens. While not a common procedure for correcting refractive errors, the placement of a
refractive IOL can help patients who are not candidates for laser refractive surgery. IOLs
have been used in the United States since the late 1960s to restore visual function to
cataract patients, and more recently are being used in refractive surgery procedures.
There are several types of refractive IOLs: phakic IOLs, multi-focal IOLs and accommodating
IOLs. Patient suitability and quality of visual outcome for each of these lens options
varies.
 Laser Correction Procedures
    8




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The Refractive Market
    Vision
 Market for Cataract Surgery
  TLC Vision Corporation
 Vision Business
Corporations Act
 Business Strategy
 Vision
 9




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
    
    continued cost containment as LASIK volumes rebound under better economic conditions;
 
    
    additional emphasis on our optometric co-management model, proven to be a sustainable
competitive advantage for TLCVision;and
 
    
    exploration of additional eye care service offerings through our national footprint of
63 majority-owned and 8 minority-owned centers.
 ®
 ®
 Description of Refractive Centers Business
  ®
 Vision Vision Vision
 Vision Vision Vision Vision Vision www.tlcvision.com www.lasik.com Vision
 ® Vision Vision
 10




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Pricing
 Vision
  Co-management Model
 Vision Vision Business  Government Regulation  Regulation of Optometrists and
Ophthalmologists
 Vision
 Vision ®
 Sales and Marketing
 Vision
  11




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Vision Vision
 Contracts with Eye Doctors
  Vision
   Description of Doctor Services Business
 Vision
 Description of Mobile Cataract Segment
 Vision
  12




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® ® ®
 ® ® Investments and Other Long-Term
Assets Financial Statements and
Supplementary Data
 Description of Refractive Access Segment
 Vision Vision
 Vision
 Vision
 Vision
  Vision Vision
 
    
    Under standard refractive mobile access agreements with surgeons, TLCVisionprovides
some or all of the following: laser platform and microkeratome equipment, certain related
supplies for the equipment (such as laser gases, per procedure cards and microkeratome
blades), laser operator, microkeratome technicians, maintenance and certain technology
upgrades. In addition, the Company may provide marketing assistance, coordination of
surgeon training and other support services. This
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access is provided on agreed upon dates at either the surgeons offices or a third partys
facility. In return, the surgeons pay a per procedure fee for access services and generally
agree to exclusively use TLCVisions equipment for refractive surgery. The Company does not
provide medical services to the patients or any administrative services to the access surgeon
customer.
 
    
    Under standard refractive fixed access agreements with surgeons, TLCVisiongenerally
provides the following: a fixed-base laser platform and microkeratome equipment, certain
related supplies for the equipment (such as laser gases, per procedure cards and
microkeratome blades), periodic maintenance and certain technology upgrades. In return, the
surgeons pay either a per procedure fee and guarantee a minimum number of procedures per
month, or a flat monthly fee plus the cost of per procedure cards and blades. In addition,
the surgeons generally agree to use exclusively TLCVisions equipment for refractive
surgery. The Company does not provide a laser operator, microkeratome technician, medical
services or any administrative services to the access surgeon customer.
 
    
    Under joint venture arrangements, TLCVisiondirectly or indirectly provides either
mobile or fixed-base laser access and the following: microkeratome equipment, certain
related supplies for the equipment (such as laser gases, per procedure cards and
microkeratome blades), laser operator, microkeratome technician, maintenance and certain
technology upgrades, the laser facility, management services which include administrative
services such as billing and collections, staffing for the refractive practice, marketing
assistance and funds and other support services. TLCVisionreceives an access fee and
management services fees in addition to being reimbursed for the direct costs paid by the
Company for the laser facility operations. In return, the surgeons generally agree to
exclusively use the Companys equipment for refractive surgery and/or not to compete with
the Company within a certain area. Neither TLCVisionnor the joint ventures provide medical
services to the patients.
 Description of Surgical and Secondary Care Center Segment
 Vision
  Description of Eye Care Business
 ® ® ®
 Website and Available Information
 Vision www.tlcvision.com www.lasik.com Vision www.tlcv.com
 Vision www.tlcv.com
 14




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Vision www.sec.gov
 www.tlcv.com/about/ethics/
 Equipment and Capital Financing
 Business  Laser Correction Procedures
 Competition
 Consumer Market for Vision Correction
     15




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Vision
 Government Regulation
 Excimer Laser Regulation
 United States
 Business  Laser
Correction Procedures
 Vision
     16




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Canada
  Regulation of Optometrists and Ophthalmologists
 United States
  Vision
 Federal Law.
    17




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
    
    Privacy Regulations designed to protect and enhance the rights of patients by providing
patient access to their PHI and controlling the use of their PHI;
 
    
    Security Regulations designed to protect electronic health information by mandating
certain physical, technical and administrative safeguards;
 
    
    Electronic Transactions and Code Sets Regulations designed to standardize electronic data
interchange in the health care industry;
 
    
    Standard Unique Employer Identifier Regulations designed to standardize employer
identification numbers used in certain electronic transactions; and
 
    
    Standard Unique Health Identifier for Health Care Providers Regulations designed to
standardize the identification of health care providers used in electronic transactions.
  State Law.
  18




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Canada
 Vision
 Vision
 Vision Vision
 Facility Licensure and Certificate of Need
  19




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Risk of Non-Compliance
 Vision
 Intellectual Property
   Employees
 Risk Factors  The Company depends on key personnel whose loss
could adversely affect its business
 
 ITEM 1A.
    
    RISK FACTORS
  20




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Visions
 Bankruptcy Related Risk Factors
 The Company filed for protection under Chapter 11 of the Bankruptcy Code and the CCAA on December
21, 2009.
 Visions
 
    
    obtain court approval with respect to motions filed in the bankruptcy proceedings;
 
    
    obtain confirmation of and consummate a plan of reorganization with respect to the
bankruptcy proceedings;
 
    
    obtain and maintain commercially reasonable terms with vendors and service providers;
 
    
    renew contracts that are critical to our operations; and
 
    
    retain management and other key individuals.
   Our ability to independently manage our business is restricted during the bankruptcy proceedings,
and steps or actions in connection therewith may require the approval of the U.S. Court, the
Canadian Court and our creditors.
  Inability to obtain confirmation of the Companys Plan of Reorganization, as amended, in a timely
manner may significantly disrupt operations.
  While the bankruptcy cases are pending, our financial results may be volatile and may not reflect
historical trends.
  21




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Failure to obtain confirmation of the Companys Plan of Reorganization, as amended, may result in
liquidation or an alternative plan on less favorable terms.
  The Companys common shares are no longer listed on the NASDAQ or TSX.
   Transfers or issuance of our equity, or a debt restructuring, may impair or reduce our ability to
utilize our net operating loss carry-forwards and certain other tax attributes in the future.
   The Company may be unable to continue as a going concern.
  22




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Other Risk Factors
 Economic conditions cause fluctuations in the Companys revenues and profitability.
    The Company has reported accumulated deficits; its profitability is uncertain.
 Vision
 
    
    the outcome of the current bankruptcy proceedings;
 
    
    macroeconomic conditions in the United States and Canada, including the availability
of discretionary income;
 
    
    general demand for eye-care services;
 
    
    the Companys public image in the marketplace;
 
    
    market acceptance of TLCVisionsvalue-oriented pricing strategy;
 
    
    the Companys ability to control costs;
 
    
    the Companys ability to execute its business strategy;
 
    
    the Companys ability to obtain adequate insurance against malpractice claims and
reduce the number of claims;
 
    
    concerns about the safety and effectiveness of laser vision correction;
 
    
    competitive factors;
 
    
    regulatory developments;
 
    
    the Companys ability to retain and attract qualified personnel; and
 
    
    doctors ability to obtain adequate insurance against malpractice claims at reasonable
rates.
 The market for laser vision correction is intensely competitive and competition may increase.
 Vision. Vision
 Visions Visions
 23




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Vision
  Vision
 The market acceptance of laser vision correction is uncertain.
 Vision
 
    
    its cost, particularly since laser vision correction typically is not covered by
government or private insurers;
 
    
    general resistance to surgery;
 
    
    the fact that effective and less expensive alternative methods of correcting
refractive vision disorders are widely available;
 
    
    the lack of long-term follow-up data;
 
    
    the possibility of unknown side effects; and
 
    
    reported adverse events or other unfavorable publicity involving patient outcomes from
laser vision correction.
 Concerns about potential side effects and long-term results of laser vision correction may
negatively impact market acceptance of laser vision correction and prevent the Company from growing
its business.
   
    
    foreign body sensation;
 
    
    pain or discomfort;
 
    
    sensitivity to bright lights;
 
    
    blurred vision;
 
    
    dryness or tearing;
 
    
    fluctuation in vision;
 
    
    night glare;
 
    
    poor or reduced visual quality;
 
    
    overcorrection or under-correction;
 24




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
    
    regression; and
 
    
    corneal flap or corneal healing complications.
   The Company may be unable to enter into or maintain agreements with doctors or other health care
providers on satisfactory terms.
 Vision Vision Vision
 Quarterly fluctuations in operating results make financial forecasting difficult.
 Vision
 The Company may make investments that may not be profitable.
 Vision
 Technological changes could occur rendering our equipment or services obsolete, requiring the
Company to make significant capital expenditures or modify its business model, which could cause
revenues or profitability to decline.
  25




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The Companys refractive centers strategy partially depends on the Companys ability to
successfully execute direct to consumer advertising programs.
 Visions
 
    
    cost-effectively generate procedures through advertising programs;
 
    
    allocate the funds necessary to support consumer advertising programs;
 
    
    develop consumer advertising as a competency in the Company; and
 
    
    maintain a reliable contact management center, including call center operations and
lead follow-up programs.
 Vision
 The Companys long-term success will depend, in part, on its ability to open new centers, make
acquisitions, or enter into affiliate arrangements.
   
    
    the integration of operations and technologies into existing platforms;
 
    
    hiring and training personnel to staff the center;
 
    
    developing and implementing effective marketing programs to attract potential
patients to the center; and
 
    
    managing the losses incurred during the development and ramp-up period.
  
    
    identifying unanticipated liabilities and contingencies;
    
    diversion of management attention; and
    
    possible adverse effects on operating results resulting from:
 
    
    possible future goodwill impairment;
    
    increased interest costs;
    
    the issuance of additional securities; and
    
    increased costs resulting from difficulties related to the integration of the acquired businesses.
  
    
    the availability of attractive acquisition opportunities;
    
    the availability of capital to complete acquisitions;
    
    the availability of working capital to fund the operations of acquired businesses; and
    
    the effect of existing and emerging competition on operations.
 Vision
 The Company must successfully balance demand for refractive surgery with its operating costs,
particularly in its refractive centers and refractive access segments.
  26




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The Company depends on key personnel whose loss could adversely affect its business.
 Visions
 Vision
 The Company may be subject to malpractice and other similar claims and may be unable to obtain or
maintain adequate insurance against these claims.
 Vision Vision
 Vision Visions Vision
  The Company may face claims for federal, state and local taxes.
 Vision Vision
 Compliance with industry regulations in the U.S. is costly and burdensome.
 Visions Vision
  27




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Vision
 Vision Vision
 Vision Vision
 Compliance with additional health care regulations in Canada is costly and burdensome.
 Vision
 Compliance with U.S. Food and Drug Administration regulations regarding the use of excimer laser
systems for laser correction is costly and burdensome.
   28




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Visions
  Visions Visions
 Healthcare reform may impact the Companys business.
 Visions
 Disputes with respect to intellectual property could adversely affect TLC Visions business.
 Vision
 Vision Vision Visions
 The ability of our shareholders to effect changes in control of the Company is limited.
 Vision Vision Visions
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We have significant tax net operating loss carryovers that may not be utilized.
 Income Taxes, Financial Statements and Supplementary Data
 
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
 Vision Vision
 Vision
 Debt Financial Statements and Supplementary Data
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
 In re TLC Vision (USA)
Corporation, et al., Business  Bankruptcy Proceedings
   30




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
   NASDAQGLOBALMARKETHIGH
    
    
    LOW2008First Quarter March 31, 2008
    
    $
    3.17
    
    
    $
    0.96Second Quarter June 30, 2008
    
    
    1.58
    
    
    
    0.99Third Quarter September 30, 2008
    
    
    1.37
    
    
    
    0.74Fourth Quarter December 31, 2008
    
    
    0.74
    
    
    
    0.142009First Quarter March 31, 2009
    
    $
    0.20
    
    
    $
    0.09Second Quarter June 30, 2009
    
    
    0.43
    
    
    
    0.11Third Quarter September 30, 2009
    
    
    0.40
    
    
    
    0.18Fourth Quarter December 31, 2009
    
    
    0.30
    
    
    
    0.04
   
 ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
  31




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®
  ® ® ® Contingencies
 ®
 ® ® ®
 Vision
    32




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YEAR ENDEDDECEMBER 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009OPERATING DATA (unaudited)Number of majority owned eye care
centers
at end of period
    
    
    64
    
    
    
    67
    
    
    
    66
    
    
    
    66
    
    
    
    63Number of minority owned eye care
centers
at end of period
    
    
    9
    
    
    
    9
    
    
    
    14
    
    
    
    9
    
    
    
    8Number of TLCVision branded eye care
centers at end of period
    
    
    73
    
    
    
    76
    
    
    
    80
    
    
    
    75
    
    
    
    71Number of service sitesRefractive access
    
    
    318
    
    
    
    327
    
    
    
    327
    
    
    
    320
    
    
    
    293Mobile cataract
    
    
    563
    
    
    
    689
    
    
    
    444
    
    
    
    367
    
    
    
    367Number of laser vision correction
procedures:Majority owned centers
    
    
    101,000
    
    
    
    101,000
    
    
    
    105,700
    
    
    
    88,300
    
    
    
    63,600Minority owned centers
    
    
    20,000
    
    
    
    20,300
    
    
    
    21,400
    
    
    
    16,800
    
    
    
    13,800Total TLCVision branded center
procedures
    
    
    121,000
    
    
    
    121,300
    
    
    
    127,100
    
    
    
    105,100
    
    
    
    77,400Refractive access procedures
    
    
    69,900
    
    
    
    65,900
    
    
    
    59,500
    
    
    
    44,100
    
    
    
    35,200Total TLCVision branded refractive
Procedures
    
    
    190,900
    
    
    
    187,200
    
    
    
    186,600
    
    
    
    149,200
    
    
    
    112,600Mobile cataract procedures
(including cataract and
YAG)
    
    
    49,000
    
    
    
    55,700
    
    
    
    56,900
    
    
    
    59,500
    
    
    
    61,900
 Developments During 2009
 Bankruptcy and Reorganization
 In re TLC Vision (USA)
Corporation, et al., Business  Bankruptcy Proceedings
 Restructuring Activities
  ® Restructuring, Financial Statements and
Supplementary Data
  33




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Stock Market Compliance
  Notal Vision® Settlement Agreement
 ® ® ® ®
 ® ® ® ® ®
 ®
 Interest Rate Swap Agreements
 Interest Rate
Swap Agreements, Financial Statements
and Supplementary Data
 TruVision Acquisition Liability
 Business Bankruptcy Proceedings
 Acquisitions and Investments
   34




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Vision
   Divestitures
  Critical Accounting Policies
 Going Concern
  Impairment of Goodwill
 Intangibles  Goodwill and
Other Impairment, Financial
Statements and Supplementary Data
 Impairment of Long-Lived Assets
 Property, Plant and
Equipment
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Recoverability of Deferred Tax Assets
  Accrual of Medical Malpractice Claims
   Accrued Enhancement
 ® ® ® Contingencies
 Deferred Revenues
 ®
 ® ® ®
 36




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®
 Liabilities Subject to Compromise
  Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
    
    
    Revenues from the refractive access services segment for the year ended December 31,
2009 were $24.0 million, a decrease of $5.2 million (18%) from revenues of $29.2 million
for the year ended December 31, 2008. For the year ended December 31, 2009, excimer
procedures declined by 9,000 (20%) from the prior year period on lower customer demand,
which accounted for a decrease in revenues of approximately $5.9 million. This decrease
was partially offset by higher average pricing and mobile Intralase revenues, which
together increased revenues by approximately $0.7 million.
    
    Revenues from the Companys mobile cataract segment for the year ended December 31,
2009 were $41.8 million, an increase of $0.9 million (2%) from revenues of $40.9 million
for the year ended December 31, 2008. The increase in mobile cataract revenue was due to
increased surgical procedure volume of 4% and higher surgical average sales price of 3%,
partially offset by a $1.4 million (50%) decline in Foresee PHP® revenue on a 49% unit
volume reduction on weakened consumer spending and the 4th quarter 2009
termination of the Foresee PHP® distribution agreement.
    
    Revenues from the Companys businesses that manage cataract and secondary care
centers for the year ended December 31, 2009 were $26.1 million, an increase of $0.6
million (2%) from revenues of $25.5 million for the year ended December 31, 2008. The
revenue increase was primarily due to an increase in procedure volume and higher priced
 37




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product mix at the Companys remaining ambulatory surgical centers, partially offset by
the early third quarter 2009 disposal of a majority-owned ambulatory surgical center,
which contributed 1,900 procedures during the year ended December 31, 2009 compared to
3,200 procedures during the year ended December 31, 2008.
     
    
    The cost of revenues from refractive access segment for the year ended December 31,
2009 was $19.2 million, a decrease of $4.4 million (19%) from cost of revenues of $23.6
million for the year ended December 31, 2008. This decrease was primarily attributable
to $4.8 million of lower costs associated with decreased excimer procedures, partially
offset by an increase in cost of revenues of $0.4 million primarily associated with
higher cost procedures and the mobile Intralase offering.
    
    The cost of revenues from the Companys mobile cataract segment for the year ended
December 31, 2009 was $31.3 million, an increase of $1.0 million (3%) from cost of
revenues of $30.3 million for the year ended December 31, 2008. This increase was
primarily due to higher surgical procedure volume of 4%, higher lens supply costs and a $0.8
million PHP Foresee® inventory write-down, partially offset by lower costs associated
with a 49% decline in PHP Foresee® unit volume.
    
    The cost of revenues from the Companys businesses that manage cataract and secondary
care centers for the year ended December 31, 2009 was $17.8 million, an increase of $0.6
million (4%) from cost of revenues of $17.2 million for the year ended December 31,
2008. The increase in cost of revenues was caused primarily by an increase in procedure
volume and higher per procedure cataract lens cost at the Companys remaining ambulatory
surgical centers, partially offset by a cost of revenues decline on lower procedure
volume associated with the majority-owned ambulatory surgical center sold during 2009.
   ®
 38




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##### Table of Contents



Intangibles  Goodwill and Other
 ®
      Liquidity and Capital Resources
 Business -
Bankruptcy Proceedings
 39




---



##### Table of Contents



2009
    
    
    2008Net cash provided by (used in):Operating activities
    
    $
    4,768
    
    
    $
    15,823Investing activities
    
    
    (2,306
    )
    
    
    (8,076
    )Financing activities
    
    
    7,669
    
    
    
    (16,180
    )Net increase (decrease) in cash
    
    $
    10,131
    
    
    $
    (8,433
    )
 Cash Provided By Operating Activities
 ®
 Cash Used In Investing Activities
  Cash Provided By Financing Activities
  Debtor-in-Possession Financing
     40




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##### Table of Contents



Subsequent Events
 Credit Facility
  
    
    Senior term debt, totaling $85.0 million, with a six-year term and required amortization
payments of 1% per annum plus a percentage of excess cash flow (as defined in the
agreement) and sales of assets or borrowings outside of the normal course of business. As
of December 31, 2009, $76.7 million was outstanding on this portion of the facility which
is classified as liabilities subject to compromise as the liability is undersecured.
    
    A revolving credit facility, totaling $25.0 million with a five-year term. As of
December 31, 2009, the Company had $23.4 million outstanding under this portion of the
facility which is classified as liabilities subject to compromise as the liability is
undersecured.
    41




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##### Table of Contents



New Accounting Pronouncements
 Summary of Significant
Accounting Policies
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Responsibility for Financial Statements
     42




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      /s/ Ernst & Young LLP
 
 43




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##### Table of Contents



TLC VISION CORPORATION
(DEBTOR-IN-POSSESION)
 CONSOLIDATED STATEMENTS OF OPERATIONS
  YEAR ENDEDDECEMBER 31,2009
    
    
    2008Revenues:Refractive centers
    
    $
    107,326
    
    
    $
    151,442Doctor services
    
    
    91,895
    
    
    
    95,615Eye care
    
    
    30,969
    
    
    
    28,611Total revenues
    
    
    230,190
    
    
    
    275,668Cost of revenues (excluding amortization expense shown below):Refractive centers
    
    
    83,812
    
    
    
    110,824Doctor services
    
    
    68,278
    
    
    
    71,104Eye care
    
    
    14,916
    
    
    
    13,010Total cost of revenues (excluding amortization expense shown below)
    
    
    167,006
    
    
    
    194,938Gross profit
    
    
    63,184
    
    
    
    80,730General and administrative
    
    
    24,052
    
    
    
    28,016Marketing and sales
    
    
    21,935
    
    
    
    42,725Amortization of intangibles
    
    
    2,321
    
    
    
    3,233Impairment of goodwill, intangibles and other assets
    
    
    1,018
    
    
    
    85,047Other expense (income), net (See Note 18)
    
    
    25,826
    
    
    
    (339
    )75,152
    
    
    
    158,682Operating loss
    
    
    (11,968
    )
    
    
    (77,952
    )Interest income
    
    
    167
    
    
    
    734Interest expense
    
    
    (12,585
    )
    
    
    (10,072
    )Earnings (losses) from equity investments
    
    
    1,307
    
    
    
    (560
    )Loss before reorganization items and income taxes
    
    
    (23,079
    )
    
    
    (87,850
    )Reorganization items, net
    
    
    (3,229
    )
    
    
    Loss before income tax expense
    
    
    (26,308
    )
    
    
    (87,850
    )Income tax expense
    
    
    (948
    )
    
    
    (874
    )Net loss
    
    
    (27,256
    )
    
    
    (88,724
    )Less: Net income attributable to noncontrolling interest
    
    
    9,468
    
    
    
    9,530Net loss attributable to TLC Vision Corporation
    
    $
    (36,724
    )
    
    $
    (98,254
    )Net loss per share attributable to TLC Vision Corporation:Basic
    
    $
    (0.73
    )
    
    $
    (1.95
    )Diluted
    
    $
    (0.73
    )
    
    $
    (1.95
    )Weighted average number of common shares outstanding:Basic
    
    
    50,554
    
    
    
    50,319Diluted
    
    
    50,554
    
    
    
    50,319
  44




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##### Table of Contents



TLC VISION CORPORATION
(DEBTOR-IN-POSSESSION)
 CONSOLIDATED BALANCE SHEETS
  DECEMBER 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    14,623
    
    
    $
    4,492Accounts receivable, net
    
    
    16,824
    
    
    
    16,870Prepaid expenses, inventory and other
    
    
    10,829
    
    
    
    14,214Total current assets
    
    
    42,276
    
    
    
    35,576Restricted cash
    
    
    1,033
    
    
    
    Investments and other assets, net
    
    
    2,875
    
    
    
    11,694Goodwill
    
    
    26,755
    
    
    
    28,570Other intangible assets, net
    
    
    7,680
    
    
    
    10,628Fixed assets, net
    
    
    34,297
    
    
    
    50,514Total assets
    
    $
    114,916
    
    
    $
    136,982LIABILITIESLiabilities not subject to compromiseCurrent liabilities:Accounts payable
    
    $
    8,636
    
    
    $
    17,897Accrued liabilities
    
    
    12,175
    
    
    
    28,076Current maturities of long-term debt
    
    
    10,049
    
    
    
    89,081Total current liabilities
    
    
    30,860
    
    
    
    135,054Other long-term liabilities
    
    
    2,208
    
    
    
    5,444Long-term debt, less current maturities
    
    
    4,800
    
    
    
    16,500Total liabilities not subject to compromise
    
    
    37,868
    
    
    
    156,998Liabilities subject to compromise
    
    
    134,444
    
    
    
    Total liabilities
    
    
    172,312
    
    
    
    156,998STOCKHOLDERS DEFICITCommon stock, no par value; unlimited number authorized
    
    
    340,059
    
    
    
    339,112Option and warrant equity
    
    
    745
    
    
    
    745Accumulated other comprehensive loss
    
    
    
    
    
    
    (1,545
    )Accumulated deficit
    
    
    (410,382
    )
    
    
    (373,658
    )Total TLC Vision Corporation stockholders deficit
    
    
    (69,578
    )
    
    
    (35,346
    )Noncontrolling interest
    
    
    12,182
    
    
    
    15,330Total stockholders deficit
    
    
    (57,396
    )
    
    
    (20,016
    )Total liabilities and stockholders deficit
    
    $
    114,916
    
    
    $
    136,982
   /s/ WARREN S. RUSTANDWarren S. Rustand, Chairman of the Board 45




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##### Table of Contents



TLC VISION CORPORATION
(DEBTOR-IN-POSSESSION)
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  YEAR ENDED DECEMBER 31,2009
    
    
    2008OPERATING ACTIVITIESNet loss
    
    $
    (27,256
    )
    
    $
    (88,724
    )Adjustments to reconcile net income to net cash from operatingactivities:Depreciation and amortization
    
    
    15,908
    
    
    
    19,670Impairment of goodwill, intangibles and other assets
    
    
    1,018
    
    
    
    85,047(Earnings) loss from equity investments
    
    
    (1,307
    )
    
    
    560Gain on sales and disposals of fixed assets
    
    
    (338
    )
    
    
    (269
    )Loss (gain) on business divestitures
    
    
    1,594
    
    
    
    (139
    )Non-cash compensation expense
    
    
    925
    
    
    
    1,391Write-down of Foresee PHP® inventory
    
    
    803
    
    
    
    Write-off of receivables due from and investments in Notal Vision®
    
    
    4,458
    
    
    
    Loss on building abandonment, net
    
    
    2,588
    
    
    
    Other
    
    
    838
    
    
    
    561Changes in operating assets and liabilities, net of acquisitions and dispositions:Accounts receivable
    
    
    (423
    )
    
    
    (626
    )Prepaid expenses, inventory and other current assets
    
    
    2,706
    
    
    
    704Accounts payable and accrued liabilities
    
    
    3,254
    
    
    
    (2,352
    )Cash provided by operating activities
    
    
    4,768
    
    
    
    15,823INVESTING ACTIVITIESPurchases of fixed assets
    
    
    (1,967
    )
    
    
    (3,534
    )Proceeds from sales of fixed assets
    
    
    889
    
    
    
    1,259Distributions and loan payments received from equity investments
    
    
    1,838
    
    
    
    2,107Acquisitions and equity investments
    
    
    (5,183
    )
    
    
    (8,862
    )Proceeds from divestitures of businesses and other investments
    
    
    2,181
    
    
    
    1,281Other
    
    
    (64
    )
    
    
    (327
    )Cash used in investing activities
    
    
    (2,306
    )
    
    
    (8,076
    )FINANCING ACTIVITIES(Increase) decrease  in restricted cash
    
    
    (1,033
    )
    
    
    1,101Proceeds from debtor-in-possession financing
    
    
    7,500
    
    
    
    Proceeds from Credit Facility and other debt financing
    
    
    18,417
    
    
    
    25,392Principal payments of debt financing and capital leases
    
    
    (6,088
    )
    
    
    (33,070
    )Deferred Credit Facility debt issuance costs
    
    
    (78
    )
    
    
    (534
    )Debtor-in-possession debt issuance costs
    
    
    (750
    )
    
    
    Distributions to noncontrolling interests
    
    
    (10,321
    )
    
    
    (9,424
    )Proceeds from issuances of common stock
    
    
    22
    
    
    
    355Cash provided by (used in) financing activities
    
    
    7,669
    
    
    
    (16,180
    )Net increase (decrease) in cash and cash equivalents during the period
    
    
    10,131
    
    
    
    (8,433
    )Cash and cash equivalents, beginning of period
    
    
    4,492
    
    
    
    12,925Cash and cash equivalents, end of period
    
    $
    14,623
    
    
    $
    4,492
  46




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##### Table of Contents



TLC VISION CORPORATION
(DEBTOR-IN-POSSESSION)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  OPTION
    
    
    
    
    
    
    
    
    
    
    TOTAL TLC VISIONAND`
    
    
    
    
    
    
    
    
    
    
    CORPORATIONCOMMON STOCK
    
    
    WARRANT
    
    
    ACCUMULATED OTHER
    
    
    
    
    
    
    STOCKHOLDERS
    
    
    NONCONTROLLINGSHARES
    
    
    AMOUNT
    
    
    EQUITY
    
    
    COMPREHENSIVE LOSS
    
    
    ACCUMULATED DEFICIT
    
    
    EQUITY (DEFICIT)
    
    
    INTEREST
    
    
    TOTALBalance December 31, 2007
    
    
    50,140
    
    
    $
    337,473
    
    
    $
    837
    
    
    $
    (784
    )
    
    $
    (275,404
    )
    
    $
    62,122
    
    
    $
    15,224
    
    
    $
    77,346Shares issued as part of the
employee share purchase plan
and 401(k) plan
    
    
    180
    
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    
    
    
    
    185Exercise of stock options
    
    
    86
    
    
    
    259
    
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    170Options expired or forfeited
    
    
    
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    1,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,391
    
    
    
    
    
    
    
    1,391Changes in subsidiaries
stockholders equity
    
    
    
    
    
    
    (199
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    
    
    
    
    (199
    )Distributions to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,424
    )
    
    
    (9,424
    )Comprehensive loss Deferred hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (761
    )
    
    
    
    
    
    
    (761
    )
    
    
    
    
    
    
    (761
    )Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,254
    )
    
    
    (98,254
    )
    
    
    9,530
    
    
    
    (88,724
    )Balance December 31, 2008
    
    
    50,406
    
    
    $
    339,112
    
    
    $
    745
    
    
    $
    (1,545
    )
    
    $
    (373,658
    )
    
    $
    (35,346
    )
    
    $
    15,330
    
    
    $
    (20,016
    )Shares issued as part of the
employee share purchase plan
and 401(k) plan
    
    
    159
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Stock based compensation
    
    
    
    
    
    
    925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    925
    
    
    
    
    
    
    
    925Distributions to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,321
    )
    
    
    (10,321
    )Divestitures and other
noncontrolling interest
activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,295
    )
    
    
    (2,295
    )Comprehensive loss Deferred hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,545
    
    
    
    
    
    
    
    1,545
    
    
    
    
    
    
    
    1,545Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,724
    )
    
    
    (36,724
    )
    
    
    9,468
    
    
    
    (27,256
    )Balance December 31, 2009
    
    
    50,565
    
    
    $
    340,059
    
    
    $
    745
    
    
    $
    
    
    
    $
    (410,382
    )
    
    $
    (69,578
    )
    
    $
    12,182
    
    
    $
    (57,396
    )
  47




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##### Table of Contents



TLC VISION CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Bankruptcy Proceedings
 Chapter 11 Bankruptcy Filings
 In re TLC Vision (USA)
Corporation, et al.,
        48




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##### Table of Contents



Debtor-In-Possession (DIP) Financing
  Debt
  Subsequent Events
 Reorganization Process
      49




---



##### Table of Contents



Going Concern Matters
  Financial Reporting Considerations
 Reorganizations,
 50




---



##### Table of Contents



2009Professional fees directly related to reorganization (a)
    
    $
    606Senior DIP Credit Agreement related fees (b)
    
    
    35Net loss on Sale-Leaseback Transaction (c)
    
    
    2,588Reorganization items, net
    
    
    3,229
 
 (a)
    
    Professional fees directly related to reorganization include
post-petition fees associated with advisors to the Debtors and certain
secured creditors. Professional fees are estimated by the Debtors and
will be reconciled to actual invoices when received.(b)
    
    DIP Credit Agreement related fees includes the
amortization of certain capitalized costs include closing, facility,
backstop and agency fees.(c)
    
    Net loss on Sale-Leaseback Transaction relates to the
Bankruptcy Courts rejection, effective December 21, 2009, of the
Companys unexpired lease with Canada Mortgage and Housing
Association further described in Note 14, Debt  Sale-Leaseback
Transaction.   DECEMBER 31,2009Accounts payable
    
    $
    8,554Accrued expenses
    
    
    13,132Secured debt
    
    
    100,060Unsecured debt
    
    
    8,075Capitalized Credit Facility debt issuance costs
    
    
    (1,403
    )Other
long-term liabilities
    
    
    4,135Kremer
option (see Note 5)
    
    
    1,891Liabilities subject to compromise
    
    
    134,444
   51




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##### Table of Contents



Leases Debt  Sale Leaseback Transaction,
 nd nd nd .
  Condensed Combined Financial Information of Debtors
  Balance Sheet Information :Cash and cash equivalents
    
    $
    7,851Accounts receivable, net
    
    
    601Prepaid expenses, inventory and other short-term assets
    
    
    2,162Restricted cash
    
    
    1,033Investments and other long-term assets, net
    
    
    61Fixed assets, net
    
    
    2,506Total assets
    
    $
    14,214Current liabilities
    
    $
    13,858Long-term liabilities
    
    
    302Liabilities not subject to compromise
    
    
    14,160Liabilities subject to compromise
    
    
    134,444Total liabilities
    
    
    148,604Stockholders deficit
    
    
    (134,390
    )Total liabilities and stockholders deficit
    
    $
    14,214Statement of Operations InformationNet sales
    
    $
    8,976Gross profit
    
    
    2,703Operating loss
    
    
    (48,136
    )Reorganization items, net
    
    
    (3,229
    )Net loss attributable to TLC Vision Corporation
    
    
    (55,265
    )Statement of Cash Flows InformationCash used in operating activities
    
    
    (41,864
    )Cash used in investing activities
    
    
    (3,269
    )Cash provided by  financing activities
    
    
    51,470
  52




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##### Table of Contents



Stock Market Compliance
  2. Summary of Significant Accounting Policies
 Nature of Operations
 ®
 Basis of Presentation and Principles of Consolidation
  Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
 The FASB Accounting Standards Codification and The Hierarchy of Generally
Accepted Accounting Principles.
 Variable Interest Entities
  Cash and Cash Equivalents
  Inventories
  53




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##### Table of Contents



Investments
  Fixed Assets
  Buildings
    
    - 40 yearsComputer equipment and software
    
    - three to four yearsFurniture, fixtures and equipment
    
    - seven yearsLaser and medical equipment
    
    - five to seven yearsLeasehold improvements
    
    - shorter of useful life or initial term of the leaseVehicles and other
    
    - five years
 Goodwill and Other Intangible Assets
 Impairment
   Long-Lived Assets
  Medical Malpractice Accruals
  54




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##### Table of Contents



Revenue Recognition
   ® ® ® Contingencies.
 ®
 ® ® ®
 ®
 Vision
 55




---



##### Table of Contents



Cost of Revenues
  Marketing
  Income Taxes
  Foreign Currency Exchange
  Loss Per Share
  Use of Estimates
  Reclassifications
  Recently Adopted Accounting Pronouncements
  56




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##### Table of Contents



Accounting Pronouncements Issued but Not Yet Adopted
 Transfers and Servicing,
 Consolidations,
 3. Impairment
 2009 Impairment
  2008 Impairment
    FISCAL 2008 IMPAIRMENT CHARGESInvestments and
    
    
    
    
    
    
    
    
    
    
    Definite-LivedOther Long-Term Assets
    
    
    Fixed Assets
    
    
    Goodwill
    
    
    Intangible Assets
    
    
    TotalRefractive centers
    
    $
    
    
    
    $
    
    
    
    $
    66,843
    
    
    $
    4,658
    
    
    $
    71,501Refractive access
    
    
    
    
    
    
    
    
    
    
    4,993
    
    
    
    1,500
    
    
    
    6,493Other doctor services
    
    
    2,478
    
    
    
    639
    
    
    
    1,555
    
    
    
    17
    
    
    
    4,689Corporate
    
    
    2,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,364Total
    
    $
    4,842
    
    
    $
    639
    
    
    $
    73,391
    
    
    $
    6,175
    
    
    $
    85,047
 57




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##### Table of Contents



4. Restructuring
  ®
  EMPLOYEE SEVERANCE
    
    
    CENTER& BENEFITS
    
    
    RESTRUCTURING COSTS
    
    

    TOTALRestructuring charges
    
    
    2,624
    
    
    776
    

    3,400Non-cash write-downs
    
    
    (40
    )
    
    (346
    )
    
    (386
    )Cash payments
    
    
    (1,370
    )
    
    (220

    )
    
    (1,590
    )Restructuring reserve balance
as of December 31, 2009
    
    $
    1,214
    
    
    $
    210
    
    
    $
    1,424
   Bankruptcy Proceedings.
 5. Acquisitions
 2009 Activity
   Vision
  58




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##### Table of Contents



2008 Activity
  6. Divestitures
   7. Accounts Receivable
  DECEMBER 31,2009
    
    
    2008Refractive centers
    
    $
    697
    
    
    $
    673Doctor servicesRefractive access
    
    
    3,184
    
    
    
    2,802Mobile cataract
    
    
    5,084
    
    
    
    4,427Other
    
    
    2,048
    
    
    
    2,882Eye careOptometric franchising
    
    
    5,262
    
    
    
    5,24316,275
    
    
    
    16,027Other corporate receivables
    
    
    549
    
    
    
    843$
    16,824
    
    
    $
    16,870
  
    
    Refractive centers accounts receivable are due principally from open-access surgeons
who utilize the Companys facilities and staff on a per-use basis (pursuant to their
contractual agreement). While the Company offers consumer financing options for LASIK
surgery, the credit risk is borne by the Companys third-party providers who perform an
independent credit evaluation on each potential patient before extending credit.
    
    Doctor services accounts receivable are generally due from surgeon and medical
facility partners who contract with the Company to use its mobile technology platform.
    
    Eye care accounts receivable represent fees due from franchisees pursuant to their
franchise agreements.
  59




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##### Table of Contents



8. Prepaid Expenses, Inventory and Other Current Assets
  DECEMBER 31,2009
    
    
    2008Prepaid expenses
    
    $
    2,607
    
    
    $
    3,341Inventory
    
    
    6,838
    
    
    
    9,371Other current assets.
    
    
    1,384
    
    
    
    1,502$
    10,829
    
    
    $
    14,214
 ® Investments and Other Long-Term Assets
 9. Investments and Other Long-Term Assets
  DECEMBER 31,2009
    
    
    2008Equity method investments
    
    $
    2,116
    
    
    $
    4,059Cost method investments
    
    
    
    
    
    
    2,010Long-term receivables
    
    
    192
    
    
    
    2,771Capitalized debt costs
    
    
    
    
    
    
    1,755Other
    
    
    567
    
    
    
    1,099$
    2,875
    
    
    $
    11,694
 2009 Activity
  ® ® ® ®
 ® ® ® ® ®
 ®
  60




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##### Table of Contents



2008 Activity
 Impairment
 Equity Method Investments
  INVESTMENT % ATDECEMBER 31,2009
    
    
    2008Laser Eye Centers of California
    
    
    30
    %
    
    
    30
    %Liberty Eye Surgery Center LLC*
    
    
    
    
    
    
    49
    %Eastern Oregon Regional Surgery Center, LLC
    
    
    49
    %
    
    
    49
    %Summit Ambulatory Surgical Center LLP*
    
    
    
    
    
    
    24
    %TLC Oklahoma Doctors LLC
    
    
    25
    %
    
    
    25
    %TLC Northwest Ohio LLC
    
    
    25
    %
    
    
    25
    %
 
 *
    
    Divested during the year ended December 31, 2009. 10. Goodwill
  DOCTOR SERVICES
    
    
    EYE CAREREFRACTIVE
    
    
    REFRACTIVE
    
    
    MOBILE
    
    
    
    
    
    
    OPTOMETRICCENTERS
    
    
    ACCESS
    
    
    CATARACT
    
    
    OTHER
    
    
    FRANCHISING
    
    
    TOTALDecember 31, 2007
    
    $
    62,075
    
    
    $
    11,195
    
    
    $
    11,051
    
    
    $
    3,920
    
    
    $
    6,105
    
    
    $
    94,346Impairment
    
    
    (66,843
    )
    
    
    (4,993
    )
    
    
    
    
    
    
    (1,555
    )
    
    
    
    
    
    
    (73,391
    )Acquired during the period
    
    
    7,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,729Disposals and other during the period
    
    
    (114
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114
    )December 31, 2008
    
    $
    2,847
    
    
    $
    6,202
    
    
    $
    11,051
    
    
    $
    2,365
    
    
    $
    6,105
    
    
    $
    28,570Impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquired during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Disposals and other during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,815
    )
    
    
    
    
    
    
    (1,815
    )December 31, 2009
    
    $
    2,847
    
    
    $
    6,202
    
    
    $
    11,051
    
    
    $
    550
    
    
    $
    6,105
    
    
    $
    26,755
 Impairment
 Impairment Acquisitions
 11. Definite-Lived Intangible Assets
    61




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##### Table of Contents



Impairment
   2009
    
    
    2008GROSS CARRYING
    
    
    ACCUMULATED
    
    
    GROSS CARRYING
    
    
    ACCUMULATEDAMOUNT
    
    
    AMORTIZATION
    
    
    AMOUNT
    
    
    AMORTIZATIONPractice management agreements
    
    $
    25,215
    
    
    $
    21,399
    
    
    $
    25,215
    
    
    $
    19,924Deferred contract rights
    
    
    3,870
    
    
    
    2,787
    
    
    
    3,870
    
    
    
    2,422Trade names
    
    
    
    
    
    
    
    
    
    
    630
    
    
    
    110Other
    
    
    4,804
    
    
    
    2,023
    
    
    
    4,936
    
    
    
    1,567Total
    
    $
    33,889
    
    
    $
    26,209
    
    
    $
    34,651
    
    
    $
    24,023
  2010
    
    $
    2,2642011
    
    
    1,6162012
    
    
    1,4852013
    
    
    7692014
    
    
    645Thereafter
    
    
    901
 12. Fixed Assets
  DECEMBER 31,2009
    
    
    2008Land and buildings
    
    $
    4,967
    
    
    $
    12,286Computer equipment and software
    
    
    14,558
    
    
    
    14,363Furniture, fixtures and equipment
    
    
    7,839
    
    
    
    7,943Laser and medical equipment
    
    
    94,817
    
    
    
    93,905Leasehold improvements
    
    
    22,882
    
    
    
    24,947Vehicles and other
    
    
    6,007
    
    
    
    5,938151,070
    
    
    
    159,382Less accumulated depreciation
    
    
    116,773
    
    
    
    108,868Net book value
    
    $
    34,297
    
    
    $
    50,514
  Impairment
  13. Accrued Liabilities and Other Long-Term Liabilities
 TruVision Liability
 Bankruptcy Proceedings.
 62




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##### Table of Contents



Other Accrued Liabilities
  14. Debt
  DECEMBER 31,2009
    
    
    2008Secured DebtDebtor-in-possession financing, weighted average interest rate of 13.0%
    
    $
    7,500
    
    
    $
    Senior term loan; weighted average interest rate of 9.25% and 8.76% at
December 31, 2009 and 2008, respectively
    
    
    76,660
    
    
    
    76,667Revolving
credit facility, weighted average interest rate of 8.24% and
6.60% at December 31, 2009 and 2008, respectively
    
    
    23,400
    
    
    
    6,000107,560
    
    
    
    82,667Unsecured DebtCapital lease obligations, payable through 2013, interest at various rates
    
    
    11,003
    
    
    
    14,176Sale-leaseback debt  interest imputed at 6.25%, due through October 2016
    
    
    1,284
    
    
    
    5,453Other
    
    
    3,137
    
    
    
    3,28515,424
    
    
    
    22,914Less: Capitalized Credit Facility debt issuance costs
    
    
    1,403
    
    
    
    Total debt
    
    
    121,581
    
    
    
    105,581Less liabilities subject to compromise
    
    
    106,732
    
    
    
    Less current portion
    
    
    10,049
    
    
    
    89,081Total long-term debt
    
    $
    4,800
    
    
    $
    16,500
  Debtor-in-Possession Financing
     63




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##### Table of Contents



Subsequent Events
 Credit Facility
  
    
    Senior term debt, totaling $85.0 million, with a six-year term and required amortization
payments of 1% per annum plus a percentage of excess cash flow (as defined in the
agreement) and sales of assets or borrowings outside of the normal course of business. As
of December 31, 2009, $76.7 million was outstanding on this portion of the facility which
is classified as liabilities subject to compromise as the liability is undersecured.
    
    A revolving credit facility, totaling $25.0 million with a five-year term. As of
December 31, 2009, the Company had $23.4 million outstanding under this portion of the
facility which is classified as liabilities subject to compromise as the liability is
undersecured.
     64




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##### Table of Contents



Capital Lease Obligations
  2010
    
    $
    4,5582011
    
    
    3,6872012
    
    
    2,4742013
    
    
    1,1572014
    
    
    241Thereafter
    
    
    Total
    
    
    12,117Less interest portion
    
    
    1,114$
    11,003
 Sale-Leaseback Transaction
  Leases
  ,
 65




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##### Table of Contents



Gain on write-down of Sale-Leaseback Liability
    
    $
    4,469Loss on abandonment of sale-leaseback asset
    
    
    (5,943
    )Other (a)
    
    
    (1,114
    )Total reorganization loss, net
    
    $
    (2,588
    )
 
 (a)
    
    Other primarily includes a $1.0 million increase to a
restricted cash reserve included in  liabilities subject to compromise. As a
result of the Companys abandonment of the International
Corporate Office, approximately $1.0 million of the Companys
restricted cash balance was immediately due to a subleasee of
the building. 15. Interest Rate Swap Agreements
    16. Stock-Based Compensation
  Vision
  OUTSTANDING
    
    
 EXERCISABLEWEIGHTEDAVERAGE
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDREMAINING
    
    AVERAGE
    
    
    
    
    
    
    AVERAGEPRICE RANGE
    
    NUMBER OF
    
    
    CONTRACTUAL
    
    EXERCISE
    
    
    NUMBER OF
    
    
    EXERCISE(U.S.$)
    
    OPTIONS *
    
    
    LIFE
    
    PRICE
    
    
    OPTIONS *
    
    
    PRICE$0.20   $1.88.
    
    
    1,392
    
    
    5.4 years
    
    $
    0.48
    
    
    
    586
    
    
    $
    0.57$2.44   $4.83
    
    
    1,684
    
    
    3.8 years
    
    
    3.61
    
    
    
    1,215
    
    
    
    3.66$5.95   $6.81
    
    
    666
    
    
    0.9 years
    
    
    6.36
    
    
    
    566
    
    
    
    6.37$8.19   $11.47
    
    
    370
    
    
    0.3 years
    
    
    10.39
    
    
    
    371
    
    
    
    10.394,112
    
    
    3.5 years
    
    $
    3.61
    
    
    
    2,738
    
    
    $
    4.47
 
 *
    
    Values in thousands. 66




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##### Table of Contents



OUTSTANDING
    
    
    EXERCISABLEWEIGHTEDAVERAGE
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDREMAINING
    
    AVERAGE
    
    
    
    
    
    
    AVERAGEPRICE RANGE
    
    NUMBER OF
    
    
    CONTRACTUAL
    
    EXERCISE
    
    
    NUMBER OF
    
    
    EXERCISE(CDN $)
    
    OPTIONS *
    
    
    LIFE
    
    PRICE
    
    
    OPTIONS *
    
    
    PRICE$0.25   $1.82
    
    
    127
    
    
    4.9 years
    
    Cdn $0.71
    
    
    
    47
    
    
    Cdn $1.07$2.98   $5.31
    
    
    116
    
    
    4.6 years
    
    
    3.80
    
    
    
    68
    
    
    
    4.03$7.51   $7.95
    
    
    48
    
    
    0.8 years
    
    
    7.60
    
    
    
    39
    
    
    
    7.62$12.60   $12.68
    
    
    23
    
    
    0.1 years
    
    
    12.67
    
    
    
    23
    
    
    
    12.67314
    
    
    3.8 years
    
    Cdn $3.79
    
    
    
    177
    
    
    Cdn$5.15
 
 *
    
    Values in thousands.  WEIGHTED
    
    
    WEIGHTED
    
    
    AGGREGATE
    
    
    AGGREGATEAVERAGE
    
    
    AVERAGE
    
    
    INTRINSIC
    
    
    INTRINSICEXERCISE PRICE
    
    
    EXERCISE PRICE
    
    
    VALUE
    
    
    VALUEOPTIONS *
    
    
    PER SHARE
    
    
    PER SHARE
    
    
    US OPTIONS
    
    
    CDN OPTIONSDecember 31, 2007
    
    
    4,625
    
    
    US$
    5.43
    
    
    Cdn$6.03Granted
    
    
    1,227
    
    
    
    0.50
    
    
    
    0.64Exercised
    
    
    (86
    )
    
    
    1.86
    
    
    
    1.82Forfeited
    
    
    (189
    )
    
    
    4.50
    
    
    
    7.97Expired
    
    
    (562
    )
    
    
    6.85
    
    
    
    9.02December 31, 2008
    
    
    5,015
    
    
    US$
    4.14
    
    
    Cdn$4.79Granted
    
    
    363
    
    
    
    0.20
    
    
    
    0.25Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (512
    )
    
    
    2.60
    
    
    
    2.37Expired
    
    
    (440
    )
    
    
    8.25
    
    
    
    10.10December 31, 2009
    
    
    4,426
    
    
    US$
    3.61
    
    
    Cdn$3.79
    
    
    US$
    0
    
    
    Cdn$0Exercisable at
December 31, 2009
    
    
    2,915
    
    
    US$
    4.47
    
    
    Cdn$5.15
    
    
    US$
    0
    
    
    Cdn$0
 
 *
    
    Values in thousands.    Vision
 2009
    
    
    2008Weighted-average risk free rate of interest
    
    
    2.45
    %
    
    
    2.19
    %Expected volatility
    
    
    103
    %
    
    
    64
    %Weighted-average expected award life
    
    3.8 years
    
    4.9 yearsDividend yield
    
    
    0.00
    %
    
    
    0.00
    %
 67




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##### Table of Contents



Vision
 17. Income Taxes
  DECEMBER 31,2009
    
    
    2008Deferred tax asset:Net operating loss carry forwards
    
    $
    100,783
    
    
    $
    91,156Fixed assets
    
    
    953
    
    
    
    243Intangibles
    
    
    12,230
    
    
    
    14.263Investments
    
    
    15,050
    
    
    
    15,989Accruals and other reserves
    
    
    6,925
    
    
    
    5,163Tax credits
    
    
    166
    
    
    
    166Other
    
    
    11,132
    
    
    
    13,780Total deferred tax asset
    
    
    147,239
    
    
    
    140,760Valuation allowance
    
    
    (147,239
    )
    
    
    (140,760
    )Total deferred tax asset, net of
valuation allowance
    
    $
    
    
    
    $
    
        68




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##### Table of Contents



YEAR ENDED DECEMBER 31,2009
    
    
    2008Income tax (benefit) expense at the Canadian statutory rate of 36.12%
    
    $
    (13,265
    )
    
    $
    (35,174
    )Change in valuation allowance
    
    
    13,171
    
    
    
    23,052Expenses not deductible for income tax purposes
    
    
    116
    
    
    
    12,136State taxes
    
    
    796
    
    
    
    605Canadian income tax
    
    
    152
    
    
    
    269Rate differential on United States operations
    
    
    (22
    )
    
    
    (14
    )Income tax expense
    
    $
    948
    
    
    $
    874
  YEAR ENDED DECEMBER 31,2009
    
    
    2008Current:Canada
    
    $
    152
    
    
    $
    269United States  federal
    
    
    
    
    
    
    United States  state
    
    
    796
    
    
    
    605Other
    
    
    
    
    
    
    $
    948
    
    
    $
    874Deferred:United States  federal
    
    $
    
    
    
    $
    United States  state
    
    
    
    
    
    
    $
    
    
    
    $
    Income tax expense
    
    $
    948
    
    
    $
    874
   18. Other Expense (Income), Net
  YEAR ENDED DECEMBER 31,2009
    
    
    2008Other expense (income):(Gain) loss on sales and disposals of fixed assets
    
    $
    (338
    )
    
    $
    (269
    )Center restructuring and closing costs
    
    
    776
    
    
    
    Loss (gain) on business divestitures
    
    
    1,594
    
    
    
    (139
    )Employee severance expense
    
    
    2,624
    
    
    
    Financial and legal advisor costs
    
    
    15,570
    
    
    
    Write-off of receivables due from and investments in
Notal Vision®
    
    
    4,458
    
    
    
    Miscellaneous expense (income)
    
    
    1,142
    
    
    
    69$
    25,826
    
    
    $
    (339
    )
 69




---



##### Table of Contents



19. Net Loss Per Share
  Below is a reconciliation of basic and diluted per share detail to net loss and income:
 YEAR ENDEDDECEMBER 31,(in thousands, except per share amounts)
    
    2009
    
    
    2008Numerator:Net loss attributable to TLC Vision Corporation
    
    $
    (36,724
    )
    
    $
    (98,254
    )Denominator:Weighted-average shares outstanding  basic
    
    
    50,554
    
    
    
    50,319Effect of dilutive stock options *
    
    
    
    
    
    
    Weighted-average shares outstanding  diluted
    
    
    50,554
    
    
    
    50,319Net loss attributable to TLC Vision Corporation
per common share:Basic
    
    $
    (0.73
    )
    
    $
    (1.95
    )Diluted
    
    $
    (0.73
    )
    
    $
    (1.95
    )
 
 *
    
    The effects of including the incremental shares associated with
options and warrants are anti-dilutive for years ended December 31,
2009 and 2008 and are not included in weighted-average shares
outstanding-diluted. The total weighted-average number of options with
exercise prices less than the average closing price of the Companys
common shares was zero and 0.2 million for the years ended December 31,
2009 and 2008, respectively. 20. Commitments and Contingencies
 Commitments
   2010
    
    $
    8,0442011
    
    
    6,2762012
    
    
    4,9152013
    
    
    3,4522014
    
    
    1,821Thereafter
    
    
    2,515$
    27,023
  2010
    
    
    3,0002011
    
    
    3,000$
    6,000
  70




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##### Table of Contents



Legal Contingencies
 Bankruptcy Proceedings
  Regulatory Tax Contingencies
 Vision Vision Vision Vision
 21. Segment Information
  
    
    Refractive Centers: The refractive centers business provides a significant
portion of the Companys revenue and is in the business of providing corrective laser
surgery (principally LASIK) in fixed sites typically branded under the TLC name.
    
    Doctor Services: The doctor services business provides a variety of services and
products directly to doctors and the facilities in which they perform surgery. It consists
of the following segments:
 
    
    Mobile Cataract: The mobile cataract segment provides technology and diagnostic
equipment and services to doctors and hospitals to support cataract surgery as well as
treatment of other eye diseases.
    
    Refractive Access: The refractive access segment assists surgeons in providing
corrective laser surgery in their own practice location by providing refractive
technology, technicians, service and practice development support at the surgeons
office.
    
    Other: The Company has ownership interests in businesses that manage surgical and
secondary care centers. None of these businesses meets the quantitative criteria to be
disclosed separately as a reportable segment and they are included in Other for
segment disclosure purposes.
 
    
    Eye Care: The eye care business consists of the optometric franchising business
segment. The optometric franchising segment provides marketing, practice development and
purchasing power to independently-owned and operated optometric practices in the United
States and Canada.
   71




---



##### Table of Contents



DOCTOR SERVICES

    
    
    EYE CAREYEAR ENDED DECEMBER 31, 2009
    
    REFRACTIVE
    
    
    REFRACTIVE
    
    
    MOBILE
    
    
    
    
    
    
    OPTOMETRIC(IN THOUSANDS)
    
    CENTERS
    
    
    ACCESS
    
    
    CATARACT
    
    
    OTHER
    
    
    FRANCHISING
    
    
    TOTALRevenues
    
    $
    107,326
    
    
    $
    23,966
    
    
    $
    41,799
    
    
    $
    26,130
    
    
    $
    30,969
    
    
    $
    230,190Cost of revenues (excluding amortization)
    
    
    83,812
    
    
    
    19,221
    
    
    
    31,265
    
    
    
    17,792
    
    
    
    14,916
    
    
    
    167,006Gross profit
    
    
    23,514
    
    
    
    4,745
    
    
    
    10,534
    
    
    
    8,338
    
    
    
    16,053
    
    
    
    63,184Segment expenses:Marketing and sales
    
    
    12,318
    
    
    
    77
    
    
    
    5,181
    
    
    
    425
    
    
    
    3,934
    
    
    
    21,935G&A, amortization and other
    
    
    6,086
    
    
    
    9
    
    
    
    3,521
    
    
    
    2,767
    
    
    
    15
    
    
    
    12,398Impairment *
    
    
    1,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018Earnings from equity investments
    
    
    (334
    )
    
    
    
    
    
    
    
    
    
    
    (973
    )
    
    
    
    
    
    
    (1,307
    )Segment profit
    
    $
    4,426
    
    
    $
    4,659
    
    
    $
    1,832
    
    
    $
    6,119
    
    
    $
    12,104
    
    
    $
    29,140Noncontrolling interest
    
    
    580
    
    
    
    32
    
    
    
    
    
    
    
    3,219
    
    
    
    5,637
    
    
    
    9,468Segment profit attributable to TLC Vision Corp
    
    $
    3,846
    
    
    $
    4,627
    
    
    $
    1,832
    
    
    $
    2,900
    
    
    $
    6,467
    
    
    $
    19,672Corporate operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,801
    )Reorganization items, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,229
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,418
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (948
    )Net loss attributable to TLC Vision Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,724
    )Depreciation and amortization
    
    $
    9,506
    
    
    $
    2,133
    
    
    $
    2,871
    
    
    $
    1,350
    
    
    $
    48
    
    
    $
    15,908Total assets
    

    $
    43,780
    
    
    $
    16,444
    
    
    $
    28,210
    
    
    $
    12,297
    
    
    $
    14,185
    
    
    $
    114,916
 
 *
    
    Note: Refractive Centers impairment charge of $1.0 million includes approximately $0.3 million of
allocated corporate related impairment charges. DOCTOR SERVICES
    
    
    EYE CAREYEAR ENDED DECEMBER 31, 2008
    
    REFRACTIVE
    
    
    REFRACTIVE
    
    
    MOBILE
    
    
    
    
    
    
    OPTOMETRIC(IN THOUSANDS)
    
    CENTERS
    
    
    ACCESS
    
    
    CATARACT
    
    
    OTHER
    
    
    FRANCHISING
    
    
    TOTALRevenues
    
    $
    151,442
    
    
    $
    29,176
    
    
    $
    40,916
    
    
    $
    25,523
    
    
    $
    28,611
    
    
    $
    275,668Cost of revenues (excluding amortization)
    
    
    110,824
    
    
    
    23,623
    
    
    
    30,294
    
    
    
    17,187
    
    
    
    13,010
    
    
    
    194,938Gross profit
    
    
    40,618
    
    
    
    5,553
    
    
    
    10,622
    
    
    
    8,336
    
    
    
    15,601
    
    
    
    80,730Segment expenses:Marketing and sales
    
    
    31,235
    
    
    
    140
    
    
    
    6,533
    
    
    
    484
    
    
    
    4,333
    
    
    
    42,725G&A, amortization and other
    
    
    7,765
    
    
    
    (299
    )
    
    
    3,931
    
    
    
    1,591
    
    
    
    51
    
    
    
    13,039Impairment **
    
    
    73,865
    
    
    
    6,493
    
    
    
    
    
    
    
    4,689
    
    
    
    
    
    
    
    85,047Loss (earnings) from equity investments
    
    
    1,820
    
    
    
    
    
    
    
    
    
    
    
    (1,260
    )
    
    
    
    
    
    
    560Segment profit
    
    $
    (74,067
    )
    
    $
    (781
    )
    
    $
    158
    
    
    $
    2,832
    
    
    $
    11,217
    
    
    $
    (60,641
    )Noncontrolling interest
    
    
    912
    
    
    
    56
    
    
    
    
    
    
    
    3,383
    
    
    
    5,179
    
    
    
    9,530Segment profit attributable to TLC Vision Corp
    
    $
    (74,979
    )
    
    $
    (837
    )
    
    $
    158
    
    
    $
    (551
    )
    
    $
    6,038
    
    
    $
    (70,171
    )Corporate operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,871
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,338
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (874
    )Net loss attributable to TLC Vision Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,254
    )Depreciation and amortization
    
    $
    12,423
    
    
    $
    2,939
    
    
    $
    2,742
    
    
    $
    1,516
    
    
    $
    50
    
    
    $
    19,670Total assets
    
    $
    61,599
    
    
    $
    16,910
    
    
    $
    25,531
    
    
    $
    17,848
    
    
    $
    15,094
    
    
    $
    136,982
 
 **
    
    Note: Refractive Centers impairment charge of $73.9 million includes approximately $2.3 million
of allocated corporate related impairment charges. 72




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YEAR      ENDED DECEMBER 31, 2009
    
    CANADA
    
    
    UNITED STATES
    
    
    TOTALRevenues
    
    $
    11,826
    
    
    $
    218,364
    
    
    $
    230,190Total fixed assets and intangibles
    
    $
    2,311
    
    
    $
    66,421
    
    
    $
    68,732
 YEAR      ENDED DECEMBER 31, 2008
    
    CANADA
    
    
    UNITED STATES
    
    
    TOTALRevenues
    
    $
    15,199
    
    
    $
    260,469
    
    
    $
    275,668Total fixed assets and intangibles
    
    $
    6,510
    
    
    $
    83,202
    
    
    $
    89,712
 22. Fair Value Measurements
   
    
    Level 1:Unadjusted quoted prices in active markets for identical assets and
liabilities.
    
    Level 2:Observable inputs other than those included in Level 1. For example, quoted
prices for similar assets or liabilities in active markets or quoted prices for identical
assets or liabilities in inactive markets.
    
    Level 3:Unobservable inputs reflecting managements own assumptions about the inputs
used in pricing the asset or liability.
    23. Supplemental Cash Flow Information
 Significant non-cash transactions:
 YEAR ENDED DECEMBER 31,2009
    
    
    2008Capital lease obligations relating to equipment purchases
    
    $
    2,042
    
    
    $
    3,110Option and warrant reduction
    
    
    
    
    
    
    92Other comprehensive (income) loss on hedge
    
    
    (1,545
    )
    
    
    761
 73




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##### Table of Contents



YEAR ENDED DECEMBER 31,2009
    
    
    2008Interest
    
    $
    6,938
        
    $
    8,637Income taxes
    
    $
    858
    
    
    $
    1,246
 24. Executive Officers
    25. Related Party Transactions
 Executive Officers
 Vision, Vision
 26. Defined Contribution and Employee Stock Purchase Plans
 Defined Contribution Plan
  Employee Stock Purchase Plan
 Vision
  74




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##### Table of Contents



27. Subsequent Events
 Bankruptcy
Proceedings
      
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
   75




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Managements Report on Internal Control Over Financial Reporting
   Internal
Control Integrated Framework.
  
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS OF AND CORPORATE GOVERNANCE
  
    
    James B. Tiffany, age 53, became the Companys President and Chief Operating Officer in
April 2009. Prior to that, Mr. Tiffany served as President of Sightpath Medical, Inc., a
subsidiary of the Company, from August 2003 to April 2009. He served as General Manager of
MSS, Inc. from July 2000 to August 2003, and as Vice President of Sales and Marketing of
LaserVision from January 1999 to July 2000. Mr. Tiffany received his undergraduate degree
from Arizona State University and a Master of Business Administration Degree from
Washington University in St. Louis, Missouri.
    
    Michael Gries, age 55, was appointed Chief Restructuring Officer in April 2009 and is a
principal and co-founder of Conway Del Genio Gries & Co., LLC (CDG), a financial advisor
firm. Mr. Gries is a nationally recognized leader in the restructuring profession with more
than 25 years experience advising companies and creditors on complex corporate
reorganizations. Since 1984, Mr. Gries has specialized in providing business and financial
advice to Boards of Directors, management, investors and other parties in interest in
distressed and turnaround situations. Prior to co-founding CDG, Mr. Gries was a Partner and
Director of the Northeast Restructuring and Reorganization practice of Ernst & Young LLP,
which was at the time one of the largest restructuring practices in the country. Mr. Gries
has a Bachelor of Science in Business Administration degree, with specializations in
Accounting and Finance, from Northeastern University. He is a Certified Public Accountant
(CPA) and a Certified Restructuring and Reorganization Accountant.
 76




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
    
    William McManus, age 54, was appointed interim Chief Financial Officer in April 2009 and
is a managing director of CDG. Mr. McManus has more than 20 years of senior financial,
operational, and consulting experience in turnaround/restructuring environments. He has
served in senior management positions in a variety of industries, such as: Automotive,
Media & Publishing, Home Furnishing, Consumer Goods, Packaging, Forest Products, Capital Equipment,
and Healthcare. Prior to joining CDG in February 2009, Mr. McManus worked at Horizon
Management from 2001 to 2009 as a Managing Director specializing in crisis / interim
management. Mr. McManus graduated from Notre Dame where he received a Bachelor of Science in
Business Administration degree, with a specialization in Finance.
    
    Charles H. Judy, age 40, was appointed Senior Vice President, Shared Services and
Secretary in April 2009. Mr. Judy joined the Company in 2007 as Vice President, Human
Resources. Prior to joining TLCVision, Mr. Judy was a National Human Resources Director at
Deloitte, one of the worlds largest professional services firms with over 120,000
employees. During his thirteen years with the organization, Mr. Judy provided senior human
resources and recruiting leadership to a number of large and diverse practices throughout
the world. Mr. Judy was also the Vice President, Human Resources for Maverick Technologies
LLC, North Americas largest independent control systems integrator and industrial
automation consultancy. He is a graduate of Tulane Universitys A.B. Freeman School of
Business with a Bachelor of Science in Management degree. Mr. Judy is also a CPA
(non-practicing) and a certified Senior Professional of Human Resources.
    
    James J. Hyland, age 57, joined TLCVisionas Vice President, Investor Relations in 2007.
Prior to joining TLCVision, Mr. Hyland was VP Investor Relations and Corporate
Communications for USF Corp, a $2.4 billion Chicago based transportation holding company.
In addition, Mr. Hyland was Senior Vice President Investor Relations for Comdisco, a
Rosemont, Illinois based Fortune 500 financial and technology services firm. Mr. Hyland is
a graduate of the University of Illinois with a Bachelor of Science in Business
Administration degree, with a specialization in Finance.
    
    Henry Lynn, age 59, became Chief Information Officer (CIO) of TLCVisionin March 1998.
Mr. Lynn has executive management responsibilities regarding the various information
systems utilized throughout the Company. Prior to joining TLCVision,he was employed as the
CIO for Beacon Eye, Inc., a laser vision correction company. He holds a Data Processing
degree from Glasgow College of Technology, Scotland.
    
    Ellen-Jo E. Plass, age 40, became the Companys Senior Vice President, Center Operations
in June 2009. Prior to that, Mrs. Plass served as Vice President of Center Support Services
for TLC Laser Eye Centers from January 2006 to June 2009. Through her career within
TLCVisionshes served in a number of roles within the organization from National Director,
Center Support Services, from 2002 to 2006, to International Director, Training and
Development, from 1999 to 2002. Her first role within the Company was in 1995 at a flagship
TLC center in Windsor, Ontario, Canada where she was that centers Executive Director. Mrs.
Plass received her Bachelor of Arts, Psychology in 1991 from the University of Windsor and
her Post Graduate in 1992 specializing in Gerontology from Algonquin College.
    
    Jim Feinstein, age 39, became TLCVisions Senior Vice President of Sales in April 2009.
Prior to that, Mr. Feinstein served as the Companys Vice President, Western Zone, from
2008 to 2009 and Vice President, North Central Region, from 2004 to 2007. In 2007, he was
recognized by the Midwest Organ and Donor Board as one of 30 influential people in
ophthalmology. Mr. Feinstein is a graduate of the University of Iowa with a Bachelor of
Arts in English.
    
    Dan Robins, age 39, joined the Company in December of 1998 first as a Laser Engineer
with LaserVision and later holding the positions of Senior Engineer; North East Operations
Manager; Manager of Recruitment, Staff Development and Research; Director of Senior
Engineering and Research; and National Director of Operations. He moved into his current
position as Vice President of Operations in January 2006 where he is responsible for all
day-to-day operations of the mobile refractive segment. Mr. Robins began his career in
operations and logistics while serving in the United States Army as an Avenger Missile
System Technician from 1989 to 1997. He holds an Associate of Applied Science degree in
Laser Electro-Optics and is finishing his Bachelor of Arts in Business Management degree at
Rasmussen College.
    
    Patricia S. Larson, age 49, joined the Company in July 2003 as Associate General
Counsel. Prior to that, Ms. Larson was the General Counsel and Executive Vice President -
General Manager from 1993 to 2002 of Husky Corporation, a privately held company that
designs, manufactures and distributes equipment for the petroleum dispensing industry.
Prior thereto, Ms. Larson was in the private practice of law in the St. Louis office of
Polsinelli Shugart, PC and with Paule, Camazine, Bluementhal, PC. Prior to joining these
law firms, Ms. Larson served as a Senior Tax Consultant with Ernst & Young. Ms. Larson
received her Juris Doctor from the University of Missouri  Kansas City and a Bachelor of
Science in Accountancy degree from the University of Missouri  Columbia.
 77




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
    
    Jonathan Compton, age 38, joined the Company in July 2002 as Director of Taxation. Mr.
Compton was appointed as an officer of the Company in December 2002. Prior to that, Mr.
Compton was the Corporate Tax Manager and Assistant Treasurer at BioMaerieux, Inc., from
1998  2002. Mr. Compton is a graduate of the University of Missouri with a Bachelor
of Science in Business Administration degree, with a specialization in Accounting. Mr.
Compton is also a CPA (non-practicing).
  www.tlcv.com
 
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Equity Compensation Plan Information
 Vision
 Number ofsecuritiesremaining availableNumber of
    
    
    
    
    
    
    for futuresecurities to be
    
    
    
    
    
    
    issuances underissued upon
    
    
    Weighted-average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions, warrants
    
    
    options, warrants
    
    
    reflected in columnand rights
    
    
    and rights
    
    
    (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    4,426
    
    
    $
    3.61
    (1)
    
    
    649Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    4,426
    
    
    $
    3.61
    (1)
    
    
    649
 
 (1)
    
    Represents the weighted-average exercise price of outstanding options, warrants and rights
denominated in U.S. dollars. The weighted-average exercise price of outstanding options, warrants
and rights denominated in Canadian dollars was Cdn$3.79. Stock-Based Compensation
 78




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ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
             79




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SIGNATURES
  TLC VISION CORPORATIONBy
    /s/ JAMES B. TIFFANYJames B. Tiffany, Chief Operating Officer   SIGNATURE
    
    TITLE
    
    DATED/s/ JAMES B. TIFFANY
    
    Chief Operating Officer
    
    March 31, 2010James. B. Tiffany/s/ MICHAEL F. GRIES
    
    Chief Restructuring Officer
    
    March 31, 2010Michael F. Gries/s/ WILLIAM J. MCMANUS
    
    Interim Chief Financial Officer
    
    March 31, 2010William J. McManus/s/ WARREN S. RUSTAND
    
    Chairman of the Board of Directors and Director
    
    March 31, 2010Warren S. Rustand/s/ RICHARD L. LINDSTROM, M.D.
    
    Director
    
    March 31, 2010Richard L. Lindstrom, M.D./s/ TOBY S. WILT
    
    Director
    
    March 31, 2010Toby S. Wilt/s/ MICHAEL D. DEPAOLIS, O.D.
    
    Director
    
    March 31, 2010Michael D. DePaolis, O.D./s/ JAY T. HOLMES
    
    Director
    
    March 31, 2010Jay T. Holmes/s/ OLDEN C. LEE
    
    Director
    
    March 31, 2010Olden C. Lee/s/ GARY F. JONAS
    
    Director
    
    March 31, 2010Gary F. Jonas
 80




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EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION3.1
    
    
    Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Companys 10-K filed with the
Commission on August 28, 1998)3.2
    
    
    Articles of Amendment (incorporated by reference to Exhibit 3.2 to the Companys 10-K filed with the
Commission on August 29, 2000)3.3
    
    
    Articles of Continuance (incorporated by reference to Exhibit 3.6 to the Companys Registration Statement
on Form S-4/A filed with the Commission on March 1, 2002 (file no. 333-71532))3.4
    
    
    Articles of Amendment (incorporated by reference to Exhibit 4.2 to the Companys Post Effective Amendment
No. 1 on Form S-8 to the Companys Registration Statement on Form S-4 filed with the Commission on May
14, 2002 (file no. 333-71532))3.5
    
    
    By-Laws of the Company (incorporated by reference to Exhibit 3.6 to the Companys Registration Statement
on Form S-4/A filed with the Commission on March 1, 2002 (file no. 333-71532))4.1
    
    
    Shareholder Rights Plan Agreement dated March 4, 2005, as amended as of June 16, 2005, between the
Company and CIBC Mellon Trust Company (incorporated by reference to Exhibit 99.2 to the Companys 8-K
filed with the Commission on June 20, 2005 (file no. 000-29302))10.1*
    
    
    TLC Vision Corporation Amended and Restated Share Option Plan (incorporated by reference to Exhibit 4.2
to the Companys Registration Statement on Form S-8 filed with the Commission on June 23, 2004 (file no.
333-116769))10.2*
    
    
    TLC Corporation 2004 Employee Share Purchase Plan (incorporated by reference to Exhibit 4.1 to the
Companys Registration Statement on Form S-8 filed with the Commission on June 23, 2004 (file no.
333-116769))10.3
    
    
    Amended and Restated Master Capital Lease Agreement with Advanced Medical Optics (IntraLase Corp),
portions of which omitted pursuant to a request for confidential treatment filed separately with the
Commission, dated December 18, 2007 (incorporated by reference to Exhibit 10.1 to the Companys 10-Q for
the three and nine months ended September 30, 2008)10.4*
    
    
    Consulting Agreement with Richard L. Lindstrom, M.D. dated July 1, 2008 (incorporated by reference to
Exhibit 10.2 to the Companys 10-Q for the three and nine months ended September 30, 2008)10.5
    
    
    Agreement and Plan of Merger By and Among TruVision, Inc. and TLC Wildcard Corp. and TLC Vision
Corporation and TLC Vision (USA) Corporation and Lindsay T. Atwood dated as of October 27, 2005
(incorporated by reference to Exhibit 2.3 to the Companys 10-Q for the three and nine months ended
September 30, 2005).10.6
    
    
    Amended and Restated Credit Agreement By and Among TLC Vision Corporation, TLC Vision (USA) Corporation,
CIT Capital Securities, LLC, CIT Healthcare, LLC and Lenders dated as of June 21, 2007 (incorporated by
reference to Exhibit 12.(B) to the Companys Schedule TO-I/A filed June 22, 2007)10.7
    
    
    Amendment No. 1 to the Amended and Restated Credit Agreement dated as of June 21, 2007 (incorporated by
reference to Exhibit 10.23 to the Companys 10-K for the year ended December 31, 2007)10.8
    
    
    Limited Waiver and Amendment No. 2 to Credit Agreement dated as of March 31, 2009 (incorporated by
reference from TLC Vision Corporations Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 3, 2009).10.9
    
    
    Limited Waiver, Consent and Amendment No. 3 to Credit Agreement dated as of June 5, 2009 (incorporated by
reference from TLC Vision Corporations Current Report on Form 8-K filed with the Securities and Exchange
Commission on June 9, 2009).10.10
    
    
    Limited Waiver, Consent and Amendment No. 4 to Credit Agreement dated as of June 30, 2009 (incorporated
by reference from TLC Vision Corporations Current Report on Form 8-K filed with the Securities and
Exchange Commission on August 5, 2009).10.11
    
    
    Amendment to Limited Waiver and Amendment No. 4 to Credit Agreement and Amendment No. 5 to Credit
Agreement dated September 8, 2009 (incorporated by reference from TLC Vision Corporations Current Report
on Form 8-K filed with the Securities and Exchange Commission on September 14, 2009.)10.12
    
    
    Limited Waiver dated September 30, 2009 (incorporated by reference from TLC Vision Corporations Current
Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2009.)




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##### Table of Contents



EXHIBITNO.
    
    DESCRIPTION10.13
    
    
    Amendment No. 2, entered August 10, 2009, to Agreement and Plan of Merger, dated as of October 27, 2005,
by and among TruVision, Inc., TLC Wildcard Corp., TLC Vision Corporation, TLC Vision (USA) Corporation
and Lindsay T. Atwood (incorporated by reference to Exhibit 10.4 to the Companys 10-Q for the three and
six months ended June 30, 2009).10.14
    
    
    Limited Forbearance and Third Amendment to Transfer Rights Agreement, entered August 20, 2009, by and
among Michael Aronsky, M.D., Carol Hoffman, M.D., George Pronesti, M.D., and Anthony Zacchei, M.D.
(collectively Kremer Minority Holders), TLC Vision (USA) Corporation, DelVal ASC, LLC, and TLC
Management, LLC (incorporated by reference to Exhibit 10.1 to the Companys 10-Q for the three and nine
months ended September 30, 2009).10.15*
    
    
    Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated as of February
16, 2009 (incorporated by reference to Exhibit 10.2 to the Companys 10-Q for the three and nine months
ended September 30, 2009).10.16*
    
    
    Addendum to the Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated
April 23, 2009 (incorporated by reference to Exhibit 10.3 to the Companys 10-Q for the three and nine
months ended September 30, 2009).10.17
    
    
    Senior Secured Super Priority Debtor-In-Possession Credit Agreement dated as of December 23, 2009 among
TLC Vision (USA) Corporation, TLC Vision Corporation, TLC Management Services Inc., Cantor Fitzgerald
Securities and lenders.10.18
    
    
    Plan Sponsor Agreement dated February 3, 2010 by and among TLC Vision Corporation, TLC Vision (USA)
Corporation, TLC Management Services, Inc., Thriller Acquisition Corp. and Thriller Canada Acquisition
Corp (incorporated by reference from TLC Vision Corporations Current Report on Form 8-K filed with the
Securities Exchange Commission on February 2, 2010).10.19
    
    
    Amendment to the Plan Sponsor Agreement dated February 3, 2010 by and among TLC Vision Corporation, TLC
Vision (USA) Corporation, TLC Management Services, Inc., Thriller Acquisition Corp. and Thriller Canada
Acquisition Corp (incorporated by reference from TLC Vision Corporations Current Report on Form 8-K
filed with the Securities Exchange Commission on February 12, 2010).10.20
    
    
    Fourth Amended Joint Chapter 11 Plan of Reorganization dated as of March 24, 2010.21
    
    
    List of the Companys Subsidiaries23
    
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    
    Chief Operating Officers Certification required by Rule 13A-14(a) of the Securities Exchange Act of 1934.31.2
    
    
    Chief Restructuring Officers Certification required by Rule 13A-14(a) of the Securities Exchange Act of 1934.31.3
    
    
    Interim Chief Executive Officers Certification required by Rule 13A-14(a) of the Securities Exchange Act of 1934.32.1
    
    
    Chief Operating Officers Certification of periodic financial report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, U.S.C. Section 135032.2
    
    
    Chief Restructuring Officers Certification of periodic financial report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, U.S.C. Section 135032.3
    
    
    Interim Chief Financial Officers Certification of periodic financial report pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350
 
 *
    
    Management contract or compensatory plan or arrangement.