LCA Vision (LCAV) CORRESP Correspondence with SEC

May 3, 2007

Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Securities and Exchange Commission
Division of Corporate Finance
Mail Stop 6010
Washington, DC 20549

RE: LCA-Vision Inc.
Form 10-K for Fiscal Year Ended December 31, 2006
File No. 0-27610

Dear Mr. Rosenberg:

Set forth below is the response from LCA-Vision Inc. to the comment of the staff of the United States Securities and Exchange Commission, dated March 9, 2007, concerning LCAV’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. For ease of reference, we have reproduced your comment in bold face type, with our response following in regular type.

You recognize revenue as services are performed. It does not appear that you defer any revenues. We understand that you have several different prices for procedures which may or may not include post-op exams, free enhancements for one year and free enhancements for life. Please provide us your analysis of why no revenue is required to be deferred because of the obligation to provide these services subsequent to the initial procedure. Please provide your analysis of supporting literature, including your consideration of, but not limited to, FASB Technical Bulletin 90-1 and EITF 00-21.

We schedule post-surgical follow-up with patients who have received a laser eye correction procedure to monitor results and provide enhancements to those patients who do not receive the desired correction in the initial procedure. Our base-price laser vision correction service includes the right to post-operative visits which generally occur after one day, one week, one month and three months. Post-operative visits are inconsequential and perfunctory to the overall services performed and take only a few minutes. Accordingly, we accrue for the estimated cost of performing the post-operative visits based on the estimated cost of the visit and the number of visits expected to occur.

In most cases our base price also includes a one-year acuity program which will cover the cost of post-surgical enhancements should the patient not achieve the desired visual correction during the initial procedure. The one-year acuity program is a warranty and maintenance obligation incurred in connection with the sale of a service (i.e., an obligation that is incurred in connection with the initial surgical procedure that may require further performance by LCAV after the service has been performed). Obligations related to warranty and maintenance obligations are governed by the provisions of FASB Statement No. 5 (FAS 5), “Accounting for Contingencies.” Pursuant to FAS 5, LCAV accrues the costs associated with performing these services based on the estimated cost of the procedure and the number of procedures expected to occur. This accounting is consistent with the requirements of FTB 90-1 paragraph 8.

The majority of our patients purchase the lifetime acuity plan. In the past, LCAV accounted for the lifetime acuity plan by deferring and recognizing revenue over the contract period in proportion to the costs expected to be incurred in performing services under the contract. Since 2000, we have calculated the deferred amount based upon the list price of the lifetime acuity plan and the number of future enhancement procedures expected to be performed. Historical data indicates that only 7% of patients elect to receive treatment under the extended warranty. Using this deferral methodology, our 2006 Annual Report on Form 10-K filed in February 2007 included a revenue deferral for future enhancements as of December 31, 2006 of $1,174,000. This was the major component of the total Accrued Enhancement Expense of $1,314,000 as disclosed in Footnote 8 to the consolidated financial statements.

Mr. Jim Rosenberg
Securities and Exchange Commission
Page 2

Following receipt of the SEC staff comment letter and upon further examination of the manner in which we have historically accounted for the revenues associated with the lifetime acuity program, it was determined the our accounting for deferred revenues was not appropriate under FTB 90-1 and resulted in an overstatement of current period revenues. Under FTB 90-1, 100 percent of revenues from separately priced extended warranties are to be recognized on a straight-line basis over the life of the contract unless the Company has sufficient experience to indicate that the costs to provide the service will be incurred other than on a straight-line basis. The Company has sufficient experience to support that future enhancements will not be performed on a straight-line basis. Accordingly, we have restated our results to reflect the proper deferral of revenues associated with our lifetime acuity program as a separately priced extended warranty under FTB 90-1. We recognized these deferred revenues in our restated results over the period in which the future costs of performing the enhancement procedures are expected to be incurred. Because our base price generally included the right to enhancements in the first year, we recognize these deferred revenues, currently estimated to extend over a seven year period, based on historical enhancement rate patterns with amortization beginning after the first anniversary of a patient’s surgical date. Under the historical pattern, approximately 51% of the deferred revenue will be recognized in the second year after the patient’s initial surgery. The following table highlights the amortization rates in each successive period:

Year after Initial	Amortization
Surgery	Rate
3 4 5 6 7	15% 13% 11% 7% 3%

In addition to the deferral of revenues under FTB 90-1, we are also deferring a portion of our costs of service related to professional fees paid to the attending surgeon. Professional fees, which are commission based, are earned when a procedure is performed. The physician receives no incremental fee for an enhancement procedure. Accordingly, a portion of the professional fee paid to the physician relates to the future enhancement procedures to be performed and qualifies for deferral under FTB 90-1 as a direct and incremental cost of the warranty contract. We will use the same historical experience to amortize the deferred revenue and the deferred professional fees.

Mr. Jim Rosenberg
Securities and Exchange Commission
Page 3

     The following schedules present a comparison of the prior reported Balance Sheet and Statement of Operations to the restated amounts with the changes highlighted in boxes:

LCA-VISION INC.
CONSOLIDATED BALANCE SHEETS

	RESTATED - SEE NOTE 10
	At December 31,
	2006						2005
	Previously						Previously
	Reported			Restated			Reported			Restated
	(Dollars in thousands, except per share amounts)
Assets
Current assets
Cash and cash equivalents	$	27,251		$	27,251		$	110,531		$	110,531
Short-term investments		70,801			70,801			—			—
Accounts receivable, net of allowance for doubtful accounts of $2,310 and $2,641		12,160			12,160			10,520			10,520
Receivables from vendors		3,310			3,310			3,207			3,207
Prepaid professional fees		—			2,223			—			1,454
Prepaid expenses and other		6,414			6,414			4,031			4,031
Prepaid income taxes		1,667			1,667			2,875			2,875
Deferred tax assets		3,022			11,155			3,542			8,847
Total current assets		124,625			134,981			134,706			141,465
Property and equipment		77,323			77,323			63,026			63,026
Accumulated depreciation and amortization		(46,399	)		(46,399	)		(38,342	)		(38,342	)
Property and equipment, net		30,924			30,924			24,684			24,684
Accounts receivable, net of allowance for doubtful accounts of $532 and $504		2,174			2,174			1,132			1,132
Deferred compensation plan assets		4,090			4,090			2,569			2,569
Investment in unconsolidated businesses		904			904			158			158
Deferred tax assets		2,775			12,141			2,064			7,982
Other assets		1,495			4,256			1,539			3,269
Total assets	$	166,987		$	189,470		$	166,852		$	181,259
Liabilities and stockholders’ investment
Current liabilities
Accounts payable	$	5,264		$	5,264		$	3,800		$	3,800
Accrued liabilities and other		9,111			9,111			8,910			8,910
Deferred revenue		—			22,234			—			14,542
Capital lease obligations maturing in one year		3,360			3,360			2,122			2,122
Total current liabilities		17,735			39,969			14,832			29,374
Capital lease obligations		2,431			2,431			1,434			1,434
Deferred compensation liability		4,136			4,136			2,569			2,569
Insurance reserve		6,163			6,163			3,840			3,840
Deferred revenue		—			27,608			—			17,298
Minority equity interest		47			47			41			41
Stockholders’ investment
Common stock ($.001 par value; 24,814,542 and 24,368,992 shares and 19,821,348 and 20,768,198 shares issued and outstanding, respectively)		25			25			24			24
Contributed capital		162,245			162,245			145,262			145,262
Common stock in treasury, at cost (4,993,194 shares and 3,600,794 shares)		(69,487	)		(69,487	)		(17,671	)		(17,671	)
Retained earnings		43,679			16,320			16,514			(919	)
Accumulated other comprehensive income		13			13			7			7
Total stockholders’ investment		136,475			109,116			144,136			126,703
Total liabilities and stockholders’ investment	$	166,987		$	189,470		$	166,852		$	181,259

Mr. Jim Rosenberg
Securities and Exchange Commission
Page 4

LCA-Vision Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands except per share data)

	For the Years Ended December 31,
	2006						2005						2004
	Previously						Previously						Previously
	Reported			Restated			Reported			Restated			Reported			Restated
Revenues — Laser refractive surgery	$	256,927		$	238,925		$	192,397		$	176,874		$	127,122		$	120,364
Operating costs and expenses
Medical professional and license fees		44,754			42,954			35,051			33,499			24,275			23,599
Direct costs of services		77,612			77,612			54,952			54,952			40,842			40,842
General and administrative expenses		21,156			21,156			14,021			14,021			10,292			10,292
Marketing and advertising		47,971			47,971			31,813			31,813			20,468			20,468
Depreciation and amortization		8,453			8,453			7,636			7,636			7,045			7,045
Operating income		56,981			40,779			48,924			34,953			24,200			18,118
Equity in earnings from unconsolidated businesses		746			746			328			328			369			369
Net investment income		6,182			6,182			3,929			3,929			2,137			2,137
Other income		(27	)		(27	)		(397	)		(397	)		(306	)		(306	)
Income before taxes on income		63,882			47,680			52,784			38,813			26,400			20,318
Income tax expense (benefit)		25,586			19,310			21,131			15,832			(5,629	)		(11,553	)
Net income	$	38,296		$	28,370		$	31,653		$	22,981		$	32,029		$	31,871
Income per common share
Basic	$	1.85		$	1.37		$	1.54		$	1.12		$	1.59		$	1.59
Diluted	$	1.80		$	1.34		$	1.47		$	1.07		$	1.54		$	1.53
Dividends declared per share	$	0.18		$	0.18		$	0.12		$	0.12		$	—		$	—
Weighted average shares outstanding
Basic		20,694			20,694			20,500			20,500			20,099			20,099
Diluted		21,235			21,235			21,492			21,492			20,814			20,814

Mr. Jim Rosenberg
Securities and Exchange Commission
Page 5

In the future, we intend to eliminate or reduce the sale of separately priced extended warranties.

We acknowledge that we are responsible for the adequacy of the disclosure in the filings; that the staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and that LCAV may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

As you can appreciate, we would like to complete the restatement of our financial statements as expeditiously as possible and, to further that effort, we request the opportunity to discuss this letter with you as soon as is convenient.

Very truly yours,

Alan H. Buckey
Executive Vice President, Finance
Chief Financial Officer

AHB/br