MONROVIA, Calif., July 31, 2014 /PRNewswire/ -- STAAR Surgical
Company (NASDAQ: STAA) a leading developer, manufacturer and
marketer of implantable lenses and delivery systems for the eye
today reported revenue for the second quarter ended July 4, 2014 of $20.0
million, a 10% increase over $18.2
million reported for the second quarter of 2013. On a
constant currency basis, revenues grew 11% during the second
quarter of 2014 compared to the second quarter of 2013. The
effect of foreign currency exchange reduced sales by $0.1 million during the quarter. The
results included quarterly sales of $12.2
million of the Company's Visian ICL product portfolio, and
$6.4 million of its IOL products.
Lower margin Other Product sales were $1.4
million, a 39% increase compared to the second quarter of
2013. The GAAP net loss for the second quarter of 2014 was
$1.8 million or $0.05 on a per diluted share basis, compared with
a net income of $278,000, or
$0.01 on a per diluted share basis,
in the second quarter of 2013.
"Our revenue growth for the first half of 2014 was 11% as
reported and 13% in constant currency which was higher than our
initial expectations," said Barry G.
Caldwell, President and CEO. "We currently expect our
second half growth rate to be even higher given new product
releases and increased IOL supply. Visian ICL growth
continues to be fueled by the expansion and penetration of the ICL
with CentraFLOW® technology, which makes the procedure more
convenient and cost effective for both the patient and the
surgeon. The CentraFLOW technology drove a revenue increase
during the first half of 24% in our EMEA region with deeper
penetration in Europe and
expansion to our Latin America
markets. We also believe the CE Mark approval of the
Preloaded ICL should help to drive additional revenue growth
starting with full commercialization during the fourth
quarter. The Preloaded ICL eliminates multiple steps in the
loading and delivery process which many surgeons believe is the
most challenging aspect of the procedure. In addition the
Preloaded System should reduce the learning curve to the procedure
and the overall ICL procedure time. We believe this ICL
enhancement will be very important for both our experienced ICL
implanters as well as those surgeons wanting to add the ICL to
their current refractive offerings. Global ICL revenue growth
was 8% in the quarter and procedure growth was 5%. We
continue to gain market share globally as LASIK procedures remain
under downward pressure."
"IOL revenue increased by 10% during the quarter driven by a 17%
increase in unit sales. This growth was driven by the
expansion of our KS-IOL products in the European and Japanese
markets. IOL revenue increased by 117% in Europe while units basically doubled.
Increased supply of the KS-IOL products allowed us to rebuild
consignment accounts in Japan to
where they were a year ago. This allowed our KS-IOL products
to generate 28% growth in Japan
during the quarter and 83% growth the final eight weeks of the
quarter. We now feel more confident about our supply levels
for the rest of the year, which should help to drive additional
growth during the second half of the year focused in our higher
margin markets," continued Mr. Caldwell.
Gross profit margin for the quarter was 68.2% compared to 69.5%
in the second quarter of 2013. Three key factors drove a 450
basis point negative impact on the gross margin during the quarter;
two of which should improve and one remain negative during the
second half. The increased geographical sales mix of
KS-IOL products had a negative impact of approximately 230 basis
points. This should improve with the increasing growth rate
of KS-IOL sales within our higher margin markets. Secondly,
the increase of lower margin IOL injectors to a third party drove a
negative impact of 80 basis points. This factor should
continue to be a headwind during the second half. Finally,
the transition of ICL production to the U.S. had a negative impact
of 140 basis points. This should improve during the second
half, as it did during the first half, with increased manufacturing
experience in the U.S. and the transfer of management from
Switzerland. An increase of 3% in the average prices on ICLs
had a positive impact on gross margin during the second
quarter. The Company expects higher average prices for both
ICLs and IOLs which should have a positive impact during the second
half of the year.
Operating expenses for the quarter were $15.1 million, up 26% from $11.9 million in the prior year. This includes a
$0.8 million increase in R&D
expenses driven by the cost of an increased number of regulatory
approvals in process, consultants working with the Company on the
actions to address the issues in the FDA Warning Letter and cost
associated with the development of the Preloaded ICL and the V6a
ICL. Investments in Sales and Marketing increased by
$1.4 million which includes cost
related to the expansion of the U.S. sales team in anticipation of
the potential launch of the TICL and increased promotional
spending. General and Administrative expenses increased by
$1.4 million primarily due to the
increased cost of stock compensation due to a higher stock price in
the second quarter of 2014 than in the second quarter of 2013,
higher bonus accrual as targets for bonus achievement are on track,
and tax consulting expenses.
The income tax provision was $0.4
million during the second quarter of 2014 compared to a
provision of $0.6 million during the
second quarter of 2013. The effective tax rate for the second
quarter was 26%, while the rate for the first half was 23%.
The effective income tax rates are negative in periods where we
have both consolidated pre-tax losses and tax provisions in foreign
jurisdictions with pre-tax profits.
Adjusted net income (excluding manufacturing consolidation
expenses, distribution transition expenses in Spain, gain (loss) on foreign currency
transactions, fair value adjustment of warrants, stock-based
compensation expense and Toric ICL FDA panel expenses) for the
quarter ended July 4, 2014 was
$0.3 million, or $0.01 per share versus adjusted net income for
the year ago quarter of $1.8 million,
or $0.05 per diluted share.
The GAAP net loss for the first half of 2014 was $3.1 million or $0.08 on a per diluted share basis, compared with
a net income of $0.7 million, or
$0.02 on a per diluted share basis,
in the first half of 2013. Adjusted net income (excluding
manufacturing consolidation expenses, distribution transition
expenses in Spain, gain (loss) on
foreign currency transactions, fair value adjustment of warrants,
stock-based compensation expense and Toric ICL FDA panel expenses)
for the first half of 2014 was $1.9
million, or $0.05 per share
versus adjusted net income for the year ago first half of 2013 at
$5.0 million, or $0.13 per diluted share.
Cash and cash equivalents at July 4,
2014 totaled $19.2 million.
During the quarter, the Company used $1.5
million in cash for operating activities including:
$1.0 million to build inventory to
support the potential U.S. launch of the TICL and the Preloaded ICL
for EU launch.
Recent Visian Implantable Collamer® Lens (ICL)
Highlights.
- Sales grew 8% globally during the second quarter and were
driven by an increase of 9% in the Company's target markets.
Average selling price increased 3% driven by mix and new product
introductions.
- Procedures grew globally 5% in the second quarter, the same
rate of growth in the target markets.
- In the more than 60 markets where the TICL is available, second
quarter sales of TICL represented 49% of total ICL revenue and 39%
of the units. TICL sales grew 19% during the quarter globally while
the ICL grew 1%.
- Visian ICLs with CentraFLOW technology represented
approximately 63% of all ICL procedures during the quarter. Over
70,000 Visian ICLs with the CentraFLOW technology have been
successfully implanted since introduction.
- During the first half of 2014, ICL sales grew 12% with
procedure growth at 9% and a 2% increase in average selling
price.
Regional ICL Updates
Europe, Middle East, Africa (EMEA)
- In the second quarter, Visian ICL revenues grew by 22% while
procedures increased 16% and average selling price increased
5%.
- Revenues in Europe during the
quarter increased 23% and ICL procedures grew 17%. 2014 results
reflect the second full year that Europe has had the CentraFLOW technology.
- France increased revenue by
47% and procedures 38%.
- Germany increased revenue by
21% and procedures 17%.
- Spain increased revenue by 26%
and procedures 19%.
- The Middle East, where the
Visian ICL with CentraFLOW was introduced last year, grew 37% in
revenues and 33% in procedures.
- Latin America declined 4% in
revenue and 9% in procedures after a 58% rate of revenue growth
during the first quarter.
- During the first half, EMEA ICL revenue grew 24% with procedure
growth at 20% and a 4% increase in average selling price.
Asia Pacific
(APAC)
- APAC grew 2% in revenue while ICL procedures increased 1% and
average selling price increased 1%. ICL revenue declined 4% while
TICL revenue grew 12% during the quarter.
- Korea ICL revenue grew 6% during the quarter while procedures
were flat. The average selling price increased by 7%.
- China ICL revenue grew 9% during the quarter while procedures
increased 9%. The average selling price was flat.
- ICL revenue increased 9% in India driven by the ICL with CentraFLOW
technology as procedures were flat.
- ICL revenue in Japan declined
32% as refractive procedures in this market continued to experience
strong downward pressure.
- During the first half, APAC ICL revenue grew 9% with procedures
growth at 8% and a 1% increase in average selling price.
North America
(NA)
- NA ICL revenue decreased 1% while units decreased 7%. Average
selling price grew 6% during the quarter.
- During the first half, NA ICL revenue declined 8% with
procedures declining at 13% and a 6% increase in average selling
price.
Quarterly Intraocular Lens (IOL) Highlights
- Second quarter IOL sales were $6.4
million, a 10% increase from $5.9
million in the second quarter of 2013 while units increased
17%. This was driven by increased supply of the KS-IOL Preloaded
Acrylic product.
- Sales in Japan represented 46%
of the Company's total IOL sales. Sales declined by 10% during the
quarter. IOL unit sales decreased by 11% during the quarter.
- IOL sales in EMEA, which represented 28% of total IOL sales,
increased by 117% and 99% in units during the quarter due to the
increased supply of the Preloaded Acrylic KS-IOLs.
- IOL sales in China increased
by 65% despite the fact that supply of the KS-IOL has not yet been
restored. Supply to this market was suspended during the second
quarter of 2013. Sales in the U.S. market declined by 11% during
the quarter.
- The Company ended the quarter with approximately $0.2 million in backorders of its preloaded
acrylic for Europe, approximately
one-half of the first quarter ending backorder level.
- During the first half of 2014 global IOL sales increased 7% and
units increased 17%.
Other Operational Highlights during the Quarter
- The Visian ICL Preloaded System received CE Mark Approval in
late June. The Preloaded ICL reduces overall procedure time,
shortens the learning curve for new surgeons to perform ICL
procedures and enables more consistent ICL lens delivery in the
eye. New intellectual property developed by the STAAR R&D team
has been incorporated into the Preloaded Injector design.
Additional intellectual property includes a new hydrophilic coating
technology, nanoCOAT™, which allows for the smooth transition of
the ICL through the injector system into the small incision for the
ICL procedure.
- On July 1, 2014 the FDA posted on
its website a Warning Letter issued to the Company which followed a
GMP inspection at the Monrovia
facility. The Company takes this letter very seriously and is
diligently working to resolve the observations cited in the letter.
The areas under review by the Company to address fall generally
within the following four categories:
- Design Control Documentation.
- Validation of software for an on-line calculator.
- Data collection and trending of ICL vault complaints.
- Shelf life data on the ICL product.
- The Company successfully completed the manufacturing
consolidation project at the end of June. This project has taken
nearly four years at a cost of approximately $6.3 million. The Company is experiencing partial
tax benefits from the project in 2014 with greater realization
expected in 2015.
- On May 15th the Company completed an Experts Panel Meeting in
China on the Visian ICL with
CentraFLOW. The CFDA has asked some post panel questions to which
the Company has prepared responses and the Company expects to
receive a decision within the next 105 working days.
- During the quarter the Company provided additional information
in response to communications with the FDA regarding the TICL
submission. The TICL received a favorable panel recommendation from
the Advisory Committee on March 14,
2014.
- The recruitment of patients for the V6a ICL technology has
begun in anticipation of the start of initial confirmatory study
during the third quarter. The V6a ICL is designed to add a
near-vision enhancement capability which would further
differentiate the ICL from LASIK for myopic patients nearing the
age of 40. The goal of the V6a ICL would be to delay the need for
reading glasses in that population. This technology would combine
the proven ICL platform with known optic designs and new
intellectual property developed by the Company.
2014 Annual Objectives
The Company's annual 2014 annual objectives were established at
beginning of the year and the Company will continue to report
progress each quarter on those objectives. Those annual
objectives are:
- Revenue growth of 8% to 10%.
- ICL revenue growth of 20%.
- Gross Margin expansion of 300 bps, 72.7%.
- Profitable on a GAAP basis.
- Successfully complete manufacturing consolidation project by
mid-year.
Conference Call
The Company will host a conference call and webcast today
5:00 p.m. Eastern / 2:00 p.m. Pacific to discuss these results and
recent corporate developments. The dial-in number for the
conference call is 866-515-2907 for domestic participants and
617-399-5121 for international participants, both using the
passcode 24164533. The Company will also be using slides to
illustrate its second quarter results and operational
progress. The webcast with accompanying slides can be
accessed from the investor relations section of the STAAR website
at www.staar.com.
A taped replay of the conference call will also be available
beginning approximately one hour after the call's conclusion and
will be available for seven days. This replay can be accessed
by dialing 888-286-8010 for domestic callers and 617-801-6888 for
international callers, both using passcode 54025734. An
archived audio webcast will also be available at www.staar.com.
Use of Non-GAAP Financial Measures
This press release includes supplemental non-GAAP financial
information, which STAAR believes investors will find helpful in
understanding its operating performance.
The Company conducts a significant part of its activities
outside the U.S. It receives sales revenue and pays expenses
principally in U.S. dollars, Swiss francs, Japanese yen and Euros.
The exchange rates between dollars and non-U.S. currencies can
fluctuate greatly and can have a significant effect on our results
when reported in U.S. dollars. When preparing its financial
statements in conformity with GAAP, the Company translates foreign
currency sales and expenses denominated in Japanese yen to dollars
at the weighted average of exchange rates in effect during the
period. As a result, the Company's reported performance may be
significantly affected by currency fluctuations. In order to
compare the Company's performance from period to period without the
effect of currency, the Company will apply the same average
exchange rate applicable in the prior period, or the "constant
currency" rate to sales or expenses in the current period as well.
Because changes in currency are outside of the control of the
Company and its managers, management finds this non-GAAP measure
useful in determining the long term progress of its initiatives and
determining whether its managers are achieving their performance
goals. The Company believes that the non-GAAP constant-currency
sales results measures provided in this press release are similarly
useful to investors to give insight on long term trends in the
Company's performance without the external effect of changes in
relative currency values. The table below shows sales results
calculated in accordance with GAAP, the effect of currency, and the
resulting non-GAAP measure expressed in constant
currency.
"Adjusted Net Income" excludes the following items that are
included in "Net Income" as calculated in accordance with U.S.
generally accepted accounting principles ("GAAP"):
manufacturing consolidation expenses, Spain distribution transition expenses, gain
or loss on foreign currency transactions, the fair value adjustment
of outstanding warrants issued in 2007, stock-based compensation
expenses, and FDA TICL Panel expense.
Management believes that "Adjusted Net Income" is useful to
investors in gauging the outcome of the key drivers of the business
performance: the ability to increase sales revenue and our
ability to increase profit margin by improving the mix of high
value products while reducing the costs over which management has
control.
We have excluded manufacturing consolidation, Spain distribution transition expenses, and
FDA Toric ICL panel expenses because these are non-recurring
expenses and their inclusion may mask underlying trends in our
business performance. Expenses associated with the Company's
plans to consolidate its manufacturing operations to the U.S. are
largely expected to have been completed by the middle of 2014 and
the Spain distribution transition
expenses were completed at the end of the first quarter of
2013.
We have excluded gains and losses on foreign currency
transactions and the fair value adjustment of warrants because of
the significant fluctuations that can result from period to period
as a result of market driven factors.
Stock-based compensation expenses consist of expenses for stock
options and restricted stock under the Financial Accounting
Standards Board's Accounting Standards Codification (ASC)
718. In calculating Adjusted Net Income STAAR excludes these
expenses and the fair value adjustment of outstanding warrants
because they are non-cash expenses and because of the complexity
and considerable judgment involved in calculating their
values. In addition, these expenses tend to be driven by
fluctuations in the price of our stock and not by the same factors
that generally affect our other business expenses.
We have provided below a detailed reconciliation table, which is
useful to investors in providing the context to understand our
Adjusted Net Income and how it differs from Net Income calculated
in accordance with GAAP.
About STAAR Surgical
STAAR, which has been dedicated solely to ophthalmic surgery for
over 25 years, designs, develops, manufactures and markets
implantable lenses for the eye and delivery systems therefor. All
of these lenses are foldable, which permits the surgeon to insert
them through a small incision. STAAR's lens used in refractive
surgery as an alternative to LASIK is called an Implantable
Collamer® Lens or "ICL." A lens used to replace the natural lens
after cataract surgery is called an intraocular lens or "IOL." More
than 450,000 Visian ICLs have been implanted to date; to learn more
about the ICL go to: www.visianinfo.com. STAAR has approximately
335 full time employees and markets lenses in over 60 countries.
Headquartered in Monrovia, CA, it
manufactures in the following locations: Nidau, Switzerland; Aliso
Viejo, CA; and Monrovia,
CA. For more information, please visit the Company's website
at www.staar.com.
Safe Harbor
All statements in this press release that are not statements of
historical fact are forward-looking statements, including
statements about any of the following: any projections of earnings,
revenue, sales, profit margins, cash, effective tax rate or any
other financial items; the plans, strategies, and objectives of
management for future operations or prospects for achieving such
plans; metrics for 2014; statements regarding new or improved
products, including but not limited to, expectations for success of
new or improved products in the U.S. or international markets or
government approval of new or improved products (including the
Toric ICL in the U.S.); the nature, timing and likelihood of
resolving issues sited in the FDA's Warning Letter; future economic
conditions or size of market opportunities; expected IOL backorder
position; expected costs of Monrovia facility expansion; expected costs
and savings from business consolidation plans and the timetable for
those plans; statements of belief, including as to achieving 2014
growth plans or metrics; expected regulatory activities and
approvals, product launches, and any statements of assumptions
underlying any of the foregoing. Important additional factors
that could cause actual results to differ materially from those
indicated by such forward-looking statements are set forth in the
company's Annual Report on Form 10-K for the year ended
January 3, 2014, under the caption
"Risk Factors," which is on file with the Securities and Exchange
Commission and available in the "Investor Information" section of
the company's website under the heading "SEC Filings."
These statements are based on expectations and assumptions as of
the date of this press release and are subject to numerous risks
and uncertainties, which could cause actual results to differ
materially from those described in the forward-looking statements.
The risks and uncertainties include the following: our limited
capital resources and limited access to financing; the negative
effect of unstable global economic conditions on sales of products,
especially products such as the ICL used in non-reimbursed elective
procedures; the challenge of managing our foreign subsidiaries;
backlog or supply delays as we fully integrate our manufacturing
facility consolidation; the risk of unfavorable changes in currency
exchange rate; the discretion of regulatory agencies to approve or
reject new or improved products, or to require additional actions
before approval (including but not limited to FDA requirements
regarding the TICL and/or actions related to the FDA Warning
Letter); unexpected costs or delays that could reduce or eliminate
the expected benefits of our consolidation plans; the risk that
research and development efforts will not be successful or may be
delayed in delivering for launch; the purchasing patterns of our
distributors carrying inventory in the market; the willingness of
surgeons and patients to adopt a new or improved product and
procedure; patterns of Visian ICL use that have typically limited
our penetration of the refractive procedure market, and a general
decline in the demand for refractive surgery particularly in the
U.S. and the Asia Pacific region,
which STAAR believes has resulted from both concerns about the
safety and effectiveness of laser procedures and current economic
conditions. The Visian Toric ICL and the Visian ICL with
CentraFLOW are not yet approved for sale in the United States.
CONTACT:
|
Investors
|
Media
|
|
EVC Group
|
EVC Group
|
|
Doug Sherk,
415-652-9100
|
Nicole Kruse,
212-850-6025
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STAAR Surgical
Company
|
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|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
(in
000's)
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
July
4,
|
|
January
3,
|
|
|
2014
|
|
2014
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 19,186
|
|
$ 22,954
|
Accounts receivable
trade, net
|
|
12,700
|
|
10,731
|
Inventories,
net
|
|
14,932
|
|
12,514
|
Prepaids, deposits,
and other current assets
|
|
3,539
|
|
3,503
|
Deferred income
taxes
|
|
384
|
|
373
|
Total
current assets
|
|
50,741
|
|
50,075
|
Property, plant, and
equipment, net
|
|
9,320
|
|
7,405
|
Intangible assets,
net
|
|
1,206
|
|
1,380
|
Goodwill
|
|
1,786
|
|
1,786
|
Deferred income
taxes
|
|
647
|
|
626
|
Other
assets
|
|
672
|
|
659
|
Total
assets
|
|
$ 64,372
|
|
$ 61,931
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Line of
credit
|
|
$ 4,900
|
|
$ 4,750
|
Accounts
payable
|
|
5,269
|
|
6,263
|
Deferred income
taxes
|
|
738
|
|
739
|
Obligations under
capital leases
|
|
445
|
|
288
|
Other current
liabilities
|
|
5,833
|
|
6,372
|
Total
current liabilities
|
|
17,185
|
|
18,412
|
Obligations under
capital leases
|
|
629
|
|
141
|
Deferred income
taxes
|
|
1,735
|
|
1,654
|
Asset retirement
obligations
|
|
134
|
|
157
|
Pension
liability
|
|
2,858
|
|
2,715
|
Total
liabilities
|
|
22,541
|
|
23,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
384
|
|
379
|
Additional paid-in
capital
|
|
176,204
|
|
170,246
|
Accumulated other
comprehensive income
|
|
446
|
|
282
|
Accumulated
deficit
|
|
(135,203)
|
|
(132,055)
|
Total
stockholders' equity
|
|
41,831
|
|
38,852
|
Total
liabilities and stockholders' equity
|
|
$ 64,372
|
|
$ 61,931
|
STAAR Surgical
Company
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Condensed
Consolidated Statements of Operations
|
|
|
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|
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(In 000's except
for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
%
of
|
July
4,
|
|
%
of
|
June
28,
|
|
Fav
(Unfav)
|
|
%
of
|
July
4,
|
|
%
of
|
June
28,
|
|
Fav
(Unfav)
|
|
|
Sales
|
2014
|
|
Sales
|
2013
|
|
Amount
|
|
%
|
|
Sales
|
2014
|
|
Sales
|
2013
|
|
Amount
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
100.0%
|
$20,048
|
|
100.0%
|
$18,164
|
|
$ 1,884
|
|
10.4%
|
|
100.0%
|
$40,226
|
|
100.0%
|
$36,165
|
|
$ 4,061
|
|
11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
31.8%
|
6,381
|
|
30.5%
|
5,544
|
|
(837)
|
|
-15.1%
|
|
31.5%
|
12,675
|
|
30.1%
|
10,891
|
|
(1,784)
|
|
-16.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
68.2%
|
13,667
|
|
69.5%
|
12,620
|
|
1,047
|
|
8.3%
|
|
68.5%
|
27,551
|
|
69.9%
|
25,274
|
|
2,277
|
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
26.5%
|
5,321
|
|
21.6%
|
3,923
|
|
(1,398)
|
|
-35.6%
|
|
26.6%
|
10,717
|
|
21.8%
|
7,881
|
|
(2,836)
|
|
-36.0%
|
Marketing and
selling
|
|
35.0%
|
7,026
|
|
31.2%
|
5,659
|
|
(1,367)
|
|
-24.2%
|
|
32.7%
|
13,164
|
|
30.3%
|
10,945
|
|
(2,219)
|
|
-20.3%
|
Research and
development
|
|
12.5%
|
2,498
|
|
9.3%
|
1,686
|
|
(812)
|
|
-48.2%
|
|
14.9%
|
5,981
|
|
8.4%
|
3,052
|
|
(2,929)
|
|
-96.0%
|
Medical device
excise tax
|
|
0.3%
|
47
|
|
0.2%
|
45
|
|
(2)
|
|
-100.0%
|
|
0.3%
|
87
|
|
0.3%
|
104
|
|
17
|
|
-100.0%
|
Selling, general, and
administrative expenses
|
|
74.3%
|
14,892
|
|
62.3%
|
11,313
|
|
(3,579)
|
|
-31.6%
|
|
74.5%
|
29,949
|
|
60.8%
|
21,982
|
|
(7,967)
|
|
-36.2%
|
Other general
and administrative expenses
|
|
0.8%
|
165
|
|
3.4%
|
613
|
|
448
|
|
73.1%
|
|
0.8%
|
334
|
|
4.2%
|
1,514
|
|
1,180
|
|
77.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and
administrative expenses
|
|
75.1%
|
15,057
|
|
65.7%
|
11,926
|
|
(3,131)
|
|
-26.3%
|
|
75.3%
|
30,283
|
|
65.0%
|
23,496
|
|
(6,787)
|
|
-28.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
-6.9%
|
(1,390)
|
|
3.8%
|
694
|
|
(2,084)
|
|
300.3%
|
|
-6.8%
|
(2,732)
|
|
4.9%
|
1,778
|
|
(4,510)
|
|
-253.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
0.0%
|
10
|
|
0.0%
|
8
|
|
2
|
|
25.0%
|
|
0.0%
|
18
|
|
0.0%
|
15
|
|
3
|
|
20.0%
|
Interest
expense
|
|
-0.2%
|
(34)
|
|
-0.2%
|
(41)
|
|
7
|
|
17.1%
|
|
-0.2%
|
(67)
|
|
-0.2%
|
(96)
|
|
29
|
|
30.2%
|
Gain (loss) on
foreign currency transactions
|
|
-0.7%
|
(134)
|
|
0.4%
|
77
|
|
(211)
|
|
274.0%
|
|
-0.2%
|
(68)
|
|
-0.7%
|
(264)
|
|
196
|
|
74.2%
|
Other income,
net
|
|
0.6%
|
126
|
|
0.8%
|
139
|
|
(13)
|
|
-9.4%
|
|
0.7%
|
287
|
|
0.6%
|
230
|
|
57
|
|
24.8%
|
Total other income (expense), net
|
|
-0.2%
|
(32)
|
|
1.0%
|
183
|
|
(215)
|
|
100.0%
|
|
0.4%
|
170
|
|
-0.3%
|
(115)
|
|
285
|
|
-247.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
provision for income taxes
|
|
-7.1%
|
(1,422)
|
|
4.8%
|
877
|
|
(2,299)
|
|
262.1%
|
|
-6.4%
|
(2,562)
|
|
4.6%
|
1,663
|
|
(4,225)
|
|
254.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
1.8%
|
367
|
|
3.3%
|
599
|
|
232
|
|
38.7%
|
|
1.4%
|
586
|
|
2.5%
|
914
|
|
328
|
|
35.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
-8.9%
|
$ (1,789)
|
|
1.5%
|
$ 278
|
|
$(2,067)
|
|
743.5%
|
|
-7.8%
|
$ (3,148)
|
|
2.1%
|
$ 749
|
|
$(3,897)
|
|
520.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - basic
|
|
|
$ (0.05)
|
|
|
$ 0.01
|
|
|
|
|
|
|
$ (0.08)
|
|
|
$ 0.02
|
|
|
|
|
Net income (loss) per
share - diluted
|
|
|
$ (0.05)
|
|
|
$ 0.01
|
|
|
|
|
|
|
$ (0.08)
|
|
|
$ 0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic
|
|
|
38,168
|
|
|
36,496
|
|
|
|
|
|
|
37,970
|
|
|
36,461
|
|
|
|
|
Weighted average
shares outstanding - diluted
|
|
|
38,168
|
|
|
38,342
|
|
|
|
|
|
|
37,970
|
|
|
37,887
|
|
|
|
|
STAAR Surgical
Company
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
|
(in
000's)
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
July
4,
|
|
June
28,
|
|
|
|
2014
|
|
2013
|
Cash flows from
operating activities:
|
|
|
|
|
Net
income (loss)
|
|
$ (3,148)
|
|
$ 749
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
981
|
|
840
|
|
Amortization of
intangibles
|
|
213
|
|
225
|
|
Deferred income
taxes
|
|
57
|
|
129
|
|
Fair value adjustment
of warrant
|
|
-
|
|
(27)
|
|
Loss on disposal of
property and equipment
|
|
-
|
|
59
|
|
Stock-based
compensation expense
|
|
3,183
|
|
2,019
|
|
Change in net pension
liability
|
|
83
|
|
57
|
|
Accretion of asset
retirement obligation
|
|
2
|
|
7
|
|
Provision for sales
returns and bad debts
|
|
1
|
|
111
|
Changes
in working capital:
|
|
|
|
|
|
Accounts receivable
trade, net
|
|
(1,895)
|
|
(2,229)
|
|
Inventories
|
|
(2,093)
|
|
71
|
|
Prepaids, deposits
and other current assets
|
|
(20)
|
|
(507)
|
|
Accounts
payable
|
|
(874)
|
|
(1,123)
|
|
Other current
liabilities
|
|
(554)
|
|
(25)
|
|
Net cash provided by
(used in) operating activities
|
|
(4,064)
|
|
356
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(2,269)
|
|
(2,017)
|
|
Cash proceeds from
sale of property and equipment
|
|
68
|
|
-
|
|
Net cash used in
investing activities
|
|
(2,201)
|
|
(2,017)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Repayment of capital
lease lines of credit
|
|
(251)
|
|
(478)
|
|
Proceeds from
exercise of stock options
|
|
2,632
|
|
952
|
|
Net cash provided by
financing activities
|
|
2,381
|
|
474
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
116
|
|
(763)
|
|
|
|
|
|
|
Decrease in cash and
cash equivalents
|
|
(3,768)
|
|
(1,950)
|
Cash and cash
equivalents, at beginning of the period
|
|
22,954
|
|
21,675
|
Cash and cash
equivalents, at end of the period
|
|
$19,186
|
|
$19,725
|
STAAR Surgical
Company
|
|
|
|
|
|
|
|
|
Global
Sales
|
|
|
|
|
|
|
|
|
(in
000's)
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
July
4,
|
|
June
28,
|
|
%
Change
|
|
|
July
4,
|
|
June
28,
|
|
%
Change
|
Geographic
Sales
|
|
2014
|
|
2013
|
|
Fav
(Unfav)
|
|
|
2014
|
|
2013
|
|
Fav
(Unfav)
|
United
States
|
14.6%
|
$ 2,926
|
17.4%
|
$ 3,154
|
|
-7.2%
|
|
14.4%
|
$
5,801
|
17.7%
|
$ 6,394
|
|
-9.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan
|
22.7%
|
4,549
|
25.6%
|
4,648
|
|
-2.1%
|
|
23.8%
|
9,557
|
26.0%
|
9,387
|
|
1.8%
|
Korea
|
9.7%
|
1,952
|
10.1%
|
1,834
|
|
6.4%
|
|
11.4%
|
4,573
|
10.7%
|
3,869
|
|
18.2%
|
China
|
12.6%
|
2,535
|
12.3%
|
2,230
|
|
13.7%
|
|
11.8%
|
4,759
|
11.9%
|
4,301
|
|
10.6%
|
Spain
|
7.4%
|
1,474
|
6.4%
|
1,163
|
|
26.7%
|
|
7.7%
|
3,092
|
6.8%
|
2,454
|
|
26.0%
|
France
|
5.9%
|
1,190
|
3.3%
|
595
|
|
100.0%
|
|
5.3%
|
2,136
|
3.1%
|
1,127
|
|
89.5%
|
Germany
|
5.1%
|
1,015
|
3.4%
|
611
|
|
66.1%
|
|
4.8%
|
1,912
|
3.1%
|
1,126
|
|
69.8%
|
Other
|
22.0%
|
4,407
|
21.6%
|
3,929
|
|
12.2%
|
|
20.8%
|
8,396
|
20.8%
|
7,507
|
|
11.8%
|
Total
International Sales
|
85.4%
|
17,122
|
82.6%
|
15,010
|
|
14.1%
|
|
85.6%
|
34,425
|
82.3%
|
29,771
|
|
15.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
|
100.0%
|
$ 20,048
|
100.0%
|
$ 18,164
|
|
10.4%
|
|
100.0%
|
$
40,226
|
100.0%
|
$ 36,165
|
|
11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ICLs
|
60.7%
|
$ 12,172
|
62.0%
|
$ 11,261
|
|
8.1%
|
|
60.7%
|
$
24,413
|
60.5%
|
$ 21,892
|
|
11.5%
|
IOLs
|
32.1%
|
6,428
|
32.3%
|
5,863
|
|
9.6%
|
|
32.4%
|
13,041
|
33.8%
|
12,211
|
|
6.8%
|
Total core
products
|
92.8%
|
18,600
|
94.3%
|
17,124
|
|
8.6%
|
|
93.1%
|
37,454
|
94.3%
|
34,103
|
|
9.8%
|
Non-core
products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
7.2%
|
1,448
|
5.7%
|
1,040
|
|
39.2%
|
|
6.9%
|
2,772
|
5.7%
|
2,062
|
|
34.4%
|
Total Sales
|
100.0%
|
$ 20,048
|
100.0%
|
$ 18,164
|
|
10.4%
|
|
100.0%
|
$
40,226
|
100.0%
|
$ 36,165
|
|
11.2%
|
STAAR Surgical
Company
|
|
|
|
|
Reconciliation of
Non-GAAP Financial Measure
|
|
|
|
|
(in
000's)
|
|
|
|
|
|
|
Unaudited
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
July
4,
|
June
28,
|
|
July
4,
|
June
28,
|
|
|
2014
|
2013
|
|
2014
|
2013
|
Net income (loss) -
(as reported)
|
|
$(1,789)
|
$ 278
|
|
$(3,148)
|
$ 749
|
Less:
|
|
|
|
|
|
|
Manufacturing
consolidation expenses
|
|
165
|
613
|
|
334
|
$ 1,514
|
Spain
distribution transition cost
|
|
-
|
-
|
|
-
|
$ 442
|
Foreign
currency impact
|
|
134
|
(77)
|
|
68
|
$ 264
|
Fair value
adjustment of warrants
|
|
-
|
-
|
|
-
|
$ (27)
|
Stock-based
compensation expense
|
|
1,683
|
985
|
|
3,183
|
$ 2,019
|
FDA panel
expense - Toric ICL
|
|
98
|
-
|
|
1,492
|
$
-
|
Net income -
(adjusted)
|
|
$ 291
|
$ 1,799
|
|
$ 1,929
|
$ 4,961
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic - (as reported)
|
|
$ (0.05)
|
$ 0.01
|
|
$ (0.08)
|
$ 0.02
|
Manufacturing
consolidation expenses
|
|
0.00
|
0.02
|
|
0.01
|
0.04
|
Spain
distribution transition cost
|
|
-
|
-
|
|
-
|
0.01
|
Foreign
currency impact
|
|
0.00
|
(0.00)
|
|
0.00
|
0.01
|
Fair value
adjustment of warrants
|
|
-
|
-
|
|
-
|
(0.00)
|
Stock-based
compensation expense
|
|
0.04
|
0.03
|
|
0.08
|
0.06
|
FDA panel
expense - Toric ICL
|
|
0.00
|
-
|
|
0.04
|
-
|
Net income per share,
basic - (adjusted)
|
|
$ 0.01
|
$ 0.05
|
|
$ 0.05
|
$ 0.14
|
|
|
|
|
|
|
|
Net income (loss) per
share, diluted - (as reported)
|
|
$ (0.04)
|
$ 0.01
|
|
$ (0.08)
|
$ 0.02
|
Manufacturing
consolidation expenses
|
|
0.00
|
0.02
|
|
0.01
|
0.04
|
Spain
distribution transition cost
|
|
-
|
-
|
|
-
|
0.01
|
Foreign
currency impact
|
|
0.00
|
(0.00)
|
|
0.00
|
0.01
|
Fair value
adjustment of warrants
|
|
-
|
-
|
|
-
|
(0.00)
|
Stock-based
compensation expense
|
|
0.04
|
0.03
|
|
0.08
|
0.05
|
FDA panel
expense - Toric ICL
|
|
0.00
|
-
|
|
0.04
|
-
|
Net income per share,
diluted - (adjusted)
|
|
$ 0.01
|
$ 0.05
|
|
$ 0.05
|
$ 0.13
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - Basic
|
|
38,168
|
36,496
|
|
37,970
|
36,461
|
Weighted average
shares outstanding - Diluted
|
|
40,557
|
38,342
|
|
40,514
|
37,887
|
|
|
|
|
|
|
|
Note: Net
income per share (adjusted), basic and diluted, may not add up due
to rounding
|
STAAR Surgical
Company
|
|
|
|
|
Reconciliation of
Non-GAAP Financial Measure
|
|
|
|
|
|
|
Constant Currency
Sales
|
|
|
|
|
|
|
(in
000's)
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
GAAP
Sales
|
|
|
|
|
|
|
|
|
|
|
|
July
4,
|
Effect
of
|
Constant
|
|
June
28,
|
|
As
Reported
|
|
Constant
Currency
|
|
2014
|
Currency
|
Currency
|
|
2013
|
|
$
Change
|
%
Change
|
|
$
Change
|
%
Change
|
ICL
|
$ 12,172
|
$ 19
|
$ 12,191
|
|
$11,261
|
|
$ 911
|
8%
|
|
$ 930
|
8%
|
IOL
|
$
6,428
|
44
|
6,472
|
|
5,863
|
|
565
|
10%
|
|
609
|
10%
|
Other
|
1,448
|
27
|
1,475
|
|
1,040
|
|
408
|
39%
|
|
435
|
42%
|
Total
Sales
|
$ 20,048
|
$ 90
|
$ 20,138
|
|
$18,164
|
|
$ 1,884
|
10%
|
|
$ 1,974
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
GAAP
Sales
|
|
|
|
|
|
|
|
|
|
|
|
July
4,
|
Effect
of
|
Constant
|
|
June
28,
|
|
As
Reported
|
|
Constant
Currency
|
|
2014
|
Currency
|
Currency
|
|
2013
|
|
$
Change
|
%
Change
|
|
$
Change
|
%
Change
|
ICL
|
$ 24,413
|
$ 34
|
$ 24,447
|
|
$21,892
|
|
$ 2,521
|
12%
|
|
$ 2,555
|
12%
|
IOL
|
13,041
|
526
|
13,567
|
|
12,211
|
|
830
|
7%
|
|
1,356
|
11%
|
Other
|
2,772
|
121
|
2,893
|
|
2,062
|
|
710
|
34%
|
|
831
|
40%
|
Total
Sales
|
$ 40,226
|
$ 681
|
$ 40,907
|
|
$36,165
|
|
$ 4,061
|
11%
|
|
$ 4,742
|
13%
|
SOURCE STAAR Surgical Company