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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 29, 2024

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 0-11634

 

STAAR Surgical Company

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

95-3797439

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

25651 Atlantic Ocean Drive
Lake Forest, California

 

92630

(Address of Principal Executive Offices)

(Zip Code)

 

(626) 303-7902

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common

STAA

NASDAQ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The registrant has 49,131,110 shares of common stock, par value $0.01 per share, issued and outstanding as of May 2, 2024.

 


STAAR SURGICAL COMPANY

 

INDEX

 

 

 

 

PAGE

NUMBER

 

 

 

 

PART I – FINANCIAL INFORMATION

 

1

 

 

 

 

ITEM 1

FINANCIAL STATEMENTS

 

1

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

16

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

21

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

 

21

 

 

 

 

PART II – OTHER INFORMATION

 

21

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

 

21

 

 

 

 

ITEM 1A.

RISK FACTORS

 

21

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

22

 

 

 

 

ITEM 5.

OTHER INFORMATION

 

22

 

 

 

 

ITEM 6.

EXHIBITS

 

22

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

 

 

 

March 29, 2024

 

 

December 29, 2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

224,024

 

 

$

183,038

 

Investments available for sale

 

 

21,125

 

 

 

37,688

 

Accounts receivable trade, net of allowance for credit losses of
   $
187 and $191, respectively

 

 

64,604

 

 

 

94,704

 

Inventories, net

 

 

38,581

 

 

 

35,130

 

Prepayments, deposits and other current assets

 

 

17,381

 

 

 

14,709

 

Total current assets

 

 

365,715

 

 

 

365,269

 

Investments available for sale

 

 

6,963

 

 

 

11,703

 

Property, plant and equipment, net

 

 

72,337

 

 

 

66,835

 

Finance lease right-of-use assets, net

 

 

146

 

 

 

183

 

Operating lease right-of-use assets, net

 

 

34,600

 

 

 

34,387

 

Goodwill

 

 

1,786

 

 

 

1,786

 

Deferred income taxes

 

 

5,125

 

 

 

5,190

 

Other assets

 

 

5,863

 

 

 

3,339

 

Total assets

 

$

492,535

 

 

$

488,692

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

16,560

 

 

$

13,557

 

Obligations under finance leases

 

 

166

 

 

 

165

 

Obligations under operating leases

 

 

4,403

 

 

 

4,202

 

Allowance for sales returns

 

 

6,284

 

 

 

6,174

 

Other current liabilities

 

 

35,261

 

 

 

40,938

 

Total current liabilities

 

 

62,674

 

 

 

65,036

 

Obligations under finance leases

 

 

 

 

 

42

 

Obligations under operating leases

 

 

31,126

 

 

 

31,425

 

Deferred income taxes

 

 

1,074

 

 

 

1,077

 

Asset retirement obligations

 

 

96

 

 

 

103

 

Pension liability

 

 

4,777

 

 

 

5,055

 

Total liabilities

 

 

99,747

 

 

 

102,738

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value; 60,000 shares authorized: 49,120 and
   
48,839 shares issued and outstanding at March 29, 2024 and
   December 29, 2023, respectively

 

 

491

 

 

 

488

 

Additional paid-in capital

 

 

447,716

 

 

 

436,947

 

Accumulated other comprehensive income (loss)

 

 

(4,712

)

 

 

(4,113

)

Accumulated deficit

 

 

(50,707

)

 

 

(47,368

)

Total stockholders’ equity

 

 

392,788

 

 

 

385,954

 

Total liabilities and stockholders’ equity

 

$

492,535

 

 

$

488,692

 

 

See accompanying notes to the condensed consolidated financial statements.

1


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 29, 2024

 

 

March 31, 2023

 

Net sales

 

$

77,356

 

 

$

73,528

 

Cost of sales

 

 

16,321

 

 

 

15,966

 

Gross profit

 

 

61,035

 

 

 

57,562

 

Selling, general and administrative expenses:

 

 

 

 

 

 

General and administrative

 

 

23,228

 

 

 

18,098

 

Selling and marketing

 

 

26,708

 

 

 

26,354

 

Research and development

 

 

13,380

 

 

 

10,310

 

Total selling, general and administrative expenses

 

 

63,316

 

 

 

54,762

 

Operating income (loss)

 

 

(2,281

)

 

 

2,800

 

Other income (expense), net:

 

 

 

 

 

 

Interest income, net

 

 

1,529

 

 

 

1,822

 

Gain (loss) on foreign currency transactions

 

 

(2,297

)

 

 

34

 

Royalty income

 

 

508

 

 

 

 

Other income, net

 

 

330

 

 

 

63

 

Total other income, net

 

 

70

 

 

 

1,919

 

Income (loss) before income taxes

 

 

(2,211

)

 

 

4,719

 

Provision for income taxes

 

 

1,128

 

 

 

2,009

 

Net income (loss)

 

$

(3,339

)

 

$

2,710

 

Net income (loss) per share:

 

 

 

 

 

 

Basic

 

$

(0.07

)

 

$

0.06

 

Diluted

 

$

(0.07

)

 

$

0.05

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

48,907

 

 

 

48,247

 

Diluted

 

 

48,907

 

 

 

49,500

 

 

See accompanying notes to the condensed consolidated financial statements.

2


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 29, 2024

 

 

March 31, 2023

 

Net income (loss)

 

$

(3,339

)

 

$

2,710

 

Other comprehensive income (loss):

 

 

 

 

 

 

Defined benefit plans:

 

 

 

 

 

 

Net change in plan assets

 

 

232

 

 

 

(1,177

)

Reclassification into other income (expense), net

 

 

(17

)

 

 

(52

)

Investments available for sale:

 

 

 

 

 

 

Change in unrealized gain (loss)

 

 

(36

)

 

 

116

 

Reclassification into other income (expense), net

 

 

3

 

 

 

(2

)

Foreign currency translation loss

 

 

(1,100

)

 

 

(129

)

Tax effect

 

 

319

 

 

 

151

 

Other comprehensive loss, net of tax

 

 

(599

)

 

 

(1,093

)

Comprehensive income (loss)

 

$

(3,938

)

 

$

1,617

 

 

See accompanying notes to the condensed consolidated financial statements.

3


 

 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

Common
Stock Shares

 

 

Common
Stock Par
Value

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Compre-
hensive
Income
(Loss)

 

 

Accumulated
Deficit

 

 

Total

 

Balance, at December 29, 2023

 

 

48,839

 

 

$

488

 

 

$

436,947

 

 

$

(4,113

)

 

$

(47,368

)

 

$

385,954

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,339

)

 

 

(3,339

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(599

)

 

 

 

 

 

(599

)

Common stock issued upon exercise of options

 

 

187

 

 

 

2

 

 

 

5,322

 

 

 

 

 

 

 

 

 

5,324

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,676

 

 

 

 

 

 

 

 

 

6,676

 

Repurchase of employee common stock for taxes withheld

 

 

(36

)

 

 

 

 

 

(1,229

)

 

 

 

 

 

 

 

 

(1,229

)

Forfeited restricted stock

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted and performance stock units

 

 

134

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, at March 29, 2024

 

 

49,120

 

 

$

491

 

 

$

447,716

 

 

$

(4,712

)

 

$

(50,707

)

 

$

392,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at December 30, 2022

 

 

48,212

 

 

$

482

 

 

$

404,189

 

 

$

156

 

 

$

(68,715

)

 

$

336,112

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,710

 

 

 

2,710

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,093

)

 

 

 

 

 

(1,093

)

Common stock issued upon exercise of options

 

 

40

 

 

 

 

 

 

529

 

 

 

 

 

 

 

 

 

529

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,434

 

 

 

 

 

 

 

 

 

6,434

 

Repurchase of employee common stock for taxes withheld

 

 

(31

)

 

 

 

 

 

(1,849

)

 

 

 

 

 

 

 

 

(1,849

)

Vested restricted and performance stock units

 

 

110

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance at March 31, 2023

 

 

48,331

 

 

$

483

 

 

$

409,303

 

 

$

(937

)

 

$

(66,005

)

 

$

342,844

 

 

See accompanying notes to the condensed consolidated financial statements.

 

4


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 29, 2024

 

 

March 31, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(3,339

)

 

$

2,710

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation of property, plant, and equipment

 

 

1,237

 

 

 

1,113

 

Amortization of intangibles

 

 

 

 

 

7

 

Accretion/Amortization of investments available for sale

 

 

(120

)

 

 

(983

)

Deferred income taxes

 

 

61

 

 

 

57

 

Change in net pension liability

 

 

(93

)

 

 

(13

)

Stock-based compensation expense

 

 

6,339

 

 

 

6,065

 

Provision for sales returns and bad debts

 

 

128

 

 

 

(377

)

Inventory provision

 

 

646

 

 

 

614

 

Changes in working capital:

 

 

 

 

 

 

Accounts receivable

 

 

29,837

 

 

 

(1,110

)

Inventories

 

 

(4,002

)

 

 

(3,920

)

Prepayments, deposits, and other assets

 

 

(5,485

)

 

 

(4,249

)

Accounts payable

 

 

1,519

 

 

 

(3,168

)

Other current liabilities

 

 

(5,048

)

 

 

(1,840

)

Net cash provided by (used in) operating activities

 

 

21,680

 

 

 

(5,094

)

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of property and equipment

 

 

(5,202

)

 

 

(2,901

)

Purchase of investments available for sale

 

 

 

 

 

(27,445

)

Proceeds from sale or maturity of investments available for sale

 

 

21,389

 

 

 

40,279

 

Net cash provided by investing activities

 

 

16,187

 

 

 

9,933

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of finance lease obligations

 

 

(40

)

 

 

(42

)

Repurchase of employee common stock for taxes withheld

 

 

(1,229

)

 

 

(1,849

)

Proceeds from the exercise of stock options

 

 

5,324

 

 

 

529

 

Proceeds from vested restricted and performance stock units

 

 

1

 

 

 

1

 

Net cash provided by (used in) financing activities

 

 

4,056

 

 

 

(1,361

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(937

)

 

 

10

 

Increase in cash and cash equivalents

 

 

40,986

 

 

 

3,488

 

Cash and cash equivalents, at beginning of the period

 

 

183,038

 

 

 

86,480

 

Cash and cash equivalents, at end of the period

 

$

224,024

 

 

$

89,968

 

 

See accompanying notes to the condensed consolidated financial statements.

5


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

Note 1 — Basis of Presentation and Significant Accounting Policies

STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The accompanying Condensed Consolidated Financial Statements present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of December 29, 2023 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2023.

The Condensed Consolidated Financial Statements for the three months ended March 29, 2024 and March 31, 2023, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three months ended March 29, 2024 and March 31, 2023, are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.

Cloud-Based Software

As of March 29, 2024 and December 29, 2023, the Company recognized $4,947,000 and $2,406,000, respectively, of net capitalized cloud-based software implementation costs recorded within Other assets on the Condensed Consolidated Balance Sheets. As of March 29, 2024, these assets are not currently placed into service. No amortization of capitalized cloud-based software implementation costs were recognized during the three months ended March 29, 2024 and March 31, 2023.

Vendor Concentration

There was one vendor that accounted for over 12% of the Company’s consolidated accounts payable as of March 29, 2024.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280).” ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments (a) disclose significant segment expenses regularly provided to the chief operating decision maker (“CODM”), (b) disclose an amount for other segment items by reportable segment and description of its composition, (c) extend certain annual disclosures to interim periods, (d) clarify single reportable segment entities must apply Topic 280 in its entirety, (e) permit more than one measure of segment profit or loss to be reported under certain conditions and (f) require disclosure of the title and position of the CODM. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company will adopt the annual disclosure requirements of ASU 2023-07 as of beginning of fiscal year 2024 and will adopt the interim disclosure requirements beginning fiscal year 2025. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” ASU 2023-09 improves the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. It also includes certain other amendments to improve the effectiveness of income tax disclosures regarding (a) income or loss from continuing operations disaggregated between domestic and foreign and (b) income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company will adopt ASU 2023-09 at the beginning of fiscal year 2025. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

6


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

Note 2 — Investments Available for Sale

Investments available for sale (“AFS”) and the related fair value measurement consisted of the following (dollars in thousands):

 

 

 

March 29, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Estimated Fair Value

 

 

Level 1

 

 

Level 2

 

Commercial paper

 

$

4,522

 

 

$

3

 

 

$

(1

)

 

$

4,524

 

 

$

 

 

$

4,524

 

Certificates of deposit

 

 

2,017

 

 

 

2

 

 

 

 

 

 

2,019

 

 

 

 

 

 

2,019

 

U.S. Treasury securities

 

 

15,432

 

 

 

 

 

 

(78

)

 

 

15,354

 

 

 

15,354

 

 

 

 

U.S. agency securities

 

 

1,732

 

 

 

 

 

 

(3

)

 

 

1,729

 

 

 

 

 

 

1,729

 

Corporate debt securities

 

 

4,462

 

 

 

4

 

 

 

(4

)

 

 

4,462

 

 

 

 

 

 

4,462

 

Total investments AFS

 

$

28,165

 

 

$

9

 

 

$

(86

)

 

$

28,088

 

 

$

15,354

 

 

$

12,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 29, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Estimated Fair Value

 

 

Level 1

 

 

Level 2

 

Commercial paper

 

$

7,720

 

 

$

9

 

 

$

 

 

$

7,729

 

 

$

 

 

$

7,729

 

Certificates of deposit

 

 

3,716

 

 

 

4

 

 

 

 

 

 

3,720

 

 

 

 

 

 

3,720

 

U.S. Treasury securities

 

 

23,036

 

 

 

3

 

 

 

(56

)

 

 

22,983

 

 

 

22,983

 

 

 

 

U.S. agency securities

 

 

3,423

 

 

 

 

 

 

(4

)

 

 

3,419

 

 

 

 

 

 

3,419

 

Corporate debt securities

 

 

11,538

 

 

 

12

 

 

 

(10

)

 

 

11,540

 

 

 

 

 

 

11,540

 

Total investments AFS

 

$

49,433

 

 

$

28

 

 

$

(70

)

 

$

49,391

 

 

$

22,983

 

 

$

26,408

 

 

The Company obtains the fair value from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers and other industry and economic events.

The Company assessed each debt security with gross unrealized losses for impairment. As part of that assessment, the Company concluded that it does not intend to sell and it is more-likely-than-not that the Company will not be required to sell, prior to the recovery of the amortized cost basis. The Company did not recognize impairment for the three months ended March 29, 2024.

The following table shows the fair value of investments AFS by contractual maturity (dollars in thousands):

 

 

 

As of March 29, 2024

 

 

 

Within one year

 

 

After one year through five years

 

 

 

Total

 

Commercial paper

 

$

4,524

 

 

$

 

 

 

$

4,524

 

Certificates of deposit

 

 

2,019

 

 

 

 

 

 

 

2,019

 

U.S. Treasury securities

 

 

9,816

 

 

 

5,538

 

 

 

 

15,354

 

U.S. agency securities

 

 

1,729

 

 

 

 

 

 

 

1,729

 

Corporate debt securities

 

 

3,037

 

 

 

1,425

 

 

 

 

4,462

 

Total investments AFS

 

$

21,125

 

 

$

6,963

 

 

 

$

28,088

 

 

7


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

Note 2 — Investments Available for Sale (Continued)

During the three months ended March 31, 2023, one of the Company’s investments AFS was the subject of a downgraded credit rating. The Company sold its investments of $600,000 following the downgrade. The Company recognized a realized gain upon sale of $2,000 during the three months ended March 31, 2023.

 

Note 3 — Inventories

Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):

 

 

 

March 29, 2024

 

 

December 29, 2023

 

Raw materials and purchased parts

 

$

9,591

 

 

$

9,766

 

Work in process

 

 

6,097

 

 

 

5,722

 

Finished goods

 

 

25,642

 

 

 

23,150

 

Total inventories, gross

 

 

41,330

 

 

 

38,638

 

Less inventory reserves

 

 

(2,749

)

 

 

(3,508

)

Total inventories, net

 

$

38,581

 

 

$

35,130

 

 

Note 4 — Prepayments, Deposits, and Other Current Assets

Prepayments, deposits, and other current assets consisted of the following (in thousands):

 

 

March 29, 2024

 

 

December 29, 2023

 

Prepayments and deposits

 

$

7,817

 

 

$

6,216

 

Prepaid insurance

 

 

1,968

 

 

 

2,314

 

Prepaid marketing costs

 

 

2,647

 

 

 

2,141

 

Consumption tax receivable

 

 

766

 

 

 

820

 

Value added tax (VAT) receivable

 

 

2,323

 

 

 

2,456

 

BVG (Swiss Pension) prepayment

 

 

1,416

 

 

 

23

 

Other(1)

 

 

444

 

 

 

739

 

Total prepayments, deposits and other current assets

 

$

17,381

 

 

$

14,709

 

 

(1)
No individual category in “other current assets” exceeds 5% of the total prepayments, deposits and other current assets.

Note 5 — Property, Plant and Equipment

Property, plant and equipment, net consisted of the following (in thousands):

 

 

 

March 29, 2024

 

 

December 29, 2023

 

Machinery and equipment

 

$

32,547

 

 

$

30,874

 

Computer equipment and software

 

 

8,511

 

 

 

8,495

 

Furniture and fixtures

 

 

4,703

 

 

 

4,122

 

Leasehold improvements

 

 

11,736

 

 

 

10,780

 

Construction in process

 

 

45,149

 

 

 

40,364

 

Total property, plant and equipment, gross

 

 

102,646

 

 

 

94,635

 

Less accumulated depreciation

 

 

(30,309

)

 

 

(27,800

)

Total property, plant and equipment, net

 

$

72,337

 

 

$

66,835

 

 

8


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

 

Note 6 – Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

 

 

 

March 29, 2024

 

 

December 29, 2023

 

Accrued salaries and wages

 

$

10,440

 

 

$

12,519

 

Accrued bonuses

 

 

2,325

 

 

 

3,456

 

Accrued insurance

 

 

1,460

 

 

 

2,315

 

Income taxes payable

 

 

9,708

 

 

 

10,848

 

Marketing obligations

 

 

2,097

 

 

 

1,874

 

Other(1)

 

 

9,231

 

 

 

9,926

 

Total other current liabilities

 

$

35,261

 

 

$

40,938

 

 

(1)
No individual category in “Other” exceeds 5% of the other current liabilities.

Note 7 – Leases

Finance Leases

The Company entered into finance leases primarily related to purchases of equipment used for manufacturing, computer-related equipment or furniture and fixtures. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):

 

 

 

March 29, 2024

 

 

December 29, 2023

 

Computer equipment and software

 

$

6

 

 

$

6

 

Furniture and fixtures

 

 

475

 

 

 

475

 

Finance lease right-of-use assets, gross

 

 

481

 

 

 

481

 

Less accumulated depreciation

 

 

(335

)

 

 

(298

)

Finance lease right-of-use assets, net

 

$

146

 

 

$

183

 

 

 

 

 

 

 

 

Current finance lease obligations

 

$

166

 

 

$

165

 

Long-term finance lease obligations

 

 

 

 

 

42

 

Total finance lease liability

 

$

166

 

 

$

207

 

Weighted-average remaining lease term (in years)

 

 

1.0

 

 

 

1.3

 

Weighted-average discount rate

 

 

4.25

%

 

 

4.24

%

 

Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):

 

 

Three Months Ended

 

 

 

March 29, 2024

 

 

March 31, 2023

 

Amortization of finance lease right-of-use asset

 

$

37

 

 

$

39

 

Interest on finance lease liabilities

 

 

2

 

 

 

4

 

Cash paid for amounts included in the measurement of finance lease liabilities:

 

 

 

 

 

 

Operating cash flows

 

 

2

 

 

 

4

 

Financing cash flows

 

 

40

 

 

 

42

 

 

9


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

Note 7 – Leases (Continued)

Operating Leases

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):

 

 

March 29, 2024

 

 

December 29, 2023

 

Machinery and equipment

 

$

701

 

 

$

735

 

Computer equipment and software

 

 

445

 

 

 

446

 

Real property

 

 

42,291

 

 

 

40,869

 

Operating lease right-of-use assets, gross

 

 

43,437

 

 

 

42,050

 

Less accumulated depreciation

 

 

(8,837

)

 

 

(7,663

)

Operating lease right-of-use assets, net

 

$

34,600

 

 

$

34,387

 

 

 

 

 

 

 

 

Current operating lease obligations

 

$

4,403

 

 

$

4,202

 

Long-term operating lease obligations

 

 

31,126

 

 

 

31,425

 

Total operating lease liability

 

$

35,529

 

 

$

35,627

 

Weighted-average remaining lease term (in years)

 

 

7.2

 

 

 

7.3

 

Weighted-average discount rate

 

 

5.51

%

 

 

5.48

%

 

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

March 29, 2024

 

 

March 31, 2023

 

Operating lease cost

 

$

2,223

 

 

$

1,107

 

Cash paid for amounts included in the measurement of operating lease liabilities:

 

 

 

 

 

 

Operating cash flows

 

 

1,384

 

 

 

1,173

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

 

1,495

 

 

 

1,909

 

Future Maturities of Lease Liabilities

Estimated future maturities of lease liabilities under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of March 29, 2024 is as follows (in thousands):

.

As of March 29, 2024
12 Months Ended

 

Operating Leases

 

 

Finance Leases

 

March 2025

 

$

6,433

 

 

$

170

 

March 2026

 

 

5,379

 

 

 

 

March 2027

 

 

5,508

 

 

 

 

March 2028

 

 

5,633

 

 

 

 

March 2029

 

 

5,743

 

 

 

 

Thereafter

 

 

16,733

 

 

 

 

Total future minimum lease payments

 

$

45,429

 

 

$

170

 

Less amounts representing interest

 

 

(9,900

)

 

 

(4

)

Total lease liability

 

$

35,529

 

 

$

166

 

 

10


STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

 

Note 8 — Income Taxes