MONROVIA, Calif., Aug. 25 /PRNewswire-FirstCall/ -- STAAR Surgical Company (Nasdaq: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today announced that it has dismissed McGladrey & Pullen, LLP as principal independent accountants to the Company and that it has re-engaged BDO Seidman, LLP as its principal independent accountants in connection with the review of its financial statements for the second fiscal quarter of 2003. The decision to dismiss McGladrey & Pullen and to re-engage BDO was made by the audit committee of the Board of Directors of STAAR. The Company filed a report on Form 8-K on August 25, 2003 describing in detail the circumstances of the change in independent accountants. Also on August 25, 2003, the Company filed its quarterly report on Form 10-Q for the period ending July 4, 2003.

McGladrey was engaged as STAAR's principal independent accountant on June 6, 2003. Since that time a disagreement as to accounting principles and financial statement disclosure arose among McGladrey, STAAR and BDO. BDO had been STAAR's principal independent accountant between 1993 and May 30, 2003.

On July 29, 2003, McGladrey informed the Audit Committee of the Board of Directors of STAAR that McGladrey had been reviewing certain promissory notes of former officers and directors (the "Notes"), which had been given in connection with the exercise of stock options. McGladrey informed the Audit Committee that based on a review of the relevant facts and circumstances, McGladrey had reached a preliminary conclusion that the Notes, which had historically been accounted for as full recourse notes, should instead have been accounted for as non-recourse notes. McGladrey confirmed its conclusion to STAAR on August 13, 2003, and informed BDO in writing of its conclusion on August 14, 2003. The determination that the Notes were non-recourse obligations would effectively result in the awards exercised with the Notes continuing to be accounted for as stock options rather than completed stock purchases. Because of the underlying terms of the initial awards and subsequent modifications to the Notes, McGladrey further believes that the awards related to the Notes should be accounted for under variable plan accounting. Accordingly, McGladrey believes that the financial statements previously audited by BDO as of and for fiscal years 2002, 2001 and 2000 may have been misstated and that accounting for the awards would require adjustment to those financial statements.

On August 21, 2003, BDO completed an analysis of the accounting treatment of the Notes. BDO informed STAAR and McGladrey that it had no basis to conclude that STAAR's historical treatment of the Notes as full recourse obligations was incorrect and that a restatement based on a change in character of the Notes and variable plan accounting for the related awards would be incorrect. On August 21, 2003, McGladrey re-confirmed its conclusion that the Notes should be re-characterized as non-recourse obligations, that the related awards were subject to variable plan accounting, and that restatements would be necessary.

Faced with conflicting advice from two national accounting firms, STAAR's management considered the information and analysis relied upon by each firm and determined that its historical treatment of the Notes was correct, basing its decision on a number of factors, including the following:

    -- Management believes that the Notes had always been regarded as full
       recourse obligations and that they had been accounted for according to
       their substance. Prior legal counsel had advised management that both
       STAAR's option plan and Delaware law would not permit the exercise of
       options for non-recourse notes.
    -- Former management and present management have collected the full
       principal amount of mature Notes. Even in circumstances that made
       collection difficult, such as bankruptcy or litigation, current
       management has realized the full principal amount of $5.4 million of
       Notes (paid in cash or by surrender of stock) from the approximately
       $7.4 million owed at the time it assumed authority.
    -- McGladrey was reluctant to identify the single specific triggering
       point or event which caused the character of the Notes to change, and
       in the opinion of management the conclusions that led McGladrey to
       determine that the Notes should be accounted for as non-recourse notes
       were subjective.
    -- BDO afforded management direct access to a technical team in its
       national office with specific expertise in the area of accounting for
       compensation arrangements to review all of the pertinent facts
       surrounding the Notes.
    -- BDO's technical team reached definitive conclusion that management's
       characterization of the Notes as full recourse obligations had not been
       contradicted by facts or circumstances, and that as a result variable
       plan accounting was not required and a restatement of the historic
       financial statements would be wrong.

On August 22, 2003, the Audit Committee accepted the conclusions of management, dismissed McGladrey and re-engaged BDO to review its financial statements for the quarter ended July 4, 2003. The Audit Committee also determined that STAAR should seek the guidance of the Office of the Chief Accountant of the SEC's Division of Corporation Finance as soon as possible regarding the subject matter of the disagreement and should be prepared to promptly make any restatements or adjustments required by such guidance.

The requested adjustments would have a material affect on STAAR's reported net income and result in the reclassification of some amounts of retained income as paid-in capital on STAAR's balance sheet. However, the adjustments would not affect STAAR's cash position. The Company has provided an estimate of the potential impact of the adjustments in its Report on Form 8-K.

About STAAR Surgical

STAAR Surgical is a leader in the development, manufacture and marketing of minimally invasive ophthalmic products employing proprietary technologies. STAAR's products are used by ophthalmic surgeons and include the Implantable Contact Lens(TM) as well as innovative products designed to improve patient outcomes for cataracts and glaucoma.

About STAAR Surgical's ICL

STAAR Surgical's ICL is a phakic refractive lens that is currently under FDA review for approval in the U.S. The current submission is for the correction of myopia, or near-sightedness, in the range of -3.0D to -20.0D. The Company is presently enrolling candidates in the clinical trial for the hyperopic ICL for the correction of far-sightedness, as well as the Toric ICL, which reduces myopia combined with astigmatism.

The ICL Pre-Market Approval Application (PMA) has been accepted for substantive review by the U.S. Food and Drug Administration (FDA) and has been granted an expedited review status. The official filing date for the ICL PMA was May 8, 2003.

STAAR's ICL has received the CE Mark approving use in the countries of the European Union, is approved for sale in 37 countries and has been implanted in more than 30,000 eyes worldwide. If granted approval by the FDA, STAAR will be allowed to market the ICL in the United States for the reduction of near- sightedness.

Safe Harbor

All statements in this press release that are not statements of historical fact are forward-looking statements, including any projections of earnings, sales, or other financial items, any statements of the plans, strategies, and objectives of management for future operations, any statements concerning proposed new products, services or developments, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. 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 possibility of adjustments to STAAR's historical financial reports, and the magnitude of those adjustments, the need to obtain regulatory approval for new products, acceptance of new products by medical practitioners and consumers, the rapid pace of technological change in the ophthalmic industry, general domestic and international economic conditions, and other factors beyond the control of STAAR Surgical Company, including those detailed from time to time in STAAR Surgical Company's reports filed with the Securities and Exchange Commission. STAAR Surgical Company assumes no obligation and does not intend to update these forward-looking statements.

    CONTACT:   Investors                     Media
               EVC Group                     EVC Group
               Douglas Sherk, 415-659-2285   Sheryl Seapy, 415-272-3323
               Jennifer Cohn, 415-659-2289


SOURCE  STAAR Surgical Company
    -0-                             08/25/2003
    /CONTACT:  investors, Douglas Sherk, +1-415-659-2285, or Jennifer Cohn,
+1-415-659-2289, or media, Sheryl Seapy, +1-415-272-3323, all of EVC Group for
STAAR Surgical Company/
    /Web site:  http://www.staar.com /
    (STAA)

CO:  STAAR Surgical Company; BDO Seidman, LLP; McGladrey & Pullen, LLP
ST:  California
IN:  HEA MTC FIN
SU:  ACC



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