STAAR Surgical Reports Significant First Quarter Progress
Substantial Improvements in Gross Margin Percentage and Operating Expense Reductions
U.S. Visian ICL(R) Revenues Increase 24%
Cash Used in Operations Reduced to $448,000
Net Loss Reduced to $1.7 Million : Adjusted EBITDA of $384,000
First Quarter Financial Highlights
-- Global sales for the first quarter were $18.3 million , a 5% increase
over the first quarter of 2008 on a constant currency basis, and a 2%
increase on a GAAP reporting basis.
-- International sales achieved 9% growth year-over-year on a constant
currency basis and 5% growth on a GAAP reporting basis. International
sales totaled $14.0 million versus $13.4 million reported in the same
period for 2008.
-- U.S. sales declined by 6% to $4.2 million compared with the same
period in 2008 due to a 33% decline in other product sales and an 8%
decline in IOL sales. These declines were partially offset by a 24%
increase in U.S. Visian ICL sales.
-- Gross profit margin rose to 57%, a 13 percentage point improvement
over the 43% gross margin reported for the first quarter of 2008.
Excluding the impact of charges for the acquisition of STAAR Japan in
2008, gross margin in the first quarter improved 500 basis points.
The U.S. reported a 10% percentage point gross profit improvement,
while international operations reported a 200 basis point improvement,
led by STAAR Japan with a 700 basis point improvement.
-- Operating expenses declined by $5.0 million , or 30%, when compared to
the $16.5 million reported for the first quarter of 2008. Excluding
the impact of the STAAR Japan acquisition in 2008, expenses during the
first quarter declined by $1.2 million , or 9% compared to the prior
year period. Operating expense as a percentage of total revenue
dropped to 63% compared to 92% reported for the prior year quarter, or
70% in the prior year quarter when acquisition charges are excluded.
-- Operating loss improved by $7.6 million , which is an 87% decrease over
the $8.7 million loss reported in 2008. Operating loss improved $2.2
million , or 66%, when acquisition charges in 2008 are excluded.
-- Cash used in operating activities decreased to $448,000 from the $3.4
million used in the first quarter of 2008, representing a $3.0 million
improvement. Cash used in operating activities during the fourth
quarter of 2008 was $991,000 .
First Quarter Visian ICL Highlights
-- Global Visian ICL(R) sales grew to $5.1 million , which is an 18%
increase over the $4.3 million reported in same period of the prior
year.
-- U.S. Visian ICL sales grew by 24% to $1.4 million , compared to $1.1
million in 2008.
-- The Visian ICL was highlighted in a major media story about Steve
Holcomb, the captain of the Gold Medal Winning U.S. Olympic Men's
Bobsled Championship Team. Prior to receiving the Visian ICL his poor
vision had almost forced him out of the sport. Television news and
other media across the country featured the product during the
quarter, with coverage in at least eight different states.
-- In the U.S. the Company reached the level of 40 Visian ICL
"Advocates," which was the target for year-end 2008. The total number
of "Regular Users" increased by 18% compared to the average during the
course of 2008, while the volume per Regular Users increased by 29%
over this same period.
-- International Visian ICL sales grew to $3.7 million which is a 17%
increase compared to the $3.2 million sales reported in the prior
year.
-- Revenue grew in several key countries, including Korea at 33% growth,
India at 201%, Japan at 17%, Spain at 16%, France at 92% and the U.K.
19%.
Recent Cataract Highlights
-- Global IOL sales increased by 3% while the non IOL portion of cataract
sales declined by 12%, reflecting the strategy in the U.S. to
deemphasize product lines that have historically yielded low gross
margins.
-- International IOL sales grew to $6 million , which is a 7% increase
over sales of $5.6 million in the prior year. During the quarter
preloaded IOL sales increased by 13% over prior year, and sales in
STAAR Japan increased by 26%.
-- U.S. IOL sales declined by 8% for the quarter, despite the fact that
during the first two months sales were flat compared to the prior
year. Unit volume of low margin IOLs decreased as the Company
continued its strategy to deemphasize low margin product lines.
Decreased sales of low margin IOLs were largely offset by increased
average selling prices of NTIOL products.
-- The announced release of the Afinity(TM) Collamer Aspheric Single
Piece New Technology Intraocular Lens (NTIOL), the third STAAR IOL
lens with NTIOL designation should provide additional momentum for the
U.S. market. This lens upgrades and will ultimately replace STAAR's
most popular spherical IOL. As a result of this on-going strategy,
IOL margins should continue to increase in the U.S.
-- Members of the Collamer Accommodating Study Team began implanting the
Afinity(TM) Collamer Aspheric Single Piece IOL the week of April 20th .
"Results for the first quarter compared to the period one year ago clearly
demonstrate our continued execution of announced strategies," said
"During the quarter, we believe we made progress on the key regulatory
approvals we are seeking in
Total product sales for the quarter were
Gross profit for the first quarter was
General and administrative expenses for the quarter were
Marketing and selling expenses for the first quarter dropped approximately
Research and development expenses for the quarter were
Net loss for the first quarter ended
On
Litigation updates
In the
Conference Call
The Company will host a conference call and webcast on
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 800-406-7325 for domestic
callers and 303-590-3030 for international callers, both using passcode
4058578#. To access the live webcast of the call, go to
About
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: projections of earnings, revenue, sales, cash or other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; strategies or objectives; prospects for appeal of the adverse verdict in the Parallax litigation; continued growth of the ICL, TICL or other products in the U.S. or international markets; expected cost savings; our future 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 need to satisfy any final judgment in the Parallax case or post an appeal bond, and the resulting effect on our liquidity, our limited capital resources and limited access to financing, the need to defend other litigation similar to the Parallax case and to satisfy judgment in the event of an adverse ruling in that case, for which we have taken no reserve, the effect the global recession may have on sales of products, especially products such as the ICL used in non-reimbursed elective procedures, the challenge of managing our foreign subsidiaries, the risk that we will not succeed in introducing improved products that restore the profitability of our U.S. IOL product line, our ability to resolve FDA concerns over the clinical study for the Toric ICL and to overcome negative publicity resulting from warning letters and other correspondence from the FDA Office of Compliance, the willingness of surgeons and patients to adopt a new product and procedure, and the potential effect of recent negative publicity about LASIK on the demand for refractive surgery in general in the U.S.
STAAR currently lacks the cash to satisfy the final judgment expected to
result from the
As reported in the Company's Annual Report on Form 10-K for the fiscal
year ended
Use of Non-GAAP Information
This news release presents selected items from the Company's Condensed Consolidated Statements of Operations as reported in accordance with U.S. generally accepted accounting principles ("GAAP"), and also on a non-GAAP basis after excluding certain non-recurring expenses, and excluding changes in currency. Additionally, this news release contains a discussion of Adjusted EBITDA which is also a non-GAAP measure of performance. None of these measures are a substitute for measures determined in accordance with GAAP, and may not be comparable to the same measures as reported by other companies.
The term "EBITDA" refers to a financial measure defined as earnings before net interest, income taxes, depreciation and amortization. "Adjusted EBITDA" refers to EBITDA before stock-based compensation expense and purchase accounting charges. This non-GAAP measure is used by management and the Company's Board of Directors to evaluate the Company's progress towards profitability and positive cash flows. The Company believes this measure of performance might also be useful to investors for the same reasons. Adjusted EBITDA is presented in the table below.
When reviewing financial information to assess the effectiveness of
initiatives to enhance long-term performance by reducing expenses, management
may eliminate the effect of significant non-recurring expenses in order to
discern underlying trends. In the 2008 fiscal year, the Company's results
were significantly affected by the following non-recurring expenses classified
in the GAAP reconciliation table as "purchase A/C [accounting] charges": a
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 conformance with GAAP, the Company translates foreign currency sales and expenses 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.
CONTACT: Investors Media
EVC Group EVC Group
Douglas Sherk, 415-896-6820 Christopher Gale, 646-201-5431
Michael Pollock, 415-896-5862
(Tables to Follow)
STAAR Surgical Company
Condensed Consolidated Statements of Operations
(In 000's except for per share data)
Unaudited
Three Months Ended
------------------
April 3, March 28,
2009 2008
---- ----
Net sales 100% $18,283 100% $17,960
Cost of sales 43% 7,944 57% 10,205
----- ------
Gross profit 57% 10,339 43% 7,755
------ -----
Selling, general and administrative
expenses:
General and administrative 23% 4,282 25% 4,441
Marketing and selling 32% 5,779 36% 6,467
Research and development 8% 1,412 10% 1,718
Loss on settlement of pre-existing
distribution arrangement 0% - 21% 3,850
- -----
Total selling, general and
administrative expenses: 63% 11,473 92% 16,476
------ ------
Operating loss -6% (1,134) -49% (8,721)
------ ------
Other income (expense):
Interest income 0% 3 0% 28
Interest expense -1% (233) -1% (201)
Gain on foreign currency 0% 75 1% 128
Other income, net 0% 63 0% 84
-- --
Other (expense) income, net -1% (92) 0% 39
--- --
Loss before provision for income taxes -7% (1,226) -48% (8,682)
Provision for income taxes 2% 436 1% 258
--- ---
Net loss -9% $(1,662) -50% $(8,940)
======= =======
Loss per share:
Basic and diluted $(0.06) $(0.30)
====== ======
Weighted average shares outstanding:
Basic and diluted 29,641 29,488
====== ======
STAAR Surgical Company
Global Sales
(in 000's)
Unaudited
Three Months Ended
------------------
April 3, March 28, %
Geographic Sales 2009 2008 Change
---- ---- ------
United States $4,238 $4,524 -6%
Germany 6,125 6,440 -5%
Japan 3,535 2,811 26%
Korea 986 747 32%
Other 3,399 3,438 -1%
----- -----
Total
International
Sales 14,045 13,436 5%
------- -------
Total Sales $18,283 $17,960 2%
======= =======
Product Sales
IOLs $8,146 $7,948 2%
ICLs $5,065 $4,279 18%
Other 5,072 5,733 -12%
----- -----
Total $18,283 $17,960 2%
======= =======
STAAR Surgical Company
Condensed Consolidated Balance Sheets
(in 000's)
Unaudited
April 3, January 2,
2009 2009
---- ----
Cash and cash equivalents $3,722 $4,992
Short-term investments - 179
Accounts receivable trade, net 7,883 8,422
Inventories 16,301 16,668
Prepaids, deposits, and other current assets 2,474 2,009
----- -----
Total current assets 30,380 32,270
------ ------
Property, plant, and equipment, net 5,629 5,974
Intangible assets, net 5,162 5,611
Goodwill 7,545 7,538
Other assets 1,140 1,189
----- -----
Total assets $49,856 $52,582
======= =======
Accounts payable $5,910 $6,626
Line of credit 2,020 2,200
Deferred income taxes - current 282 282
Obligations under capital leases - current 965 989
Other current liabilities 11,325 11,366
------ ------
Total current liabilities 20,502 21,463
------ ------
Notes payable - long-term, net of discount 4,482 4,414
Obligations under capital leases - long-term 885 1,335
Deferred income taxes - long-term 872 897
Other long-term liabilities 1,949 1,678
----- -----
Total liabilities 28,690 29,787
Series A redeemable convertible preferred stock 6,772 6,768
Common stock 301 295
Additional paid-in capital 139,878 138,811
Accumulated other comprehensive income 1,768 2,812
Accumulated deficit (127,553) (125,891)
-------- --------
Total stockholders' equity 14,394 16,027
------ ------
Total liabilities, redeemable convertible preferred
stock and stockholders' equity $49,856 $52,582
======= =======
STAAR Surgical Company
Condensed Consolidated Statements of Cash Flows
(in 000's)
Unaudited
Three Months Ended
------------------
April 3, March 28,
2009 2008
---- ----
Cash flows from operating activities:
Net loss $(1,662) $(8,940)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 575 802
Amortization of intangibles 197 250
Amortization of discount 68 59
Fair value adjustment of warrant (50) (24)
Loss on disposal of property and equipment 2 75
Stock-based compensation expense 608 438
Loss on settlement of pre-existing
distribution arrangement - 3,850
Pension accounting 64 -
Other 3 51
Changes in working capital, net of
business acquisition:
Accounts receivable 273 (1,442)
Inventories (56) 1,984
Prepaids, deposits and other current assets (72) (828)
Accounts payable (120) 284
Other current liabilities (278) 71
---- --
Net cash used in operating activities (448) (3,370)
---- ------
Cash flows from investing activities:
Cash acquired in acquisition of Canon Staar,
net of acquisition costs - 2,743
Acquisition of property and equipment (154) (234)
Proceeds from sale of property and equipment 38 -
Proceeds from sale of short-term investments - 33
Net change in other assets (24) (1)
--- ---
Net cash provided by (used in)
investing activities (140) 2,541
---- -----
Cash flows from financing activities:
Borrowings under lines of credit - 940
Repayments of lines of credit - (940)
Repayment of capital lease lines of credit (282) (152)
---- ----
Net cash used in financing activities (282) (152)
---- ----
Effect of exchange rate changes on cash
and cash equivalents (400) 608
---- ---
Decrease in cash and cash equivalents (1,270) (373)
Cash and cash equivalents, at
beginning of the period 4,992 10,895
----- ------
Cash and cash equivalents, at end of the period $3,722 $10,522
====== =======
STAAR Surgical Company
GAAP Reconciliation Tables
(in 000's)
Unaudited
Three Months Ended
------------------
April 3, March 28,
2009 2008
---- ----
Adjusted EBITDA
Net loss (1,662) (8,940)
Income taxes 436 258
Interest income (3) (28)
Interest expense 233 201
Depreciation 575 802
Amortization 197 250
--- ---
EBITDA (224) (7,457)
---- ------
Stock-based compensation 608 438
Cost of sales - 1,500
Loss on settlement of pre-existing
distribution arrangement - 3,850
--- -----
Adjusted EBITDA 384 (1,669)
=== ======
April 3, 2009
Sales in Constant -------------
Currency Effect of March 28,
As Reported Currency Ex-Currency 2008
----------- --------- ----------- ---------
US 4,238 - 4,238 4,524
International 14,045 (598) 14,643 13,436
------ ---- ------ ------
Total 18,283 (598) 18,881 17,960
====== ==== ====== ======
Q1 2009 vs. Q1 2008
-------------------
As Reported Ex-Currency
----------- -----------
Sales in Constant
Currency $ Change % Change $ Change % Change
-------- -------- -------- --------
US (286) -6% (286) -6%
International 609 5% 1,207 9%
Total 323 2% 921 5%
As
Reported
% of April 3, % of March 28,
Statement of Operations Sales 2009 Sales 2008
----- ---- ----- ----
Net sales 100% $18,283 100% $17,960
Cost of sales 43% 7,944 57% 10,205
----- ------
Gross profit 57% 10,339 43% 7,755
------ -----
Selling, general and
administrative
expenses:
General and administrative 23% 4,282 25% 4,441
Marketing and selling 32% 5,779 36% 6,467
Research and development 8% 1,412 10% 1,718
Loss on settlement of pre-
existing distribution
arrangement - 21% 3,850
- -----
Total selling, general and
administrative expenses: 63% 11,473 92% 16,476
------ ------
Operating loss -6% (1,134) -49% (8,721)
------ ------
Other income (expense):
Interest income 0% 3 0% 28
Interest expense -1% (233) -1% (201)
Gain on foreign currency 0% 75 1% 128
Other income, net 0% 63 0% 84
--- ---
Total other
(expense)
income, net -1% (92) 0% 39
--- ---
Loss before
provision for
income taxes -7% (1,226) -48% (8,682)
Income tax provision 2% 436 1% 258
--- ---
Net loss -9% $(1,662) -50% $(8,940)
======= =======
Loss per share:
basic and diluted $(0.06) $(0.30)
====== ======
Weighted average shares
outstanding: basic and
diluted 29,641 29,488
====== ======
Purchase Ex Purchase % of
Statement of Operations A/C Chgs A/C Chgs Sales
-------- -------- -----
Net sales $- $17,960 100%
Cost of sales (1,500) 8,705 48%
------ -----
Gross profit 1,500 9,255 52%
----- -----
Selling, general and
administrative
expenses:
General and administrative - 4,441 25%
Marketing and selling - 6,467 36%
Research and development - 1,718 10%
Loss on settlement of pre-
existing distribution
arrangement (3,850) - 0%
------ -
Total selling, general and
administrative expenses: (3,850) 12,626 70%
------ ------
Operating loss 5,350 (3,371) -19%
----- ------
Other income (expense): 0%
Interest income - 28 0%
Interest expense - (201) -1%
Gain on foreign currency - 128 1%
Other income, net - 84 0%
- --
Total other
(expense)
income, net 0 39 0%
- --
Loss before
provision for
income taxes 5,350 (3,332) -19%
Income tax provision - 258 1%
- ---
Net loss $5,350 $(3,590) -20%
====== =======
Loss per share:
basic and diluted $0.18 $(0.12)
===== ======
Weighted average shares
outstanding: basic and
diluted 29,488 29,488
====== ======
SOURCESTAAR Surgical Company -0-05/05/2009 /CONTACT: Investors,Douglas Sherk , +1-415-896-6820,Michael Pollock , +1-415-896-5862, Media,Christopher Gale , +1-646-201-5431, all ofEVC Group forSTAAR Surgical Company / /Web Site: http://www.staar.com / (STAA) CO:STAAR Surgical Company ST:California IN: HEA MEQ SU: ERN CCA PR -- SF11508 -- 310805/05/2009 16:08 EDT http://www.prnewswire.com