Form 8-K STAAR SURGICAL CO For: Oct 30

October 30, 2014 4:17 PM

�

UNITED STATES

�

SECURITIES AND EXCHANGE COMMISSION

�

WASHINGTON, D.C. 20549

�

FORM 8-K

�

CURRENT REPORT

�

Pursuant to Section�13 or 15(d) of the Securities Exchange Act of 1934

�

Date of Report (Date of Earliest Event Reported):

�

October 30, 2014

�

STAAR Surgical Company
__________________________________________

�

(Exact name of registrant as specified in its charter)

�

Delaware	0-11634	95-3797439
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)
�	�	�
1911 Walker Ave, Monrovia, California	�	91016
(Address of principal executive offices)	�	(Zip Code)

�

�	�	�
Registrant’s telephone number, including area code:	�	626-303-7902

�

Not Applicable

�______________________________________________

�

Former name or former address, if changed since last report

��

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

�

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

�

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

��

Item 2.02 Results of Operations and Financial Condition.

�

On October 30, 2014, STAAR Surgical Company (the “Company”) published a press release reporting its financial results for the quarter ended October 3, 2014, a copy of which is furnished as Exhibit 99.1 to this report and is incorporated herein by this reference.

�

�This information and the information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report, and Exhibits 99.1 and 99.2 are not incorporated by reference into any filings of STAAR made under the Securities Act of 1933, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated so therein.

�

Item 7.01 Regulation FD Disclosure.

�

On October 30, 2014, the Company held a conference call to discuss the financial results for the quarter ended October 3, 2014.��The Company provided slides to accompany its presentation on the October 30, 2014 conference call, which are available on the Company’s website at www.staar.com.� A copy of the slide presentation is furnished as Exhibit 99.2 to this report and is incorporated herein by this reference.

�

Item 9.01 Financial Statements and Exhibits

�

Exhibit No.	�	Description
99.1	�	Press release of the Company dated October 30, 2014
99.2�	�	Slide presentation dated October 30, 2014

�

SIGNATURES

�

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�

�	�	STAAR Surgical Company�
�	�	�
October 30, 2014	By:	/s/ Barry G. Caldwell
�	�	Barry G. Caldwell
�	�	President and Chief Executive Officer

��

�

Exhibit 99.1

��

�

��

STAAR Surgical Reports Third Quarter Results

�

~Total Sales Increase to $18.2M from $17.1M in Q3 2013; Up 9% on Constant Currency Basis~

~ Visian� ICL™ Sales of $10.6 Million versus $10.7 Million in Q3 2013 ~

~ IOL Sales Growth of 8.3%; Up 13% on Constant Currency Basis~

~ GAAP Net Loss of $0.07 per Share, Non-GAAP Breakeven~

~Visian ICL with CentraFLOW� Gains Marketing Approval in China~

�

MONROVIA, CA, October 30, 2014---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 third quarter ended October 3, 2014 of $18.2 million, a 6.3% increase over $17.1 million reported for the third quarter of 2013. The results included quarterly sales of $10.6 million of the Company’s Visian ICL product portfolio, $5.8 million of its IOL products and $1.8 million of its lower margin Other Product sales. The effect of foreign currency exchange reduced sales by $0.4 million during the quarter. On a constant currency basis, revenues grew 9% during the third quarter of 2014 compared to the third quarter of 2013.

�

“The third quarter revenue results offer both disappointing and promising news with Visian ICL revenue basically flat while IOL and Other Product sales reflect strong top line growth,” said Barry G. Caldwell, President & CEO. “Data from major centers in Korea report a decline in all refractive surgery of more than 50% during the quarter largely driven by quite negative media coverage on LASIK complications. The out the door demand to our distributor in Korea was down 40% and as a result ICL orders to us declined approximately $900,000, or 45% as compared to the third quarter of last year. We are taking action with our distributor to combat this negative coverage with an aggressive direct to consumer campaign planned to begin in December. We also have yet to see a rebound in the refractive market in Japan which was under downward pressure all of last year as well.”

�

��

“Excluding Korea and Japan, ICL sales globally increased 12% over the third quarter of last year,” Mr. Caldwell continued. “Led by a 27% increase in China, we grew ICL revenue in 8 of our 12 focus markets. We received news of the final marketing approval for the ICL with CentraFLOW in China yesterday which should help increase our momentum in this market. The final step necessary to ship product is the Approval Certification which is normally issued within 10 working days. In addition, the development of our Visian ICL pipeline continued to advance during the quarter.”

�

“We continued to gain momentum during the quarter in the IOL market. IOL revenue increased by 8% during the quarter as reported, and 13% in constant currency, which was driven by a 13% increase in unit sales. This growth was driven by our KS-IOL products in the European and Japanese markets as we continue to benefit from positive market acceptance and an increased supply of this product. Japan IOL revenue increased by 7%, 16% in constant currency, while European IOL revenue increased 45%. The lack of backorders allows us to more actively promote IOLs in current markets. We remain confident about supply into 2015, which should help to drive additional growth in both existing and new markets.” added Mr. Caldwell.

�

Gross profit margin for the quarter was 65.3% compared to 70.5% in the third quarter of 2013. Several factors drove the gross margin comparison, at least one of which is expected to continue through calendar 2015. First, higher distribution costs and increased inventory reserves impacted margins by approximately 200 basis points; higher ICL unit costs negatively impacted gross margin by 160 basis points; and preloaded acrylic mix was an approximate 90 basis point negative impact on gross margin. Finally, a greater proportion of lower-margin IOL injector sales to a third party impacted gross margin by approximately 160 basis points. These IOL injector sales are included on the Other Product sales line which was approximately 9.8% of sales in the third quarter of 2014 compared with 6.2% in the year ago period. The Company anticipates this trend continuing to be a gross margin headwind into 2015 as IOL injector sales are expected to increase. A positive impact on gross margin during the third quarter was the combination of higher average selling prices on ICLs and IOL unit cost reductions, which positively impacted gross margin by approximately 85 basis points.

�

Operating expenses for the quarter were $13.4 million, up 13% from $11.9 million in the prior year. This includes a $1.5 million increase in R&D expenses and a $1.5 million increase in selling and marketing expenses, which was partially offset by a $0.9 million decrease in G&A due to lower bonus accruals. Increased R&D expenses were driven by project costs on the V5 and V6a ICL models, and the ongoing cost of an increased number of regulatory approvals and responses in the U.S. and China, including approximately $600,000 of costs related to actions to address the FDA Warning Letter observations. Increased selling and marketing expenses were driven by the timing of ESCRS expenses that occurred in this year’s third quarter, but last year’s fourth quarter. Those expenses, reflecting the Company’s largest presence ever at this important meeting, were $1.2 million in the third quarter of 2014.

�

��

The Company recorded an income tax provision of $548,000 during the third quarter of 2014, compared to a benefit of $25,000 during the third quarter of 2013. The tax provision in the quarter was driven by the amount of profit generated outside the U.S. The income tax benefit recorded in the third quarter of 2013 is due to the release of $0.4 million valuation allowance.

�

The GAAP net loss for the third quarter of 2014 was $2.7 million or $0.07 on a per diluted share basis, compared with a net income of $525,000 or $0.01 on a per diluted share basis, in the third quarter of 2013. Adjusted net income (excluding manufacturing consolidation expenses for the year ago quarter, gain (loss) on foreign currency transactions, fair value adjustment of warrants, stock-based compensation expense and FDA panel and remediation expenses) for the quarter ended October 3, 2014 was $0.09 million, or $0.00 per share versus adjusted net income for the year ago quarter of $1.7 million, or $0.04 per diluted share. The reconciliation between GAAP and non-GAAP financial matters is provided with financial tables included with this release.

�

Cash and cash equivalents at October 3, 2014 totaled $18.4 million. During the quarter, the Company used $0.4 million in cash for operating activities.

�

Recent Visian Implantable Collamer� Lens (ICL) Highlights.

�

Over 80,000 Visian ICLs with the CentraFLOW technology have been successfully implanted since introduction. ICLs with CentraFLOW represented 57% of all ICLs shipped during the quarter.

�

According to Market Scope China is the largest refractive market with an estimated 875,000 refractive procedures in 2013. The Visian ICL has grown 20% year to date in the market and has the highest ICL sales of any market this year though still only about a 2% share of the total refractive market. With the approval of the ICL with CentraFLOW the opportunity to grow share should increase as has been seen in other markets.

�

Visian ICLs represented 58.5% of total sales, compared to 62.7% of sales in Q3 2013.

�

Total ICL sales decreased 1% globally during the third quarter, driven by the 45% decrease in Korea due to pressure on refractive procedures largely generated by media coverage of LASIK complications. The Japan refractive market also continues to be under negative pressure.

�

ICL sales outside of Korea and Japan increased 12% during the quarter as growth was seen in 8 of the 10 other focus markets.

�

Average selling price increased 2% driven by mix and new product introductions, but volume was down 3%.

�

First surgeries began in Europe with the Preloaded ICL System during October with leading refractive surgeons. The purpose of these demonstrations is to capture key learnings important for the launch of the new technology to the broader market. The Company is working through the challenge to manufacture this new technology in quantities large enough for the broader release.

�

Regional ICL Updates

�

Europe, Middle East, Africa (EMEA)

�

In the third quarter, Visian ICL revenues grew by 11% while procedures increased 12% and average selling price decreased 1%.

�

Revenues in Europe during the quarter increased 12% and ICL procedures grew 12%. 2014 results reflect the second full year that Europe has had the CentraFLOW technology.

�

Spain increased revenue by 19% and procedures 18%.

�

France increased revenue by 18% and procedures 22%.

�

Italy and the U.K. grew at higher rates on a smaller base.

�

Germany revenue decreased by 14% and procedures 9%.

�

The Middle East, where the Visian ICL with CentraFLOW was introduced last year, grew 24% in revenues and 30% in procedures.

�

Latin America declined 15% in revenue and 16% in procedures after a 21% rate of revenue growth during the first half of the year.

�

Asia Pacific (APAC)

�

APAC revenue decreased 8% while ICL procedures decreased 10% and average selling price increased 3%. Korea ICL revenue decreased 45% during the quarter while procedures decreased 47%.

�

China ICL revenue grew 27% during the quarter while procedures increased 28%.

�

ICL revenue increased 9% in India driven by the ICL with CentraFLOW technology.

�

ICL revenue in Japan declined 30% while procedures declined 29% as refractive procedures in this market continued to experience downward pressure.

��

North America (NA)

�

NA ICL revenue decreased 1% while units decreased 4%. Average selling price grew 2% during the quarter.

�

Third quarter ICL revenue in the U.S. grew 2% on flat procedure growth.

�

Quarterly Intraocular Lens (IOL) Highlights

�

Third quarter IOL sales were $5.8 million, an 8% increase (+13% in constant currency) from $5.3 million in the third quarter of 2013 while units increased 13%. This was driven by increased market acceptance and supply of the KS-IOL Preloaded Acrylic product.

�

Sales in Japan represented 51% of the Company’s total IOL sales, and increased 7.4% during the quarter (+16% in constant currency). IOL unit sales increased by 14% during the quarter.

�

IOL sales in Europe, which represented 18% of total IOL sales, increased by 45% and 41% in units during the quarter due to the increased supply of the Preloaded Acrylic KS-IOLs.

�

IOL sales in the U.S. declined by 6% while IOLs in the rest of the world declined by 1% during the quarter.

�

Other Operational Highlights and Upcoming Milestones

�

The Company continues to work diligently to resolve observations issued in a Warning Letter which followed a GMP inspection at the Monrovia facility. The Company has submitted a total of eight responses to the FDA with data, which includes the Company’s initial response, six monthly progress reports and an October 15 response regarding the current process for surgeon selection of the approved ICL in the U.S.

�

In China, the Company previously reported a successful Experts Panel Meeting on the ICL with CentraFLOW technology in China on May 15^th. On September 24^th the CMDE issued a Technical Recommendation of Approval and on October 29^th the Company learned that CFDA issued the Marketing Approval. The final step is the Approval Certification which should be issued within 10 working days. This is a necessary step for shipping product to the market.

�

With over 80,000 Visian ICL implants utilizing the CentraFLOW technology good clinical data is starting to emerge regarding the lower rate of cataract complications associated with the new technology. During the recent ESCRS meeting Dr. Alfonso from Spain presented data on over 1,000 ICL with CentraFLOW implants with two years of follow up showing no incidence of cataract. His work will be presented in an upcoming issue of the Journal of Cataract and Refractive Surgery, a peer reviewed publication. At the AAO earlier this month Dr. Mertens from Belgium presented data on nearly 1,000 ICL with CentraFLOW implants with three years of follow up showing no incidence of cataract. The incidence of cataract formation with these two surgeons was 0.7% and 0.81%, respectively, with the previous ICL technology.

�

During the third quarter the Company provided additional information in response to communications with the FDA regarding the calculator software contained in the TICL submission. The TICL received a favorable panel recommendation from the Advisory Committee on March 14, 2014. The last response to the FDA on the TICL post-panel was submitted on September 26, 2014. The Company is waiting to learn the next steps of the process.

�

The confirmatory study for the V6a ICL technology is planned with surgeries by Dr. Robert Ang. 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. The technology combines the proven ICL platform with known optic designs and new intellectual property developed by the Company. Assuming the Confirmatory Study goes as planned, this new technology could gain CE Mark approval during 2015.

�

Conference Call

�

The Company will host a conference call and video webcast today at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss these results and recent corporate developments. The dial-in number for the conference call is 877-415-3177 for domestic participants and 857-244-7320 for international participants, both using the passcode 59045211. The Company will also be using slides to illustrate its third quarter results and operational progress. The slides and live video 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 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 77729383. An archived video 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 panel and remediation expenses.

�

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 from the third quarter of 2014, Spain distribution transition expenses, and FDA panel and remediation expenses because these are non-recurring expenses and their inclusion may mask underlying trends in our business performance. Expenses associated with the consolidation of the Company’s manufacturing operations to the U.S. were largely completed by the end of the second quarter 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 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.) or commercialization of new products; the nature, timing and likelihood of resolving issues cited in the FDA’s Warning Letter; future economic conditions or size of market opportunities; expected costs of quality system remediation efforts; 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,” and also in the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 2014, under the caption “Risk Factors,” both of 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, negative media coverage in different regions regarding refractive procedures, 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
�	Brian Moore, 310-770-0389	Nicole Kruse, 212-850-6025
�	Doug Sherk, 415-652-9100	�

��

�

STAAR Surgical Company

Condensed Consolidated Balance Sheets

(in 000's)

Unaudited

�

�	�	October 3,		�	�	January 3,		�
ASSETS	�	2014		�	�	2014		�
�	�	�		�	�	�		�
Current assets:	�	�	�	�	�	�	�	�
Cash and cash equivalents	�	$	18,359	�	�	$	22,954	�
Accounts receivable trade, net	�	�	11,666	�	�	�	10,731	�
Inventories, net	�	�	15,731	�	�	�	12,514	�
Prepaids, deposits, and other current assets	�	�	3,293	�	�	�	3,503	�
Deferred income taxes	�	�	361	�	�	�	373	�
Total current assets	�	�	49,410	�	�	�	50,075	�
Property, plant, and equipment, net	�	�	9,339	�	�	�	7,405	�
Intangible assets, net	�	�	1,033	�	�	�	1,380	�
Goodwill	�	�	1,786	�	�	�	1,786	�
Deferred income taxes	�	�	586	�	�	�	626	�
Other assets	�	�	640	�	�	�	659	�
Total assets	�	$	62,794	�	�	$	61,931	�
�	�	�	�	�	�	�	�	�
LIABILITIES AND STOCKHOLDERS' EQUITY	�	�	�	�	�	�	�	�
Current liabilities:	�	�	�	�	�	�	�	�
Line of credit	�	$	4,600	�	�	$	4,750	�
Accounts payable	�	�	6,259	�	�	�	6,263	�
Deferred income taxes	�	�	738	�	�	�	739	�
Obligations under capital leases	�	�	419	�	�	�	288	�
Other current liabilities	�	�	4,989	�	�	�	6,372	�
Total current liabilities	�	�	17,005	�	�	�	18,412	�
Obligations under capital leases	�	�	538	�	�	�	141	�
Deferred income taxes	�	�	1,773	�	�	�	1,654	�
Asset retirement obligations	�	�	127	�	�	�	157	�
Pension liability	�	�	2,708	�	�	�	2,715	�
Total liabilities	�	�	22,151	�	�	�	23,079	�
�	�	�	�	�	�	�	�	�
�	�	�	�	�	�	�	�	�
�	�	�	�	�	�	�	�	�
Stockholders' equity:	�	�	�	�	�	�	�	�
Common stock	�	�	384	�	�	�	379	�
Additional paid-in capital	�	�	178,049	�	�	�	170,246	�
Accumulated other comprehensive income	�	�	119	�	�	�	282	�
Accumulated deficit	�	�	(137,909	)	�	�	(132,055	)
Total stockholders' equity	�	�	40,643	�	�	�	38,852	�
Total liabilities and stockholders' equity	�	$	62,794	�	�	$	61,931	�

�

STAAR Surgical Company

Condensed Consolidated Statements of Operations

(In 000's except for per share data)

Unaudited � � � �

�

Three Months Ended

�

Nine Months Ended

�

% of

�

October 3,

�

% of

�

September 27,

�

Fav (Unfav)

�

% of

�

October 3,

�

% of

�

September 27,

�

Fav (Unfav)

�

Sales

�

2014

�

Sales

�

2013

�

Amount

�

Sales

�

2014

�

Sales

�

2013

�

Amount

�

Net sales

�

100.0

�

18,188

�

100.0

�

17,106

�

1,082

�

6.3

�

100.0

�

58,414

�

100.0

�

53,271

�

5,143

�

9.7

�

Cost of sales

�

34.7

�

6,319

�

29.5

�

5,047

�

(1,272

)

�

-25.2

�

32.5

�

18,995

�

29.9

�

15,939

�

(3,056

)

�

-19.2

�

Gross profit

�

65.3

�

11,869

�

70.5

�

12,059

�

(190

)

�

-1.6

�

67.5

�

39,419

�

70.1

�

37,332

�

2,087

�

5.6

�

Selling, general and administrative expenses:

�

General and administrative

�

17.9

�

3,250

�

24.2

�

4,140

�

890

�

21.5

�

23.9

�

13,968

�

22.5

�

12,021

�

(1,947

)

�

-16.2

Marketing and selling

�

38.6

�

7,026

�

32.3

�

5,527

�

(1,499

)

�

-27.1

�

34.6

�

20,189

�

30.9

�

16,471

�

(3,718

)

�

-22.6

Research and development

�

17.2

�

3,137

�

9.8

�

1,684

�

(1,453

)

�

-86.3

�

15.6

�

9,118

�

8.9

�

4,736

�

(4,382

)

�

-92.5

Medical device tax

�

0.1

�

0.3

�

-100.0

�

0.1

�

0.3

�

149

�

-100.0

Selling, general, and administrative expenses

�

73.8

�

13,422

�

66.6

�

11,396

�

(2,026

)

�

-17.8

�

74.2

�

43,371

�

62.6

�

33,377

�

(9,994

)

�

-29.9

Other general and administrative expenses

�

0.0

�

2.9

�

490

�

490

�

100.0

�

0.6

�

334

�

3.8

�

2,004

�

1,670

�

83.3

�

��Total selling, general and administrative expenses

�

73.8

�

13,422

�

69.5

�

11,886

�

(1,536

)

�

-12.9

�

74.8

�

43,705

�

66.4

�

35,381

�

(8,324

)

�

-23.5

�

Operating income (loss)

�

-8.5

�

(1,553

)

�

1.0

�

173

�

(1,726

)

�

—

�

-7.3

�

(4,286

)

�

3.7

�

1,951

�

(6,237

)

�

-319.7

�

Other income (expense):

�

Interest income

�

0.0

�

0.0

�

)

�

-22.2

�

0.0

�

0.0

�

13.0

Interest expense

�

-0.2

�

(35

)

�

-0.2

�

(38

)

�

7.9

�

-0.2

�

(102

)

�

-0.2

�

(134

)

�

23.9

Gain (loss) on foreign currency transactions

�

-3.5

�

(628

)

�

1.3

�

226

�

(854

)

�

-377.9

�

-1.2

�

(696

)

�

-0.1

�

(38

)

�

(658

)

�

—

�

Other income, net

�

0.3

�

0.8

�

130

�

(79

)

�

-60.8

�

0.6

�

338

�

0.7

�

360

�

(22

)

�

-6.1

Total other income (expense), net

�

-3.4

�

(605

)

�

1.9

�

327

�

(932

)

�

-285.0

�

-0.8

�

(434

)

�

0.4

�

211

�

(645

)

�

-305.7

�

Income before provision (benefit) for income taxes

�

-11.9

�

(2,158

)

�

2.9

�

500

�

(2,658

)

�

-531.6

�

-8.1

�

(4,720

)

�

4.1

�

2,162

�

(6,882

)

�

-318.3

�

Provision (benefit) for income taxes

�

3.0

�

548

�

-0.1

�

(25

)

�

(573

)

�

—

�

1.9

�

1,134

�

1.7

�

888

�

(246

)

�

-27.7

�

Net income (loss)

�

-14.9

�

(2,706

)

�

3.0

�

525

�

(3,231

)

�

—

�

-10.0

�

(5,854

)

�

2.4

�

1,274

�

(7,128

)

�

—

�

Net income (loss) per share - basic

�

(0.07

)

�

0.01

�

(0.15

)

�

0.03

�

Net income (loss) per share - diluted

�

(0.07

)

�

0.01

�

(0.15

)

�

0.03

�

Weighted average shares outstanding - basic

�

38,369

�

36,750

�

38,044

�

36,552

�

Weighted average shares outstanding - diluted

�

38,369

�

39,284

�

38,044

�

38,482

�

STAAR Surgical Company

Condensed Consolidated Statements of Cash Flows

(in 000's)

Unaudited

�

�	�	Nine Months Ended						�
�	�	October 3,		�	�	September 27,		�
�	�	2014		�	�	2013		�
Cash flows from operating activities:	�	�	�	�	�	�	�	�
Net income (loss)	�	$	(5,854	)	�	$	1,274	�
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	�	�	�	�	�	�	�	�
Depreciation of property and equipment	�	�	1,520	�	�	�	1,325	�
Amortization of intangibles	�	�	317	�	�	�	334	�
Deferred income taxes	�	�	161	�	�	�	(220	)
Fair value adjustment of warrant	�	�	-	�	�	�	(27	)
Loss on disposal of property and equipment	�	�	-	�	�	�	172	�
Stock-based compensation expense	�	�	4,736	�	�	�	2,924	�
Change in net pension liability	�	�	118	�	�	�	124	�
Accretion of asset retirement obligation	�	�	3	�	�	�	9	�
Other	�	�	-	�	�	�	157	�
Changes in working capital:	�	�	�	�	�	�	�	�
Accounts receivable	�	�	(1,064	)	�	�	(1,423	)
Inventories	�	�	(3,191	)	�	�	(707	)
Prepaids, deposits and other current assets	�	�	207	�	�	�	(614	)
Accounts payable	�	�	(17	)	�	�	(389	)
Other current liabilities	�	�	(1,364	)	�	�	489	�
Net cash (used in) provided by operating activities	�	�	(4,428	)	�	�	3,428	�
�	�	�	�	�	�	�	�	�
Cash flows from investing activities:	�	�	�	�	�	�	�	�
Acquisition of property and equipment	�	�	(2,517	)	�	�	(2,984	)
Disposal of property and equipment	�	�	68	�	�	�	-	�
Net cash used in investing activities	�	�	(2,449	)	�	�	(2,984	)
�	�	�	�	�	�	�	�	�
Cash flows from financing activities:	�	�	�	�	�	�	�	�
Repayment of capital lease obligations	�	�	(372	)	�	�	(675	)
Proceeds from exercise of stock options	�	�	2,793	�	�	�	2,723	�
Net cash provided by financing activities	�	�	2,421	�	�	�	2,048	�
�	�	�	�	�	�	�	�	�
Effect of exchange rate changes on cash and cash equivalents	�	�	(139	)	�	�	(816	)
�	�	�	�	�	�	�	�	�
(Decrease) increase in cash and cash equivalents	�	�	(4,595	)	�	�	1,676	�
Cash and cash equivalents, at beginning of the period	�	�	22,954	�	�	�	21,675	�
Cash and cash equivalents, at end of the period	�	$	18,359	�	�	$	23,351	�

�

STAAR Surgical Company

Global Sales

(in 000's)

Unaudited � �

�

Three Months Ended

�

Nine Months Ended

�

October 3,

�

September 27,

�

% Change

�

October 3,

�

September 27,

�

% Change

�

Geographic Sales

�

2014

�

2013

�

Fav (Unfav)

�

2014

�

2013

�

Fav (Unfav)

�

United States

�

15.8

�

2,875

�

17.5

�

2,993

�

-3.9

�

14.9

�

8,676

�

17.6

�

9,388

�

-7.6

�

Japan

�

26.3

�

4,792

�

23.6

�

4,040

�

18.6

�

24.6

�

14,349

�

25.2

�

13,427

�

6.9

China

�

16.0

�

2,915

�

13.3

�

2,275

�

28.1

�

13.1

�

7,675

�

12.3

�

6,575

�

16.7

Korea

�

6.0

�

1,098

�

11.6

�

1,982

�

-44.6

�

9.7

�

5,671

�

11.0

�

5,851

�

-3.1

Spain

�

6.5

�

1,178

�

5.9

�

1,012

�

16.4

�

7.3

�

4,270

�

6.5

�

3,466

�

23.2

France

�

4.5

�

820

�

3.5

�

595

�

37.8

�

5.1

�

2,956

�

3.2

�

1,722

�

71.7

Other

�

24.9

�

4,510

�

24.6

�

4,209

�

7.2

�

25.4

�

14,817

�

24.1

�

12,842

�

15.4

Total International Sales

�

84.2

�

15,313

�

82.5

�

14,113

�

8.5

�

85.1

�

49,738

�

82.4

�

43,883

�

13.3

�

Total Sales

�

100.0

�

18,188

�

100.0

�

17,106

�

6.3

�

100.0

�

58,414

�

100.0

�

53,271

�

9.7

�

Product Sales

�

Core products

�

ICLs

�

58.5

�

10,640

�

62.7

�

10,725

�

-0.8

�

60.0

�

35,052

�

61.2

�

32,616

�

7.5

IOLs

�

31.7

�

5,763

�

31.1

�

5,322

�

8.3

�

32.2

�

18,804

�

32.9

�

17,533

�

7.3

Total core products

�

90.2

�

16,403

�

93.8

�

16,047

�

2.2

�

92.2

�

53,856

�

94.1

�

50,149

�

7.4

Non-core products

�

Other

�

9.8

�

1,785

�

6.2

�

1,059

�

68.4

�

7.8

�

4,558

�

5.9

�

3,122

�

46.0

Total Sales

�

100.0

�

18,188

�

100.0

�

17,106

�

6.3

�

100.0

�

58,414

�

100.0

�

53,271

�

9.7

��

�

STAAR Surgical Company

Reconciliation of Non-GAAP Financial Measure

(in 000's)

Unaudited �

�

Three Months Ended

�

Nine Months Ended

�

October 3,

�

September 27,

�

October 3,

�

September 27,

�

2014

�

2013

�

2014

�

2013

�

Net income (loss) - (as reported)

�

(2,706

)

�

525

�

(5,854

)

�

1,274

�

Less:

�

Manufacturing consolidation expenses

�

490

�

334

�

2,004

�

Spain distribution transition cost

�

442

�

Foreign currency impact

�

628

�

(226

)

�

696

�

Fair value adjustment of warrants

�

(27

)

Stock-based compensation expense

�

1,553

�

906

�

4,736

�

2,924

�

FDA panel/remediation expense

�

612

�

2,104

�

Net income - (adjusted)

�

1,695

�

2,016

�

6,655

�

Net income (loss) per share, basic - (as reported)

�

(0.07

)

�

0.01

�

(0.15

)

�

0.03

�

Manufacturing consolidation expenses

�

0.01

�

0.01

�

0.05

�

Spain distribution transition cost

�

0.01

�

Foreign currency impact

�

0.02

�

(0.01

)

�

0.02

�

0.00

�

Fair value adjustment of warrants

�

(0.00

)

Stock-based compensation expense

�

0.04

�

0.02

�

0.12

�

0.08

�

FDA panel/remediation expense

�

0.02

�

0.06

�

Net income per share, basic - (adjusted)

�

0.00

�

0.05

�

0.05

�

0.18

�

Net income (loss) per share, diluted - (as reported)

�

(0.07

)

�

0.01

�

(0.15

)

�

0.03

�

Manufacturing consolidation expenses

�

0.01

�

0.01

�

0.05

�

Spain distribution transition cost

�

0.01

�

Foreign currency impact

�

0.02

�

(0.01

)

�

0.02

�

0.00

�

Fair value adjustment of warrants

�

(0.00

)

Stock-based compensation expense

�

0.04

�

0.02

�

0.12

�

0.08

�

FDA panel/remediation expense

�

0.02

�

0.05

�

Net income per share, diluted - (adjusted)

�

0.00

�

0.04

�

0.05

�

0.17

�

Weighted average shares outstanding - Basic

�

38,369

�

36,750

�

38,044

�

36,552

�

Weighted average shares outstanding - Diluted

�

40,169

�

39,284

�

40,348

�

38,482

�

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

�

October 3,

�

Effect of

�

Constant

�

September 27,

�

As Reported

�

Constant Currency

�

2014

�

Currency

�

Currency

�

2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

ICL

�

10,640

�

10,674

�

10,725

�

(85

)

�

-1

�

(51

)

�

IOL

�

5,763

�

228

�

5,991

�

5,322

�

441

�

669

�

Other

�

1,785

�

118

�

1,903

�

1,059

�

726

�

844

�

Total Sales

�

18,188

�

380

�

18,568

�

17,106

�

1,082

�

1,462

�

Nine Months Ended

�

GAAP Sales

�

October 3,

�

Effect of

�

Constant

�

September 27,

�

As Reported

�

Constant Currency

�

2014

�

Currency

�

Currency

�

2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

ICL

�

35,052

�

35,120

�

32,616

�

2,436

�

2,504

�

IOL

�

18,804

�

754

�

19,558

�

17,533

�

1,271

�

2,025

�

Other

�

4,558

�

239

�

4,797

�

3,122

�

1,436

�

1,675

�

Total Sales

�

58,414

�

1,061

�

59,475

�

53,271

�

5,143

�

6,204

�

Exhibit 99.2

�

1 NASDAQ: STAA Q3 2014 Results Investor Presentation October 30, 2014 Version 11

�

Forward - Looking Statements 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 o bje ctives of management for future operations or prospects for achieving such plans; metrics for 2014; statements regarding new or improved products, including but not limite d t o, 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 cited in the FDAs Warning Letter; future economic conditions or size of market opportunities; expected costs of quality system remediation; statements of belief, including as to achieving 2014 growth plans or metrics; expected regulatory activities and approvals, product launches, and a ny statements of assumptions underlying any of the foregoing. Important additional factors that could cause actual results to differ materially from those indicated by such fo rwa rd - looking statements are set forth in the companys Annual Report on Form 10 - K for the year ended January 3, 2014, under the caption Risk Factors, and also in the companys Quart erly Report on Form 10 - Q for the quarter ended July 4, 2014, under the caption Risk Factors, both of which are on file with the Securities and Exchange Commission a nd available in the Investor Information section of the companys 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 r isk s 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 suc h a s the ICL used in non - reimbursed elective procedures; the challenge of managing our foreign subsidiaries; backlog or supply delays as we fully integrate our manufactur ing 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 re quire additional actions before approval (including but not limited to FDA requirements regarding the TICL and/or actions related to the FDA Warning Letter); unexpect ed 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 ma y b e 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 imp rov ed product and procedure; patterns of Visian ICL use that have typically limited our penetration of the refractive procedure market, negative media coverage in different regions regarding refractive procedures, and a general decline in the demand for refractive surgery particularly in the U.S. and the Asia Pacific region, which STAAR believes has r esu lted 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 a re not yet approved for sale in the United States . In addition, to supplement the GAAP numbers, this presentation includes supplemental non - GAAP financial information, which STAAR believes investors will find helpful in understanding its operating performance. Adjusted Net Income excludes the following items that are included in Net Income (L oss) as calculated in accordance with U.S. generally accepted accounting principles (GAAP): manufacturing consolidation expenses, gain or loss on foreign currency tran sactions, Spain distribution transition cost, the fair value adjustment of outstanding warrants issued in 2007, stock - based compensation expenses and FDA Panel/Remediation expenses. A table reconciling the GAAP information to the non - GAAP information is included in our financial release which can be found in our Form 8 - K filed on October 30, 2014 and also available on our website. 2

�

Agenda 2014 Annual Objectives Barry G. Caldwell Chief Executive Officer Q3 & YTD Key Financial Results Steve Brown Chief Financial Officer Operational Updates Barry G. Caldwell Chief Executive Officer 3 Q&A Session Your Questions

�

Key Operating Metrics for 2014 Annual Objectives " Annual Key Operating Metrics established at the beginning of 2014 are Annual Objectives to Which We Report Our Progress Quarterly Revenue Growth of 8% to 10% ICL Revenue Growth of 20% Gross Margin Expansion of 300 bps GAAP Profitable Full Year Successfully Complete Manufacturing Consolidation by Mid - Year 4

�

2014 Annual Objectives Report Q3 Revenue Growth " Q3 Revenue Growth of 6.3% to $18.2M $18.6M in Constant Currency (CC )/+9% " Visian ICL Revenue Declined 1% " 58.5% of t otal sales vs. 62.7% " IOL Revenue Increased 8.3% " 31.7% of total sales vs. 31.1% " Other Product Revenue Increased 68% " 9.8% of total sales vs. 6.2% " YTD Revenue Growth of 10% to $58.4M/12% Growth in CC 5

�

Total ICL Revenue Increased in 8 of 12 Focus Markets 2014 Annual Objectives Report Q3 ICL Growth +19% +2% +24% + 9 % - 15% +18% - 14% +99% +55% Revenue Growth of 12% in ROW Korea & Japan (41%) +27% - 30% - 45%

�

2014 Annual Objectives Report Korean Refractive Market " Negative media coverage of LASIK complications began on a Regional N etwork and Expanded to National Network - MBC " Focus was only on patients with Complications from LASIK " Theme was Patients giving up on their Dreams because of LASIK " Major refractive practices report 50%+ decline in patients and procedures the second half of Q3 " ICL out the door sales from our distributor declined 40% during Q3 " ICL purchases from our distributor declined by 45% in the quarter " In October starting to see some encouraging signs 7

�

2014 Annual Objectives Report New Korean DTC Marketing Program Initiation " The Big Model Strategy Campaign (Lee Bo - young) " Engaged a famous Korean actress who has Visian ICLs " She was about - 8.0 in both eyes, had ICLs for 8 years " Multiple marketing avenues for the Campaign " First ever TV Commercials for the Visian ICL in Korea " Movie Theater Commercials " Bus Wraps " On - line Marketing Activities to Answer Patient Inquiries 8

�

Visian ICL Revenue and Units Increase in 9 of 12 Focus Markets 2014 Annual Objectives Report YTD ICL Growth APAC EMEA NA Total APAC EMEA NA Total Q3 14 Q3 13 Revenue Growth of 8 % APAC +3% EMEA +20% NA (6%) Procedure Growth of 5% APAC +2% EMEA +17% NA (10%)

�

2014 Annual Objectives Report Q3 IOL Revenue Growth " Q3 Sales Were $5.8M, Increase of 8.3%/+13% in CC 7.4% Increase in Japan/+16% in CC, +45% in Europe " IOL Units Increased 13% during the Quarter 14% Unit Increase in Japan, 41% in Europe " KS - IOL Units Increase 58% in Quarter Acrylic Preloaded now 41% of all IOL units Silicone is 47% of IOL units " Lack of Backorders now Allow us to Expand to New Markets KS - IOL Supply for 2015 looks to be Stronger 10

�

Japan Europe U.S. ROW Total Revenue in CC +$669k an Increase of 13% 2014 Annual Objectives Report Q3 IOL Revenue and Unit Growth +7.4% / +16% - 6 % +45% - 1% +13% CC +14% +41% - 8% +9% +13% Japan Europe U.S. ROW Total Q3 14 Q3 13 Revenue Growth of 8.3% Unit Growth of 13%

�

2014 Annual Objectives Report Gross Margin Expansion " Headwinds Continue in Three Areas: " Geographic Mix of IOL Sales " Start up Costs for ICL in U.S. Higher " Increased Sales of Lower Margin IOL Injectors " Steve will cover in More Detail 12

�

2014 Annual Objectives Report GAAP Profitability " Not Profitable in Q3 with Increased Spending " Investment Spending in R&D for V5 and V6a ICLs " Investment Spending in Sales and Marketing for Launch of TICL " Expense of ESCRS meeting, $1.2M, in Q3 versus $750k cost in Q4 PY " Higher Expenses for Remediation Efforts around the Warning Letter " Other Income Line N egative Swing of $900k " Target to make a profit in Q4 " Will not be Profitable for the F ull Year 13

�

2014 Annual Objectives Report Manufacturing Consolidation " All Approved Products being Manufactured in Monrovia " Still working through inventory of some product which was manufactured in Switzerland " Maintaining manufacturing capability in Switzerland which adds some additional facility and overhead costs " Continue to make progress on cost of product in Monrovia though not yet at the yield level and cost level expected 14

�

Q3 Adds to Solid Start of 2 014 Puts and Takes YTD " Revenue Growth currently at Upper Range of Expectations IOL and Other Product Growth Higher than Expected ICL Growth not as High as Expected Impact of Yen a Negative Factor during H2 " ICL Positive Price Variances with New Product Introductions " Continued Gross Margin Headwinds from Higher than Expected IOL and Injector sales " Continuing to Invest in key parts of business to drive expanded future growth 15

�

Q3 Key Financial Results Topics to Discuss " GAAP and non - GAAP P&L " Gross Margin Expansion Challenges " Operating Expenses " Below Operating Income line Tax Provisions Other Income 16

�

Q3 Key Financial Results 17 Q3 2014 Q3 2013 Change Revenue $18,188 $17,106 +$1,082/+6% Gross Profit $11,869 $12,059 $(190)/(1.6%) Gross Profit Margin 65.3% 70.5% (520bps) Operating Expenses $13,422 $11,886 +$1,536/+13% Other Income (Loss) $( 605) $ 327 $( 932) Income (Loss) Before Taxes $(2,158) $ 500 $(2,658) Income Taxes $ 548 $( 25) $( 573) Net Income (Loss) $ ( 2,706) $ 525 $(3,231) Net Inc. (Lost) per Diluted Share $(0.07) $0.01 $(0.08) 2014 GAAP ($ 000s except per share )

�

Q3 Key Financial Results 2014 Non - GAAP Measures ($ 000s except per share ) 18 Measure Q3 2014 Q3 2013 GAAP Net Income (Loss) $(2,706) $525 Mfg. Consolidation Expenses ---- $490 Spain Distribution Transition Cost ---- ---- Foreign Currency Impact $628 $(226) Adjustment of Warrant Value ---- ----- Stock - based Compensation Expense $1,553 $905 FDA Panel/Remediation Expenses $ 612 ---- Adjusted Net Income (Loss) $ 87 $1,694 Adjusted Net Income (Loss) Per Share $0.00 $0.04

�

YTD Key Financial Results 19 YTD Q3 2014 YTD Q3 2013 Change Revenue $58,414 $53,271 +$5,143/+10% Gross Profit $39,419 $37,332 +$2,087/+6% Gross Profit Margin 67.5% 70.1% (260bps) Operating Expenses $43,705 $35,381 +$8,324/+23.5% Other Income (Loss) $( 434) $ 211 $( 645) Income (Loss) Before Taxes $(4,720) $ 2,162 $(6,882) Income Taxes $ 1,134 $ 888 $( 246) Net Income (Loss) $ ( 5,854) $ 1,274 $(7,128) Net Inc. (Loss) per Diluted Share $(0.15) $0.03 $(0.18) 2014 GAAP ($ 000s except per share )

�

YTD Key Financial Results 2014 Non - GAAP Measures ($000s except per share ) 20 Measure YTD Q3 2014 YTD Q3 2013 GAAP Net Income (Loss) $(5,854) $1,274 Mfg. Consolidation Expenses $334 $2,004 Spain Distribution Transition Cost ---- $442 Foreign Currency Impact $696 $ 38 Adjustment of Warrant Value ---- $ (27) Stock - based Compensation Expense $4,736 $2,924 FDA Panel/Remediation Expenses $2,104 ---- Adjusted Net Income (Loss) $2,016 $6,655 Adjusted Net Income (Loss) Per Share $0.05 $0.17

�

Gross Margin Expansion Opportunities and Headwinds YTD 21

�

Operating Expenses Q3 Expenses " R&D Increased by $1.5M " Key Project Costs on V5 and V6a ICL new products " Remediation actions relating to the Warning Letter " Sales and Marketing Increased by $1.5M " $1.2M Expense of ESCRS in Q3 vs. Q4 of PY at $750k " Some of Increase Related to Anticipated Launch of TICL in U.S . " G&A Declined by $900k " Reversal of Bonus Plan Pool as Profit Target missed " Benefit of no manufacturing consolidation charges, $500k in Q3 2013 22

�

Below Operating Income Line Other Income and Tax Provisions During the Quarter " Other Income Line " Recorded as $(605k) vs. $327k, Impact of $(932k) in quarter " Primarily driven by foreign currency transactions $(854k) " Tax Provisions " Provision of $548k vs. $(25k), Impact of $(573k) in quarter " Primarily driven by profit driven outside the U.S. 23

�

Operational Updates Opportunities and Challenges H2 " Warning Letter Remediation Actions " Regulatory Approval Process Updates " CentraFLOW ICL in China " TICL in U.S. " V6a ICL in Europe " Clinical Updates on ICL with CentraFLOW 24

�

2/10 Insp 3/21 483 Issued 4/11 Initial Response to 483 5/12 1 st Monthly Update 5/27 WL Received 6/13 2 nd Update, 483 & WL Data 7/18 3 rd Update + 483 & WL Data 8/14 4 th Monthly Update 9/12 5 th Monthly Update 10/14 6 th Monthly Update GMP Warning Letter Updates Working Diligently to Resolve " A Total of Eight Responses to the Agency with Data Initial Response Plus Six Proactive Monthly Progress Reports Proactive Reporting has included Remediation Action Items " October 15 response on current MICL process in U.S. " Four Key Categories Under Review Design Control Documents Validation of Software for On - Line Calculator Data Collection and Trending on ICL Vault Complaints Shelf Life Data on the ICL Product 25

�

Regulatory Process CentraFLOW ICL in China 26 " Successful May 15 th Expert Panel Meeting in China " September 24 th Technical Recommendation of Approval from CMDE Both ICL and TICL " Learned of Marketing Approval from CFDA on October 29 th " Final Step is the Approval Certification Necessary to ship product This is normally within a 10 working day period " Additional Surgeon Training in China during November " China is the Largest Refractive market in the world Today ICL only about 2% of refractive surgeries

�

Regulatory Process Toric ICL in U.S. 27 " September 3 rd received questions from the FDA on the TICL Calculator System Response was required by October 3 rd " The Calculator Software was updated, verified and validated during September " Submitted our Response to the Agency on September 25 th " Waiting to Hear Next Steps from the Agency

�

Regulatory Process V6a ICL in Europe 28 " V6a designed to bring new optic to the ICL which would provide near vision capability for one who is approaching presbyopia " Could delay the need for reading glasses for several years " Optical bench results have been very good using a concept known as EDOF (Extended Depth of Focus) " Dr. Robert Ang will conduct a Confirmatory Study in the coming months with implants of the new design " Believe we could gain CE Mark Approval during 2015 Potential market over 3 billion eyes

�

29 Operational Updates ESCRS & AAO Clinical Data on CentraFLOW ICL " Very interesting clinical data presented " Dr. Alfonso data from Spain Zero Cataracts in over 1,000 ICLs with CentraFLOW Two years out " Dr. Mertens data from Belgium Zero cataracts in nearly 1,000 ICLs with CentraFLOW Three years out Visian ICL with CentraFLOW not yet approved in the U.S.

�

Upcoming Investor Meetings " November 11 - 12 at Stephens Healthcare Conference in New York City " November 20 - 21 at Canaccord Genuity Conference in New York City " December 2 - 3 at Piper Jaffray Healthcare Conference in New York City " We Expect to Report our Q4/FY Results on February 25, 2015 30

�

" Continued Adoption of ICL with CentraFLOW technology Should begin shipping product to China during Q4 I nteresting Clinical results seen in First T hree Y ears " We are committed to enhancement of our Quality System and investing significant resources to improve " Continue to Dialogue with the Agency on TICL in the U.S. " On - going progress of V6a ICL including the Confirmatory Study " Increased Supply of Preloaded Acrylic IOLs should enhance growth rate " Working with distributor on DTC Campaign to address Korean media focus on LASIK complications with new ICL Messaging 31 Upcoming STAAR Catalysts Q4 and 2015 Growth Roadmap

�

Thank You YOUR QUESTIONS PLEASE 32

�

33 NASDAQ: STAA Q3 2014 Results Investor Presentation October 30, 2014

�

StreetInsider

Log in to your account:

Form 8-K STAAR SURGICAL CO For: Oct 30

Categories

Next Articles