MONROVIA, Calif., Oct. 31, 2012 /PRNewswire/ -- STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today reported that sales of its Visian ICL product portfolio in the third quarter ended September 28, 2012 increased 15% to $9.1 million. Total revenue was $15.9 million, up 4% from $15.3 million in the third quarter of 2011. Gross margin of 70.4% was 190 basis points above the 68.5% margin in the third quarter of 2011. The year over year gross margin improvement continues to reflect the increased contribution of Visian ICL sales, margin improvement in ICLs based on increased prices and lower cost of goods for both ICLs and IOLs.
Net loss, calculated in accordance with GAAP, was $90,000, or breakeven on a per diluted share basis, compared with net income of $77,000, also breakeven on a per diluted share basis, in the third quarter of 2011. Adjusted net income (excluding manufacturing consolidation expenses, gain (loss) on foreign currency transactions, fair value adjustment of warrants, and stock-based compensation expense) for the quarter ended September 28, 2012 was $1.3 million, or $0.04 per diluted share versus adjusted net income for the year ago quarter of $1.2 million, or $0.03 per diluted share. Cash and cash equivalents at September 28, 2012 totaled $19.8 million, the largest amount in the history of the Company. This represents an increase of $2.2 million in cash from the end of June despite the increased investment spending in sales and marketing personnel and manufacturing consolidation of $1.7 million during the quarter.
"Visian ICL revenues during the quarter were strong in most of our key focused markets as compared to prior year," said Barry Caldwell, president and CEO. "ICL sales were up double digits in all three of our regions: North America, Asia Pacific and Europe. Our transition to a direct selling model in Spain resulted in a sales increase of 72% year over year. ICL sales in China did show a partial rebound with an increase of 52% during the quarter. Reports continue from the majority of refractive surgeons in China that patients are still asking questions about the safety of refractive surgery due to the negative media focus on the complications of LASIK during the second quarter. We just completed a special training session for ICL users in China which should help drive our rebound during the fourth quarter and into next year. In addition we also saw strong Visian ICL increases in Japan, India, and the U.S. These positive dynamics were partially offset by weak sales in Korea, our largest market. For the first time we saw the demand from our distributor to end-customers less in the quarter than the prior year. Excluding Korea our ICL sales increased by 26% in the rest of the world. We are in the process of hiring a direct employee in Korea to work with our distributor on a day to day basis to help grow our ICL franchise. Additionally, a strategic session with our distributor focused on both the short term and long term ICL growth will take place this weekend in Korea."
"IOL sales declined by 8% from the third quarter of 2011," continued Mr. Caldwell. "We believe this may have been partially driven by a decline in cataract procedures evidenced by the third quarter results and reports of the two largest competitors. The decline in IOL sales was evenly spread throughout all three regions. We did begin shipping the KS-SP, our Single Piece Preloaded Acrylic IOL, for the limited launch late in the quarter. The feedback from customers has been very good which has led our key distributors to increase their forecasts for the product significantly. We will continue to have limited supply during the fourth quarter but should be able to catch up with demand during the first half of next year. We are still awaiting clinical feedback from customers on the new nanoFLEX® Toric IOL. This should be completed during the fourth quarter.
"The third quarter was a solid quarter for the Company despite lower revenue results than expected," concluded Mr. Caldwell. "With the exception of one market, our Visian ICL sales were quite strong and we continue to make progress on getting new IOL products to market which will help return these products to a growth position. While we are making significant investments in our future, we are still generating good cash and have the largest cash position in our history at nearly $20 million. Our investments this year in additional sales and marketing personnel will help increase our growth rates in 2013. Our investments in manufacturing consolidation will help generate continued expansion of our gross margins and provide significant tax benefits starting in 2014."
Recent Visian Implantable Collamer® Lens (ICL) Highlights
Recent Intraocular Lens (IOL) Highlights
Third Quarter Financial Highlights
Second Half 2012 Key Metrics UpdateBelow is an update on the Company's progress against the second half key metrics:
Key Operational Updates
Conference CallThe Company will host a conference call and video webcast today, October 31, 2012 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss the Company's third quarter 2012 financial results and recent corporate developments. The dial-in number for the conference call is 877-941-8609 for domestic participants and 480-629-9692 for international participants.
The Company will also be using slides to illustrate its third quarter 2012 results and operational progress. The slides and live webcast of the call can be accessed from the investor relations section of the STAAR website at www.staar.com.Use of Non-GAAP Financial MeasuresThis press release 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 (Loss)" as calculated in accordance with U.S. generally accepted accounting principles ("GAAP"):
manufacturing consolidation expenses, gain or loss on foreign currency transactions, the fair value adjustment of outstanding warrants issued in 2007, and stock-based compensation expenses.
We believe that "Adjusted Net Income" is useful to investors in gauging the outcome of the key drivers of our business performance: our 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 we have control.
We have excluded manufacturing consolidation expenses because these are non-recurring expenses and their inclusion may mask underlying trends in our business performance.
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 Statement of Financial Accounting Standards ("SFAS") No. 123R. 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 (Loss) calculated in accordance with GAAP.
About STAAR SurgicalSTAAR, which has been dedicated solely to ophthalmic surgery for over 25 years, designs, develops, manufactures and markets implantable lenses for the eye. 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." Over 300,000 Visian ICLs have been implanted to date; to learn more about the ICL go to: www.visianinfo.com. STAAR has approximately 300 full time employees and markets lenses in over 60 countries. Headquartered in Monrovia, CA, it manufactures in the following locations: Nidau, Switzerland; Ichikawa City, Japan; Aliso Viejo, CA; and Monrovia, CA. For more information, please visit the Company's website at www.staar.com or call 626-303-7902.
Collamer® is the registered trademark for STAAR's proprietary biocompatible collagen copolymer lens material.
Safe HarborAll 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 or any other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new products, including but not limited to, expectations for success of the new ICL, KS-SP and nanoFLEX Toric IOL products in the U.S. or international markets or government approval of new products, the outcome of product research or development of future economic conditions or performance, size of market opportunities, expected savings from business consolidation plans and the timetable for those plans; 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 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 as we prepare for our manufacturing facility consolidation; the risk of unfavorable changes in currency exchange rate; the discretion of regulatory agencies to approve or reject new products, or to require additional actions before approval; 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 product and procedure; patterns of Visian ICL use that have typically limited our penetration of the refractive surgery market, and a general decline in the demand for refractive surgery particularly in the U.S. and China, which STAAR believes has resulted from both concerns about the safety and effectiveness of laser procedures and current economic conditions; the impact of the federal presidential elections, or the upcoming "fiscal cliff," in the United States. The Visian Toric ICL and the Visian ICL with CentraFLOW are not yet approved for sale in the United States. STAAR Surgical CompanyCondensed Consolidated Balance Sheets(in 000's)September 28,December 30,20122011Current assets:Cash and cash equivalents$
,582Restricted cash -129Accounts receivable trade, net8,1429,089Inventories, net11,79310,933Prepaids, deposits, and other current assets1,8401,921Total current assets41,52838,654Property, plant, and equipment, net4,6984,222Intangible assets, net2,4582,989Goodwill1,7861,786Deferred income taxes149152Other assets1,2101,203Total assets$
49,006Current liabilities:Line of credit$
2,580Accounts payable3,8184,261Deferred income taxes472472Obligations under capital leases 933597Other current liabilities6,3486,106Total current liabilities14,15114,016Obligations under capital leases 5341,124Deferred income taxes824708Other long-term liabilities723940Pension obligations2,9822,760Total liabilities19,21419,548Stockholders' equity:Common stock363360Additional paid-in capital160,910157,383Accumulated other comprehensive income2,3812,405Accumulated deficit(131,039)(130,690)Total stockholders' equity32,61529,458Total liabilities and stockholders' equity$
STAAR Surgical CompanyCondensed Consolidated Statements of Operations(In 000's except for per share data)Three Months EndedNine Months Ended% ofSeptember 28,% ofSeptember 30,Change% ofSeptember 28,% ofSeptember 30,ChangeSales2012Sales2011Amount%Sales2012Sales2011Amount%Net sales100.0%
9312.0%Cost of sales29.6%
30,9402,1827.1%Selling, general and administrative expenses: General and administrative21.7%
10,985(43)-0.4% Marketing and selling34.7%
13,0982,43818.6% Research and development10.0%
4,2793618.4%Selling, general, and administrative expenses66.4%
28,3622,7569.7% Other general and administrative expenses4.6%
4631,517327.6%Total selling, general and administrative expenses71.0%
28,8254,27314.8%Operating income (loss) -0.6%
2,115(2,091)-98.9%Other income (expense): Interest income0.0%
24(10)-41.7% Interest expense-0.4%
(440)213-48.4% Gain (loss) on foreign currency transactions1.2%
167(158)-94.6% Other income (expense), net0.5%
35825270.4%Total other income (expense), net1.4%
109297272.5%Income before provision for income taxes0.8%
2,224(1,794)-80.7%Provision for income taxes1.4%
985(206)-20.9%Net income (loss)-0.6%
(1,588)-128.2%Net income (loss) per share-basic$
0.04Net income (loss) per share-diluted$
0.03Weighted average shares outstanding - basic36,29235,53936,20635,304Weighted average shares outstanding - diluted36,29236,95336,20636,507STAAR Surgical CompanyCondensed Consolidated Statements of Cash Flows(in 000's)Nine Months EndedSeptember 28,September 30,20122011Cash flows from operating activities:Net income (loss)$
1,239Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation of property and equipment989890Amortization of intangibles525595Deferred income taxes114150Fair value adjustment of warrant(217)(29)Loss (gain) on disposal of property and equipment47(14)Stock-based compensation expense2,3171,330Change in net pension liability187147Other40(70)Changes in working capital:Accounts receivable9101,630Inventories(734)241Prepaids, deposits and other current assets85331Accounts payable(444)(201)Other current liabilities236(829)Net cash provided by operating activities3,7065,410Cash flows from investing activities:Acquisition of property and equipment(1,161)(722)Release of restricted cash129-Proceeds from sale of property and equipment-26Net change in other assets-48Net cash used in investing activities(1,032)(648)Cash flows from financing activities:Repayment of capital lease lines of credit(619)(412)Proceeds from exercise of stock options1,1022,983Net cash provided by financing activities4832,571Effect of exchange rate changes on cash and cash equivalents
1446Increase in cash and cash equivalents3,1717,379Cash and cash equivalents, at beginning of the period16,5829,376Cash and cash equivalents, at end of the period$
16,755STAAR Surgical CompanyGlobal Sales(in 000's)Three Months EndedYear EndedSeptember 28,September 30,%September 28,September 30,%Geographic Sales20122011Change20122011ChangeUnited States
13,870-1.7% Total International Sales
46,3852.0%Product Sales Core productsICLs
20,767-7.6% Total core products
43,8583.8% Non-core productsOther
STAAR Surgical CompanyReconciliation of Non-GAAP Financial MeasureThree Months EndedNine Months EndedSeptember 28,September 30,September 28,September 30,2012201120122011Net income (loss) - (as reported)$
1,239Less: Manufacturing consolidation expenses$
463 Loss (gain) on foreign currency$
(167) Fair value adjustment of warrants$
(29) Stock-based compensation expense$
1,330Net income - (adjusted)$
2,836Net income (loss) per share, basic - (as reported)$
0.04 Manufacturing consolidation expenses$
0.01 Loss (gain) on foreign currency$
(0.00) Fair value adjustment of warrants$
(0.00) Stock-based compensation expense$
0.04Net income per share, basic - (adjusted)$
0.08Net income (loss) per share, diluted - (as reported)$
0.03 Manufacturing consolidation expenses$
0.01 Loss (gain) on foreign currency$
(0.00) Fair value adjustment of warrants$
(0.00) Stock-based compensation expense$
0.04Net income per share, diluted - (adjusted)$
0.08Weighted average shares outstanding - Basic36,292
35,304Weighted average shares outstanding - Diluted36,292
36,507Note: Net income (loss) per share (adjusted), basic and diluted, may not add up due to rounding
EVC GroupJenifer Kirtland, 415-568-9349
Amy Phillips, 412-327-9499Jamar Ismail, 415-568-9348 Douglas Sherk, 415-652-9100
|SOURCE STAAR Surgical Company|
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