Full Press Release Details
STAAR Surgical Reports First Quarter
MONROVIA, CA, April 29, 2015---STAAR Surgical Company
(NASDAQ: STAA), a leading developer, manufacturer and marketer of implantable lenses and delivery systems for the eye, today reported
financial results for the first quarter ended April 3, 2015.
First Quarter Overview
"Our first quarter results clearly indicate the work we
have accomplished in rebuilding our manufacturing efficiency and meeting volume demands," said Caren Mason, President and
CEO. "We exceeded our ICL manufacturing production record during the month of March and reduced our backlog significantly.
The unit growth in our EMEA markets is trending nicely with currency challenge continuing to dampen the dollar impact. We are also
pleased that the CentraFLOW has had such a positive reception in China as the momentum continues to build internationally. The
global opportunity for STAAR's proprietary lenses and work we have initiated to strengthen our foundational business practices
is front and center. We will remain significantly focused on all global regulatory requirements and FDA remediation efforts while
undertaking the systemic changes required including the building of an enhanced Quality System."
Net sales were $18.9 million for the first quarter of 2015,
a decrease of 7% compared to $20.2 million reported in the prior year. Adjusting for the negative effect of changes in foreign
currency, first quarter net sales declined 3% compared to the prior period.
International sales represented 85% of total net sales for the
first quarter. In China, STAAR continued shipping the CentraFLOW product, following final approval for the ICL and TICL with
CentraFLOW in November 2014. In the first quarter 78% of all ICL shipments to China were the CentraFLOW technology.
For the first quarter of 2015, the gross profit margin declined
40 basis points compared to the prior year period to 68.4%, which was also a sequential improvement over the 56.7% gross margin
reported in the fourth quarter of 2014. Compared to the first quarter of 2014, the gross margin benefited from improved average
unit costs and a smaller proportion of lower-margin product sales, offset by the impact of a weaker Euro on average selling prices
and moderately higher inventory reserves and freight and distribution costs as a proportion of sales.
Operating expenses for the quarter declined 5% to $14.4 million
from $15.2 million in the prior year, primarily due to lower general and administrative expense and lower marketing and selling
expense than the prior year period. General and administrative expense was $5.1 million and approximately $280,000 lower than the
prior year due to decreased compensation and tax consulting costs, partially offset by accrued separation costs. Marketing and
selling expense was $5.7 million and approximately $470,000 lower than the prior year due to decreased marketing costs internationally,
stock-based compensation and favorable currency exchange, partially offset by higher ICL and online marketing support and U.S.
commissions. Research and development expense, which includes remediation and other FDA expenses, was relatively flat at $3.6 million
compared to $3.5 million in the prior year period. R&D expense includes $1.4 million of remediation expenses for the first
quarter of 2015 and approximately the same amount in FDA panel expenses for the first quarter of 2014. The Company's full
year 2015 budget contemplates future remediation expenses of approximately $4 million that are expected to be fully funded from
internally generated cash flows.
The net loss for the first quarter of 2015 was $2.3 million
or $0.06 per diluted share, compared with a net loss of $1.4 million or $0.04 per diluted share, for the prior year period.
Adjusted net income for the first quarter of 2015 was $1.1 million
or $0.03 per diluted share, compared with adjusted net income of $1.6 million or $0.04 per diluted share, for the prior year period.
The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.
Cash and cash equivalents at April 3, 2015 totaled $10.8 million.
The Company used $2.2 million in cash during the first quarter of 2015.
The Company will host a conference call and webcast on Wednesday,
April 29 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss its financial results. To access the conference call (Conference ID
26021251), please dial 855-765-5684 for domestic participants and 262-912-6252 for international participants. No passcode is necessary.
The live webcast 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 855-859-2056
for domestic callers and 404-537-3406 for international callers. An archived 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 the Company's 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, gain or loss on foreign currency transactions, 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
Management has excluded manufacturing consolidation 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.
Management has also excluded gains and losses on foreign currency
transactions 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 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.
The Company has provided below a detailed reconciliation table,
which is useful to investors in providing the context to understand STAAR Surgical's 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 500,000 Visian ICLs have been
implanted to date. To learn more about the ICL go to: www.visianinfo.com. STAAR has approximately 300 employees and markets lenses
in over 60 countries. Headquartered in Monrovia, CA, the company operates manufacturing facilities in Aliso Viejo, CA and Monrovia,
CA. For more information, please visit the Company's website at www.staar.com.
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 financial projections;
the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding
new or improved products, including but not limited to, expectations for success of new, existing, or improved products in the