MONROVIA, Calif., Aug. 3 /PRNewswire-FirstCall/ -- STAAR Surgical Company , a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today reported that it generated $286,000 in cash from operating activities during the second quarter. The cash generation marked the first time since the first quarter of 2003 that the company generated cash from operating activities. This milestone was made possible due to improvement in sales mix and the significant progress in the management of operating expenses and working capital. That progress also contributed to the positive EBTIDA reported during the quarter and year to date, which STAAR has not achieved since the first quarter of 2003.
Second Quarter Financial Highlights
Recent Visian ICL Highlights
Recent Intraocular Lens (IOL) Highlights
"The STAAR team has accomplished a major goal with the generation of cash from operating activities as well as EBITDA during the second quarter. These significant milestones, six years in the making, were achieved by the successful execution by the management team of our sales strategy, which is focused on higher margin products, and vigilant control of costs. What's most important now is that we stay on track to generate cash from operating activities in the third and fourth quarters of this year and move to achieve positive net income," commented Barry G. Caldwell, President and CEO.
"While our sales growth year to date has been impacted by our decision to de-emphasize sales of lower margin products, we are optimistic that we will achieve growth in both our Visian ICL and IOL lines for the second half of the year," Mr. Caldwell continued. "The FDA's decision to remove the integrity hold that halted scientific review of our Visian Toric ICL means that review of our PMA supplement has resumed. In addition, we are making progress in the regulatory process towards the approval of the Visian ICL and Visian Toric ICL in Japan. On the IOL front, our newly released nanoFLEX Collamer Aspheric IOL combined with the nanoPOINT Injector System and our newly approved Epiphany injector system for the Three Piece Collamer Aspheric IOL is expected to create growth in the U.S. market during the second half of the year. These developments lead us to a favorable outlook for the second half and 2010 while our continued efforts to reduce costs remain a daily focus at our company. We believe we are on plan to generate cash from operations for the full year, improve overall gross margin, decrease operating expense and move to profitability," added Mr. Caldwell.
Financial Performance for the Second Quarter Ended July 3, 2009
Gross profit for the second quarter was $10.7 million compared with $11.5 million, which was 55.8% of net sales in both periods. Gross profit margin was flat year over year as a result of lower ASPs on IOLs and ICLs and higher unit costs due to decreased manufacturing volume as part of an effort to reduce inventories, offset by the favorable effect of increased volume and mix. Gross profit for the first six months of 2009 was $21.0 million, or 56% of net sales, compared with $19.3 million, or 50% of net sales in the prior year period. Gross profit for the first six months of 2008 was negatively impacted by a $1.5M purchase accounting charge associated with the acquisition of STAAR Japan.
Continued improvement in the management of operating expenses during the second quarter resulted in a $2.2 million dollar reduction or 16% from the year ago period. Sales and marketing expenses were reduced by $1.6 million during the quarter. Research and Development declined by $900,000 as a result of the Center of Excellence project and reduced regulatory consulting fees, although the investment level is still 10.4% of all STAAR manufactured product sales.
Net loss for the second quarter ended July 3, 2009 was $1.1 million or $0.04 per share, compared with $2.5 million, or $0.09 per share for the second quarter of 2008. Non-cash charges for the quarter were $1.4 million or $0.04 per share. For the six months ended July 3, 2009, the net loss was $2.8 million, or $0.09 per share, compared with a net loss of $11.5 million, or $0.39 per share for the first half of 2008. During the first six months of 2009, non-cash charges were $2.9 million or $0.09 per share. Purchase accounting charges associated with the acquisition of STAAR Japan impacting the first six months of 2008 were $5.4 million or $0.18 per share.
On July 3, 2009, the Company reported cash, cash equivalents and restricted cash of $13.1 million compared with $5.2 million at the end of 2008 and $3.7 million at the end of the first quarter of 2009. During the quarter, the Company raised $8.6 million to fund a deposit as a guarantee for the judgment in the Parallax case pending appeal.
Conference Call
The Company will host a conference call and webcast on Monday, August 3, 2009 at 8:30 a.m. Eastern Time to discuss the Company's second quarter and current corporate developments. The dial-in number for the conference call is 877-941-1848 for domestic participants and 480-629-9722 for international participants.
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 4117561#. To access the live webcast of the call, go to STAAR Surgical's website at www.staar.com. An archived webcast will also be available at www.staar.com.
About STAAR Surgical
STAAR Surgical is a leader in the development, manufacture and marketing of minimally invasive ophthalmic products employing proprietary technologies. STAAR's products are used by ophthalmic surgeons and include the Visian ICL, a tiny, flexible lens implanted to correct refractive errors, as well as innovative products designed to improve patient outcomes for cataracts and glaucoma. Manufactured in Switzerland by STAAR, the ICL is approved by the FDA for use in treating myopia, has received CE Marking and is sold in more than 50 countries. Collamer(R) is the brand name for STAAR's proprietary collagen copolymer lens material. More information is available 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: projections of earnings, revenue, sales, cash or any other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; future sale; prospects for approval of the Visian Toric ICL supplemental premarket approval application, or any other future approval by the FDA or other regulatory agencies; 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 our limited capital resources and limited access to financing, the fact that our public accounting firm has expressed doubt about our ability to continue as a going concern in their opinion on our financial statements, the broad discretion of the FDA in approving any medical device and the inherent uncertainty that new devices will be approved, the likelihood of administrative delays, the need in certain future FDA submissions to satisfy additional and potentially costly requirements such as third party audits, the cost of defending pending litigation and satisfying judgment in the event of an adverse ruling, for which we have taken no reserve, the negative effect of the global recession 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 sales of our newly introduced products may not restore profitability to our U.S. IOL product line, our ability to overcome negative publicity resulting from warning letters and other correspondence from the FDA Office of Compliance and to demonstrate to the agency that its past concerns have been resolved, 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 assumes no obligation to update its forward-looking statements to reflect future events or actual outcomes and does not intend to do so.
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 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.
"EBITDA" is defined as earnings before net interest, income taxes, depreciation and amortization. EBITDA is a widely accepted measure of operating profitability because it excludes non-operating expenses and noncash charges that can mask trends in core performance. STAAR's management uses EBITDA to track the company's progress toward profitability and measure its core performance. The Company believes this measure of performance might also be useful to investors for the same reasons. The table below presents EBITDA and reconciles it to net earnings (loss).
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 $1.5 million purchase accounting charge related to inventory purchased in the acquisition of STAAR Japan, Inc. and a $3.8 million charge for the settlement of a pre-existing distribution arrangement in connection with the STAAR Japan, Inc. acquisition. Because the effect of purchase accounting charges can overwhelm the effect of meaningful trends in the Company's business performance, management evaluates its performance excluding these non-recurring items. The Company believes that this non-GAAP measure is also helpful to investors in discerning underlying trends. The table below shows the effects of the excluded non-recurring items.
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.
SOURCE STAAR Surgical Company
CONTACT: Investors, Douglas Sherk, +1-415-896-6820, Michael Pollock,
+1-415-896-5862, or Media, Christopher Gale, +1-646-201-5431, all of EVC
Group for STAAR Surgical Company
Web site: http://www.staar.com/
