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STAAR Surgical Company's CEO Announces Plans to Transform Business and Enactment of 'Best Practices' Corporate Governance at Annual Meeting

  • 2001-05-25
  • Press release

MONROVIA, Calif., May 25 /PRNewswire/ -- STAAR Surgical Company (Nasdaq: STAA) Chief Executive Officer, President and Chairman David Bailey told shareholders he was disappointed that the former management team has allowed a sustained cash outflow to continue so long and pledged to transform the Company into a profitable operating concern. Bailey also promised shareholders a strong corporate governance policy. Shareholders elected to pass the four items on the proxy statement.

Text of Bailey's speech follows:

"Having been with STAAR for nearly six months I have had the opportunity to review and come to a clear understanding of the company and its particular issues. This review confirms my initial impression of a business that has deep seated problems and that needs radical change to drive shareholder value.

"In summary, the company has failed to successfully commercialize its exciting leading edge technologies in a timely manner. As a result, most of STAAR's revenues are still being derived from a shrinking mature market segment. This is the backdrop to the less than satisfactory financial performance in year 2000 and the reduced estimates for 2001. I was pleased to report that the first quarter's performance was in line with revised estimates. The chief concern we have with our performance, however, continues to be the failure to drive new markets at a pace that compensates for the decline in the core silicone business and the associated cash outflows.

"Since joining the company, I have placed a major emphasis on corporate governance issues with a commitment to make changes as and when appropriate. On behalf of the new management, I pledge to you, the shareholders, renewed emphasis in all areas of corporate governance. As you are all aware, much of the pending litigation against the STAAR focuses on transactions between our Company and its officers. Without addressing the merits of any particular litigation, let me assure you of the board's intention to run an open, transparent and ethical business that works to the benefit of all shareholders. Although we will manage outstanding litigation to best effect, it is our position that this company will not reward any past activities, which were taken without the best interest of the company in mind. Explicitly, we will not seek out of court settlements where we believe that either corporate ethics or shareholder interests have not been fully considered.

"Clearly, we must take strong and rapid action to address all of these issues. I am pleased to confirm that we are now in the final stages of a root and branch operational review that will be presented to the board in June. This review will form the backdrop to a significant changes that we will be making to the operations of the company. The goal will be to transform our business so that it generates sustained increases in shareholder value.

The results of the review will be taken up in three distinct initiatives.

First, we will seek to leverage STAAR's reputation for innovation by organizing our global marketing efforts and partnerships to drive R&D to deliver to the marketplace, effective commercialized surgical products that address emerging treatment needs.

Second, we will establish "Best Practices" corporate governance. Much has already been addressed in this area, but much more remains to be done. Never again will we enter into employment relationships with officers of our Company where they have the opportunity to establish an independent parallel business venture that can detract from their work at STAAR. We will not allow directors or officers of the Company to take out loans to purchase Company stock under extended or disadvantageous terms to the Company. We will virgorously pursue the full repayment of everything outstanding against loans.

At this meeting today we are improving corporate governance and the protection of shareholders interests by approving the appointment of two outside directors to the board. I would like to thank shareholders for electing David Morrison and John Gilbert to the board. In addition, it is my desire to relinquish my role as chairman and to have the board appoint an outside director as chairman to ensure that there is a proper and independent review of executive management's actions.

"Finally but, perhaps most urgent, we must take near term action to improve our operational effectiveness. I am disappointed that the former management team has allowed a sustained cash outflow to continue for so long. This is unacceptable. The thrust over the next 16 weeks will be to drive the Company's day-to-day operations cash positive and to re-evaluate our funding to ensure we secure access to the partnerships and financial resources that a dynamic technology driven business requires.

"I know that many of you are concerned about some of our ongoing litigation, in particular the Canon STAAR litigation. Although no general settlement has been agreed, and may never be agreed, I am pleased to report that we have had a number of productive meetings with Canon STAAR in both Japan and California and that marked improvement in relations has occurred. This has culminated in an agreement that, subject to formalities, the joint venture will distribute dividends for 1999 and 2000 in the near future. We see this as a positive step and will continue to attempt to resolve our overall differences in the best interest of the shareholders.

"Our Company has been in turmoil over the last 18 months. There is more pain to come as we move to take the actions required to bring STAAR to its rightful position in the market place. I intend to make a detailed announcement on the strategy that will deliver this goal in early July 2001. My review team has set the goal of executing the changes during fiscal 2001 to drive real and sustainable benefits to shareholder value during 2002.

"We are all grateful for your thoughtful and ongoing support through this challenging and rapid transition."

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on the current expectations, assumptions, estimates and projections about our business and out industry. Words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may," and other similar expressions identify characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward- looking statements. Factors that might cause such a difference include, but are not limited to, the following: whether or not our newer products are accepted by the marketplace and the pace of any such acceptance, our ability to obtain regulatory approvals, changes in government regulations relating to reimbursement practices, pricing policies resulting from decisions made by health care organizations or policies set by various government agencies, improvements in the technologies of our competitors, changing economic conditions, fluctuations in foreign currency exchange rates, political unrest and changing economic conditions in our markets abroad, and other factors, some of which will be outside our control. You are cautioned not to place undue reliance on these forward-looking statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

For additional information, about STAAR Surgical, visit the Company's web site at or . You may wish to contact David Bailey, President, STAAR Surgical, or John Santos, Chief Financial Officer, STAAR Surgical, at (626) 303-7902. To contact Bill Roberts, President, CTC, Inc., or Ellen Geron, CTC Inc., please call (937) 434-2700.

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SOURCE STAAR Surgical Company

CONTACT: David Bailey, President, or John Santos, Chief Financial Officer of STAAR Surgical, 626-303-7902; or Bill Roberts, President, or Ellen Geron, both of CTC Inc., 937-434-2700/