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STAAR Surgical Reports Second Quarter Results

  • 2001-08-09
  • Press release

MONROVIA, Calif., Aug. 9 /PRNewswire/ -- STAAR Surgical Company (Nasdaq: STAA) today reported results for its second quarter ended June 29, 2001, with revenues of $12.9 million, compared to revenues of $12.8 million for the second quarter last year and $13.0 million in the first quarter of 2001.

The Company reported a net loss for the quarter of $227,000, or $0.01 per basic and diluted share, excluding a $2.0 million charge for excess and obsolete inventory and a $3.6 million charge for failed products. Including the $5.6 million charge the Company had a net loss of $4.2 million, or $0.25 loss per basic and diluted share. For the second quarter 2000 the Company reported a net loss of $330,000, or $0.02 per basic and diluted share, excluding a $24 million charge. After the charge there was an $18.5 million net loss, or $1.25 loss per basic and diluted share. In the first quarter, STAAR, reported a net loss of $230,000 or a loss of $0.01 per basic and diluted share.

Revenues for the first half of 2001 were $25.9 million, compared to $27.0 million for the first six months of 2000. There was a net loss for the first half of $522,000, or $0.03 per diluted and basic share, excluding the previously mentioned charges. After the charge the net loss was $4.4 million or $0.26 loss per basic and diluted share. For 2000, the Company report a net loss of $66,000, or $0.00 per basic and diluted share for the first half, excluding the $24 million charge. After the charge there was a net loss of $18.3 million or a loss of $1.23 per basic and diluted share.

Two separate charges were taken in the second quarter accounting for $5.6 million. The first charge for $2.0 million was for excess and obsolete inventory, which was found as a result of a product review and assessment management conducted during the root and branch review of the business. A $3.6 million charge was taken to cover costs of failed products found during the recalls of the three-piece Collamer IOL and the Silicone IOL. The Company does not expect to incur additional costs from the recalled lenses. However, sales of the three-piece Collamer lens will be lower than the Company estimated as a result of the recall which has removed the lens from the market.

David Bailey, President and Chief Executive Officer said, "We told shareholders in our August 1, 2001 announcement of a new corporate strategy and that it was necessary to record these charges to address issues found during our 'root and branch' review. We don't expect additional costs to be incurred. Moreover, we have taken the corrective steps necessary to ensure such operating issues in our businesses do not reoccur."

Revenues were at $12.9 million, down slightly from market expectations. Bailey commented, "We realized the lower than expected revenues in the quarter for three reasons. First, the recall of our three-piece Collamer lens in the quarter took the lens off the market. Second, we incurred lower than expected sales of our SonicWAVE(TM) Phaco machine. Third, the approval of our Aqua- Flow glaucoma device by the U.S. Food and Drug Administration took longer than we had expected. We believe these events will impact third quarter revenues and possibly fourth quarter revenues. We are addressing the revenue issue aggressively to overcome the shortfall through several opportunities. One example is that sales for the Silicone IOL in the quarter were slightly ahead of where we expected."

"Cost of sales as a percentage of revenues increased in the quarter due to higher unit costs of the Silicone IOL lens as the Company reduces production of the lens to bring it in line with demand," said Bailey. "We expect higher cost of sales throughout 2001 as we continue to lower inventories to better manage assets. According to our plan, we are consolidating and changing our silicone production to make them more efficient and should see significant reductions in unit costs of the Silicone lens starting in the first quarter of 2002."

Bailey confirmed, "Our cash-flow projections remains on target. The Company achieved a great deal in this area in the second quarter with negative cash flow cut by nearly 60 percent, from $2.6 million in the first quarter to $1.1 million in the second quarter. We are well positioned as we implement our strategic plan aligning the Company's capacity to market demands to drive cash flow positive from the third quarter going forward."

During the quarter, Wells Fargo Bank extended the Company's line of credit for up to $7 million. The Company has shared its business strategy and related changes to the operations with the bank, which is currently exploring alternative financing arrangements to be presented to the Company within the next 45 to 60 days.

"The second quarter reflects where the Company is today, and gives clear indications that we are making progress in many areas. Unfortunately we have some issues to work through that we will aggressively attack over the next two quarters. But as we start executing our plan, I am optimistic that STAAR Surgical Company has a bright and strong future going forward," Bailey concluded.

Founded in 1982, STAAR Surgical Company develops, manufactures and globally distributes medical devices for use in refractive, cataract and glaucoma surgery. The Company's five product lines include silicone and Collamer(TM) foldable intraocular lenses and the Sonic WAVE(TM) phacoemulsification system, all of which are used during cataract surgery, the ICL(TM) (implantable contact lens) which is a refractive lens for the treatment of near- and far-sightedness and the AquaFlow(TM) Collagen Glaucoma Drainage Device. Regulatory approvals vary from market to market with all products except the Toric ICL(TM) and the 3-piece Collamer(TM) IOL available in Europe and all except the ICL(TM) in the United States.

Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements involve risks and uncertainties that may cause the Company's actual results to be materially different.

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 Wayne Buckhout, CTC Inc., please call (937) 434-2700

STAAR Surgical Company

Condensed Consolidated Statements of Income

(In 000's except for per share data)

                                        Three Months Ended  Six Months Ended
                                        June 29,  June 30,  June 29,  June 30,
                                           2001      2000     2001      2000

      Sales                              $12,780   $12,790  $25,684   $26,870
      Royalties                              110        58      208       116
         Total Revenues                   12,890    12,848   25,892    26,986

         Total Cost of Goods Sold         11,025    10,130   16,205    15,610

    Gross Profit                           1,865     2,718    9,687    11,376

      General and Administrative           2,355     2,788    4,614     5,126
      Marketing and Selling                5,587     5,791   10,679    10,662
      Research and Development               937     1,124    1,754     2,234
      Restructuring                            0    13,776        0    13,776

         Total Selling, General and
          Administrative Expenses:         8,879    23,479   17,047    31,798

    Operating Loss                        (7,014)  (20,761)  (7,360)  (20,422)

    Total other expense                      (53)   (4,152)    (158)   (4,027)

    Loss before income taxes              (7,067)  (24,913)  (7,518)  (24,449)

    Income tax benefit                    (2,915)   (6,409)  (3,181)   (6,251)

    Minority interest                         25        10       69        53

    Net loss                             ($4,177) ($18,514) ($4,406) ($18,251)

    Net loss excluding impact of non-
     recurring charges                     ($227)    ($330)   ($522)     ($66)

    Net loss per share

      Basic and diluted                   ($0.25)   ($1.25)  ($0.26)   ($1.23)

      Basic and diluted, excluding
       impact of non-recurring charges    ($0.01)   ($0.02)  ($0.03)    $0.00

    Shares for basic and diluted EPS      16,954    14,817   16,953    14,786

STAAR Surgical Company

Condensed Consolidated Balance Sheet

(in 000's)


                                                   June 29,       December 29,
                                                     2001              2001

    Current assets                                 $38,848           $45,474
    Total assets                                    76,107            80,152

    Current liabilities                             21,699            21,171
    Total liabilities                               21,975            21,483
    Stockholders' equity - net                      53,859            58,465
    Total liabilities and equity                   $76,107           $80,152

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SOURCE STAAR Surgical Company

CONTACT: David Bailey, President, or John Santos, Chief Financial Officer of STAAR Surgical, +1-626-303-7902; or Bill Roberts, President, or Wayne Buckhout of CTC Inc., +1-937-434-2700/