MOUNTAIN VIEW, Calif., March 10 /PRNewswire-FirstCall/ -- IRIDEX Corporation (Nasdaq: IRIX) today reported its financial results for the fourth quarter and full fiscal year ended January 3, 2009.

Revenues for the fourth quarter of 2008 were $12.1 million, a 14.1% decrease from the $14.1 million reported for the fourth quarter of 2007. The company's net loss was $6.5 million or $0.74 per diluted share for the fourth quarter of 2008 compared with a loss of $15.8 million or a loss of $1.82 per diluted share in the fourth quarter of 2007. The fourth quarter results for 2008 and 2007 include an impairment charge of $5.4 million and $14.7 million, respectively, for write down of goodwill and intangible assets acquired from the AMS/Laserscope aesthetics acquisition which occurred in January 2007 and represents $0.61 and $1.69 per diluted share, respectively.

Revenues for the fiscal year ended January 3, 2009 were $48.5 million, compared with $55.5 million reported for 2007, a 12.6% decrease. Ophthalmology sales remained constant, the decrease in total revenues for fiscal 2008 was primarily attributable to a reduction in aesthetics sales resulting from the global contraction of the aesthetics market. The company's net loss, excluding the impact for the write down of goodwill and intangibles was $2.0 million or $0.23 per diluted share for the 2008 fiscal year compared with a net loss of $7.6 million or $0.91 per diluted share in 2007. Including the write down of goodwill and intangibles, the results were a net loss of $7.4 million or $0.84 per diluted share for 2008 compared with a net loss of $22.3 million and $2.69 per share for 2007.

Mr. Theodore A. Boutacoff, President and CEO stated, '2008 presented us with a number of challenges. At the beginning of the year we set our goals to become cash flow positive, pay the $6.3 million we owed American Medical Systems Inc. (AMS), renegotiate our bank debt, and return the company to financial stability. These tasks were made more challenging by the effects of the global recession. We executed well and we achieved our objectives: in the first quarter of 2008 we renegotiated our bank debt, in the third quarter of 2008 we made our final payment to AMS and in the fourth quarter of 2008 we generated $2.3 million in cash from operations. Excluding payments to AMS, we generated a total of $6.2 million in cash during 2008. We exited 2008 having established financial stability and we are now better positioned to navigate the current recession.

'Going forward, our primary financial focus will remain cash management, we will closely monitor our revenues and manage our expenses accordingly; and we expect a 5-10% improvement in gross margins as a result of us working through a number of issues that were negatively impacting our margins in 2008. Our dominant market focus will be our Ophthalmology business which we see as our core competency and where we believe we can achieve long term sustainable growth. Furthermore, our Ophthalmology business has historically been less impacted during recessionary times due to demand for Ophthalmology treatments being non-elective and reimbursable by insurance and because a significant portion of our Ophthalmology business comes from recurring revenues, consisting of disposable products and service. These recurring revenues for 2008 totaled 53% of our Ophthalmology sales. Including Aesthetics service revenue, total recurring revenues represented 50% of total company revenues.'

Gross margin for the fourth quarter of 2008 was 37.5% compared with 44.6%, for the fourth quarter of 2007. Gross margin for the full year 2008 represented 40.6% of revenues, compared with 43.7% for 2007. Gross margins for the fourth quarter of 2008 and for the full year 2008 were negatively impacted by: amortization of intangible assets; expensing of previously capitalized manufacturing overhead costs as a consequence of reducing inventory levels during 2008; and increases in inventory reserves, primarily relating to aesthetics inventory. The aggregate impact of these items for the fourth quarter of 2008 was to reduce gross margin by 11.6% and for the full year 2008 by 8.3%.

Excluding the impairment charge for the write down of goodwill and intangible assets, operating expenses for the fourth quarter 2008 were $5.5 million compared with $7.3 million for 2007.