Nov. 2, 2009 (PR Newswire) -- MONROVIA, Calif., Nov. 2 /PRNewswire-FirstCall/ -- STAAR Surgical Company (Nasdaq: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today reported that it generated $464,000 in cash from operating activities during the third quarter. The cash generated was the largest amount from operating activities for any quarterly period in the past six years. This achievement was made possible due to continued significant progress in the management of domestic operating expense despite recording over $400,000 in legal expenses during the quarter related to former sales representative litigation, net of approximately $300,000 in estimated insurance recoveries.

Third Quarter Financial Highlights

    --  Cash provided by operating activities was $464,000, compared to cash
used in operating activities of $1.1 million during the third quarter of
2008.  This reflects continuous improvement for the past seven quarters
as shown below:

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (000'S)

Q1 2008   Q2 2008  Q3 2008  Q4 2008  Q1 2009  Q2 2009  Q3 2009
--------  -------  -------  -------  -------  -------  -------
($3,370)  ($2,760) (1,107)   ($991)   ($448)    $286     $464
-------   -------  ------    -----    -----     ----     ----

--  Global sales for the third quarter were $18.1 million, unchanged on a
constant currency basis, as compared to $18.1 million during the third
quarter of 2008.   Global sales for the third quarter of 2009 were
impacted by the Company's decision in late 2008 to de-emphasize sales of
low margin products.  Sales of these lower margin products declined by
15% or $821,000 during the third quarter and represented 26% of total
sales versus 30% in the third quarter of 2008. For the nine months to
date, global sales were $55.5 million, or $56.8 million on a constant
currency basis, as compared to $56.7 million for the first nine months
of 2008.  Sales of the lower margin products declined by 17% or $3.0
million during the nine month period.
--  Gross profit margin was 54.3% versus 57.7% for the third quarter of 2008
due to a 500 basis point decline in international markets.  The decline
primarily resulted from a significant gross margin decline in Japan
which was due to intense price competition during the quarter.  Although
prices were down, volumes in Japan were up 8%.  Gross profit margin was
favorably impacted by improved gross margins in the US due to higher
average selling prices of IOLs and ICLs.  For the nine month period
gross profit margin was 55.6% versus 52.4% in 2008.

--  Total operating expenses declined by 7.4% to $11.0 million from $11.9
million reported for the third quarter of 2008.  Operating expense as a
percentage of total revenue dropped to 60.8% compared to 65.6% reported
for the prior year quarter.  For the nine months to date operating
expenses have declined by 19.3%.

Recent Visian ICL Highlights

--  Global Visian ICL sales grew 5% during the third quarter of 2009 versus
the third quarter of 2008 driven by a 12% increase in Visian Toric
sales. Visian ICL units increased by 15% during the period.  For the
nine months to date Visian ICL sales have increased by 9%, while units
increased by 23%.
--  International Visian ICL sales grew to $3.9 million, which is a 5%
increase compared to the $3.7 million sales reported in the prior year
third quarter.  International Visian ICL units grew 19% from the year
ago period and are up 30% year to date reflecting the increased
underlying demand for the Visian products despite the global economic
downturn.
--  U.S. Visian ICL sales increased by 4% during the third quarter.  Visian
ICL units were up 10% sequentially and down only 1% from the third
quarter of last year. This performance contrasts with the estimated 30%
decline in refractive procedures industry-wide in the U.S. during the
third quarter, and reflects continued growth in Visian ICL market share.
Year to date, U.S. Visian ICL sales have increased by 2% while overall
U.S. refractive procedures have declined by 33%.
--  Following the FDA's resumption of scientific review of STAAR's
application for the Toric Implantable Collamer® Lens (Visian TIC®) for
Myopic/Astigmatic patients, during the 60 day period between mid July
and mid September there have been frequent interactions between the
Company and the FDA.  During this period the Company received and
responded to questions from the FDA. All questions have been answered
and the Company awaits the next communication.

--  Japan's Ministry of Health Labor and Welfare continues to evaluate
STAAR's application for marketing approval of the Visian ICL and the
Visian Toric ICL.  The Ministry has separated the consideration of the
two products and requested additional clinical data on the Toric ICL,
which was provided in September.  The injector system for the Visian ICL
has been approved and the Company has been responding to questions
regarding data and labeling related issues.

Recent Intraocular Lens (IOL) Highlights

--  Global IOL sales were up 7.5% to $8.2 million versus $7.6 million in the
prior year third quarter driven by increased sales in international
markets.
--  International IOL sales were $6.2 million versus $5.4 million in the
prior year third quarter primarily driven by a 16% increase in Japan.
Growth was also seen in Europe with the recent release of the KS-X
Preloaded Hydrophobic Acrylic IOL.
--  U.S. IOL sales were $2.0 million in the third quarter of 2009 compared
to $2.2 million in the third quarter of 2008.   Demand was high for the
new nanoFLEX Collamer Single Piece Aspheric IOL reflected by increased
consignments to new customers.
--  On October 24, the Collamer Accommodating Study Team (CAST), which
formed in late 2008, reported preliminary assessments reported
surpassing 300 patient eye implants with the nanoFLEX Collamer Aspheric
Single Piece IOL. The data presented provided compelling near vision
results when compared with leading standard IOLs.  In addition, the data
provided encouraging near vision results when compared with premium IOLs
and superior intermediate vision results when compared to all IOLs.
Meanwhile, the Company's product development team is engineering some
minor design changes for the nanoFLEX for the purpose of moving to the
second phase of the CAST project.  Members will evaluate these design
changes to determine if improvements upon current accommodation
assessments can be achieved.

--  STAAR is expanding the marketing message on the effectiveness of
nanoFLEX in the standard IOL channel, the largest volume channel of all
IOLs sold today.

"Our third quarter performance illustrates the continued successful execution in several areas of our overall strategy," said Barry G. Caldwell, President and CEO. "While we have focused sales resources on higher margin products, and our top line was flat versus year ago levels as a result, we generated the most cash from operating activities for any quarter since 2003. We remain vigilant about controlling costs and in the quarter reduced operation expenses by $0.9 million. We still have lots of work to do. One area requiring immediate attention is our gross margins in our international markets. Additional focus will be placed in this area as we finish the year and head into 2010."

"Since we released the nanoFLEX Collamer Aspheric IOL combined with the nanoPOINT Injector System with NTIOL pricing status in the second quarter, we've begun to see increased market interest and sales from this strategically important product line. Our sales team will be asking surgeons to compare their results with the nanoFLEX IOL to their current IOL of choice in ten patients by using standard visual measuring tools. Historically, STAAR had up to 10% domestic market share for IOLs and with a superior product we want to begin moving from our current 3% share level back to the position we earned in the past. Each market share point represents approximately $6 million sales, so if we are successful at moving toward our goal, we will be adding high margin revenue from increased IOL sales," added Mr. Caldwell.

Financial Performance for the Third Quarter Ended October 2, 2009

Gross profit for the third quarter was $9.8 million compared with $10.5 million in the comparable quarter of 2008, which was 54.3% and 57.7% of net sales in respective periods. The decline in gross profit and gross profit margin is primarily due to lower average selling prices in Japan due to intense price competition. Gross profit margin also reflects the negative impact of a 43% increase in sales of preloaded IOLs to international distributors, which carry low profit margins and lower ASPs on IOLs in Germany and Japan due to significant price competition. Factors that had a favorable effect on gross profit margin were increased sales of toric ICLs, favorable mix of ICLs and IOLs versus other products, and higher ASPs on ICLs and IOLs in the US. Gross profit for the first nine months of 2009 was $30.8 million, or 55.6% of net sales, compared with $29.7 million, or 52.4% of net sales in the prior year period. Gross profit for the first nine months of 2008 was negatively impacted by a $1.5 million purchase accounting charge associated with the acquisition of STAAR Japan.

Continued improvement in the management of operating expenses during the third quarter resulted in an approximate $0.9 million or 7.4% reduction from the year ago period. General and administrative expenses were unchanged compared to the third quarter of 2008 despite a $700,000 increase in legal fees associated with former sales representative litigation. These costs were partially offset by $300,000 in negotiated insurance reimbursements. Sales and marketing expenses were reduced by $542,000 during the quarter due to reduced salaries, travel, consulting, commissions, and promotional activities in the US. Research and development expenses declined by $348,000 as a result of reduced salaries, regulatory consulting and legal fees, although the investment level is still approximately 11% of all STAAR manufactured product sales. During the first nine months of 2009, the Company reduced its general and administrative, marketing and selling, and research and development expenses by $4.2 million compared with the same period in 2009 despite spending $1.2 million, net of estimated insurance recovery, in legal fees associated with former sales representative litigation.

Net loss for the third quarter ended October 2, 2009 was $2.0 million or $0.06 per share, compared with $2.2 million, or $0.08 per share for the third quarter of 2008. Non-cash charges for the quarter were $1.3 million or $0.04 per share and included depreciation, amortization and stock-based compensation. For the nine months ended October 2, 2009, the net loss was $4.7 million, or $0.15 per share, compared with a net loss of $13.7 million, or $0.47 per share for the first nine months of 2008. During the first nine months of 2009, non-cash charges were $4.2 million or $0.13 per share. Purchase accounting charges associated with the acquisition of STAAR Japan impacting the first nine months of 2008 were $5.3 million or $0.18 per share.

As of October 2, 2009, the Company reported cash, cash equivalents and restricted cash of $13.0 million compared with $5.2 million at the end of 2008 and $6.7 million at the end of the third quarter of 2008. During the second quarter, the Company raised $8.6 million to fund a restricted deposit to secure potential payment of the judgment in the Parallax case subject to our pending appeal.

Conference Call

The Company will host a conference call and webcast on Tuesday, November 3, 2009 at 10:00 a.m. Eastern Time to discuss the Company's third quarter and current corporate developments. The dial-in number for the conference call is 877-941-2927 for domestic participants and 480-629-9725 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 4169709#. 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.