UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SeptemberMarch 29, 20232024
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-11634
STAAR Surgical CompanyCompany
(Exact Name of Registrant as Specified in its Charter)
Delaware | 95-3797439 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
25651 Atlantic Ocean Drive |
92630 |
(Address of Principal Executive Offices) | (Zip Code) |
(626) 303-7902
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common | STAA | NASDAQ |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☑ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ |
| Smaller reporting company | ☐ |
Emerging growth company | ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The registrant has 48,817,47349,131,110 shares of common stock, par value $0.01 per share, issued and outstanding as of October 27, 2023.May 2, 2024.
STAAR SURGICAL COMPANY
INDEX
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| PAGE NUMBER |
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| 1 | ||
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ITEM 1 |
| 1 | |
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 3. |
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ITEM 4. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)
|
| September 29, 2023 |
|
| December 30, 2022 |
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| March 29, 2024 |
|
| December 29, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 127,432 |
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| $ | 86,480 |
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| $ | 224,024 |
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| $ | 183,038 |
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Investments available for sale |
|
| 60,681 |
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|
| 125,159 |
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|
| 21,125 |
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|
| 37,688 |
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Accounts receivable trade, net of allowance for credit losses of |
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| 112,367 |
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| 62,447 |
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Accounts receivable trade, net of allowance for credit losses of |
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| 64,604 |
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| 94,704 |
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Inventories, net |
|
| 31,061 |
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|
| 24,161 |
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|
| 38,581 |
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|
| 35,130 |
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Prepayments, deposits and other current assets |
|
| 15,527 |
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|
| 13,476 |
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|
| 17,381 |
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|
| 14,709 |
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Total current assets |
|
| 347,068 |
|
|
| 311,723 |
|
|
| 365,715 |
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|
| 365,269 |
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Investments available for sale |
|
| 13,627 |
|
|
| 13,902 |
|
|
| 6,963 |
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| 11,703 |
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Property, plant and equipment, net |
|
| 62,886 |
|
|
| 50,921 |
|
|
| 72,337 |
|
|
| 66,835 |
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Finance lease right-of-use assets, net |
|
| 220 |
|
|
| 342 |
|
|
| 146 |
|
|
| 183 |
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Operating lease right-of-use assets, net |
|
| 34,992 |
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|
| 30,270 |
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|
| 34,600 |
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|
| 34,387 |
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Intangible assets, net |
|
| — |
|
|
| 173 |
| ||||||||
Goodwill |
|
| 1,786 |
|
|
| 1,786 |
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|
| 1,786 |
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|
| 1,786 |
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Deferred income taxes |
|
| 8,560 |
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|
| 8,744 |
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|
| 5,125 |
|
|
| 5,190 |
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Other assets |
|
| 2,382 |
|
|
| 957 |
|
|
| 5,863 |
|
|
| 3,339 |
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Total assets |
| $ | 471,521 |
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| $ | 418,818 |
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| $ | 492,535 |
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| $ | 488,692 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 8,786 |
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| $ | 11,576 |
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| $ | 16,560 |
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| $ | 13,557 |
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Obligations under finance leases |
|
| 164 |
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| 169 |
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| 166 |
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| 165 |
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Obligations under operating leases |
|
| 4,003 |
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| 3,524 |
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| 4,403 |
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| 4,202 |
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Allowance for sales returns |
|
| 7,557 |
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| 5,706 |
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| 6,284 |
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|
| 6,174 |
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Other current liabilities |
|
| 36,265 |
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| 30,741 |
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|
| 35,261 |
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|
| 40,938 |
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Total current liabilities |
|
| 56,775 |
|
|
| 51,716 |
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| 62,674 |
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|
| 65,036 |
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Obligations under finance leases |
|
| 84 |
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|
| 210 |
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|
| — |
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|
| 42 |
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Obligations under operating leases |
|
| 31,643 |
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| 27,136 |
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| 31,126 |
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| 31,425 |
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Deferred income taxes |
|
| 1,295 |
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| 1,489 |
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|
| 1,074 |
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|
| 1,077 |
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Asset retirement obligations |
|
| 98 |
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|
| 220 |
|
|
| 96 |
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| 103 |
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Pension liability |
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| 3,031 |
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| 1,935 |
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| 4,777 |
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| 5,055 |
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Total liabilities |
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| 92,926 |
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| 82,706 |
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| 99,747 |
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| 102,738 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, $0.01 par value; 60,000 shares authorized: 48,817 and |
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| 488 |
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| 482 |
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Common stock, $0.01 par value; 60,000 shares authorized: 49,120 and |
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| 491 |
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| 488 |
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Additional paid-in capital |
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| 436,117 |
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| 404,189 |
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| 447,716 |
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| 436,947 |
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Accumulated other comprehensive gain (loss) |
|
| (2,886 | ) |
|
| 156 |
| ||||||||
Accumulated other comprehensive income (loss) |
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| (4,712 | ) |
|
| (4,113 | ) | ||||||||
Accumulated deficit |
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| (55,124 | ) |
|
| (68,715 | ) |
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| (50,707 | ) |
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| (47,368 | ) |
Total stockholders’ equity |
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| 378,595 |
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| 336,112 |
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| 392,788 |
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| 385,954 |
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Total liabilities and stockholders’ equity |
| $ | 471,521 |
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| $ | 418,818 |
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| $ | 492,535 |
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| $ | 488,692 |
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See accompanying notes to the condensed consolidated financial statements.
1
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
| Three Months Ended |
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| Nine Months Ended |
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| Three Months Ended |
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|
| September 29, 2023 |
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| September 30, 2022 |
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| September 29, 2023 |
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| September 30, 2022 |
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| March 29, 2024 |
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| March 31, 2023 |
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Net sales |
| $ | 80,308 |
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| $ | 76,046 |
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| $ | 246,142 |
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| $ | 220,347 |
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| $ | 77,356 |
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| $ | 73,528 |
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Cost of sales |
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| 16,670 |
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| 15,584 |
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| 54,216 |
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| 46,749 |
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| 16,321 |
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| 15,966 |
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Gross profit |
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| 63,638 |
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| 60,462 |
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| 191,926 |
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| 173,598 |
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| 61,035 |
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| 57,562 |
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Selling, general and administrative expenses: |
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General and administrative |
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| 19,266 |
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| 14,011 |
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| 55,461 |
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| 39,934 |
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| 23,228 |
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| 18,098 |
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Selling and marketing |
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| 26,607 |
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| 23,130 |
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| 85,238 |
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| 64,633 |
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| 26,708 |
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| 26,354 |
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Research and development |
|
| 11,470 |
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| 9,616 |
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| 33,535 |
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| 26,193 |
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|
| 13,380 |
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|
| 10,310 |
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Total selling, general and administrative expenses |
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| 57,343 |
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|
| 46,757 |
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|
| 174,234 |
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| 130,760 |
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|
| 63,316 |
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| 54,762 |
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Operating income |
|
| 6,295 |
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|
| 13,705 |
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| 17,692 |
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|
| 42,838 |
| ||||||||
Operating income (loss) |
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| (2,281 | ) |
|
| 2,800 |
| ||||||||||||||||
Other income (expense), net: |
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Interest income, net |
|
| 1,690 |
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|
| 897 |
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|
| 5,287 |
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|
| 934 |
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|
| 1,529 |
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| 1,822 |
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Loss on foreign currency transactions |
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| (1,384 | ) |
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| (2,129 | ) |
|
| (3,240 | ) |
|
| (4,904 | ) | ||||||||
Gain (loss) on foreign currency transactions |
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| (2,297 | ) |
|
| 34 |
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Royalty income |
|
| 74 |
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|
| 77 |
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|
| 74 |
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|
| 527 |
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|
| 508 |
|
|
| — |
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Other income, net |
|
| 71 |
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|
| 27 |
|
|
| 144 |
|
|
| 178 |
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|
| 330 |
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|
| 63 |
|
Total other income (expense), net |
|
| 451 |
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| (1,128 | ) |
|
| 2,265 |
|
|
| (3,265 | ) | ||||||||
Income before income taxes |
|
| 6,746 |
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|
| 12,577 |
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| 19,957 |
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| 39,573 |
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Total other income, net |
|
| 70 |
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|
| 1,919 |
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Income (loss) before income taxes |
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| (2,211 | ) |
|
| 4,719 |
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Provision for income taxes |
|
| 1,929 |
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|
| 2,315 |
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|
| 6,366 |
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|
| 6,671 |
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|
| 1,128 |
|
|
| 2,009 |
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Net income |
| $ | 4,817 |
|
| $ | 10,262 |
|
| $ | 13,591 |
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| $ | 32,902 |
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Net income per share: |
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Net income (loss) |
| $ | (3,339 | ) |
| $ | 2,710 |
| ||||||||||||||||
Net income (loss) per share: |
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Basic |
| $ | 0.10 |
|
| $ | 0.21 |
|
| $ | 0.28 |
|
| $ | 0.69 |
|
| $ | (0.07 | ) |
| $ | 0.06 |
|
Diluted |
| $ | 0.10 |
|
| $ | 0.21 |
|
| $ | 0.27 |
|
| $ | 0.67 |
|
| $ | (0.07 | ) |
| $ | 0.05 |
|
Weighted average shares outstanding: |
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Basic |
|
| 48,613 |
|
|
| 48,102 |
|
|
| 48,426 |
|
|
| 47,915 |
|
|
| 48,907 |
|
|
| 48,247 |
|
Diluted |
|
| 49,370 |
|
|
| 49,549 |
|
|
| 49,494 |
|
|
| 49,371 |
|
|
| 48,907 |
|
|
| 49,500 |
|
See accompanying notes to the condensed consolidated financial statements.
2
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Net income |
| $ | 4,817 |
|
| $ | 10,262 |
|
| $ | 13,591 |
|
| $ | 32,902 |
| ||||||||
Net income (loss) |
| $ | (3,339 | ) |
| $ | 2,710 |
| ||||||||||||||||
Other comprehensive income (loss): |
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Defined benefit plans: |
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Net change in plan assets |
|
| (115 | ) |
|
| 465 |
|
|
| (1,839 | ) |
|
| 7,126 |
|
|
| 232 |
|
|
| (1,177 | ) |
Reclassification into other income (expense), net |
|
| (51 | ) |
|
| 54 |
|
|
| (154 | ) |
|
| 139 |
|
|
| (17 | ) |
|
| (52 | ) |
Investments available for sale: |
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|
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|
|
|
|
|
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|
|
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| ||||||
Change in unrealized gain (loss) |
|
| 149 |
|
|
| (432 | ) |
|
| 123 |
|
|
| (432 | ) |
|
| (36 | ) |
|
| 116 |
|
Reclassification into other income (expense), net |
|
| — |
|
|
| — |
|
|
| (2 | ) |
|
| — |
|
|
| 3 |
|
|
| (2 | ) |
Foreign currency translation gain (loss) |
|
| (494 | ) |
|
| (958 | ) |
|
| (1,965 | ) |
|
| (3,474 | ) | ||||||||
Foreign currency translation loss |
|
| (1,100 | ) |
|
| (129 | ) | ||||||||||||||||
Tax effect |
|
| 146 |
|
|
| 312 |
|
|
| 795 |
|
|
| 379 |
|
|
| 319 |
|
|
| 151 |
|
Other comprehensive income (loss), net of tax |
|
| (365 | ) |
|
| (559 | ) |
|
| (3,042 | ) |
|
| 3,738 |
| ||||||||
Comprehensive income |
| $ | 4,452 |
|
| $ | 9,703 |
|
| $ | 10,549 |
|
| $ | 36,640 |
| ||||||||
Other comprehensive loss, net of tax |
|
| (599 | ) |
|
| (1,093 | ) | ||||||||||||||||
Comprehensive income (loss) |
| $ | (3,938 | ) |
| $ | 1,617 |
|
See accompanying notes to the condensed consolidated financial statements.
3
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
|
| Three Months Ended |
|
| Three Months Ended |
| ||||||||||||||||||||||||||||||||||||||||||
|
| Common |
|
| Common |
|
| Additional |
|
| Accumulated |
|
| Accumulated |
|
| Total |
|
| Common |
|
| Common |
|
| Additional |
|
| Accumulated |
|
| Accumulated |
|
| Total |
| ||||||||||||
Balance, at June 30, 2023 |
|
| 48,499 |
|
| $ | 485 |
|
| $ | 419,594 |
|
| $ | (2,521 | ) |
| $ | (59,941 | ) |
| $ | 357,617 |
| ||||||||||||||||||||||||
Balance, at December 29, 2023 |
|
| 48,839 |
|
| $ | 488 |
|
| $ | 436,947 |
|
| $ | (4,113 | ) |
| $ | (47,368 | ) |
| $ | 385,954 |
| ||||||||||||||||||||||||
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,339 | ) |
|
| (3,339 | ) | ||||||||||||||||||||||||
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (599 | ) |
|
| — |
|
|
| (599 | ) | ||||||||||||||||||||||||
Common stock issued upon exercise of options |
|
| 187 |
|
|
| 2 |
|
|
| 5,322 |
|
|
| — |
|
|
| — |
|
|
| 5,324 |
| ||||||||||||||||||||||||
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 6,676 |
|
|
| — |
|
|
| — |
|
|
| 6,676 |
| ||||||||||||||||||||||||
Repurchase of employee common stock for taxes withheld |
|
| (36 | ) |
|
| — |
|
|
| (1,229 | ) |
|
| — |
|
|
| — |
|
|
| (1,229 | ) | ||||||||||||||||||||||||
Forfeited restricted stock |
|
| (4 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Vested restricted and performance stock units |
|
| 134 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
| ||||||||||||||||||||||||
Balance, at March 29, 2024 |
|
| 49,120 |
|
| $ | 491 |
|
| $ | 447,716 |
|
| $ | (4,712 | ) |
| $ | (50,707 | ) |
| $ | 392,788 |
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Balance, at December 30, 2022 |
|
| 48,212 |
|
| $ | 482 |
|
| $ | 404,189 |
|
| $ | 156 |
|
| $ | (68,715 | ) |
| $ | 336,112 |
| ||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,817 |
|
|
| 4,817 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,710 |
|
|
| 2,710 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (365 | ) |
|
| — |
|
|
| (365 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,093 | ) |
|
| — |
|
|
| (1,093 | ) |
Common stock issued upon exercise of options |
|
| 305 |
|
|
| 3 |
|
|
| 7,255 |
|
|
| — |
|
|
| — |
|
|
| 7,258 |
|
|
| 40 |
|
|
| — |
|
|
| 529 |
|
|
| — |
|
|
| — |
|
|
| 529 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 9,380 |
|
|
| — |
|
|
| — |
|
|
| 9,380 |
|
|
| — |
|
|
| — |
|
|
| 6,434 |
|
|
| — |
|
|
| — |
|
|
| 6,434 |
|
Repurchase of employee common stock for taxes withheld |
|
| (1 | ) |
|
| — |
|
|
| (112 | ) |
|
| — |
|
|
| — |
|
|
| (112 | ) |
|
| (31 | ) |
|
| — |
|
|
| (1,849 | ) |
|
| — |
|
|
| — |
|
|
| (1,849 | ) |
Vested restricted and performance stock |
|
| 14 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Balance, at September 29, 2023 |
|
| 48,817 |
|
| $ | 488 |
|
| $ | 436,117 |
|
| $ | (2,886 | ) |
| $ | (55,124 | ) |
| $ | 378,595 |
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Balance, at July 1, 2022 |
|
| 48,024 |
|
| $ | 480 |
|
| $ | 387,328 |
|
| $ | 249 |
|
| $ | (85,740 | ) |
| $ | 302,317 |
| ||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,262 |
|
|
| 10,262 |
| ||||||||||||||||||||||||
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (559 | ) |
|
| — |
|
|
| (559 | ) | ||||||||||||||||||||||||
Common stock issued upon exercise of options |
|
| 166 |
|
|
| 2 |
|
|
| 5,032 |
|
|
| — |
|
|
| — |
|
|
| 5,034 |
| ||||||||||||||||||||||||
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 6,088 |
|
|
| — |
|
|
| — |
|
|
| 6,088 |
| ||||||||||||||||||||||||
Vested restricted and performance stock |
|
| 12 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Balance, at September 30, 2022 |
|
| 48,202 |
|
| $ | 482 |
|
| $ | 398,448 |
|
| $ | (310 | ) |
| $ | (75,478 | ) |
| $ | 323,142 |
| ||||||||||||||||||||||||
Vested restricted and performance stock units |
|
| 110 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
| ||||||||||||||||||||||||
Balance at March 31, 2023 |
|
| 48,331 |
|
| $ | 483 |
|
| $ | 409,303 |
|
| $ | (937 | ) |
| $ | (66,005 | ) |
| $ | 342,844 |
|
See accompanying notes to the condensed consolidated financial statements.
4
4
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
|
| Nine Months Ended |
| |||||||||||||||||||||
|
| Common |
|
| Common |
|
| Additional |
|
| Accumulated |
|
| Accumulated |
|
| Total |
| ||||||
Balance, at December 30, 2022 |
|
| 48,212 |
|
| $ | 482 |
|
| $ | 404,189 |
|
| $ | 156 |
|
| $ | (68,715 | ) |
| $ | 336,112 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,591 |
|
|
| 13,591 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,042 | ) |
|
| — |
|
|
| (3,042 | ) |
Common stock issued upon exercise of options |
|
| 500 |
|
|
| 5 |
|
|
| 9,259 |
|
|
| — |
|
|
| — |
|
|
| 9,264 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 24,765 |
|
|
| — |
|
|
| — |
|
|
| 24,765 |
|
Repurchase of employee common stock for taxes withheld |
|
| (35 | ) |
|
| — |
|
|
| (2,096 | ) |
|
| — |
|
|
| — |
|
|
| (2,096 | ) |
Unvested restricted stock |
|
| 10 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vested restricted and performance stock |
|
| 130 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Balance, at September 29, 2023 |
|
| 48,817 |
|
| $ | 488 |
|
| $ | 436,117 |
|
| $ | (2,886 | ) |
| $ | (55,124 | ) |
| $ | 378,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, at December 31, 2021 |
|
| 47,716 |
|
| $ | 477 |
|
| $ | 373,519 |
|
| $ | (4,048 | ) |
| $ | (108,380 | ) |
| $ | 261,568 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 32,902 |
|
|
| 32,902 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,738 |
|
|
| — |
|
|
| 3,738 |
|
Common stock issued upon exercise of options |
|
| 417 |
|
|
| 4 |
|
|
| 8,175 |
|
|
| — |
|
|
| — |
|
|
| 8,179 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 16,754 |
|
|
| — |
|
|
| — |
|
|
| 16,754 |
|
Unvested restricted stock |
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vested restricted and performance stock |
|
| 62 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Balance, at September 30, 2022 |
|
| 48,202 |
|
| $ | 482 |
|
| $ | 398,448 |
|
| $ | (310 | ) |
| $ | (75,478 | ) |
| $ | 323,142 |
|
See accompanying notes to the condensed consolidated financial statements.
5
STAAR SURGICAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 13,591 |
|
| $ | 32,902 |
| ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
| ||||||||||
Net income (loss) |
| $ | (3,339 | ) |
| $ | 2,710 |
| ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
| ||||||||||
Depreciation of property, plant, and equipment |
|
| 3,743 |
|
|
| 3,101 |
|
|
| 1,237 |
|
|
| 1,113 |
|
Amortization/Impairment of intangibles |
|
| 169 |
|
|
| 22 |
| ||||||||
Amortization of intangibles |
|
| — |
|
|
| 7 |
| ||||||||
Accretion/Amortization of investments available for sale |
|
| (2,172 | ) |
|
| (307 | ) |
|
| (120 | ) |
|
| (983 | ) |
Deferred income taxes |
|
| 65 |
|
|
| 23 |
|
|
| 61 |
|
|
| 57 |
|
Change in net pension liability |
|
| (766 | ) |
|
| 40 |
|
|
| (93 | ) |
|
| (13 | ) |
Loss on disposal of property and equipment |
|
| 41 |
|
|
| — |
| ||||||||
Stock-based compensation expense |
|
| 23,334 |
|
|
| 15,375 |
|
|
| 6,339 |
|
|
| 6,065 |
|
Change in asset retirement obligation |
|
| (104 | ) |
|
| — |
| ||||||||
Provision for sales returns and bad debts |
|
| 1,925 |
|
|
| 361 |
|
|
| 128 |
|
|
| (377 | ) |
Inventory provision |
|
| 4,090 |
|
|
| 2,020 |
|
|
| 646 |
|
|
| 614 |
|
Changes in working capital: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
|
| (50,436 | ) |
|
| (13,108 | ) |
|
| 29,837 |
|
|
| (1,110 | ) |
Inventories |
|
| (9,975 | ) |
|
| (4,123 | ) |
|
| (4,002 | ) |
|
| (3,920 | ) |
Prepayments, deposits, and other current assets |
|
| (3,584 | ) |
|
| 526 |
| ||||||||
Prepayments, deposits, and other assets |
|
| (5,485 | ) |
|
| (4,249 | ) | ||||||||
Accounts payable |
|
| (3,266 | ) |
|
| (1,834 | ) |
|
| 1,519 |
|
|
| (3,168 | ) |
Other current liabilities |
|
| 5,970 |
|
|
| (2,253 | ) |
|
| (5,048 | ) |
|
| (1,840 | ) |
Net cash provided by (used in) operating activities |
|
| (17,375 | ) |
|
| 32,745 |
|
|
| 21,680 |
|
|
| (5,094 | ) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acquisition of property and equipment |
|
| (15,100 | ) |
|
| (14,083 | ) |
|
| (5,202 | ) |
|
| (2,901 | ) |
Purchase of investments available for sale |
|
| (52,314 | ) |
|
| (95,576 | ) |
|
| — |
|
|
| (27,445 | ) |
Proceeds from sale or maturity of investments available for sale |
|
| 119,359 |
|
|
| — |
|
|
| 21,389 |
|
|
| 40,279 |
|
Net cash provided by (used in) investing activities |
|
| 51,945 |
|
|
| (109,659 | ) | ||||||||
Net cash provided by investing activities |
|
| 16,187 |
|
|
| 9,933 |
| ||||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Repayment of finance lease obligations |
|
| (121 | ) |
|
| (85 | ) |
|
| (40 | ) |
|
| (42 | ) |
Repurchase of employee common stock for taxes withheld |
|
| (2,096 | ) |
|
| — |
|
|
| (1,229 | ) |
|
| (1,849 | ) |
Proceeds from the exercise of stock options |
|
| 9,264 |
|
|
| 8,179 |
|
|
| 5,324 |
|
|
| 529 |
|
Proceeds from vested restricted stock |
|
| 1 |
|
|
| 1 |
| ||||||||
Net cash provided by financing activities |
|
| 7,048 |
|
|
| 8,095 |
| ||||||||
Proceeds from vested restricted and performance stock units |
|
| 1 |
|
|
| 1 |
| ||||||||
Net cash provided by (used in) financing activities |
|
| 4,056 |
|
|
| (1,361 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents |
|
| (666 | ) |
|
| (1,645 | ) |
|
| (937 | ) |
|
| 10 |
|
Increase (decrease) in cash and cash equivalents |
|
| 40,952 |
|
|
| (70,464 | ) | ||||||||
Increase in cash and cash equivalents |
|
| 40,986 |
|
|
| 3,488 |
| ||||||||
Cash and cash equivalents, at beginning of the period |
|
| 86,480 |
|
|
| 199,706 |
|
|
| 183,038 |
|
|
| 86,480 |
|
Cash and cash equivalents, at end of the period |
| $ | 127,432 |
|
| $ | 129,242 |
|
| $ | 224,024 |
|
| $ | 89,968 |
|
See accompanying notes to the condensed consolidated financial statements.
65
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1 — Basis of Presentation and Significant Accounting Policies
STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The accompanying Condensed Consolidated Financial Statements of the Company present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries.subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of December 30, 202229, 2023 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2022.29, 2023.
The Condensed Consolidated Financial Statements for the three and nine months ended SeptemberMarch 29, 20232024 and September 30, 2022,March 31, 2023, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and nine months ended SeptemberMarch 29, 20232024 and September 30, 2022,March 31, 2023, are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.
Revision of Financial Statements for Correction of Immaterial Misstatements
Subsequent to the issuance of the Company’s consolidated financial statements for the year ended December 30, 2022, the Company determined that it had not correctly deducted compensation expense in calculating its income tax provision, deferred tax asset and valuation allowance under the Incremental Cash Tax Method. This resulted in an understatement of the net deferred tax asset, an overstatement in the valuation allowance, an overstatement of the provision for income taxes and understatement of net income. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the error and determined that the related impact was not material to results of operations or financial position for any prior annual or interim period, but that correcting the cumulative impact of the error would be material to our results of operations for the year ended December 29, 2023. Accordingly, the Company has corrected the consolidated balance sheet as of December 30, 2022 and the consolidated statements of income and comprehensive income for the years ended December 30, 2022 and December 31, 2021. The effects of the revision on the previously issued consolidated financial statements were as follows:
Condensed Consolidated Balance Sheet
(in thousands)
(Unaudited)
|
| December 30, 2022 |
| |||||||||
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
| |||
Deferred income taxes |
| $ | 4,824 |
|
| $ | 3,920 |
|
| $ | 8,744 |
|
Total assets |
|
| 414,898 |
|
|
| 3,920 |
|
|
| 418,818 |
|
Accumulated deficit |
|
| (72,635 | ) |
|
| 3,920 |
|
|
| (68,715 | ) |
Total stockholders’ equity |
|
| 332,192 |
|
|
| 3,920 |
|
|
| 336,112 |
|
Total liabilities and stockholders’ equity |
|
| 414,898 |
|
|
| 3,920 |
|
|
| 418,818 |
|
7
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)
Revision of Financial Statements for Correction of Immaterial Misstatements (Continued)
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
| |||
At December 31, 2021 |
|
|
|
|
|
|
|
|
| |||
Accumulated deficit |
| $ | (111,390 | ) |
| $ | 3,010 |
|
| $ | (108,380 | ) |
Total stockholders’ equity |
|
| 258,558 |
|
|
| 3,010 |
|
|
| 261,568 |
|
At December 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Accumulated deficit |
|
| (72,635 | ) |
|
| 3,920 |
|
|
| (68,715 | ) |
Total stockholders’ equity |
|
| 332,192 |
|
|
| 3,920 |
|
|
| 336,112 |
|
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share amounts)
(Unaudited)
|
| December 30, 2022 |
|
| December 31, 2021 |
| ||||||||||||||||||
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
| ||||||
Provision (benefit) for income taxes |
| $ | 6,797 |
|
| $ | (910 | ) |
| $ | 5,887 |
|
| $ | 6,803 |
|
| $ | (3,010 | ) |
| $ | 3,793 |
|
Net income |
|
| 38,755 |
|
|
| 910 |
|
|
| 39,665 |
|
|
| 24,501 |
|
|
| 3,010 |
|
|
| 27,511 |
|
Comprehensive income |
|
| 42,959 |
|
|
| 910 |
|
|
| 43,869 |
|
|
| 25,998 |
|
|
| 3,010 |
|
|
| 29,008 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Basic |
| $ | 0.81 |
|
| $ | 0.02 |
|
| $ | 0.83 |
|
| $ | 0.52 |
|
| $ | 0.06 |
|
| $ | 0.58 |
|
Diluted |
| $ | 0.78 |
|
| $ | 0.02 |
|
| $ | 0.80 |
|
| $ | 0.50 |
|
| $ | 0.06 |
|
| $ | 0.56 |
|
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
| December 30, 2022 |
|
| December 31, 2021 |
| ||||||||||||||||||
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
|
| As Previously Reported |
|
| Adjustment |
|
| As revised |
| ||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income |
| $ | 38,755 |
|
| $ | 910 |
|
| $ | 39,665 |
|
| $ | 24,501 |
|
| $ | 3,010 |
|
| $ | 27,511 |
|
Deferred income taxes |
|
| (1,344 | ) |
|
| (910 | ) |
|
| (2,254 | ) |
|
| 1,495 |
|
|
| (3,010 | ) |
|
| (1,515 | ) |
8
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)
Cloud-Based Software Implementation Costs
The Company has entered into cloud-based software hosting arrangements for which it incurs implementation costs. Certain costs incurred during the application development stage are capitalized and included within Prepayments, deposits and other current assets or Other assets on the condensed consolidated balance sheet, depending on the short or long-term nature of such costs, in line with the Company's policy on the accounting for prepaid software hosting arrangements. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred. Capitalized cloud-based software implementation costs are amortized, beginning on the date the related software or module is ready for its intended use, on a straight-line basis over the remaining term of the hosting arrangement. Amortization is recognized as a component of selling, general, and administrative expenses, in the same line item as the expense for the associated hosting arrangement.
As of SeptemberMarch 29, 2024 and December 29, 2023, the Company recognized $1,318,0004,947,000 and $2,406,000, respectively, of net capitalized cloud-based software implementation costs recorded within Other assets on the condensed consolidated balance sheets. There were no capitalized cloud-based software implementation costs recognized at December 30, 2022.Condensed Consolidated Balance Sheets. As of SeptemberMarch 29, 2023,2024, these assets are not currently placed into service. No amortization of capitalized cloud-based software implementation costs were recognized during the three and nine months ended SeptemberMarch 29, 2024 and March 31, 2023.
Vendor Concentration
There was one vendor that accounted for over 12% of the Company’s consolidated accounts payable as of March 29, 2024.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280).” ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments (a) disclose significant segment expenses regularly provided to the chief operating decision maker (“CODM”), (b) disclose an amount for other segment items by reportable segment and description of its composition, (c) extend certain annual disclosures to interim periods, (d) clarify single reportable segment entities must apply Topic 280 in its entirety, (e) permit more than one measure of segment profit or loss to be reported under certain conditions and (f) require disclosure of the title and position of the CODM. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company will adopt the annual disclosure requirements of ASU 2023-07 as of beginning of fiscal year 2024 and will adopt the interim disclosure requirements beginning fiscal year 2025. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” ASU 2023-09 improves the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. It also includes certain other amendments to improve the effectiveness of income tax disclosures regarding (a) income or loss from continuing operations disaggregated between domestic and foreign and (b) income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company will adopt ASU 2023-09 at the beginning of fiscal year 2025. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.
6
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 2 — Investments Available for Sale
During the second half of 2022, the Company started to invest its cash in slightly higher yielding securities. Investments available for sale (“AFS”) and the related fair value measurement consisted of the following (dollars in thousands):
|
| September 29, 2023 |
|
| March 29, 2024 |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| Fair Value Measurements |
|
|
|
|
|
|
|
|
|
| Fair Value Measurements |
| ||||||||||||||||||||||||||
|
| Amortized Cost |
|
| Unrealized Gains |
|
| Unrealized Losses |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Amortized Cost |
|
| Unrealized Gains |
|
| Unrealized Losses |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
| ||||||||||||
Commercial paper |
| $ | 17,102 |
|
| $ | 1 |
|
| $ | (5 | ) |
| $ | 17,098 |
|
| $ | — |
|
| $ | 17,098 |
|
| $ | 4,522 |
|
| $ | 3 |
|
| $ | (1 | ) |
| $ | 4,524 |
|
| $ | — |
|
| $ | 4,524 |
|
Certificates of deposit |
|
| 4,080 |
|
|
| 1 |
|
|
| (2 | ) |
|
| 4,079 |
|
|
| — |
|
|
| 4,079 |
|
|
| 2,017 |
|
|
| 2 |
|
|
| — |
|
|
| 2,019 |
|
|
| — |
|
|
| 2,019 |
|
U.S. Treasury securities |
|
| 24,828 |
|
|
| — |
|
|
| (188 | ) |
|
| 24,640 |
|
|
| 24,640 |
|
|
| — |
|
|
| 15,432 |
|
|
| — |
|
|
| (78 | ) |
|
| 15,354 |
|
|
| 15,354 |
|
|
| — |
|
U.S. agency securities |
|
| 9,771 |
|
|
| — |
|
|
| (21 | ) |
|
| 9,750 |
|
|
| — |
|
|
| 9,750 |
|
|
| 1,732 |
|
|
| — |
|
|
| (3 | ) |
|
| 1,729 |
|
|
| — |
|
|
| 1,729 |
|
Corporate debt securities |
|
| 18,812 |
|
|
| 2 |
|
|
| (73 | ) |
|
| 18,741 |
|
|
| — |
|
|
| 18,741 |
|
|
| 4,462 |
|
|
| 4 |
|
|
| (4 | ) |
|
| 4,462 |
|
|
| — |
|
|
| 4,462 |
|
Total investments AFS |
| $ | 74,593 |
|
| $ | 4 |
|
| $ | (289 | ) |
| $ | 74,308 |
|
| $ | 24,640 |
|
| $ | 49,668 |
|
| $ | 28,165 |
|
| $ | 9 |
|
| $ | (86 | ) |
| $ | 28,088 |
|
| $ | 15,354 |
|
| $ | 12,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
| December 30, 2022 |
|
| December 29, 2023 |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| Fair Value Measurements |
|
|
|
|
|
|
|
|
|
| Fair Value Measurements |
| ||||||||||||||||||||||||||
|
| Amortized Cost |
|
| Unrealized Gains |
|
| Unrealized Losses |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Amortized Cost |
|
| Unrealized Gains |
|
| Unrealized Losses |
|
| Estimated Fair Value |
|
| Level 1 |
|
| Level 2 |
| ||||||||||||
Commercial paper |
| $ | 44,054 |
|
| $ | 11 |
|
| $ | (62 | ) |
| $ | 44,003 |
|
| $ | — |
|
| $ | 44,003 |
|
| $ | 7,720 |
|
| $ | 9 |
|
| $ | — |
|
| $ | 7,729 |
|
| $ | — |
|
| $ | 7,729 |
|
Certificates of deposit |
|
| 17,355 |
|
|
| 4 |
|
|
| (75 | ) |
|
| 17,284 |
|
|
| — |
|
|
| 17,284 |
|
|
| 3,716 |
|
|
| 4 |
|
|
| — |
|
|
| 3,720 |
|
|
| — |
|
|
| 3,720 |
|
U.S. Treasury securities |
|
| 21,847 |
|
|
| 3 |
|
|
| (15 | ) |
|
| 21,835 |
|
|
| 21,835 |
|
|
| — |
|
|
| 23,036 |
|
|
| 3 |
|
|
| (56 | ) |
|
| 22,983 |
|
|
| 22,983 |
|
|
| — |
|
U.S. agency securities |
|
| 10,688 |
|
|
| 16 |
|
|
| (3 | ) |
|
| 10,701 |
|
|
| — |
|
|
| 10,701 |
|
|
| 3,423 |
|
|
| — |
|
|
| (4 | ) |
|
| 3,419 |
|
|
| — |
|
|
| 3,419 |
|
Corporate debt securities |
|
| 45,522 |
|
|
| 4 |
|
|
| (288 | ) |
|
| 45,238 |
|
|
| — |
|
|
| 45,238 |
|
|
| 11,538 |
|
|
| 12 |
|
|
| (10 | ) |
|
| 11,540 |
|
|
| — |
|
|
| 11,540 |
|
Total investments AFS |
| $ | 139,466 |
|
| $ | 38 |
|
| $ | (443 | ) |
| $ | 139,061 |
|
| $ | 21,835 |
|
| $ | 117,226 |
|
| $ | 49,433 |
|
| $ | 28 |
|
| $ | (70 | ) |
| $ | 49,391 |
|
| $ | 22,983 |
|
| $ | 26,408 |
|
The Company obtains the fair value from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers and other industry and economic events.
9
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 2 — Investments Available for Sale (Continued)
The Company assessed each debt security with gross unrealized losses for impairment. As part of that assessment, the Company concluded that it does not intend to sell and it is more-likely-than-not that the Company will not be required to sell, prior to the recovery of the amortized cost basis. The Company did not recognize impairment for the three and nine months ended SeptemberMarch 29, 2023.2024.
The following table shows the fair value of investments AFS by contractual maturity (dollars in thousands):
|
| As of September 29, 2023 |
|
| As of March 29, 2024 |
| ||||||||||||||||||||
|
| Within one year |
|
| After one year through five years |
|
| Total |
|
| Within one year |
|
| After one year through five years |
|
| Total |
| ||||||||
Commercial paper |
| $ | 17,098 |
|
| $ | — |
|
| $ | 17,098 |
|
| $ | 4,524 |
|
| $ | — |
|
| $ | 4,524 |
| ||
Certificates of deposit |
|
| 4,079 |
|
|
| — |
|
|
| 4,079 |
|
|
| 2,019 |
|
|
| — |
|
|
| 2,019 |
| ||
U.S. Treasury securities |
|
| 14,855 |
|
|
| 9,785 |
|
|
| 24,640 |
|
|
| 9,816 |
|
|
| 5,538 |
|
|
| 15,354 |
| ||
U.S. agency securities |
|
| 9,354 |
|
|
| 396 |
|
|
| 9,750 |
|
|
| 1,729 |
|
|
| — |
|
|
| 1,729 |
| ||
Corporate debt securities |
|
| 15,295 |
|
|
| 3,446 |
|
|
| 18,741 |
|
|
| 3,037 |
|
|
| 1,425 |
|
|
| 4,462 |
| ||
Total investments AFS |
| $ | 60,681 |
|
| $ | 13,627 |
|
| $ | 74,308 |
|
| $ | 21,125 |
|
| $ | 6,963 |
|
| $ | 28,088 |
|
7
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 2 — Investments Available for Sale (Continued)
During the ninethree months ended September 29,March 31, 2023, one of the Company’s investments AFS was the subject of a downgraded credit rating. The Company sold its investments of $600,000 in securities duringfollowing the first quarter of 2023 due to a downgraded credit rating.downgrade. The Company recognized a realized gain upon sale of $2,000 during the ninethree months ended September 29,March 31, 2023.
Note 3 — Inventories
Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Raw materials and purchased parts |
| $ | 9,591 |
|
| $ | 6,703 |
|
| $ | 9,591 |
|
| $ | 9,766 |
|
Work in process |
|
| 6,451 |
|
|
| 5,499 |
|
|
| 6,097 |
|
|
| 5,722 |
|
Finished goods |
|
| 18,944 |
|
|
| 13,633 |
|
|
| 25,642 |
|
|
| 23,150 |
|
Total inventories, gross |
|
| 34,986 |
|
|
| 25,835 |
|
|
| 41,330 |
|
|
| 38,638 |
|
Less inventory reserves |
|
| (3,925 | ) |
|
| (1,674 | ) |
|
| (2,749 | ) |
|
| (3,508 | ) |
Total inventories, net |
| $ | 31,061 |
|
| $ | 24,161 |
|
| $ | 38,581 |
|
| $ | 35,130 |
|
Note 4 — Prepayments, Deposits, and Other Current Assets
Prepayments, deposits, and other current assets consisted of the following (in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Prepayments and deposits |
| $ | 5,830 |
|
| $ | 3,986 |
|
| $ | 7,817 |
|
| $ | 6,216 |
|
Prepaid insurance |
|
| 455 |
|
|
| 2,620 |
|
|
| 1,968 |
|
|
| 2,314 |
|
Prepaid marketing costs |
|
| 4,543 |
|
|
| 2,534 |
|
|
| 2,647 |
|
|
| 2,141 |
|
Consumption tax receivable |
|
| 777 |
|
|
| 864 |
|
|
| 766 |
|
|
| 820 |
|
Value added tax (VAT) receivable |
|
| 2,189 |
|
|
| 2,661 |
|
|
| 2,323 |
|
|
| 2,456 |
|
BVG (Swiss Pension) prepayment |
|
| 801 |
|
|
| 111 |
|
|
| 1,416 |
|
|
| 23 |
|
Other(1) |
|
| 932 |
|
|
| 700 |
|
|
| 444 |
|
|
| 739 |
|
Total prepayments, deposits and other current assets |
| $ | 15,527 |
|
| $ | 13,476 |
|
| $ | 17,381 |
|
| $ | 14,709 |
|
10
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 5 — Property, Plant and Equipment
Property, plant and equipment, net consisted of the following (in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Machinery and equipment |
| $ | 29,461 |
|
| $ | 28,026 |
|
| $ | 32,547 |
|
| $ | 30,874 |
|
Computer equipment and software |
|
| 8,329 |
|
|
| 9,266 |
|
|
| 8,511 |
|
|
| 8,495 |
|
Furniture and fixtures |
|
| 4,110 |
|
|
| 4,276 |
|
|
| 4,703 |
|
|
| 4,122 |
|
Leasehold improvements |
|
| 10,047 |
|
|
| 14,965 |
|
|
| 11,736 |
|
|
| 10,780 |
|
Construction in process |
|
| 40,174 |
|
|
| 32,269 |
|
|
| 45,149 |
|
|
| 40,364 |
|
Total property, plant and equipment, gross |
|
| 92,121 |
|
|
| 88,802 |
|
|
| 102,646 |
|
|
| 94,635 |
|
Less accumulated depreciation |
|
| (29,235 | ) |
|
| (37,881 | ) |
|
| (30,309 | ) |
|
| (27,800 | ) |
Total property, plant and equipment, net |
| $ | 62,886 |
|
| $ | 50,921 |
|
| $ | 72,337 |
|
| $ | 66,835 |
|
8
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 6 – Intangible Assets
Intangible assets, net consisted of the following (in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
| ||||||||||||||||||
Long-lived amortized intangible assets |
| Gross |
|
| Accumulated |
|
| Net |
|
| Gross |
|
| Accumulated |
|
| Net |
| ||||||
Patents and licenses |
| $ | 9,180 |
|
| $ | (9,180 | ) |
| $ | — |
|
| $ | 9,240 |
|
| $ | (9,067 | ) |
| $ | 173 |
|
During the nine months ended September 29, 2023, the Company recognized full impairment of $154,000 for its Japan patents and licenses related to cataract IOLs.
Note 76 – Other Current Liabilities
Other current liabilities consisted of the following (in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Accrued salaries and wages |
| $ | 11,813 |
|
| $ | 10,862 |
|
| $ | 10,440 |
|
| $ | 12,519 |
|
Accrued bonuses |
|
| 2,517 |
|
|
| 6,925 |
|
|
| 2,325 |
|
|
| 3,456 |
|
Accrued insurance |
|
| 1,460 |
|
|
| 2,315 |
| ||||||||
Income taxes payable |
|
| 8,540 |
|
|
| 3,845 |
|
|
| 9,708 |
|
|
| 10,848 |
|
Marketing obligations |
|
| 1,571 |
|
|
| 1,374 |
|
|
| 2,097 |
|
|
| 1,874 |
|
Other(1) |
|
| 11,824 |
|
|
| 7,735 |
|
|
| 9,231 |
|
|
| 9,926 |
|
Total other current liabilities |
| $ | 36,265 |
|
| $ | 30,741 |
|
| $ | 35,261 |
|
| $ | 40,938 |
|
Note 87 – Leases
Finance Leases
The Company entered into finance leases primarily related to purchases of equipment used for manufacturing, computer-related equipment or furniture and fixtures. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):
11
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 8 – Leases (Continued)
Finance Leases (Continued)
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Machinery and equipment |
| $ | — |
|
| $ | 30 |
| ||||||||
Computer equipment and software |
|
| 6 |
|
|
| 18 |
|
| $ | 6 |
|
| $ | 6 |
|
Furniture and fixtures |
|
| 475 |
|
|
| 475 |
|
|
| 475 |
|
|
| 475 |
|
Finance lease right-of-use assets, gross |
|
| 481 |
|
|
| 523 |
|
|
| 481 |
|
|
| 481 |
|
Less accumulated depreciation |
|
| (261 | ) |
|
| (181 | ) |
|
| (335 | ) |
|
| (298 | ) |
Finance lease right-of-use assets, net |
| $ | 220 |
|
| $ | 342 |
|
| $ | 146 |
|
| $ | 183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current finance lease obligations |
| $ | 164 |
|
| $ | 169 |
|
| $ | 166 |
|
| $ | 165 |
|
Long-term finance lease obligations |
|
| 84 |
|
|
| 210 |
|
|
| — |
|
|
| 42 |
|
Total finance lease liability |
| $ | 248 |
|
| $ | 379 |
|
| $ | 166 |
|
| $ | 207 |
|
Weighted-average remaining lease term (in years) |
|
| 1.5 |
|
|
| 2.2 |
|
|
| 1.0 |
|
|
| 1.3 |
|
Weighted-average discount rate |
|
| 4.23 | % |
|
| 4.10 | % |
|
| 4.25 | % |
|
| 4.24 | % |
Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Amortization of finance lease right-of-use asset |
| $ | 37 |
|
| $ | 39 |
|
| $ | 114 |
|
| $ | 121 |
|
| $ | 37 |
|
| $ | 39 |
|
Interest on finance lease liabilities |
|
| 3 |
|
|
| 5 |
|
|
| 10 |
|
|
| 13 |
|
|
| 2 |
|
|
| 4 |
|
Cash paid for amounts included in the measurement of finance lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating cash flows |
|
| 3 |
|
|
| 5 |
|
|
| 10 |
|
|
| 13 |
|
|
| 2 |
|
|
| 4 |
|
Financing cash flows |
|
| 39 |
|
|
| 40 |
|
|
| 121 |
|
|
| 85 |
|
|
| 40 |
|
|
| 42 |
|
9
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 7 – Leases (Continued)
Operating Leases
The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):
|
| September 29, 2023 |
|
| December 30, 2022 |
|
| March 29, 2024 |
|
| December 29, 2023 |
| ||||
Machinery and equipment |
| $ | 726 |
|
| $ | 789 |
|
| $ | 701 |
|
| $ | 735 |
|
Computer equipment and software |
|
| 446 |
|
|
| 446 |
|
|
| 445 |
|
|
| 446 |
|
Real property |
|
| 41,313 |
|
|
| 34,465 |
|
|
| 42,291 |
|
|
| 40,869 |
|
Operating lease right-of-use assets, gross |
|
| 42,485 |
|
|
| 35,700 |
|
|
| 43,437 |
|
|
| 42,050 |
|
Less accumulated depreciation |
|
| (7,493 | ) |
|
| (5,430 | ) |
|
| (8,837 | ) |
|
| (7,663 | ) |
Operating lease right-of-use assets, net |
| $ | 34,992 |
|
| $ | 30,270 |
|
| $ | 34,600 |
|
| $ | 34,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current operating lease obligations |
| $ | 4,003 |
|
| $ | 3,524 |
|
| $ | 4,403 |
|
| $ | 4,202 |
|
Long-term operating lease obligations |
|
| 31,643 |
|
|
| 27,136 |
|
|
| 31,126 |
|
|
| 31,425 |
|
Total operating lease liability |
| $ | 35,646 |
|
| $ | 30,660 |
|
| $ | 35,529 |
|
| $ | 35,627 |
|
Weighted-average remaining lease term (in years) |
|
| 7.5 |
|
|
| 7.5 |
|
|
| 7.2 |
|
|
| 7.3 |
|
Weighted-average discount rate |
|
| 5.15 | % |
|
| 3.87 | % |
|
| 5.51 | % |
|
| 5.48 | % |
12
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 8 – Leases (Continued)
Operating Leases (Continued)
Supplemental cash flow information related to operating leases was as follows (dollars in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Operating lease cost |
| $ | 1,419 |
|
| $ | 1,167 |
|
| $ | 3,883 |
|
| $ | 3,471 |
|
| $ | 2,223 |
|
| $ | 1,107 |
|
Cash paid for amounts included in the measurement of operating lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating cash flows |
|
| 1,259 |
|
|
| 1,103 |
|
|
| 3,584 |
|
|
| 3,069 |
|
|
| 1,384 |
|
|
| 1,173 |
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
| 4,580 |
|
|
| 126 |
|
|
| 8,000 |
|
|
| 1,166 |
|
|
| 1,495 |
|
|
| 1,909 |
|
Future Maturities of Lease Liabilities
Estimated future maturities of lease liabilities under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of SeptemberMarch 29, 20232024 is as follows (in thousands):
.
As of September 29, 2023 |
| Operating Leases |
|
| Finance Leases |
| ||
September 2024 |
| $ | 5,957 |
|
| $ | 171 |
|
September 2025 |
|
| 5,630 |
|
|
| 85 |
|
September 2026 |
|
| 4,987 |
|
|
| — |
|
September 2027 |
|
| 5,319 |
|
|
| — |
|
September 2028 |
|
| 5,381 |
|
|
| — |
|
Thereafter |
|
| 18,105 |
|
|
| — |
|
Total future minimum lease payments |
| $ | 45,379 |
|
| $ | 256 |
|
Less amounts representing interest |
|
| (9,733 | ) |
|
| (8 | ) |
Total lease liability |
| $ | 35,646 |
|
| $ | 248 |
|
As of March 29, 2024 |
| Operating Leases |
|
| Finance Leases |
| ||
March 2025 |
| $ | 6,433 |
|
| $ | 170 |
|
March 2026 |
|
| 5,379 |
|
|
| — |
|
March 2027 |
|
| 5,508 |
|
|
| — |
|
March 2028 |
|
| 5,633 |
|
|
| — |
|
March 2029 |
|
| 5,743 |
|
|
| — |
|
Thereafter |
|
| 16,733 |
|
|
| — |
|
Total future minimum lease payments |
| $ | 45,429 |
|
| $ | 170 |
|
Less amounts representing interest |
|
| (9,900 | ) |
|
| (4 | ) |
Total lease liability |
| $ | 35,529 |
|
| $ | 166 |
|
10
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 98 — Income Taxes
The Company recorded an income tax provision as follows (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
| ||||
Provision for income taxes |
| $ | 1,929 |
|
| $ | 2,315 |
|
| $ | 6,366 |
|
| $ | 6,671 |
|
|
| Three Months Ended |
| |||||
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||
Provision for income taxes |
| $ | 1,128 |
|
| $ | 2,009 |
|
The effective tax rates for the three months ended SeptemberMarch 29, 2024 and March 31, 2023 and September 30, 2022 were (28.651.0)% and 18.442.6%, respectively, and were 31.9% and 16.9% for the nine months ended September 29, 2023 and September 30, 2022, respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the three and nine months ended SeptemberMarch 29, 20232024 and September 30, 2022,March 31, 2023, respectively, primarily due to the income tax expense generated in foreign jurisdictions.
13
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 109 – Defined Benefit Pension Plans
The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Service cost(1) |
| $ | 256 |
|
| $ | 306 |
|
| $ | 759 |
|
| $ | 941 |
|
| $ | 325 |
|
| $ | 249 |
|
Interest cost(2) |
|
| 91 |
|
|
| 22 |
|
|
| 268 |
|
|
| 63 |
|
|
| 84 |
|
|
| 87 |
|
Expected return on plan assets(2) |
|
| (92 | ) |
|
| (125 | ) |
|
| (270 | ) |
|
| (366 | ) |
|
| (132 | ) |
|
| (87 | ) |
Prior service credit(2),(3) |
|
| (45 | ) |
|
| (44 | ) |
|
| (135 | ) |
|
| (135 | ) |
|
| (45 | ) |
|
| (45 | ) |
Actuarial loss recognized in current period(2),(3) |
|
| (6 | ) |
|
| 98 |
|
|
| (19 | ) |
|
| 274 |
|
|
| 28 |
|
|
| (7 | ) |
Net periodic pension cost |
| $ | 204 |
|
| $ | 257 |
|
| $ | 603 |
|
| $ | 777 |
|
| $ | 260 |
|
| $ | 197 |
|
The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
| ||||
Employer contribution |
| $ | 269 |
|
| $ | 230 |
|
| $ | 731 |
|
| $ | 666 |
|
|
| Three Months Ended |
| |||||
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||
Employer contribution |
| $ | 267 |
|
| $ | 217 |
|
Note 11 — Stockholders’ Equity
Stock-Based Compensation
The cost that has been charged against income for stock-based compensation is set forth below (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
| ||||
Employee stock options |
| $ | 3,517 |
|
| $ | 2,865 |
|
| $ | 9,973 |
|
| $ | 7,649 |
|
Restricted stock |
|
| 201 |
|
|
| 67 |
|
|
| 347 |
|
|
| 618 |
|
Restricted stock units |
|
| 2,214 |
|
|
| 1,249 |
|
|
| 5,963 |
|
|
| 3,242 |
|
Performance stock units |
|
| 2,449 |
|
|
| 1,240 |
|
|
| 5,958 |
|
|
| 2,932 |
|
Nonemployee stock options |
|
| 465 |
|
|
| 306 |
|
|
| 1,093 |
|
|
| 934 |
|
Total stock-based compensation expense |
| $ | 8,846 |
|
| $ | 5,727 |
|
| $ | 23,334 |
|
| $ | 15,375 |
|
The Company recorded stock-based compensation costs in the following categories (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
| ||||
Cost of sales |
| $ | 223 |
|
| $ | 233 |
|
| $ | 595 |
|
| $ | 409 |
|
General and administrative |
|
| 4,049 |
|
|
| 2,584 |
|
|
| 11,107 |
|
|
| 7,171 |
|
Selling and marketing |
|
| 2,561 |
|
|
| 1,335 |
|
|
| 5,910 |
|
|
| 3,548 |
|
Research and development |
|
| 2,013 |
|
|
| 1,575 |
|
|
| 5,722 |
|
|
| 4,247 |
|
Total stock-based compensation expense, net |
|
| 8,846 |
|
|
| 5,727 |
|
|
| 23,334 |
|
|
| 15,375 |
|
Amounts capitalized as part of inventory |
|
| 534 |
|
|
| 361 |
|
|
| 1,431 |
|
|
| 1,379 |
|
Total stock-based compensation expense, gross |
| $ | 9,380 |
|
| $ | 6,088 |
|
| $ | 24,765 |
|
| $ | 16,754 |
|
14
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1110 — Stockholders’ Equity (Continued)
Stock-Based Compensation (Continued)
As of September 29, 2023, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands):
|
| September 29, 2023 |
| |
Stock options |
| $ | 23,888 |
|
Restricted stock, RSUs and PSUs |
|
| 24,690 |
|
Total unrecognized stock-based compensation cost |
| $ | 48,578 |
|
The cost is expected to be recognized over a weighted-average period of approximately two years.
Incentive Plan
The Company maintains an Amended and Restated Omnibus Equity Incentive Plan (“the(the “Equity Plan”) provides. The Equity Plan allows for various formsawards of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, stock appreciation rights, restricted stock, unrestricted share grants, restricted stock units (“RSUs”) and performance stock units (“PSUs”). Options and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of March 29, 2024, the Company had outstanding grants of stock options, restricted stock awards, RSUs and PSUs.
Stock option granted under the Equity Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain optionstock options and sharestock-based awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Equity Plan). Grants of restricted stock outstanding under the Equity Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Equity Plan generally vest based on service, performance, or a combination of both. On June 15, 2023, stockholders approved a proposal to increase the number of shares under the plan by 2,170,000 shares, for a total of 20,205,000 shares. As of SeptemberMarch 29, 2023,2024, there were 2,784,909962,029 shares available for grant under the Equity Plan.
Stock-Based Compensation
The cost that has been charged against income for stock-based compensation is set forth below (in thousands):
|
| Three Months Ended |
| |||||
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||
Employee stock options |
| $ | 3,173 |
|
| $ | 2,977 |
|
Restricted stock |
|
| 28 |
|
|
| 67 |
|
RSUs |
|
| 2,312 |
|
|
| 1,601 |
|
PSUs |
|
| 685 |
|
|
| 1,106 |
|
Nonemployee stock options |
|
| 141 |
|
|
| 314 |
|
Total stock-based compensation expense |
| $ | 6,339 |
|
| $ | 6,065 |
|
The Company recorded stock-based compensation costs in the following categories (in thousands):
|
| Three Months Ended |
| |||||
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||
Cost of sales |
| $ | 298 |
|
| $ | 149 |
|
General and administrative |
|
| 3,075 |
|
|
| 3,363 |
|
Selling and marketing |
|
| 1,210 |
|
|
| 857 |
|
Research and development |
|
| 1,756 |
|
|
| 1,696 |
|
Total stock-based compensation expense, net |
|
| 6,339 |
|
|
| 6,065 |
|
Amounts capitalized as part of inventory |
|
| 337 |
|
|
| 369 |
|
Total stock-based compensation expense, gross |
| $ | 6,676 |
|
| $ | 6,434 |
|
As of March 29, 2024, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands):
|
| March 29, 2024 |
| |
Stock options |
| $ | 28,392 |
|
Restricted stock, RSUs and PSUs |
|
| 43,614 |
|
Total unrecognized stock-based compensation cost |
| $ | 72,006 |
|
The cost is expected to be recognized over a weighted-average period of approximately two years.
12
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 10 — Stockholders’ Equity (Continued)
Assumptions
The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of stock options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that stock options granted are expected to be outstanding. The Company has calculated a 78% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Expected dividend yield |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
Expected volatility |
|
| 60 | % |
|
| 54 | % |
|
| 60 | % |
|
| 54 | % |
|
| 59 | % |
|
| 60 | % |
Risk-free interest rate |
|
| 4.18 | % |
|
| 2.91 | % |
|
| 3.91 | % |
|
| 1.88 | % |
|
| 4.16 | % |
|
| 3.96 | % |
Expected term (in years) |
|
| 5.05 |
|
|
| 5.10 |
|
|
| 5.05 |
|
|
| 5.10 |
|
|
| 5.29 |
|
|
| 5.05 |
|
15
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 11 — Stockholders’ Equity (Continued)
Stock Options
A summary of stock option activity under the Equity Plan for ninethree months ended SeptemberMarch 29, 20232024 is presented below:
|
| Stock |
|
| Weighted- |
|
| Weighted- |
|
| Aggregate |
|
| Stock |
|
| Weighted- |
|
| Weighted- |
|
| Aggregate |
| ||||||||
Outstanding at December 30, 2022 |
|
| 2,469 |
|
| $ | 39.63 |
|
|
|
|
|
|
| ||||||||||||||||||
Outstanding at December 29, 2023 |
|
| 2,630 |
|
| $ | 46.38 |
|
|
|
|
|
|
| ||||||||||||||||||
Granted |
|
| 622 |
|
|
| 55.84 |
|
|
|
|
|
|
|
|
| 523 |
|
|
| 37.21 |
|
|
|
|
|
|
| ||||
Exercised |
|
| (500 | ) |
|
| 18.54 |
|
|
|
|
|
|
|
|
| (187 | ) |
|
| 28.50 |
|
|
|
|
|
|
| ||||
Forfeited or expired |
|
| (38 | ) |
|
| 72.49 |
|
|
|
|
|
|
|
|
| (83 | ) |
|
| 76.05 |
|
|
|
|
|
|
| ||||
Outstanding at September 29, 2023 |
|
| 2,553 |
|
| $ | 47.22 |
|
|
| 6.77 |
|
| $ | 19,641 |
| ||||||||||||||||
Exercisable at September 29, 2023 |
|
| 1,663 |
|
| $ | 39.11 |
|
|
| 5.52 |
|
| $ | 19,641 |
| ||||||||||||||||
Outstanding at March 29, 2024 |
|
| 2,883 |
|
| $ | 45.01 |
|
|
| 6.98 |
|
| $ | 16,386 |
| ||||||||||||||||
Exercisable at March 29, 2024 |
|
| 1,668 |
|
| $ | 42.93 |
|
|
| 5.41 |
|
| $ | 15,090 |
|
Restricted Stock, Restricted Stock Units and Performance Stock Units
A summary of restricted stock, RSUsRSU and PSUsPSU activity under the Equity Plan for the ninethree months ended SeptemberMarch 29, 20232024 is presented below (shares in thousands):
|
| Restricted |
|
| RSUs |
|
| PSUs |
|
| Restricted |
|
| RSUs |
|
| PSUs |
| ||||||
Unvested at December 30, 2022 |
|
| 4 |
|
|
| 192 |
|
|
| 118 |
| ||||||||||||
Unvested at December 29, 2023 |
|
| 14 |
|
|
| 401 |
|
|
| 56 |
| ||||||||||||
Granted |
|
| 12 |
|
|
| 269 |
|
|
| 182 |
|
|
| — |
|
|
| 415 |
|
|
| 390 |
|
Vested |
|
| (4 | ) |
|
| (94 | ) |
|
| (36 | ) |
|
| — |
|
|
| (110 | ) |
|
| (24 | ) |
Forfeited or expired |
|
| — |
|
|
| (6 | ) |
|
| (13 | ) |
|
| (4 | ) |
|
| (1 | ) |
|
| (4 | ) |
Unvested at September 29, 2023 |
|
| 12 |
|
|
| 361 |
|
|
| 251 |
| ||||||||||||
Unvested at March 29, 2024 |
|
| 10 |
|
|
| 705 |
|
|
| 418 |
|
13
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1211 - Commitments and Contingencies
Severance Payable
As of September 29, 2023 and December 30, 2022 there was severance payable of $422,000 and $410,000, respectively. recognized in other current liabilities on the Consolidated Balance Sheets, which included approximately $258,000 and $300,000, respectively, in one-time employee benefits to be paid to certain employees in STAAR Japan who work primarily in IOL sales. During the three and nine months ended September 29, 2023, the Company recognized $80,000 and $1,441,000, respectively, related to this. The Company is expected to incur through the end of 2023, one-time employee benefits of approximately $1,457,000 related to this. These one-time employee benefits are recognized in general and administrative expense on the Consolidated Statements of Income.
Litigation and Claims
From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. STAARThe Company maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.
Employment Agreements
The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective January 1, 2023. He and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all its assets, or termination “without cause or for good reason” as defined in the employment agreements.
16
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1312 — Basic and Diluted Net Income (Loss) Per Share
The following table sets forth the computation of basic and diluted net income per share (in thousands except per share amounts):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income |
| $ | 4,817 |
|
| $ | 10,262 |
|
| $ | 13,591 |
|
| $ | 32,902 |
| ||||||||
Net income (loss) |
| $ | (3,339 | ) |
| $ | 2,710 |
| ||||||||||||||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common shares outstanding |
|
| 48,625 |
|
|
| 48,106 |
|
|
| 48,438 |
|
|
| 47,919 |
|
|
| 48,907 |
|
|
| 48,251 |
|
Less: Unvested restricted stock |
|
| (12 | ) |
|
| (4 | ) |
|
| (12 | ) |
|
| (4 | ) |
|
| — |
|
|
| (4 | ) |
Denominator for basic calculation |
|
| 48,613 |
|
|
| 48,102 |
|
|
| 48,426 |
|
|
| 47,915 |
|
|
| 48,907 |
|
|
| 48,247 |
|
Weighted average effects of potentially diluted common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock options |
|
| 679 |
|
|
| 1,336 |
|
|
| 933 |
|
|
| 1,378 |
|
|
| — |
|
|
| 1,116 |
|
Unvested restricted stock |
|
| — |
|
|
| 2 |
|
|
| 3 |
|
|
| 2 |
|
|
| — |
|
|
| 3 |
|
RSUs |
|
| 17 |
|
|
| 64 |
|
|
| 67 |
|
|
| 55 |
|
|
| — |
|
|
| 81 |
|
PSUs |
|
| 61 |
|
|
| 45 |
|
|
| 65 |
|
|
| 21 |
|
|
| — |
|
|
| 53 |
|
Denominator for diluted calculation |
|
| 49,370 |
|
|
| 49,549 |
|
|
| 49,494 |
|
|
| 49,371 |
|
|
| 48,907 |
|
|
| 49,500 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Net income (loss) per share: |
|
|
|
|
|
| ||||||||||||||||||
Basic |
| $ | 0.10 |
|
| $ | 0.21 |
|
| $ | 0.28 |
|
| $ | 0.69 |
|
| $ | (0.07 | ) |
| $ | 0.06 |
|
Diluted |
| $ | 0.10 |
|
| $ | 0.21 |
|
| $ | 0.27 |
|
| $ | 0.67 |
|
| $ | (0.07 | ) |
| $ | 0.05 |
|
Because the Company had a net loss for the three months ended March 29, 2024, the number of diluted shares is equal to the number of basic shares. The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, RSUs and PSUs with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive.
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Stock options |
|
| 2,453 |
|
|
| 864 |
|
|
| 1,853 |
|
|
| 865 |
|
|
| 4,316 |
|
|
| 1,392 |
|
Restricted stock, RSUs and PSUs |
|
| 341 |
|
|
| 2 |
|
|
| 26 |
|
|
| 20 |
|
|
| 495 |
|
|
| 15 |
|
Total |
|
| 2,794 |
|
|
| 866 |
|
|
| 1,879 |
|
|
| 885 |
|
|
| 4,811 |
|
|
| 1,407 |
|
14
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1413 — Disaggregation of Sales, Geographic Sales and Product Sales
In the following tables, sales are disaggregated by category, sales by geographic market and sales by product data. The following breaks down sales into the following categories (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Non-consignment sales |
| $ | 75,296 |
|
| $ | 71,223 |
|
| $ | 230,527 |
|
| $ | 205,236 |
|
| $ | 71,764 |
|
| $ | 67,163 |
|
Consignment sales |
|
| 5,012 |
|
|
| 4,823 |
|
|
| 15,615 |
|
|
| 15,111 |
|
|
| 5,592 |
|
|
| 6,365 |
|
Total net sales |
| $ | 80,308 |
|
| $ | 76,046 |
|
| $ | 246,142 |
|
| $ | 220,347 |
|
| $ | 77,356 |
|
| $ | 73,528 |
|
The Company markets and sells its products in over 75 countries and conducts its manufacturing in the United States. Other than China and Japan, the Company does not conduct business in any country in which its sales exceed 10% of worldwide consolidated net sales. Sales are attributed to countries based on location of customers. The composition of the Company’s net sales to unaffiliated customers was as follows (in thousands):
17
STAAR SURGICAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 14 — Disaggregation of Sales, Geographic Sales and Product Sales (Continued)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Domestic |
| $ | 4,164 |
|
| $ | 3,873 |
|
| $ | 13,061 |
|
| $ | 10,375 |
|
| $ | 4,935 |
|
| $ | 4,551 |
|
Foreign: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
China |
|
| 48,287 |
|
|
| 42,246 |
|
|
| 144,716 |
|
|
| 116,635 |
|
|
| 38,549 |
|
|
| 35,090 |
|
Japan |
|
| 9,175 |
|
|
| 10,546 |
|
|
| 28,526 |
|
|
| 32,481 |
|
|
| 10,456 |
|
|
| 10,936 |
|
Other(1) |
|
| 18,682 |
|
|
| 19,381 |
|
|
| 59,839 |
|
|
| 60,856 |
|
|
| 23,416 |
|
|
| 22,951 |
|
Total foreign sales |
|
| 76,144 |
|
|
| 72,173 |
|
|
| 233,081 |
|
|
| 209,972 |
|
|
| 72,421 |
|
|
| 68,977 |
|
Total net sales |
| $ | 80,308 |
|
| $ | 76,046 |
|
| $ | 246,142 |
|
| $ | 220,347 |
|
| $ | 77,356 |
|
| $ | 73,528 |
|
100% of the Company’s sales are generated from the ophthalmic surgical product segment and the chief operating decision maker makes operating decisions and allocates resources based upon the consolidated operating results, and therefore the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are implantable Collamer lenses (“ICLs”) used in refractive surgerysurgery. Historically the Company marketed and sold cataract intraocular lenses (“IOLs”) usedand related injectors and injector parts. The Company phased out sales of such products in cataract surgery.fiscal 2023, and does not expect to sell any such products in fiscal 2024 or thereafter. The composition of the Company’s net sales by product line was as follows (in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
ICLs |
| $ | 81,069 |
|
| $ | 71,953 |
|
| $ | 244,806 |
|
| $ | 208,550 |
|
| $ | 77,151 |
|
| $ | 70,625 |
|
Other product sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cataract IOLs |
|
| (221 | ) |
|
| 2,191 |
|
|
| 1,295 |
|
|
| 7,640 |
|
|
| — |
|
|
| 1,476 |
|
Other surgical products(1) |
|
| (540 | ) |
|
| 1,902 |
|
|
| 41 |
|
|
| 4,157 |
|
|
| 205 |
|
|
| 1,427 |
|
Total other product sales |
|
| (761 | ) |
|
| 4,093 |
|
|
| 1,336 |
|
|
| 11,797 |
|
|
| 205 |
|
|
| 2,903 |
|
Total net sales |
| $ | 80,308 |
|
| $ | 76,046 |
|
| $ | 246,142 |
|
| $ | 220,347 |
|
| $ | 77,356 |
|
| $ | 73,528 |
|
(1) Other surgical products include delivery systems and normal recurring sales adjustments such as sales return allowances.
One customer, theThe Company’s distributor in China distributors accounted for 6049% and 5648% of net sales for the three months ended SeptemberMarch 29, 2024 and March 31, 2023, respectively. As of March 29, 2024 and December 29, 2023, and September 30, 2022, respectively, and the same customerCompany’s China distributors accounted for 5954% and 5370% for the nine months ended September 29, 2023 and September 30, 2022, respectively. As of September 29, 2023 and December 30, 2022,, respectively, one customer, the Company’s distributor in China, accounted for 78% and 59% of consolidated trade receivables.
Note 15 — COVID-19 Developments
In December 2019, COVID-19 surfaced and in March 2020, the World Health Organization declared a pandemic related to the rapid spread of COVID-19 around the world. The impact of the COVID-19 outbreak on the businesses and the economy in the U.S. and the rest of the world is, and is expected to continue to be, uncertain and may continue to be significant as COVID-19 variant strains emerge. The Company’s revenues have been adversely impacted, and the Company experienced a substantial slowdown in sales beginning March 20, 2020 in global geographies characterized as “hot spots” for the COVID-19 virus, including parts of Europe, North America, Asia, the Middle East and India. In certain of these markets, sales have paused as elective surgeries are discouraged to support COVID-19 related needs. While COVID-19 restrictions have since eased globally, a resurgence of the COVID-19 pandemic in global geographies, depending upon its duration and severity, could material adversely impact the global economy and the Company's industry, operations and financial condition and performance. The Company continues to monitor the commercial and operational impact of new variants of COVID-19 in its markets.
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Readersamended (“Exchange Act”), and the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created therein. In some cases readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “believe,” “will,” “should,” “forecast”“could,” “forecast,” “potential,” “continue,” “ongoing” (or the negative of those words and similar expressions in connection with any discussion of future operatingwords or financial performance.expressions), although not all forward-looking statements contain these words. In particular, these include statements aboutregarding the intent, belief or current expectations of the Company and its management regarding any of the following: any projections of or guidance as to future earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally),; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products; commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving 2023 business plans;plans for 2024 and beyond; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution investors and prospective investors that any such forward-looking statements are inherently subjectnot guarantees of future performance and involve risks, uncertainties, assumptions and other factors, which if they do not materialize or prove correct, could cause actual results to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ materially from those describedexpressed or implied by such forward-looking statements. We caution you not to place undue reliance on these forward-looking statements and to note they speak only as of the date hereof. Factors that could cause actual results to differ materially from those set forth in this report because of numerous factors, many of which are beyond our control. These factorsthe forward-looking statements include, without limitation, those described in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on February 23, 2023.27, 2024. We undertake nodisclaim any intention or obligation to update or review these financial projections or forward-looking statements after the date of this reportdue to reflect futurenew information or other events or circumstances or to reflect actual outcomes.except as required by law.
The following discussion should be read in conjunction with the audited consolidated financial statements of STAAR,Company’s unaudited Condensed Consolidated Financial Statements, including the related notes, provided in this report.
We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the ‘Investor Relations’ sections. Accordingly, investors should monitor such portions of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
Overview
STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and companionaccessory delivery systems used to deliver the lenses into the eye. We are the world’s leading manufacturer of intraocular lenses for patients seeking refractive vision correction. All the lenses we make are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Refractive surgery is performed to treat the type of visual disorders that have traditionally been corrected using eyeglasses or contact lenses. We refer to ourphakic implantable lenses used worldwide in refractivecorrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery as “implantable Collamer® lenses” or “ICLs.” The field of refractive surgery includes both lens-based procedures, using products like our ICL family of products, and laser-based procedures like LASIK. Successful refractive surgery can correct common vision disorders such as myopia, hyperopia, and astigmatism. STAAR employs a commercialization strategy that strives for sustainable profitable growth.over 40 years. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction.
Recent Developments We generate worldwide revenue almost exclusively from sales of our implantable Collamer® lenses, or “ICLs.” Our ICLs are made from Collamer, which is a proprietary collagen copolymer material created and exclusively used by STAAR to make our lenses soft, flexible and biocompatible with the eye. Our ICLs are phakic lenses, meaning that they are implanted into the eye without removing the eye’s natural crystalline lens. This distinguishes an ICL procedure from other refractive procedures, as it does not involve the removal of corneal eye tissue. All of our ICLs are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Further, while ICLs are intended to be permanent, our ICLs are reversible lens implants, meaning they can be removed by a doctor if desired.
STAAR achieved 13%employs a commercialization strategy that strives for sustainable profitable growth. Our growth strategy includes making our complete ICL product line available in our existing geographic markets and expanding into attractive markets where we do not sell our products today. In addition, we are focused on driving awareness of the ICL sales in the third quarter of 2023, compared to the third quarter of 2022, with ICL sales growth in the Asia Pacific markets up 13%, EMEA markets up 14%,procedure and the Americas up 5%. In China, ICL sales were up 14% compared to the second quarterclinical benefits of 2022. The uncertain economic environment globallyour ICLs, and world events may have an impact onproviding surgeon training, support and education, particularly in our surgeon customers and patients. As a result, while we are reaffirming our previously provided outlook for fiscal 2023 ICL sales of $320 million to $325 million, revenue may come in at the lower end of the range should macroeconomic weakness and/or other disruptions materialize.newer markets.
16
On October 25, we began a voluntary recall of approximately 300 EVO/EVO+ lenses with a measurement deviating +/- 0.5 diopters from the as labeled power. We have identified and fixed the problem. We do not expect material operational costs related to this matter.
19
Critical Accounting Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of IncomeOperations discusses and analyzes data in our unaudited Condensed Consolidated Financial Statements provided in this report, which we have prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual conditions may differ from our assumptions and actual results may differ from our estimates.
Management believes that there have been no significant changes during the ninethree months ended SeptemberMarch 29, 20232024 to the items that we disclosed as our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 30, 2022.29, 2023.
Results of Operations
The following table shows the percentage of our total sales represented by certain items reflected in our Condensed Consolidated Statements of Income for the periods indicated.
|
| Percentage of Net |
|
| Percentage of Net |
|
| Percentage of Net |
| |||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||||
Net sales |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of sales |
|
| 20.8 | % |
|
| 20.5 | % |
|
| 22.0 | % |
|
| 21.2 | % |
|
| 21.1 | % |
|
| 21.7 | % |
Gross profit |
|
| 79.2 | % |
|
| 79.5 | % |
|
| 78.0 | % |
|
| 78.8 | % |
|
| 78.9 | % |
|
| 78.3 | % |
General and administrative |
|
| 24.0 | % |
|
| 18.4 | % |
|
| 22.6 | % |
|
| 18.1 | % |
|
| 30.0 | % |
|
| 24.7 | % |
Selling and marketing |
|
| 33.1 | % |
|
| 30.4 | % |
|
| 34.6 | % |
|
| 29.3 | % |
|
| 34.5 | % |
|
| 35.8 | % |
Research and development |
|
| 14.3 | % |
|
| 12.7 | % |
|
| 13.6 | % |
|
| 12.0 | % |
|
| 17.3 | % |
|
| 14.0 | % |
Total selling, general and administrative |
|
| 71.4 | % |
|
| 61.5 | % |
|
| 70.8 | % |
|
| 59.4 | % |
|
| 81.8 | % |
|
| 74.5 | % |
Operating income |
|
| 7.8 | % |
|
| 18.0 | % |
|
| 7.2 | % |
|
| 19.4 | % | ||||||||
Total other income (expense), net |
|
| 0.6 | % |
|
| (1.5 | )% |
|
| 0.9 | % |
|
| (1.5 | )% | ||||||||
Income before income taxes |
|
| 8.4 | % |
|
| 16.5 | % |
|
| 8.1 | % |
|
| 17.9 | % | ||||||||
Operating income (loss) |
|
| (2.9 | )% |
|
| 3.8 | % | ||||||||||||||||
Total other income, net |
|
| 0.1 | % |
|
| 2.6 | % | ||||||||||||||||
Income (loss) before income taxes |
|
| (2.8 | )% |
|
| 6.4 | % | ||||||||||||||||
Provision for income taxes |
|
| 2.4 | % |
|
| 3.0 | % |
|
| 2.6 | % |
|
| 3.0 | % |
|
| 1.5 | % |
|
| 2.7 | % |
Net income |
|
| 6.0 | % |
|
| 13.5 | % |
|
| 5.5 | % |
|
| 14.9 | % | ||||||||
Net income (loss) |
|
| (4.3 | )% |
|
| 3.7 | % |
Net Sales
The following table presents our net sales, by product (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
| ||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
| ||||||
ICLs |
| $ | 81,069 |
|
| $ | 71,953 |
|
|
| 12.7 | % |
| $ | 244,806 |
|
| $ | 208,550 |
|
|
| 17.4 | % |
Other product sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cataract IOLs |
|
| (221 | ) |
|
| 2,191 |
|
|
| — | * |
|
| 1,295 |
|
|
| 7,640 |
|
|
| (83.0 | )% |
Other surgical products |
|
| (540 | ) |
|
| 1,902 |
|
|
| — | * |
|
| 41 |
|
|
| 4,157 |
|
|
| (99.0 | )% |
Total other product sales |
|
| (761 | ) |
|
| 4,093 |
|
|
| — | * |
|
| 1,336 |
|
|
| 11,797 |
|
|
| (88.7 | )% |
Net sales |
| $ | 80,308 |
|
| $ | 76,046 |
|
|
| 5.6 | % |
| $ | 246,142 |
|
| $ | 220,347 |
|
|
| 11.7 | % |
* Denotes change is greater than +100%.
|
| Three Months Ended |
|
| Percentage |
| ||||||
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||
ICLs |
| $ | 77,151 |
|
| $ | 70,625 |
|
|
| 9.2 | % |
Other product sales: |
|
|
|
|
|
|
|
|
| |||
Cataract IOLs |
|
| — |
|
|
| 1,476 |
|
|
| (100.0 | )% |
Other surgical products |
|
| 205 |
|
|
| 1,427 |
|
|
| (85.6 | )% |
Total other product sales |
|
| 205 |
|
|
| 2,903 |
|
|
| (92.9 | )% |
Net sales |
| $ | 77,356 |
|
| $ | 73,528 |
|
|
| 5.2 | % |
Net sales for the three months ended SeptemberMarch 29, 20232024 increased 6%5% from the same period of 2022.2023. The increase in net sales was primarily due to increased ICL sales of $9.1$6.5 million, slightly offset by decreased other product sales of $4.9 million. Changes in foreign currency favorably impacted net sales by $0.1 million.
20
Net sales for the nine months ended September 29, 2023 increased 12% from the same period of 2022. The increase in net sales was primarily due to increased ICL sales of $36.3 million, slightly offset by decreased other product sales of $10.5$2.7 million. Changes in foreign currency unfavorably impacted net sales by $2.3$1.0 million.
Total ICL sales for the three months ended SeptemberMarch 29, 20232024 increased 13%9% from the same period of 2022,2023, with unit increase of 14%2%. The APAC region sales increased by 13%9%, with unit growth up 15%decrease of 1%, due to sales growth in India up 40%, China up 14%10%, Japan up 12%11% and other APAC regionsChina up 6%10%. The EMEA region sales increased 14%11% with unit growth up 13%22%, due to sales increases in our distributor markets up 20% and35%, partially offset by direct markets up 9%down 5%. The Americas region sales increased 5%12%, with unit growth up 3%, primarily due to sales growth in Canada up 26% and the U.S. up 6%, partially offset by sales decrease in Latin America of 12%. Changes in foreign currency favorably impacted ICL sales by $0.1 million for the three months ended September 29, 2023. ICL sales represented 100.9% and 94.6% of our total sales for the three months ended September 29, 2023 and September 30, 2022, respectively.
Total ICL sales for the nine months ended September 29, 2023 increased 17% from the same period of 2022, with unit increase of 19%. The APAC region sales increased by 20%, with unit growth up 21%, due to sales growth in China up 24%, India up 20%, other APAC regions up 10%, Japan up 10% and Korea up 4%. The EMEA region sales increased 4%, with unit decrease of 2%, due to sales increases in our distributor markets up 5% and our direct markets up 3%. The Americas region sales increased 18%, with unit growth up 16%17
11%, primarily due to sales growth in the U.S. up 23%15% and Canada up 11%. In late March 2022, the U.S. started to sell EVO ICLs. Changes in foreign currency unfavorably impacted ICL sales by $2.0$1.0 million for the ninethree months ended SeptemberMarch 29, 2023, which impacted our Japan and Europe, Middle East and Africa markets.2024. ICL sales represented 99.5%99.7% and 94.6%96.1% of our total sales for the ninethree months ended SeptemberMarch 29, 20232024 and September 30, 2022,March 31, 2023, respectively.
Other product sales, includes cataract IOLs,intraocular lenses (“IOLs”), delivery systems and normal recurring sales adjustments such as sales return allowances. As a result of third-party materials and supply chain challenges that affectaffected our cataract IOLs and associated delivery devices, we will no longer manufacturehave phased out sales of our cataract IOLs thoughas we will continuefocus on growing our ICL business. During 2023, we stopped manufacturing cataract IOLs, and we do not plan to support these products through the end of 2023, as supplies permit.sell cataract IOLs in 2024. We do not expect this decision to have a significant impact to revenue growth in future years. Other product sales for the three and nine months ended SeptemberMarch 29, 2023,2024, decreased 119% and 89%, respectively,93% from the same period of 2022,2023, due primarily to a reduction in cataract IOL sales and decreased sales of cataract IOL injector parts and increased sales return reserves. Changes in foreign currency unfavorably impacted other product sales by $0.3 million for the nine months ended September 29, 2023.parts. Other product sales represented (0.9%)0.3% and 5.4%3.9% of our total sales for the three months ended SeptemberMarch 29, 20232024 and September 30, 2022, respectively, and represented 0.5% and 5.4% of our total sales for the nine months ended September 29,March 31, 2023, and September 30, 2022, respectively.
Gross Profit
The following table presents our gross profit and gross profit margin (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
|
| Three Months Ended |
|
| Percentage |
| ||||||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||||||||
Gross profit |
| $ | 63,638 |
|
| $ | 60,462 |
|
|
| 5.3 | % |
| $ | 191,926 |
|
| $ | 173,598 |
|
|
| 10.6 | % |
| $ | 61,035 |
|
| $ | 57,562 |
|
|
| 6.0 | % |
Gross margin |
|
| 79.2 | % |
|
| 79.5 | % |
|
|
|
|
| 78.0 | % |
|
| 78.8 | % |
|
|
|
|
| 78.9 | % |
|
| 78.3 | % |
|
|
|
Gross profit for the three months ended SeptemberMarch 29, 20232024 increased 5.3%6.0%, from the same period of 2022.2023. Gross profit margin decreasedincreased to 79.2%78.9% of revenue for the three months ended SeptemberMarch 29, 20232024 compared to 79.5%78.3% of revenue for the three months ended September 30, 2022,March 31, 2023, due mainlyprimarily to increased sales return reserves and period costs associated with manufacturing projects, partially offset by product and geographic sales mix.country mix of ICL sales.
Gross profit for the nine months ended September 29, 2023 increased 10.6%, from the same period of 2022. Gross profit margin decreased to 78.0% of revenue for the nine months ended September 29, 2023 compared to 78.8% of revenue for the nine months ended September 30, 2022, due mainly to reserves related to cataract IOLs.
21
General and Administrative Expense
The following table presents our general and administrative expenses (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
|
| Three Months Ended |
|
| Percentage |
| ||||||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||||||||
General and administrative expense |
| $ | 19,266 |
|
| $ | 14,011 |
|
|
| 37.5 | % |
| $ | 55,461 |
|
| $ | 39,934 |
|
|
| 38.9 | % |
| $ | 23,228 |
|
| $ | 18,098 |
|
|
| 28.3 | % |
Percentage of sales |
|
| 24.0 | % |
|
| 18.4 | % |
|
|
|
|
| 22.6 | % |
|
| 18.1 | % |
|
|
|
|
| 30.0 | % |
|
| 24.7 | % |
|
|
|
General and administrative expenses for the three months ended SeptemberMarch 29, 20232024 increased 37.5%28.3% from the same period of 20222023 due to increased salary-related and payroll tax expenses, outside services, facility costs and bonus and stock-based compensation expenses.
General and administrative expenses for the nine months ended September 29, 2023 increased 38.9% from the same period of 2022 due to increased salary-related and payroll tax expenses, outside services, bonus and stock-based compensation expenses, facility costs and Japan one-time employee benefits.expenses.
Selling and Marketing Expense
The following table presents our selling and marketing expenses (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
|
| Three Months Ended |
|
| Percentage |
| ||||||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||||||||
Selling and marketing expense |
| $ | 26,607 |
|
| $ | 23,130 |
|
|
| 15.0 | % |
| $ | 85,238 |
|
| $ | 64,633 |
|
|
| 31.9 | % |
| $ | 26,708 |
|
| $ | 26,354 |
|
|
| 1.3 | % |
Percentage of sales |
|
| 33.1 | % |
|
| 30.4 | % |
|
|
|
|
| 34.6 | % |
|
| 29.3 | % |
|
|
|
|
| 34.5 | % |
|
| 35.8 | % |
|
|
|
Selling and marketing expenses for the three months ended SeptemberMarch 29, 20232024 increased 15.0%1.3% from the same period of 20222023 due to increased advertising and promotional activities, salary-related and payroll tax expenses, trade shows and sales meetings expenses and bonus and stock-based compensation expenses, partially offset by decreased trade shows and sales meetings expenses.
Selling and marketing expenses for the nine months ended September 29, 2023 increased 31.9% from the same period of 2022 due to increased advertising and promotional activities especially in the U.S., salary-related and payroll tax expenses, bonus and stock-based compensation expenses and sales commission expenses.
18
Research and Development Expense
The following table presents our research and development expenses (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
|
| Three Months Ended |
|
| Percentage |
| ||||||||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||||||||
Research and development expense |
| $ | 11,470 |
|
| $ | 9,616 |
|
|
| 19.3 | % |
| $ | 33,535 |
|
| $ | 26,193 |
|
|
| 28.0 | % |
| $ | 13,380 |
|
| $ | 10,310 |
|
|
| 29.8 | % |
Percentage of sales |
|
| 14.3 | % |
|
| 12.7 | % |
|
|
|
|
| 13.6 | % |
|
| 12.0 | % |
|
|
|
|
| 17.3 | % |
|
| 14.0 | % |
|
|
|
Research and development expenses for the three and nine months ended SeptemberMarch 29, 20232024 increased 19.3% and 28.0%29.8% from the same period of 2022, respectively,2023, due mainly to increased salary-related and payroll tax expenses and clinical expenses associated with our U.S. post-approval clinical trials, and for the nine months ended September 29, 2023, increased bonus and stock-based compensation expenses as compared to the nine months ended September 30, 2022.expenses.
22
Other Expense, Net
The following table presents our other expenses, net (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
| ||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
| ||||||
Other income (expense), net |
| $ | 451 |
|
| $ | (1,128 | ) |
|
| — | * |
| $ | 2,265 |
|
| $ | (3,265 | ) |
|
| — | * |
Percentage of sales |
|
| 0.6 | % |
|
| (1.5 | )% |
|
|
|
|
| 0.9 | % |
|
| (1.5 | )% |
|
|
|
* Denotes change is greater than +100%.
|
| Three Months Ended |
|
| Percentage |
| ||||||
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||
Other income, net |
| $ | 70 |
|
| $ | 1,919 |
|
|
| (96.4 | )% |
Percentage of sales |
|
| 0.1 | % |
|
| 2.6 | % |
|
|
|
The changedecrease in other income, (expense), net for the three and nine months ended SeptemberMarch 29, 20232024 and September 30, 2022,March 31, 2023, respectively, was due mainly to increased interest income mainly due to our investments held available for sale and lowerhigher foreign exchange losses.
Income Taxes
The following table presents our income tax provision (dollars in thousands):
|
| Three Months Ended |
|
| Percentage |
|
| Nine Months Ended |
|
| Percentage |
| ||||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| 2023 vs. 2022 |
| ||||||
Income tax provision |
| $ | 1,929 |
|
| $ | 2,315 |
|
|
| (16.7 | )% |
| $ | 6,366 |
|
| $ | 6,671 |
|
|
| (4.6 | )% |
|
| Three Months Ended |
|
| Percentage |
| ||||||
|
| March 29, 2024 |
|
| March 31, 2023 |
|
| 2024 vs. 2023 |
| |||
Income tax provision |
| $ | 1,128 |
|
| $ | 2,009 |
|
|
| (43.9 | )% |
The effective tax rates for the three months ended SeptemberMarch 29, 2024 and March 31, 2023 were (51.0)% and September 30, 2022 were 28.6% and 18.4%42.6%, respectively, and were 31.9% and 16.9% for the nine months ended September 29, 2023 and September 30, 2022, respectively. Our effective tax rates differ from the U.S. federal statutory rate of 21%, primarily due to the income tax expense generated in foreign jurisdictions.
Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly.
Liquidity and Capital Resources
We believe that currentOur principal sources of liquidity are cash, and cash equivalents, investments available for sale (“AFS”) and future cash flow from operating activitiesactivities. We believe these sources of liquidity will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements includedstatements. We expect that cash flow from operating activities may fluctuate in this quarterly report.future periods as a result of a number of factors, including fluctuations in our operating results, working capital needs, capital expenditures, and capital deployment decisions. In addition, future capital requirements will depend on many factors including our growth rate in net sales, the timing and extent of spending to support our growth strategy, the expansion of selling and marketing activities, the timing of introductions of new products, as well as global macroeconomic factors. Our financial condition at SeptemberMarch 29, 20232024 and December 30, 202229, 2023 included the following (in thousands):
19
|
| September 29, 2023 |
|
| December 30, |
|
| 2023 vs. 2022 |
| |||
Cash and cash equivalents |
| $ | 127,432 |
|
| $ | 86,480 |
|
| $ | 40,952 |
|
Investments available for sale |
|
| 74,308 |
|
|
| 139,061 |
|
|
| (64,753 | ) |
Total |
| $ | 201,740 |
|
| $ | 225,541 |
|
| $ | (23,801 | ) |
|
|
|
|
|
|
|
|
|
| |||
Current assets |
| $ | 347,068 |
|
| $ | 311,723 |
|
| $ | 35,345 |
|
Current liabilities |
|
| 56,775 |
|
|
| 51,716 |
|
|
| 5,059 |
|
Working capital |
| $ | 290,293 |
|
| $ | 260,007 |
|
| $ | 30,286 |
|
|
| March 29, 2024 |
|
| December 29, 2023 |
|
| 2024 vs. 2023 |
| |||
Cash and cash equivalents |
| $ | 224,024 |
|
| $ | 183,038 |
|
| $ | 40,986 |
|
Investments available for sale |
|
| 28,088 |
|
|
| 49,391 |
|
|
| (21,303 | ) |
Total |
| $ | 252,112 |
|
| $ | 232,429 |
|
| $ | 19,683 |
|
|
|
|
|
|
|
|
|
|
| |||
Current assets |
| $ | 365,715 |
|
| $ | 365,269 |
|
| $ | 446 |
|
Current liabilities |
|
| 62,674 |
|
|
| 65,036 |
|
|
| (2,362 | ) |
Working capital |
| $ | 303,041 |
|
| $ | 300,233 |
|
| $ | 2,808 |
|
Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions. Our investment policy primary objective is capital preservation while maximizing our return on investment. Investments available for sale may include U.S. government and corporate debt securities, commercial paper, certain certificates deposit and related security types, that are rated by two nationally recognized statistical rating organizations with minimum investment grade ratings of AAA to A-/A-1+ to A-2, or the equivalent. The maturity of individual investments may not extend 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type. We do not have any off-balance sheet arrangements.
23
A summary of cash flows for the ninethree months ended SeptemberMarch 29, 20232024 and September 30, 2022March 31, 2023 was as follows (in thousands):
|
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| September 29, 2023 |
|
| September 30, 2022 |
|
| March 29, 2024 |
|
| March 31, 2023 |
| ||||
Cash flows from: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating activities |
| $ | (17,375 | ) |
| $ | 32,745 |
|
| $ | 21,680 |
|
| $ | (5,094 | ) |
Investing activities |
|
| 51,945 |
|
|
| (109,659 | ) |
|
| 16,187 |
|
|
| 9,933 |
|
Financing activities |
|
| 7,048 |
|
|
| 8,095 |
|
|
| 4,056 |
|
|
| (1,361 | ) |
Effect of exchange rate changes |
|
| (666 | ) |
|
| (1,645 | ) |
|
| (937 | ) |
|
| 10 |
|
Net increase (decrease) in cash and cash equivalents |
|
| 40,952 |
|
|
| (70,464 | ) | ||||||||
Net increase in cash and cash equivalents |
|
| 40,986 |
|
|
| 3,488 |
| ||||||||
Cash and cash equivalents, at beginning of year |
|
| 86,480 |
|
|
| 199,706 |
|
|
| 183,038 |
|
|
| 86,480 |
|
Cash and cash equivalents, at end of year |
| $ | 127,432 |
|
| $ | 129,242 |
|
| $ | 224,024 |
|
| $ | 89,968 |
|
For the ninethree months ended SeptemberMarch 29, 20232024 net cash usedprovided by operating activities consisted of $61.3$16.8 million in working-capital changes and $8.2 million in non-cash items, partially offset by the net loss of $3.3 million. For the three months ended March 31, 2023 net cash used in operating activities consisted of $14.3 million in working-capital changes, partially offset by $30.3$6.5 million in non-cash items and net income of $13.6$2.7 million.
Starting in the second half of 2022, we decided to invest our cash in slightly higher yielding securities. For the ninethree months ended SeptemberMarch 29, 2023,2024, net cash provided by investment activities was $52.0$16.2 million which consisted of $119.4$21.4 million of proceeds from the sale or maturity of investments AFS, partially offset by $52.3 million in purchases of investments AFS and $15.1$5.2 million in purchases of property, plant and equipment. For the ninethree months ended September 30, 2022,March 31, 2023, net cash used inprovided by investment activity was $109.7$9.9 million which consisted of $95.6$40.3 million of proceeds from the sale or maturity of investments AFS, partially offset by $27.4 million in purchases of investments AFS and $14.1$2.9 million in purchases of property, plant and equipment.
Net cash provided by financing activities for the ninethree months ended SeptemberMarch 29, 20232024 was $7.0$4.1 million which consisted of $9.3$5.3 million of proceeds from the exercise of stock options, partially offset by $2.1$1.2 million to repurchase of employee common stock for taxes withheld. For the ninethree months ended September 30, 2022,March 31, 2023, net cash provided byused in financing activities was $1.4 million which consisted of $8.2$1.8 million to repurchase of proceeds from the exercise ofemployee common stock options.for taxes withheld.
Commitments
Employment Agreements
The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective January 1, 2023. He and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all of its assets, or termination “without cause or for good reason” as defined in the employment agreements.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the ninethree months ended SeptemberMarch 29, 2023,2024, there have been no material changes in the Company’s qualitative and quantitative market risk since the disclosure in the Company’s Annual Report on Form 10-K for the year ended December 30, 2022.29, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company. Based on that evaluation, our CEO and CFO concluded, as of the end of the period covered by this quarterly report on Form 10-Q, that our disclosure controls and procedures were effective. For purposes of this statement, the term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
24
Our management, including the CEO and the CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud or material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended SeptemberMarch 29, 20232024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. STAARThe Company maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.
ITEM 1A. RISK FACTORS
Our short and long-term success is subject to many factors that are beyond our control. Investors and prospective investors should consider carefully information contained in this report and the risks and uncertainties described in “Part I—Item 1A—Risk Factors” of the Company’s Form 10-K for the fiscal year ended December 30, 2022.29, 2023. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.
21
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended SeptemberMarch 29, 2023,2024, no director or officer adopted or terminated:
25
ITEM 6. EXHIBITS
|
| Description | |
|
| ||
| |||
|
| ||
3.1 | Amended and Restated Certificate of Incorporation (incorporated by reference to Appendix 2 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 26, 2018). | ||
3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the Commission on February 1, 2023). | ||
4.1 | Form of Certificate for Common Stock, par value $0.01 per | ||
|
| ||
| |||
* |
| ||
| |||
|
| ||
31.2 | * | ||
|
| ||
32.1 | ** | ||
|
| ||
101 | * | Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended | |
|
| ||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended | ||
* | Filed herewith. | ||
** | Certification furnished herewith solely to accompany this annual report pursuant to 18 U.S.C. Section 1350. Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference. |
* Filed herewith.22
** Furnished herewith.
† Management contract or compensatory plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| STAAR SURGICAL COMPANY | ||
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Dated: |
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| By: |
| /s/ PATRICK F. WILLIAMS |
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| Patrick F. Williams |
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| Chief Financial Officer |
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| (on behalf of the Registrant and as its principal financial officer) |
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