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.

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 ~~48,206,299~~48,817,473 shares of common stock, par value $0.01 per share, issued and outstanding as of October ~~28, 2022.~~27, 2023.


	September 30, 2022			December 31, 2021			September 29, 2023			December 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	129,242		$	199,706		$	127,432		$	86,480
Investments available for sale		82,091			—			60,681			125,159
Accounts receivable trade, net of allowance for credit losses of $103 and $43, respectively		55,429			43,531
Accounts receivable trade, net of allowance for credit losses of $38 and $20, respectively								112,367			62,447
Inventories, net		19,930			17,274			31,061			24,161
Prepayments, deposits and other current assets		10,218			10,900			15,527			13,476
Total current assets		296,910			271,411			347,068			311,723
Investments available for sale		13,360			—			13,627			13,902
Property, plant and equipment, net		48,048			35,912			62,886			50,921
Finance lease right-of-use assets, net		380			506			220			342
Operating lease right-of-use assets, net		29,503			31,310			34,992			30,270
Intangible assets, net		171			218			—			173
Goodwill		1,786			1,786			1,786			1,786
Deferred income taxes		3,710			3,813			8,560			8,744
Other assets		808			822			2,382			957
Total assets	$	394,676		$	345,778		$	471,521		$	418,818
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,567		$	8,699		$	8,786		$	11,576
Obligations under finance leases		167			127			164			169
Obligations under operating leases		3,474			3,283			4,003			3,524
Allowance for sales returns		5,040			4,816			7,557			5,706
Other current liabilities		29,072			31,877			36,265			30,741
Total current liabilities		45,320			48,802			56,775			51,716
Obligations under finance leases		252			382			84			210
Obligations under operating leases		26,032			28,269			31,643			27,136
Deferred income taxes		1,554			811			1,295			1,489
Asset retirement obligations		158			198			98			220
Pension liability		1,228			8,758			3,031			1,935
Total liabilities		74,544			87,220			92,926			82,706
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 48,202 and 47,716 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		482			477
Common stock, $0.01 par value; 60,000 shares authorized: 48,817 and 48,212 shares issued and outstanding at September 29, 2023 and December 30, 2022, respectively								488			482
Additional paid-in capital		398,448			373,519			436,117			404,189
Accumulated other comprehensive loss		(310	)		(4,048	)
Accumulated other comprehensive gain (loss)								(2,886	)		156
Accumulated deficit		(78,488	)		(111,390	)		(55,124	)		(68,715	)
Total stockholders’ equity		320,132			258,558			378,595			336,112
Total liabilities and stockholders’ equity	$	394,676		$	345,778		$	471,521		$	418,818


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2022			October 1, 2021			September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Net sales	$	76,046		$	58,352		$	220,347		$	171,471		$	80,308		$	76,046		$	246,142		$	220,347
Cost of sales		15,584			13,051			46,749			37,825			16,670			15,584			54,216			46,749
Gross profit		60,462			45,301			173,598			133,646			63,638			60,462			191,926			173,598
Selling, general and administrative expenses:
General and administrative		14,011			11,018			39,934			32,671			19,266			14,011			55,461			39,934
Selling and marketing		23,130			18,175			64,633			50,229			26,607			23,130			85,238			64,633
Research and development		9,616			8,271			26,193			24,790			11,470			9,616			33,535			26,193
Total selling, general and administrative expenses		46,757			37,464			130,760			107,690			57,343			46,757			174,234			130,760
Operating income		13,705			7,837			42,838			25,956			6,295			13,705			17,692			42,838
Other expense, net:
Interest income (expense), net		897			(23	)		934			(35	)
Other income (expense), net:
Interest income, net														1,690			897			5,287			934
Loss on foreign currency transactions		(2,129	)		(610	)		(4,904	)		(2,040	)		(1,384	)		(2,129	)		(3,240	)		(4,904	)
Royalty income		77			185			527			496			74			77			74			527
Other income (expense), net		27			(13	)		178			(47	)
Total other expense, net		(1,128	)		(461	)		(3,265	)		(1,626	)
Other income, net														71			27			144			178
Total other income (expense), net														451			(1,128	)		2,265			(3,265	)
Income before income taxes		12,577			7,376			39,573			24,330			6,746			12,577			19,957			39,573
Provision for income taxes		2,315			1,356			6,671			4,751			1,929			2,315			6,366			6,671
Net income	$	10,262		$	6,020		$	32,902		$	19,579		$	4,817		$	10,262		$	13,591		$	32,902
Net income per share:
Basic	$	0.21		$	0.13		$	0.69		$	0.42		$	0.10		$	0.21		$	0.28		$	0.69
Diluted	$	0.21		$	0.12		$	0.67		$	0.40		$	0.10		$	0.21		$	0.27		$	0.67
Weighted average shares outstanding:
Basic		48,102			47,483			47,915			47,064			48,613			48,102			48,426			47,915
Diluted		49,549			49,592			49,371			49,448			49,370			49,549			49,494			49,371


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2022			October 1, 2021			September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Net income	$	10,262		$	6,020		$	32,902		$	19,579		$	4,817		$	10,262		$	13,591		$	32,902
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		465			90			7,126			2,717			(115	)		465			(1,839	)		7,126
Reclassification into other income (expense), net		54			121			139			361			(51	)		54			(154	)		139
Investments available for sale unrealized loss		(432	)		—			(432	)		—
Investments available for sale:
Change in unrealized gain (loss)														149			(432	)		123			(432	)
Reclassification into other income (expense), net														—			—			(2	)		—
Foreign currency translation gain (loss)		(958	)		29			(3,474	)		(1,198	)		(494	)		(958	)		(1,965	)		(3,474	)
Tax effect		312			(32	)		379			37			146			312			795			379
Other comprehensive income (loss), net of tax		(559	)		208			3,738			1,917			(365	)		(559	)		(3,042	)		3,738
Comprehensive income	$	9,703		$	6,228		$	36,640		$	21,496		$	4,452		$	9,703		$	10,549		$	36,640

	Three Months Ended
																Three Months Ended
																Common Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at June 30, 2023																	48,499		$	485	$	419,594		$	(2,521	)	$	(59,941	)	$	357,617
Net income																	—			—		—			—			4,817			4,817
Other comprehensive loss																	—			—		—			(365	)		—			(365	)
Common stock issued upon exercise of options																	305			3		7,255			—			—			7,258
Stock-based compensation																	—			—		9,380			—			—			9,380
Repurchase of employee common stock for taxes withheld																	(1	)		—		(112	)		—			—			(112	)
Vested restricted and performance stock																	14			—		—			—			—			—
Balance, at September 29, 2023																	48,817		$	488	$	436,117		$	(2,886	)	$	(55,124	)	$	378,595
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at July 1, 2022		48,024	$	480	$	387,328	$	249		$	(88,750	)	$	299,307			48,024		$	480	$	387,328		$	249		$	(85,740	)	$	302,317
Net income		—		—		—		—			10,262			10,262			—			—		—			—			10,262			10,262
Other comprehensive loss		—		—		—		(559	)		—			(559	)		—			—		—			(559	)		—			(559	)
Common stock issued upon exercise of options		166		2		5,032		—			—			5,034			166			2		5,032			—			—			5,034
Stock-based compensation		—		—		6,088		—			—			6,088			—			—		6,088			—			—			6,088
Vested restricted and performance stock		12		—		—		—			—			—			12			—		—			—			—			—
Balance, at September 30, 2022		48,202	$	482	$	398,448	$	(310	)	$	(78,488	)	$	320,132			48,202		$	482	$	398,448		$	(310	)	$	(75,478	)	$	323,142

Balance, at July 2, 2021		47,391	$	474	$	360,316	$	(3,836	)	$	(122,332	)	$	234,622
Net income		—		—		—		—			6,020			6,020
Other comprehensive income		—		—		—		208			—			208
Common stock issued upon exercise of options		183		2		4,210		—			—			4,212
Stock-based compensation		—		—		4,046		—			—			4,046
Vested restricted and performance stock		25		—		—		—			—			—
Balance, at October 1, 2021		47,599	$	476	$	368,572	$	(3,628	)	$	(116,312	)	$	249,108

	Nine Months Ended
															Nine Months Ended
															Common Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			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
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at December 31, 2021		47,716	$	477	$	373,519	$	(4,048	)	$	(111,390	)	$	258,558		47,716		$	477	$	373,519		$	(4,048	)	$	(108,380	)	$	261,568
Net income		—		—		—		—			32,902			32,902		—			—		—			—			32,902			32,902
Other comprehensive income		—		—		—		3,738			—			3,738		—			—		—			3,738			—			3,738
Common stock issued upon exercise of options		417		4		8,175		—			—			8,179		417			4		8,175			—			—			8,179
Stock-based compensation		—		—		16,754		—			—			16,754		—			—		16,754			—			—			16,754
Unvested restricted stock		7		—		—		—			—			—		7			—		—			—			—			—
Vested restricted and performance stock		62		1		—		—			—			1		62			1		—			—			—			1
Balance, at September 30, 2022		48,202	$	482	$	398,448	$	(310	)	$	(78,488	)	$	320,132		48,202		$	482	$	398,448		$	(310	)	$	(75,478	)	$	323,142

Balance, at January 1, 2021		46,448	$	464	$	338,194	$	(5,545	)	$	(135,891	)	$	197,222
Net income		—		—		—		—			19,579			19,579
Other comprehensive income		—		—		—		1,917			—			1,917
Common stock issued upon exercise of options		1,089		11		18,311		—			—			18,322
Stock-based compensation		—		—		12,067		—			—			12,067
Unvested restricted stock		3		—		—		—			—			—
Vested restricted and performance stock		59		1		—		—			—			1
Balance, at October 1, 2021		47,599	$	476	$	368,572	$	(3,628	)	$	(116,312	)	$	249,108


	Nine Months Ended						Nine Months Ended
	September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022
Cash flows from operating activities:
Net income	$	32,902		$	19,579		$	13,591		$	32,902
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment		3,101			2,671			3,743			3,101
Amortization of intangibles		22			26
Amortization/Impairment of intangibles								169			22
Accretion/Amortization of investments available for sale		(307	)		—			(2,172	)		(307	)
Deferred income taxes		23			845			65			23
Change in net pension liability		40			91			(766	)		40
Loss on disposal of property and equipment		—			2			41			—
Stock-based compensation expense		15,375			10,985			23,334			15,375
Change in asset retirement obligation								(104	)		—
Provision for sales returns and bad debts		361			1,069			1,925			361
Inventory provision		2,020			1,097			4,090			2,020
Changes in working capital:
Accounts receivable		(13,108	)		(7,072	)		(50,436	)		(13,108	)
Inventories		(4,123	)		1,301			(9,975	)		(4,123	)
Prepayments, deposits, and other current assets		526			1,288			(3,584	)		526
Accounts payable		(1,834	)		(40	)		(3,266	)		(1,834	)
Other current liabilities		(2,253	)		3,622			5,970			(2,253	)
Net cash provided by operating activities		32,745			35,464
Net cash provided by (used in) operating activities								(17,375	)		32,745
Cash flows from investing activities:
Acquisition of property and equipment		(14,083	)		(8,956	)		(15,100	)		(14,083	)
Purchase of investments available for sale		(95,576	)		—			(52,314	)		(95,576	)
Net cash used in investing activities		(109,659	)		(8,956	)
Proceeds from sale or maturity of investments available for sale								119,359			—
Net cash provided by (used in) investing activities								51,945			(109,659	)
Cash flows from financing activities:
Repayment of finance lease obligations		(85	)		(314	)		(121	)		(85	)
Repurchase of employee common stock for taxes withheld								(2,096	)		—
Proceeds from the exercise of stock options		8,179			18,322			9,264			8,179
Proceeds from vested restricted stock		1			1			1			1
Net cash provided by financing activities		8,095			18,009			7,048			8,095
Effect of exchange rate changes on cash and cash equivalents		(1,645	)		(724	)		(666	)		(1,645	)
Increase (decrease) in cash and cash equivalents		(70,464	)		43,793			40,952			(70,464	)
Cash and cash equivalents, at beginning of the period		199,706			152,453			86,480			199,706
Cash and cash equivalents, at end of the period	$	129,242		$	196,246		$	127,432		$	129,242

Note 1 — Basis of Presentation and Significant Accounting Policies

The 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. 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 ~~31, 2021~~30, 2022 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 ~~31, 2021.~~30, 2022.

The Condensed Consolidated Financial Statements for the three and nine months ended September 29, 2023 and September 30, 2022, ~~and October 1, 2021,~~ 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 September 29, 2023 and September 30, 2022, ~~and October 1, 2021,~~ 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

~~Cash and Cash Equivalents~~

~~Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and~~Subsequent to the issuance of the Company’s consolidated financial ~~institutions. Such balances generally exceed~~statements for the ~~federal insurance limits; however,~~year ended December 30, 2022, the Company ~~periodically assesses~~determined that it had not correctly deducted compensation expense in calculating its income tax provision, deferred tax asset and valuation allowance under the ~~financial condition~~Incremental Cash Tax Method. This resulted in an understatement of the ~~institutions~~net deferred tax asset, an overstatement in the valuation allowance, an overstatement of the provision for income taxes and ~~believes~~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 ~~risk~~related impact was not material to results of operations or financial position for any ~~loss is minimal.~~

~~Investments Available~~prior annual or interim period, but that correcting the cumulative impact of the error would be material to our results of operations for ~~Sale~~

~~Investments available for sale (“AFS”) are investments in debt securities for which~~the year ended December 29, 2023. Accordingly, the Company ~~does not have~~has corrected the ~~positive intent~~consolidated balance sheet as of December 30, 2022 and ~~ability to hold to maturity.~~the consolidated statements of income and comprehensive income for the years ended December 30, 2022 and December 31, 2021. The Company’s investment policy primary objective is capital preservation while maximizing its return on investment. Investments may include U.S. government and corporate debt securities, commercial paper, certain certificates of 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. There are also limits to the amount of credit exposure in any given security type.

~~Investments AFS are measured at fair value and its unrealized gains and losses reported net~~effects of the ~~allowance for credit losses and applicable income taxes, are recognized in accumulated other comprehensive income (loss)~~revision on the previously issued consolidated financial statements were as follows:

Condensed Consolidated Balance Sheets. The cost of investments AFS is adjusted for amortization of premiums and accretion of discounts to maturity. Interest earned, including amortization of premiums and accretion of discounts recognized, is included Sheet

(in interest income (expense) on the Consolidated Statements of Income. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method.thousands)

The Company recognizes other-than-temporary impairment (“OTTI”) of a debt security for which there has been a decline in fair value below amortized cost if (i) management intends to sell the security, (ii) it is more-likely-than-not that the Company will be required to sell the security before recovery of its amortized cost basis, or (iii) the Company does not expect to recover the entire amortized cost basis of the security. The amount by which amortized cost exceeds the fair value of a debt security that is considered to have OTTI is separated into a component representing the credit loss, which is recognized in other income (expense) on the Consolidated Statements of Income, and a component related to all other factors, which is recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The measurement of the credit loss component is equal to the difference between the debt security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. (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

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)

~~Vendor Concentration~~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	)

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 September 29, 2023, the Company recognized $1,318,000 of net capitalized cloud-based software implementation costs recorded within Other assets on the condensed consolidated balance sheets. There were no ~~vendors that accounted for over 10% of the Company’s consolidated accounts payable as~~ capitalized cloud-based software implementation costs recognized at December 30, 2022. As of September ~~30, 2022 and December 31, 2021. There~~29, 2023, these assets are not currently placed into service. No amortization of capitalized cloud-based software implementation costs were ~~no vendors that accounted for over 10% of the Company’s consolidated purchases for~~recognized during the three and nine months ended September ~~30, 2022 and October 1, 2021, respectively.~~29, 2023.

Note 2 — Investments Available for Sale

InDuring the ~~three months ended September 30,~~second half of 2022, the Company started to invest its cash in slightly higher yielding securities. Investments ~~AFS~~available for sale (“AFS”) and the related fair value measurement consisted of the following (dollars in thousands):


	September 29, 2023
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	17,102	$	1	$	(5	)	$	17,098	$	—	$	17,098
Certificates of deposit		4,080		1		(2	)		4,079		—		4,079
U.S. Treasury securities		24,828		—		(188	)		24,640		24,640		—
U.S. agency securities		9,771		—		(21	)		9,750		—		9,750
Corporate debt securities		18,812		2		(73	)		18,741		—		18,741
Total investments AFS	$	74,593	$	4	$	(289	)	$	74,308	$	24,640	$	49,668

	December 30, 2022
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	44,054	$	11	$	(62	)	$	44,003	$	—	$	44,003
Certificates of deposit		17,355		4		(75	)		17,284		—		17,284
U.S. Treasury securities		21,847		3		(15	)		21,835		21,835		—
U.S. agency securities		10,688		16		(3	)		10,701		—		10,701
Corporate debt securities		45,522		4		(288	)		45,238		—		45,238
Total investments AFS	$	139,466	$	38	$	(443	)	$	139,061	$	21,835	$	117,226

September 30, 2022

Amortized Cost

Unrealized Gains

Unrealized Losses

Estimated Fair Value

Level 2 Fair Value Measurements:

Commercial paper

$
35,093

$
1

$
(75
)

$
35,019

Certificates of deposit

14,404

1

(66
)

14,339

U.S. Treasury and agency securities

4,188

—

(1
)

4,187

Corporate debt securities

41,898

5

(297
)

41,606

Accrued interest receivable

300

—

—

300

Total investments AFS

$
95,883

$
7

$
(439
)

$
95,451

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.

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 ~~credit~~ 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~~not recognize impairment for the three and nine months ended September ~~30, 2022.~~29, 2023.

The following table shows the fair value of investments AFS by contractual maturity (dollars in thousands):


	As of September 29, 2023
	Within one year		After one year through five years		Total
Commercial paper	$	17,098	$	—	$	17,098
Certificates of deposit		4,079		—		4,079
U.S. Treasury securities		14,855		9,785		24,640
U.S. agency securities		9,354		396		9,750
Corporate debt securities		15,295		3,446		18,741
Total investments AFS	$	60,681	$	13,627	$	74,308

During the nine months ended September 29, 2023, the Company sold $600,000 in securities during the first quarter of 2023 due to a downgraded credit rating. The Company recognized a realized gain upon sale of $2,000 during the nine months ended September 29, 2023.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

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.

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):

Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Amortization of finance lease right-of-use asset	$	39	$	15	$	121	$	71	$	37	$	39	$	114	$	121
Interest on finance lease liabilities		5		1		13		6		3		5		10		13
Cash paid for amounts included in the measurement of finance lease liabilities:
Operating cash flows		5		1		13		6		3		5		10		13
Financing cash flows		40		36		85		314		39		40		121		85

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):

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Operating lease cost	$	1,167	$	931	$	3,471	$	2,571	$	1,419	$	1,167	$	3,883	$	3,471
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		1,103		846		3,069		2,432		1,259		1,103		3,584		3,069
Right-of-use assets obtained in exchange for new operating lease liabilities		126		15,212		1,166		19,219		4,580		126		8,000		1,166

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

Note 10 – 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
	September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Service cost(1)	$	256		$	306		$	759		$	941
Interest cost(2)		91			22			268			63
Expected return on plan assets(2)		(92	)		(125	)		(270	)		(366	)
Prior service credit(2),(3)		(45	)		(44	)		(135	)		(135	)
Actuarial loss recognized in current period(2),(3)		(6	)		98			(19	)		274
Net periodic pension cost	$	204		$	257		$	603		$	777

Three Months Ended

Nine Months Ended

September 30, 2022

October 1, 2021

September 30, 2022

October 1, 2021

Service cost⁽¹⁾

$
306

$
326

$
941

$
1,003

Interest cost⁽²⁾

22

14

63

42

Expected return on plan assets⁽²⁾

(125
)

(99
)

(366
)

(299
)
Prior service credit⁽^2),(3)

(44
)

(10
)

(135
)

(32
)
Actuarial loss recognized in current period⁽^2),(3)

98

131

274

393

Net periodic pension cost

$
257

$
362

$
777

$
1,107

(1)

Recognized in selling general and administrative expenses on the Condensed Consolidated Statements of Income.

(2)

Recognized in other expense, net on the Condensed Consolidated Statements of Income.

(3)

Amounts reclassified from accumulated other comprehensive income (loss).

⁽¹⁾

~~Recognized in selling general and administrative expenses on the Condensed Consolidated Statements of Income.~~

⁽²⁾	~~Recognized in other expense, net on the Condensed Consolidated Statements of Income.~~

⁽³⁾	~~Amounts reclassified from accumulated other comprehensive income (loss).~~

~~STAAR SURGICAL COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~Note 10 – Defined Benefit Pension Plans (Continued)~~

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

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Employee stock options	$	2,865	$	2,594	$	7,649	$	7,850	$	3,517	$	2,865	$	9,973	$	7,649
Restricted stock		67		109		618		507		201		67		347		618
Restricted stock units		1,249		700		3,242		2,048		2,214		1,249		5,963		3,242
Performance stock units		1,240		124		2,932		325		2,449		1,240		5,958		2,932
Nonemployee stock options		306		136		934		255		465		306		1,093		934
Total stock-based compensation expense	$	5,727	$	3,663	$	15,375	$	10,985	$	8,846	$	5,727	$	23,334	$	15,375

The cost is expected to be recognized over a weighted-average period of approximately two years.

The Amended and Restated Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, restricted stock units (“RSUs”) and performance stock units (“PSUs”). Options under the 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 option and share awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three ~~years.~~years. Grants of RSUs and PSUs outstanding under the 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 September ~~30, 2022,~~29, 2023, there were ~~2,133,765~~2,784,909 shares available for grant under the Plan.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

The fair value of each 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 options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that options granted are expected to be outstanding. The Company has calculated a 5%7% 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.

A summary of stock option activity under the Plan for nine months ended September ~~30, 2022~~29, 2023 is presented below:

	Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price
Outstanding at December 31, 2021		2,435
								Stock Options (in 000’s)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in 000’s)
Outstanding at December 30, 2022									2,469		$	39.63
Granted		443							622			55.84
Exercised		(417	)						(500	)		18.54
Forfeited or expired		(23	)						(38	)		72.49
Outstanding at September 30, 2022		2,438		$	5.34	$	154.96
Exercisable at September 30, 2022		1,778
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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

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.

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. STAAR 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.

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective ~~March~~January 1, ~~2015. She~~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.

Note 13 — Basic and Diluted Net Income 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						Nine Months Ended
	September 30, 2022			October 1, 2021			September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Numerator:
Net income	$	10,262		$	6,020		$	32,902		$	19,579		$	4,817		$	10,262		$	13,591		$	32,902
Denominator:
Weighted average common shares:
Common shares outstanding		48,106			47,486			47,919			47,067			48,625			48,106			48,438			47,919
Less: Unvested restricted stock		(4	)		(3	)		(4	)		(3	)		(12	)		(4	)		(12	)		(4	)
Denominator for basic calculation		48,102			47,483			47,915			47,064			48,613			48,102			48,426			47,915
Weighted average effects of potentially diluted common stock:
Stock options		1,336			2,013			1,378			2,277			679			1,336			933			1,378
Unvested restricted stock		2			—			2			6			—			2			3			2
RSUs		64			86			55			90			17			64			67			55
PSUs		45			10			21			11			61			45			65			21
Denominator for diluted calculation		49,549			49,592			49,371			49,448			49,370			49,549			49,494			49,371
Net income per share:
Basic	$	0.21		$	0.13		$	0.69		$	0.42		$	0.10		$	0.21		$	0.28		$	0.69
Diluted	$	0.21		$	0.12		$	0.67		$	0.40		$	0.10		$	0.21		$	0.27		$	0.67

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				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Stock options		864		33		865		201		2,453		864		1,853		865
Restricted stock, RSUs and PSUs		2		6		20		3		341		2		26		20
Total		866		39		885		204		2,794		866		1,879		885

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

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				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Non-consignment sales	$	71,223	$	53,819	$	205,236	$	156,604	$	75,296	$	71,223	$	230,527	$	205,236
Consignment sales		4,823		4,533		15,111		14,867		5,012		4,823		15,615		15,111
Total net sales	$	76,046	$	58,352	$	220,347	$	171,471	$	80,308	$	76,046	$	246,142	$	220,347

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%~~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):

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				Nine Months Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021		September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Domestic	$	3,873	$	2,385	$	10,375	$	7,429	$	4,164	$	3,873	$	13,061	$	10,375
Foreign:
China		42,246		28,411		116,635		80,984		48,287		42,246		144,716		116,635
Japan		10,546		10,488		32,481		29,374		9,175		10,546		28,526		32,481
Other⁽¹⁾		19,381		17,068		60,856		53,684
Other(1)										18,682		19,381		59,839		60,856
Total foreign sales		72,173		55,967		209,972		164,042		76,144		72,173		233,081		209,972
Total net sales	$	76,046	$	58,352	$	220,347	$	171,471	$	80,308	$	76,046	$	246,142	$	220,347

⁽¹⁾	~~No other location individually exceeds 10% of the total sales.~~

(1)

No other location individually exceeds 10% of the total sales.

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 surgery and intraocular lenses (“IOLs”) used in cataract surgery. The composition of the Company’s net sales by product line was as follows (in thousands):


	Three Months Ended					Nine Months Ended
	September 29, 2023			September 30, 2022		September 29, 2023		September 30, 2022
ICLs	$	81,069		$	71,953	$	244,806	$	208,550
Other product sales:
Cataract IOLs		(221	)		2,191		1,295		7,640
Other surgical products(1)		(540	)		1,902		41		4,157
Total other product sales		(761	)		4,093		1,336		11,797
Total net sales	$	80,308		$	76,046	$	246,142	$	220,347

(1) Other surgical products include delivery systems and normal recurring sales adjustments such as sales return allowances.

Three Months Ended

Nine Months Ended

September 30, 2022

October 1, 2021

September 30, 2022

October 1, 2021

ICLs

$
71,953

$
54,153

$
208,550

$
159,889

Other product sales:

Cataract IOLs

2,191

2,525

7,640

9,324

Other surgical products

1,902

1,674

4,157

2,258

Total other product sales

4,093

4,199

11,797

11,582

Total net sales

$
76,046

$
58,352

$
220,347

$
171,471

One customer, the Company’s distributor in China, accounted for ~~56%~~60% and ~~49%~~56% of net sales for the three months ended September 29, 2023 and September 30, 2022, ~~and October 1, 2021,~~ respectively, and the same customer accounted for ~~53%~~59% and ~~47%~~53% for the nine months ended September 29, 2023 and September 30, 2022, ~~and October 1, 2021,~~ respectively. As of September ~~30, 2022~~29, 2023 and December ~~31, 2021,~~30, 2022, respectively, one customer, the Company’s distributor in China, accounted for ~~57%~~78% and ~~47%~~59% of consolidated trade receivables.

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, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “should,” “forecast” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements about any of the following: any projections of or guidance as to 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 ~~2022 and~~ 2023 business plans; 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, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, those described in in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on February 23, ~~2022.~~2023. We undertake no obligation to update these forward-looking statements after the date of this report to reflect future events or circumstances or to reflect actual outcomes.

The following discussion should be read in conjunction with the audited consolidated financial statements of STAAR, including the related notes, provided in this report.

~~Overview~~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.

STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and companion 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, and we also make lenses for use in surgery to treat cataracts.~~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 our lenses used in refractive 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. Cataract surgery is a common outpatient procedure where the eye’s natural lens that has become cloudy with age is removed and replaced with an artificial lens called an intraocular lens (“IOL”) to restore the patient’s vision. STAAR employs a commercialization strategy that strives for sustainable profitable growth. 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. ~~We position our cataract IOL lenses used in surgery that treats cataracts based on quality and value.~~

STAAR achieved ~~30% net~~13% growth in ICL sales in the third quarter of 2023, compared to the third quarter of 2022, with ICL sales growth in the third quarter despite constant currency challenges and, in Europe, macroeconomic headwinds. In the third quarter global ICL unit growth was up 40% year over year, highlighted by unit growth in China up 52%, the U.S. up 63%, Japan up 40%, South Korea up 49% and Asia Pacific ~~distributor~~ markets up ~~47%~~13%, EMEA markets up 14%, and the Americas up 5%. ~~We advanced our patient awareness, engagement and market building initiatives for EVO in the U.S. during and subsequent~~In China, ICL sales were up 14% compared to the ~~third~~second quarter of 2022. The uncertain economic environment globally and ~~introduced~~world events may have an impact on our ~~presbyopia lens, EVO Viva™, to surgeons at~~surgeon customers and patients. As a result, while we are reaffirming our Experts Meeting preceding the annual congress of the European Society of Cataract and Refractive Surgeons. In China, we expect to exceed a 25% share of refractive surgery market units by year end. Due to tighter COVID restrictions in China resulting in expected delayed demand in the fourth quarter, ongoing headwinds in Europe, weakness in the Yen and Euro, and lower Other Products sales, we now anticipate total net sales will be approximately $285 millionpreviously provided outlook for fiscal ~~2022. Our fiscal 2022 outlook includes~~2023 ICL sales of ~~approximately $272~~$320 million ~~representing 28% year over year growth, and Other Products sales~~to $325 million, revenue may come in at the lower end of the range should macroeconomic weakness and/or other disruptions materialize.

~~Our low margin Other Products business, which represents approximately 5% of sales~~300 EVO/EVO+ lenses with a measurement deviating +/- 0.5 diopters from the as labeled power. We have identified and ~~consists of cataract IOLs, IOL injectors and injector parts, has faced increasing supply chain challenges. As a result of third-party materials and supply chain~~

~~challenges that only affect our Other Products business, we will no longer be able to support Other Products as we have historically. We will continue to support customers of Other Products through~~fixed the end of 2023. As we look to fiscal 2023, we expect to achieve approximately 30% ICL sales growth, year over year, to approximately $355 million in total company net sales which contemplates limited sales from Other Products.problem. We do not expect ~~contribution from Other Products thereafter. We continue~~material operational costs related to ~~see significant growth potential for our EVO family of lenses globally.~~this matter.

This Management’s Discussion and Analysis of Financial Condition and Results of Income 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 nine months ended September 30~~, 2022~~ 29, 2023 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 ~~31, 2021.~~30, 2022.

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 Sales for Three Months						Percentage of Net Sales for Nine Months						Percentage of Net Sales for Three Months						Percentage of Net Sales for Nine Months
	September 30, 2022			October 1, 2021			September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		20.5	%		22.4	%		21.2	%		22.1	%		20.8	%		20.5	%		22.0	%		21.2	%
Gross profit		79.5	%		77.6	%		78.8	%		77.9	%		79.2	%		79.5	%		78.0	%		78.8	%
General and administrative		18.4	%		18.9	%		18.1	%		19.0	%		24.0	%		18.4	%		22.6	%		18.1	%
Selling and marketing		30.4	%		31.1	%		29.3	%		29.3	%		33.1	%		30.4	%		34.6	%		29.3	%
Research and development		12.7	%		14.2	%		12.0	%		14.5	%		14.3	%		12.7	%		13.6	%		12.0	%
Total selling, general and administrative		61.5	%		64.2	%		59.4	%		62.8	%		71.4	%		61.5	%		70.8	%		59.4	%
Operating income		18.0	%		13.4	%		19.4	%		15.1	%		7.8	%		18.0	%		7.2	%		19.4	%
Total other expense, net		(1.5	)%		(0.8	)%		(1.5	)%		(0.9	)%
Total other income (expense), net														0.6	%		(1.5	)%		0.9	%		(1.5	)%
Income before income taxes		16.5	%		12.6	%		17.9	%		14.2	%		8.4	%		16.5	%		8.1	%		17.9	%
Provision for income taxes		3.0	%		2.3	%		3.0	%		2.8	%		2.4	%		3.0	%		2.6	%		3.0	%
Net income		13.5	%		10.3	%		14.9	%		11.4	%		6.0	%		13.5	%		5.5	%		14.9	%


	Three Months Ended				Percentage Change			Nine Months Ended				Percentage Change			Three Months Ended					Percentage Change			Nine Months Ended				Percentage Change
	September 30, 2022		October 1, 2021		2022 vs. 2021			September 30, 2022		October 1, 2021		2022 vs. 2021			September 29, 2023			September 30, 2022		2023 vs. 2022			September 29, 2023		September 30, 2022		2023 vs. 2022
ICLs	$	71,953	$	54,153		32.9	%	$	208,550	$	159,889		30.4	%	$	81,069		$	71,953		12.7	%	$	244,806	$	208,550		17.4	%
Other product sales:
Cataract IOLs		2,191		2,525		(13.2	)%		7,640		9,324		(18.1	)%		(221	)		2,191		—	*		1,295		7,640		(83.0	)%
Other surgical products		1,902		1,674		13.6	%		4,157		2,258		84.1	%		(540	)		1,902		—	*		41		4,157		(99.0	)%
Total other product sales		4,093		4,199		(2.5	)%		11,797		11,582		1.9	%		(761	)		4,093		—	*		1,336		11,797		(88.7	)%
Net sales	$	76,046	$	58,352		30.3	%	$	220,347	$	171,471		28.5	%	$	80,308		$	76,046		5.6	%	$	246,142	$	220,347		11.7	%

Net sales for the three months ended September ~~30, 2022~~29, 2023 increased ~~30%~~6% from the same period of ~~2021.~~2022. The increase in net sales was primarily due to increased ICL sales of ~~$17.8~~$9.1 million, slightly offset by decreased other product sales of $4.9 million. Changes in foreign currency favorably impacted net sales by $0.1 million.

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 million. Changes in foreign currency unfavorably impacted net sales by ~~$4.0~~$2.3 million.

Net sales for the nine months ended September 30, 2022 increased 29% from same period of 2021. The increase in net sales was due to increased ICL sales of $48.7 million. Changes in foreign currency unfavorably impacted net sales by $9.0 million.

Total ICL sales for the three months ended September ~~30, 2022~~29, 2023 increased ~~33%~~13% from the same period of ~~2021,~~2022, with unit increase of ~~40%~~14%. The APAC region sales increased by ~~40%~~13%, with unit growth up ~~47%~~15%, due to sales growth in ~~Korea~~India up ~~50%~~40%, China up ~~49%~~14%, Japan up 12% and other APAC regions up 6%. The EMEA region sales increased 14% with unit growth up 13%, due to sales increases in our distributor markets up 20% and direct markets up 9%. The Americas region sales increased 5%, 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 ~~49% and~~10%, Japan up ~~12%~~10% and Korea up 4%. The ~~Europe, Middle East, Africa and Latin America~~EMEA region sales ~~decreased 9%~~increased 4%, with unit decrease of 2%, due to sales ~~decreases~~increases in inour distributor markets up 5% and our direct markets ~~down 12% and distributor markets down 4%~~up 3%. The ~~North America~~Americas region sales increased ~~66%~~18%, with unit growth up ~~56%~~16%, primarily due to sales growth in the U.S. up ~~75%~~23%. In late March 2022, the U.S. started to sell EVO ICLs. Changes in foreign currency unfavorably impacted ICL sales by ~~$3.2~~$2.0 million for the ~~three~~nine months ended September ~~30, 2022,~~29, 2023, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 99.5% and 94.6% of our total sales for the nine months ended September 29, 2023 and ~~92.8%~~September 30, 2022, respectively.

Other product sales, includes cataract 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 affect our cataract IOLs and associated delivery devices, we will no longer manufacture cataract IOLs, though we will continue to support these products through the end of 2023, as supplies permit. 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 September 29, 2023, decreased 119% and 89%, respectively, from the same period of 2022, due primarily to a reduction in cataract IOL sales, 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. Other product sales represented (0.9%) and 5.4% of our total sales for the three months ended September ~~30, 2022~~29, 2023 and ~~October 1, 2021, respectively.~~

~~Total ICL sales for the nine months ended~~ September 30, 2022, ~~increased 30% from the same period of 2021, with unit increase of 38%. The APAC region sales increased by 38%, with unit growth up 43%, due to sales growth in other APAC regions up 59%, India up 44%,China up 44%, Korea up 25%~~respectively, and ~~Japan up 16%. The Europe, Middle East, Africa~~represented 0.5% and Latin America region sales decreased 1% with unit growth up 12%, due to sales decreases in our direct markets down 8%, offset by sales growth in distributor markets up 8%. The North America region sales increased 43%, with unit growth up 35%, primarily due to sales growth in the U.S. up 47%. In late March 2022, the U.S. started to sell EVO ICLs. Changes in foreign currency unfavorably impacted ICL sales by $7.2 million for the nine months ended September 30, 2022, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 94.6% and 93.2%5.4% of our total sales for the nine months ended September ~~30, 2022~~29, 2023 and ~~October 1, 2021, respectively.~~

~~Other product sales, including cataract IOLs for the three months ended~~ September 30, 2022, decreased 3% from the same period of 2021, due to decreased sales of cataract IOLs, partially offset by other surgical products. Other product sales for the nine months ended September 30, 2022, increased 2% due to other surgical products, offset by decreased sales of cataract IOLs. Included in other product sales are sales of preloaded injector parts. In the first half of 2021, we experienced product yield issues requiring rework related to preloaded injector parts manufactured on our behalf by a third-party vendor then sold by us to a third-party manufacturer for product they sell to their customers. respectively.

~~Changes in foreign currency unfavorably impacted other product sales by $0.8 million and $1.8 million for the three and nine months September 30, 2022, respectively.~~ ~~Other product sales represented~~ ~~5.4% and 7.2% of our total sales for the three months ended September 30, 2022 and October 1, 2021, respectively, and~~ ~~represented~~ ~~5.4% and 6.8% of our total sales for the nine months ended September 30, 2022 and October 1, 2021, respectively.~~

The following table presents our gross profit and gross profit margin (dollars in thousands):


	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 30, 2022			October 1, 2021			2022 vs. 2021			September 30, 2022			October 1, 2021			2022 vs. 2021			September 29, 2023			September 30, 2022			2023 vs. 2022			September 29, 2023			September 30, 2022			2023 vs. 2022
Gross profit	$	60,462		$	45,301			33.5	%	$	173,598		$	133,646			29.9	%	$	63,638		$	60,462			5.3	%	$	191,926		$	173,598			10.6	%
Gross margin		79.5	%		77.6	%					78.8	%		77.9	%					79.2	%		79.5	%					78.0	%		78.8	%

Gross profit for the three months ended September ~~30, 2022~~29, 2023 increased ~~33.5%~~5.3%, from the same period of ~~2021.~~2022. Gross profit margin ~~increased~~decreased to 79.2% of revenue for the three months ended September 29, 2023 compared to 79.5% of revenue for the three months ended September 30, 2022, ~~compared to 77.6% of revenue for the three months ended October 1, 2021,~~due mainly to ~~product~~increased sales return reserves and ~~geographic sales mix, partially offset by increased~~ period costs associated with manufacturing projects, partially offset by product and geographic sales mix..

Gross profit for the nine months ended September ~~30, 2022~~29, 2023 increased ~~29.9%~~10.6%, from the same period of ~~2021.~~2022. Gross profit margin ~~increased~~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, ~~compared to 77.9% of revenue for the nine months ended October 1, 2021,~~due mainly to ~~product and geographic sales mix, partially offset by inventory~~ reserves ~~recognized as a result of discontinuance of our older generation Visian ICL in the U.S. and increased period costs associated with manufacturing projects.~~related to cataract IOLs.

The following table presents our general and administrative expenses (dollars in thousands):


	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 30, 2022			October 1, 2021			2022 vs. 2021			September 30, 2022			October 1, 2021			2022 vs. 2021			September 29, 2023			September 30, 2022			2023 vs. 2022			September 29, 2023			September 30, 2022			2023 vs. 2022
General and administrative expense	$	14,011		$	11,018			27.2	%	$	39,934		$	32,671			22.2	%	$	19,266		$	14,011			37.5	%	$	55,461		$	39,934			38.9	%
Percentage of sales		18.4	%		18.9	%					18.1	%		19.0	%					24.0	%		18.4	%					22.6	%		18.1	%

General and administrative expenses for the three months ended September ~~30, 2022~~29, 2023 increased ~~27.2%~~37.5% from the same period of ~~2021~~2022 due to increased ~~stock-based compensation~~salary-related and payroll tax expenses, outside services, facility costs and ~~outside services.~~ bonus and stock-based compensation expenses.

General and administrative expenses for the nine months ended September ~~30, 2022~~29, 2023 increased ~~22.2%~~38.9% from the same period of ~~2021~~2022 due to increased ~~facility costs,~~salary-related and payroll tax expenses, outside services, bonus and stock-based compensation expenses, facility costs and ~~outside services.~~Japan one-time employee benefits.

The following table presents our selling and marketing expenses (dollars in thousands):


	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 30, 2022			October 1, 2021			2022 vs. 2021			September 30, 2022			October 1, 2021			2022 vs. 2021			September 29, 2023			September 30, 2022			2023 vs. 2022			September 29, 2023			September 30, 2022			2023 vs. 2022
Selling and marketing expense	$	23,130		$	18,175			27.3	%	$	64,633		$	50,229			28.7	%	$	26,607		$	23,130			15.0	%	$	85,238		$	64,633			31.9	%
Percentage of sales		30.4	%		31.1	%					29.3	%		29.3	%					33.1	%		30.4	%					34.6	%		29.3	%

Selling and marketing expenses for the three months ended September ~~30, 2022~~29, 2023 increased ~~27.3%~~15.0% from the same period of ~~2021~~2022 due to increased advertising and promotional activities, salary-related and payroll tax expenses, and bonus and stock-based compensation expenses, partially offset by decreased trade shows and sales meetings ~~advertising and promotional activities, travel expenses and stock-based compensation~~ expenses.

Selling and marketing expenses for the nine months ended September ~~30, 2022~~29, 2023 increased ~~28.7%~~31.9% from the same period of ~~2021~~2022 due to increased advertising and promotional activities, ~~trade shows~~especially in the U.S., salary-related and ~~sales meetings, travel~~payroll tax expenses, bonus and stock-based compensation expenses and sales commission expenses.

The following table presents our research and development expenses (dollars in thousands):


	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 30, 2022			October 1, 2021			2022 vs. 2021			September 30, 2022			October 1, 2021			2022 vs. 2021			September 29, 2023			September 30, 2022			2023 vs. 2022			September 29, 2023			September 30, 2022			2023 vs. 2022
Research and development expense	$	9,616		$	8,271			16.3	%	$	26,193		$	24,790			5.7	%	$	11,470		$	9,616			19.3	%	$	33,535		$	26,193			28.0	%
Percentage of sales		12.7	%		14.2	%					12.0	%		14.5	%					14.3	%		12.7	%					13.6	%		12.0	%

Research and development expenses for the three and nine months ended September ~~30, 2022~~29, 2023 increased ~~16.3%~~19.3% and 28.0% from the same period of ~~2021 due mainly to increased salary-related and payroll tax expenses. Research and development expenses for the nine months ended September 30,~~ 2022, ~~increased 5.7% from the same period of 2021~~respectively, due mainly to increased salary-related and payroll tax expenses and ~~stock-based compensation expenses, partially offset by decreased~~ clinical expenses associated with our U.S. post-approval clinical ~~trials.~~ 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.

	Three Months Ended						Percentage Change		Nine Months Ended						Percentage Change
	September 30, 2022			October 1, 2021			2022 vs. 2021		September 30, 2022			October 1, 2021			2022 vs. 2021		Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
Other expense, net	$	(1,128	)	$	(461	)		—*	$	(3,265	)	$	(1,626	)		—*
																	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		(1.5	)%		(0.8	)%				(1.5	)%		(0.9	)%				0.6	%		(1.5	)%					0.9	%		(1.5	)%

The change in other ~~expense,~~income (expense), net for the three and nine months ended September ~~30, 2022~~29, 2023 and ~~October 1, 2021, respectively, was~~ ~~due primarily to foreign exchange losses (primarily euro), and for the three and nine months ended~~ September 30, 2022, ~~partially offset by~~respectively, was due to increased interest income mainly due to our investments held available for ~~sale.~~ sale and lower foreign exchange losses.

The effective tax rates for the three months ended September 29, 2023 and September 30, 2022 ~~and October 1, 2021 was 18.4%~~were 28.6% and 18.4%, respectively, and ~~was~~were 31.9% and 16.9% ~~and 19.5%,~~ for the nine months ended September 29, 2023 and September 30, 2022, ~~and October 1, 2021,~~ respectively. Our effective tax rates differ from the U.S. federal statutory rate of 21% ~~for the three and nine months ended September 30, 2022 and October 1, 2021, respectively,~~, primarily due to the income ~~taxes~~tax expense generated in foreign jurisdictions. ~~The differences in the effective tax rate for the three and nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to jurisdictions in which the income is earned.~~

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.

We believe that current cash and cash equivalents, investments available for sale (“AFS”) and future cash flow from operating activities 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 included in this quarterly report. Our financial condition at September ~~30, 2022~~29, 2023 and December ~~31, 2021~~30, 2022 included the following (in thousands):


	September 30, 2022		December 31, 2021		2022 vs. 2021			September 29, 2023		December 30, 2022		2023 vs. 2022
Cash and cash equivalents	$	129,242	$	199,706	$	(70,464	)	$	127,432	$	86,480	$	40,952
Investments available for sale		95,451		—		95,451			74,308		139,061		(64,753	)
Total	$	224,693	$	199,706	$	24,987		$	201,740	$	225,541	$	(23,801	)

Current assets	$	296,910	$	271,411	$	25,499		$	347,068	$	311,723	$	35,345
Current liabilities		45,320		48,802		(3,482	)		56,775		51,716		5,059
Working capital	$	251,590	$	222,609	$	28,981		$	290,293	$	260,007	$	30,286

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.

A summary of cash flows for the nine months ended September 29, 2023 and September 30, 2022 ~~and October 1, 2021~~ was as follows (in thousands):


	Nine Months Ended						Nine Months Ended
	September 30, 2022			October 1, 2021			September 29, 2023			September 30, 2022
Cash flows from:
Operating activities	$	32,745		$	35,464		$	(17,375	)	$	32,745
Investing activities		(109,659	)		(8,956	)		51,945			(109,659	)
Financing activities		8,095			18,009			7,048			8,095
Effect of exchange rate changes		(1,645	)		(724	)		(666	)		(1,645	)
Net increase (decrease) in cash and cash equivalents		(70,464	)		43,793			40,952			(70,464	)
Cash and cash equivalents, at beginning of year		199,706			152,453			86,480			199,706
Cash and cash equivalents, at end of year	$	129,242		$	196,246		$	127,432		$	129,242

For the nine months ended September ~~30, 2022,~~29, 2023 net cash used by operating activities consisted of ~~$32.9~~$61.3 million in ~~net income, $20.6~~working-capital changes partially offset by $30.3 million in non-cash items ~~offset by $20.8 million~~and net income of $13.6 million.

In the ~~three months ended September 30,~~second half of 2022, we decided to invest our cash in slightly higher yielding securities. For the nine months ended September 29, 2023, net cash provided by investment activities was $52.0 million which consisted of $119.4 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 million in purchases of property, plant and equipment. For the nine months ended September 30, 2022, net cash used in investment ~~activities~~activity was $109.7 million which consisted of $95.6 million in purchases of investments ~~available for sale~~AFS and $14.1 million in purchases of property, plant and equipment. The increase in investments of property, plant and equipment of $5.1 million for the nine months ended September 30, 2022 relative to the same period of 2021, was due to increased investments in manufacturing facilities.

Net cash provided by financing activities for the nine months ended September 29, 2023 was $7.0 million which consisted of $9.3 million of proceeds from the exercise of stock options, partially offset by $2.1 million to repurchase of employee common stock for taxes withheld. For the nine months ended September 30, 2022, net cash provided by financing activities consisted of $8.2 million of proceeds from the exercise of stock options. ~~For the nine months ended~~ ~~October 1, 2021, net cash provided by financing activities consisted of $18.3 million of proceeds from the exercise of stock options, partially offset by $0.3 million repayment of finance lease obligations.~~

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective ~~March~~January 1, ~~2015. She~~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.

During the nine months ended September ~~30, 2022,~~29, 2023, 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 ~~31, 2021.~~30, 2022.

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.

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.

There were no changes in our internal control over financial reporting during the quarter ended September ~~30, 2022~~29, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 ~~31, 2021.~~30, 2022. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

~~ITEM 5.~~

~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

(c)

Trading Plans

~~None.~~During the quarter ended September 29, 2023, no director or officer adopted or terminated:

(i)

Any contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b51-1(c); and

(ii)

Any “non-Rule 10b5-1 trading arrangement” as defined in paragraph (c) of item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS


3.1	~~EXHIBITS~~

~~3.1~~	Amended and Restated Certificate of Incorporation.(1)

3.2	Amended and Restated Bylaws.(2)

4.1	Form of Certificate for Common Stock, par value $0.01 per share.(3)

†4.2	Amended and Restated Omnibus Equity Incentive Plan.(4)

31.1	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101	Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended September ~~30, 2022~~29, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL), are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.*

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September ~~30, 2022,~~29, 2023, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101.

(1)

Incorporated by reference to Appendix 2 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 13, 2018.

(2)

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on February 1, 2023.

(3)

Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form 8‑A/A as filed with the Commission on April 18, 2003.

(4)

Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, for the period ended July 3, 2020, as filed with the Commission on August 5, 2020.

* Filed herewith.

** Furnished herewith.

† Management contract or compensatory plan.

SIGNATURES

~~(1)~~

~~Incorporated by reference to Appendix 2 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 13, 2018.~~

~~(2)~~

~~Incorporated by reference to Appendix 3 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 13, 2018.~~

~~(3)~~

~~Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form 8‑A/A as filed with the Commission on April 18, 2003.~~

~~(4)~~

~~Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, for the period ended July 3, 2020, as filed with the Commission on August 5, 2020.~~

*	~~Filed herewith.~~

**	~~Furnished herewith.~~

†	~~Management contract or compensatory plan.~~

~~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.


		STAAR SURGICAL COMPANY

Dated:	November ~~2, 2022~~6, 2023	By:	/s/ PATRICK F. WILLIAMS
			Patrick F. Williams
			Chief Financial Officer
			(on behalf of the Registrant and as its principal financial officer)

2627


Delaware	95-3797439
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
25651 Atlantic Ocean Drive Lake Forest, California	92630
(Address of Principal Executive Offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	STAA	NASDAQ


		PAGE NUMBER

PART I – FINANCIAL INFORMATION		1

ITEM 1	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1819

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24

ITEM 4.	CONTROLS AND PROCEDURES	24

PART II – OTHER INFORMATION		2425

ITEM 1.	LEGAL PROCEEDINGS	2425

ITEM 1A.	RISK FACTORS	25

ITEM 4.	MINE SAFETY DISCLOSURES	25

ITEM 5.	OTHER INFORMATION	25

ITEM 6.	EXHIBITS	2526


	September 29, 2023			December 30, 2022
Raw materials and purchased parts	$	9,591		$	6,703
Work in process		6,451			5,499
Finished goods		18,944			13,633
Total inventories, gross		34,986			25,835
Less inventory reserves		(3,925	)		(1,674	)
Total inventories, net	$	31,061		$	24,161

	September 30, 2022			December 31, 2021
Raw materials and purchased parts	$	5,607		$	3,971
Work in process		4,038			4,031
Finished goods		12,109			10,429
Total inventories, gross		21,754			18,431
Less inventory reserves		(1,824	)		(1,157	)
Total inventories, net	$	19,930		$	17,274


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

	As of September 30, 2022
	Within one year		After one year through five years		Total
Commercial paper	$	35,019	$	—	$	35,019
Certificates of deposit		14,339		—		14,339
U.S. Treasury and agency securities		4,187		—		4,187
Corporate debt securities		28,246		13,360		41,606
Accrued interest receivable		300		—		300
Total investments AFS	$	82,091	$	13,360	$	95,451


	September 29, 2023		December 30, 2022
Prepayments and deposits	$	5,830	$	3,986
Prepaid insurance		455		2,620
Prepaid marketing costs		4,543		2,534
Consumption tax receivable		777		864
Value added tax (VAT) receivable		2,189		2,661
BVG (Swiss Pension) prepayment		801		111
Other(1)		932		700
Total prepayments, deposits and other current assets	$	15,527	$	13,476


	September 29, 2023			December 30, 2022
Machinery and equipment	$	29,461		$	28,026
Computer equipment and software		8,329			9,266
Furniture and fixtures		4,110			4,276
Leasehold improvements		10,047			14,965
Construction in process		40,174			32,269
Total property, plant and equipment, gross		92,121			88,802
Less accumulated depreciation		(29,235	)		(37,881	)
Total property, plant and equipment, net	$	62,886		$	50,921


	September 29, 2023							December 30, 2022
Long-lived amortized intangible assets	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Patents and licenses	$	9,180	$	(9,180	)	$	—	$	9,240	$	(9,067	)	$	173


	September 29, 2023		December 30, 2022
Accrued salaries and wages	$	11,813	$	10,862
Accrued bonuses		2,517		6,925
Income taxes payable		8,540		3,845
Marketing obligations		1,571		1,374
Other(1)		11,824		7,735
Total other current liabilities	$	36,265	$	30,741


As of September 29, 2023 12 Months Ended	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 September 30, 2022 12 Months Ended	Operating Leases			Finance Leases
September 2023	$	5,179		$	181
September 2024		5,152			176
September 2025		4,224			85
September 2026		3,659			—
September 2027		3,671			—
Thereafter		13,099			—
Total future minimum lease payments	$	34,984		$	442
Less amounts representing interest		(5,478	)		(23	)
Present value of future minimum lease payments	$	29,506		$	419


	September 29, 2023
Stock options	$	23,888
Restricted stock, RSUs and PSUs		24,690
Total unrecognized stock-based compensation cost	$	48,578


	Restricted Stock			RSUs			PSUs
Unvested at December 30, 2022		4			192			118
Granted		12			269			182
Vested		(4	)		(94	)		(36	)
Forfeited or expired		—			(6	)		(13	)
Unvested at September 29, 2023		12			361			251