-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IErbZqKzOyLNB/4V/m/WNK681vcRpeBwJfI9Q/hn9mLf32z8vQlge7e1eGh9PEae ol+xKjUQ1MMEJgboGSkjsw== 0000898430-96-001787.txt : 19960514 0000898430-96-001787.hdr.sgml : 19960514 ACCESSION NUMBER: 0000898430-96-001787 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960329 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAAR SURGICAL COMPANY CENTRAL INDEX KEY: 0000718937 STANDARD INDUSTRIAL CLASSIFICATION: OPHTHALMIC GOODS [3851] IRS NUMBER: 953797439 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11634 FILM NUMBER: 96562056 BUSINESS ADDRESS: STREET 1: 1911 WALKER AVE CITY: MONROVIA STATE: CA ZIP: 91016 BUSINESS PHONE: 8183037902 MAIL ADDRESS: STREET 1: 1911 WALKER AVE CITY: MONROVIA STATE: CA ZIP: 91016 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended . . . . . . . . . . . . . . . March 29, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number . . . . . . . . . . . . . . . . . . . . 0-11634 STAAR SURGICAL COMPANY (Exact name of registrant as specified in its charter) Delaware 95-3797439 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 1911 Walker Avenue Monrovia, California 91016 (Address of principal executive offices) (Zip Code) (818) 303-7902 (Registrant's telephone number including area code) N/A (Former name, former address and former fiscal year, if changed since last report) 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 X NO --- --- The Registrant has 12,851,343 shares of common stock, par value $0.01 per share, issued and outstanding as of May 8, 1996. Total number of sequentially numbered pages in this document: 8 STAAR SURGICAL COMPANY INDEX
PAGE NUMBER PART I Item 1 - Financial Information Condensed Consolidated Balance Sheets - March 29, 1996 and December 29, 1995................................................. 1 Condensed Consolidated Statements of Income - Three Months Ended March 29, 1996 and March 31, 1995..................................... 2 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 29, 1996 and March 31, 1995..................................... 3 Notes to Condensed Consolidated Financial Statements.................. 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................... 6 PART II Other Information ................................................... 7 Signature Page ....................................................... 8
STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 29, 1996 DECEMBER 29, 1995 -------------- ----------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 4,018,619 $ 3,767,011 Accounts receivable, less allowance for doubtful accounts and estimated returns 7,679,956 7,492,439 Inventories 10,814,377 9,591,898 Prepaids, deposits and other current assets 1,248,286 917,895 Deferred income tax 2,889,223 3,323,724 ----------- ----------- Total current assets 26,650,461 25,092,967 Investment in joint venture 2,250,715 2,121,492 Property, plant and equipment, net 7,113,557 6,362,696 Patents and licenses, net 4,424,656 3,538,769 Other assets 1,628,304 1,687,066 ----------- ----------- Total assets $42,067,693 $38,802,990 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Notes payable $ 4,068,180 $ 3,548,686 Current portion of long-term debt 647,421 480,151 Accounts payable 2,346,252 1,448,135 Other current liabilities 3,097,298 3,281,321 ----------- ----------- Total current liabilities 10,159,151 8,758,293 ----------- ----------- Long term debt 1,310,975 1,212,178 Deferred gain on sale of license 96,875 143,750 Other long term liabilities 7,989 10,743 ----------- ----------- Total liabilities 11,574,990 10,124,964 ----------- ----------- Stockholders' equity: Common stock $0.01 par value, 40,000,000 shares authorized; issued and outstanding 12,858,028 at March 29, 1996 and 12,784,148 at December 29, 1995 128,580 127,841 Capital in excess of par value 40,641,346 40,325,287 Accumulated deficit (7,951,208) (9,449,087) ----------- ----------- 32,818,718 31,004,041 Notes and other receivables (2,326,015) (2,326,015) ----------- ----------- Total stockholders' equity 30,492,703 28,678,026 ----------- ----------- Total liabilities and stockholders' equity $42,067,693 $38,802,990 =========== ===========
STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED -------------------------------- MARCH 29, 1996 MARCH 31, 1995 -------------- -------------- REVENUES - -------- Sales $9,279,078 $7,307,599 Royalty income 250,000 -- ---------- ---------- Total revenues 9,529,078 7,307,599 Cost of sales 2,273,870 1,753,910 ---------- ---------- Gross profit 7,255,208 5,553,689 Selling, general and administrative expenses: General & administrative 1,423,698 1,029,799 Marketing & selling 2,778,451 2,196,705 Research & development 870,598 739,173 ---------- ---------- Total selling general & administrative expense 5,072,747 3,965,677 Operating income 2,182,461 1,588,012 ---------- ---------- Other income (expense) Equity in earnings of joint venture 176,098 229,600 Interest expense - net (70,389) (20,164) Other expense 15,649 (92,548) ---------- ---------- Total other income - net 121,358 116,888 Income before income taxes 2,303,819 1,704,900 Income tax provision 805,940 58,931 ---------- ---------- Net income $1,497,879 $1,645,969 ========== ========== Income per share: Primary $ .11 $ .12 ========== ========== Fully diluted $ .11 $ .12 ========== ==========
STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED --------------------------------- MARCH 29, 1996 MARCH 31, 1995 --------------- --------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - ------------------------------------------------- Cash flows from operating activities: Net income $ 1,497,879 $ 1,645,969 Adjustments to reconcile operating activities: Depreciation and amortization 651,435 384,878 Recognition of deferred tax asset 434,501 -- Income in equity of joint venture (176,098) (229,600) Stock issued in exchange for services 325,000 325,000 Other 56,008 (26,094) Change in working capital (1,026,293) (413,539) ----------- ----------- Net cash provided by (used in) operating activities 1,762,432 1,686,614 Cash flows from investing activities: Acquisition of property, plant and equipment (1,314,450) (579,058) Increase in patent and licenses (973,733) (680,001) ----------- ----------- Net cash used in investing activities (2,288,183) (1,259,059) Cash flows from financing activities: Net borrowings under debt financing 785,561 437,527 Proceeds from exercise of stock options & warrants 68,798 313,220 Payments for repurchase of common stock (77,000) (982,341) ----------- ----------- Net cash provided by (used in) financing activities 777,359 (231,594) Increase (decrease) in cash and cash equivalents 251,608 195,961 Cash and cash equivalents at beginning of period 3,767,011 3,203,887 ----------- ----------- Cash and cash equivalents at end of period $ 4,018,619 $ 3,399,848 =========== ===========
STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 29, 1996 -------------- 1. BASIS OF PRESENTATION --------------------- The accompanying financial statements consolidate the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Assets and liabilities of foreign subsidiaries are translated at rates of exchange in effect at the close of the period. Revenues and expenses are translated at the weighted average of exchange rates in effect during the year. Net foreign currency translation and transaction gains and losses were not material. Investments in affiliates and joint ventures are accounted for using the equity method of accounting. Certain reclassifications have been made to the 1995 consolidated financial statements to conform with the 1996 presentation. 2. REVENUE RECOGNITION ------------------- The Company records revenues from product sales to hospitals and physicians principally upon implant of IOL's from cataract surgery. Revenues from product sales to distributors (primarily export sales) are recorded upon shipment. Revenue from license and technology agreements is recorded as income in accordance with the terms of such agreements. 3. EXPORT SALES ------------ During the three months ended March 29, 1996 and March 31, 1995, the Company had export sales primarily to Europe and South Africa, South America, Australia and Japan, of approximately $2,728,000 and $1,681,000. 4. INVENTORIES ----------- Inventories are valued at the lower of cost (first-in, first-out) or market (net realizable value) and consisted of the following at March 29, 1996 and December 29, 1995.
March 29, 1996 December 29, 1995 -------------- ----------------- Raw materials and purchased parts $ 1,275,011 $1,104,203 Work in process 1,496,400 1,143,119 Finished goods 8,042,966 7,344,576 ----------- ---------- $10,814,377 $9,591,898 =========== ==========
5. PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment are stated at cost. Depreciation is provided on the straight-line method over the estimated useful lives, which are generally not greater than five years. Leasehold improvements ar amortized over the life of the lease or estimated useful life, if shorter. 6. PATENTS AND LICENSES -------------------- The Company capitalizes the costs of acquiring patents and licenses as well as the legal costs of successfully defending its rights to these patents. Amortization is computed on the straight-line basis over the estimated useful lives, which range from 8 to 17 years. 7. INCOME PER SHARE ---------------- Income per share computations are based on the weighted average number of common shares and common equivalent shares outstanding during each period. Common equivalent shares include the dilutive effects from the assumed exercise of stock options and warrants computed using the treasury stock method. The shares used to calculate primary earnings per share were 13,877,000 for March 29, 1996 and 13,478,434 for March 31, 1995. The shares used to calculate fully diluted earnings per share were 13,924,000 for March 29, 1996 and 13,478,434 for March 31, 1995. 8. CASH EQUIVALENTS ---------------- For purposes of the cash flow statements, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. 9. INTERIM ACCOUNTING POLICY ------------------------- The accompanying unaudited condensed consolidated financial statements do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements and should, therefore, be read in conjunction with the audited financial statements included in the Company's annual report on Form 10-K for the year ended December 29, 1995. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (of a normal recurring nature) necessary to present fairly the Company's consolidated financial position as of March 29, 1996, its consolidated results of operations for the three months ended March 29, 1996 and March 31, 1995 and its consolidated cash flows for the three months ended March 29, 1996 and March 31, 1995. PART 1 - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: RESULTS OF OPERATIONS - --------------------- The following table sets forth for the periods: (1) the percentage which certain items reflected in the financial data bear to sales and, (2) the percentage increase of such items as compared to the indicated prior period.
Relationship To Total Revenues For Percentage change Three Months ended for Three Months March 29, 1996 March 31, 1995 1996 vs 1995 ----------------- ---------------- ------------------- Increase (Decrease) Total Revenues 100.0% 100.0% 30.4% Cost of Sales 23.9 24.0 29.6 General & Administrative 14.9 14.1 38.3 Marketing & Selling 29.2 30.1 26.5 Research & Development 9.1 10.1 17.8 Other Income 1.3 1.6 3.8 Income before taxes 24.2 23.3 35.1 Income tax provision 8.5 0.8 1,267.6 Net Income 15.7 22.5 (9.0)
REVENUES: - --------- The Company's revenues for the three months ended March 29, 1996 were $9.5 million compared to $7.3 million for three months ended March 31, 1995, a 30.4% increase. The primary reason for this increase is expanding international sales in Europe, South Africa, Australia, and the continuing acceptance of STAAR's product in the U.S. COST OF SALES: - -------------- Cost of Sales decreased to 23.9% of revenues for the three months ended March 29, 1996 from 24.0% of revenues for the three months March 31, 1995. The primary reasons for this decrease was lower product cost related to better efficiencies in manufacturing. GENERAL & ADMINISTRATIVE (G&A): - ------------------------------- G&A expense increased to 14.9% of revenues for the three months ended March 29, 1996 from 14.1% of revenues for the three months ended March 31, 1995. This increase is the result of investing in the Company's infrastructure to handle its future growth. MARKETING AND SELLING (M&S): - ---------------------------- Marketing and selling expenses decreased to 29.2% of revenues for the three months ended March 29, 1996 compared to 30.1% of revenues for the three months ended March 31, 1995. The primary reason for the decrease was due to increases in sales, without significant increases in cost. RESEARCH AND DEVELOPMENT (R&D): - ------------------------------- R&D expense decreased to 9.1% of revenues for the first quarter ending March 29, 1996 compared to 10.1% of revenues for the first quarter ending March 31, 1995. The Company expects to continue to spend around ten percent of revenues for the continued development and approval of products currently in the development stage and for new products in the research stage. INCOME TAX PROVISION (INCOME TAXES) - ----------------------------------- Income taxes increased to 8.5% of revenues for the three months ended March 29, 1996 from .8% of revenues for the three months ended March 31, 1995. This is due to the Company's recording of its remaining book net operating loss carryforwards as a deferred tax asset of $3.3 million as of December 29, 1995. The Company has remaining net operating loss carryforwards for tax purposes and will not be paying Federal income taxes until they are used up. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- In March 1996 the Company refinanced and increased its domestic line of credit with a different lender. As a result, the Company significantly lowered its interest rate under the refinancing and increased its line of credit. As of March 29, 1996, the Company had a current ratio of 2.6:1, net working capital of $16.5 million and net equity of $30.5 million compared to December 29, 1995 when the Company's current ratio was 2.9:1, its net working capital was $16.3 million, and its net equity was $28.7 million. The Company expects to continue to be profitable in the future and the Company believes that all future cash flow needs will come from cash generated by operations or additional financing, if required. PART II - ITEM 1 OTHER INFORMATION - ----------------- None 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 Date: May 13, 1996 By: /s/ William C. Huddleston ------------------------- William C. Huddleston Chief Financial Officer and Duly Authorized Officer (principal accounting and financial officer for the quarter) EX-27 2 FINANCIAL DATA SCHEDULE
5 1 3-MOS DEC-29-1996 MAR-29-1996 4,018,619 0 7,807,683 127,727 10,814,377 26,650,461 14,060,633 6,947,076 42,067,693 10,159,151 0 0 0 128,580 30,364,123 42,067,693 9,279,078 9,529,078 2,273,870 2,273,870 5,072,747 21,079 103,083 2,303,819 805,940 1,497,879 0 0 0 1,497,879 .11 .11
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