-----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, BVBRlSoe0S7+DBQ65nFVVMIcNrKP8BzXb4i+2RwQLRWrZoLFfvEwL3+0d/k7ceG7 YcyCKE/RD0xuxuMEBCaEpg== 0001021408-02-006416.txt : 20020509 0001021408-02-006416.hdr.sgml : 20020509 ACCESSION NUMBER: 0001021408-02-006416 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020329 FILED AS OF DATE: 20020509 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: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11634 FILM NUMBER: 02639198 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 d10q.txt 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, 2002 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) (626) 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 17,162,891 shares of common stock, par value $0.01 per share, issued and outstanding as of May 3, 2002. Total number of sequentially numbered pages in this document: 12 STAAR SURGICAL COMPANY INDEX
PAGE PART I NUMBER Item 1 - Financial Information Condensed Consolidated Balance Sheets - March 29, 2002 and December 28, 2001 1 Condensed Consolidated Statements of Operations - Three Months Ended March 29, 2002 and March 30, 2001 2 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 29, 2002 and March 30, 2001 3 Notes to the Condensed Consolidated Financial Statements 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II Item 1 - Legal Proceedings 11 Item 2 - Changes in Securities and Use of Proceeds 11 Item 3 - Defaults Upon Senior Securities 11 Item 4 - Submission of Matters to a Vote of Security Holders 11 Item 5 - Other Information 11 Item 6 - Exhibits and Reports on Form 8-K 11 Signature Page 12
STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value)
March 29, December 28, ASSETS 2002 2001 ------------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 764 $ 853 Restricted cash 2,000 2,000 Accounts receivable, net 7,633 7,903 Other receivables 2,025 2,041 Inventories 13,981 15,231 Prepaids, deposits, and other current assets 2,753 2,470 Deferred income tax, current 5,304 5,304 -------- -------- Total current assets 34,460 35,802 -------- -------- Investment in joint venture 478 466 Property, plant and equipment, net 8,386 8,742 Patents and licenses, net 9,669 9,896 Goodwill, net 5,985 5,985 Deferred income tax, non-current 3,982 3,982 Other assets 982 932 -------- -------- Total assets $ 63,942 $ 65,805 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 7,769 $ 8,216 Accounts payable 5,378 5,593 Other current liabilities 4,478 4,852 -------- -------- Total current liabilities 17,625 18,661 Other long-term liabilities 274 316 -------- -------- Total liabilities 17,899 18,977 -------- -------- Minority interest 429 382 -------- -------- Stockholders' equity: Common stock, $.01 par value; 30,000 shares authorized; issued and outstanding 17,163 at March 29, 2002 and 17,158, at December 28, 2001 172 172 Capital in excess of par value 75,630 75,573 Accumulated other comprehensive income (1,620) (1,728) Accumulated deficit (25,260) (24,263) -------- -------- 48,922 49,754 Notes receivable from officers and directors (3,308) (3,308) -------- -------- Total stockholders' equity 45,614 46,446 -------- -------- Total liabilities and stockholders' equity $ 63,942 $ 65,805 ======== ========
Note: The amounts presented in the December 28, 2001 balance sheet are derived from the audited financial statements for the year ended December 28, 2001. See accompanying notes to the condensed consolidated financial statements. 1 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
Three Months Ended March 29, March 30, 2002 2001 ----------- ---------- Sales $ 11,631 $ 12,903 Royalty and other income 100 98 -------- -------- Total revenues 11,731 13,001 -------- -------- Cost of sales 6,019 5,179 -------- -------- Gross profit 5,712 7,822 -------- -------- Selling, general, and administrative expenses: General and administrative 2,402 2,259 Marketing and selling 4,002 5,091 Research and development 1,076 818 -------- -------- Total selling, general, and administrative expenses 7,480 8,168 -------- -------- Operating loss (1,768) (346) -------- -------- Other income (expense): Equity in earnings of joint venture 12 -- Interest income 18 67 Interest expense (127) (207) Other income (expense) (23) 34 -------- -------- Total other expense, net (120) (106) -------- -------- Loss before income taxes and minority interest (1,888) (452) Income tax benefit (932) (266) Minority interest 41 44 -------- -------- Net loss $ (997) $ (230) ======== ======== Net loss per share $ (.06) $ (.01) ======== ======== Weighted average shares outstanding 17,159 16,953 ======== ========
See accompanying notes to the condensed consolidated financial statements. 2 STAAR SURGICAL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
March 29, March 30, 2002 2001 --------- --------- Cash flows from operating activities: Net loss $ (997) $ (230) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation of property and equipment 521 555 Amortization of intangibles 227 290 Equity in earnings of joint venture (12) -- Deferred revenue -- 710 Deferred income taxes -- (420) Stock-based compensation expense 51 -- Minority interest 47 44 Changes in working capital: Accounts receivable 270 (135) Other receivable 16 -- Inventories 1,250 (1,733) Prepaids, deposits, and other current assets (283) (45) Accounts payable (215) (6) Other current liabilities (374) (1,317) ------- ------- Net cash provided by (used in) operating activities 501 (2,287) ------- ------- Cash flows from investing activities: Acquisition of property and equipment (165) (129) Increase in patents and licenses -- (51) Increase in other assets (50) (126) Proceeds from notes receivable and other -- 321 ------- ------- Net cash provided by (used in) investing activities (215) 15 ------- ------- Cash flows from financing activities: Increase (decrease) in borrowings under notes payable (489) 518 Proceeds from stock options 6 31 ------- ------- Net cash provided by (used in) financing activities (483) 549 ------- ------- Effect of exchange rate changes on cash and cash equivalents 108 (337) ------- ------- Decrease in cash and cash equivalents (89) (2,060) Cash and cash equivalents, at the beginning of the year 853 6,087 ------- ------- Cash and cash equivalents, at the end of the year $ 764 $ 4,027 ======= =======
See accompanying notes to the condensed consolidated financial statements. 3 STAAR SURGICAL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands) March 29, 2002 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company, its wholly and its majority 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 period. The resulting translation gains and losses are deferred and are shown as a separate component of stockholders' equity as accumulated other comprehensive income. During the three-months ended March 29, 2002 and March 30, 2001, the net foreign translation gain (loss) was $108 and ($337). Net foreign currency transaction gain (loss) for the three months ended March 29, 2002 and March 30, 2001 was ($3) and $92. Investment in the Japanese joint venture is accounted for using the equity method of accounting except for the nine-months ended September 29, 2001 and the year ended December 28, 2000 when the investment was written off and earnings were recognized on a cash basis. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial statements for the three months ended March 29, 2002 and March 30, 2001, in the opinion of management, include all adjustments consisting only of normal recurring adjustments, necessary for a fair presentation of the financial condition and results of operations. 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 28, 2001. The results of operations for the three months ended March 29, 2002 and March 30, 2001 are not necessarily indicative of the results to be expected for any other interim period or the entire year. Each of the Company's reporting periods ends on the Friday nearest to the quarter ending date. 2. Geographic and Product Data The Company develops, manufactures and distributes medical devices used in minimally invasive ophthalmic surgery. Substantially all of the Company's revenues result from the sale of the Company's medical devices. The Company distributes its medical devices in the cataract, refractive and glaucoma segments within ophthalmology. During the periods presented, revenues from the refractive and glaucoma segments were less than 10% of total revenue. Accordingly, there is not enough difference for the Company to account for these products separately or to justify segmented reporting by product type. 4 The Company markets its products in over 40 countries and has manufacturing sites in the United States and Switzerland. Other than the United States and Germany, the Company does not conduct business in any country in which its sales in that country exceed 5% of consolidated sales. Sales are attributed to countries based on the location of customers. The composition of the Company's sales to unaffiliated customers between those in the United States, Germany, and those in other locations for each period is set forth below. Three Months Ended March 29, March 30, 2002 2001 --------- --------- Sales to unaffiliated customers United States $ 6,252 $ 6,906 Germany 3,692 3,761 Other 1,687 2,236 --------- --------- Total $ 11,631 $ 12,903 ========= ========= The Company sells its products internationally. International transactions subject the Company to several potential risks, including fluctuating exchange rates (to the extent the Company's transactions are not in U.S. dollars), regulation of fund transfers by foreign governments, United States and foreign export and import duties and tariffs and possible political instability. 3. 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, 2002 and December 28, 2001: March 29, December 28, 2002 2001 --------- ---------- Raw materials and purchased parts $ 1,502 $ 1,610 Work in process 2,959 3,252 Finished goods 9,520 10,369 --------- --------- $ 13,981 $ 15,231 ========= ========= 4. Notes Payable On March 29, 2002 the Company's line of credit was amended. The amended terms extend the maturity date to March 31, 2003, provide as additional collateral 66% of the common stock of STAAR Surgical AG and 100% of the Company's interest in Circuit Tree Medical, Inc. Additionally, the bank, at its option, may request collateral in the form of the Company's interest in its subsidiaries in Australia and Canada. The interest rate is prime plus a spread from 1% to 4% plus a commitment fee of .25% to 1% based on the Company's ratio of funded debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) at each fiscal quarter on a trailing 12-month basis. The agreement requires the Company to satisfy certain financial tests, which include positive and negative covenants and also requires the maintenance of minimum cash balances. 5 5. Reclassifications Certain reclassifications may have been made to the 2001 consolidated financial statements to conform to the 2002 presentation. 6. Contingencies The Company terminated its former President and Chief Executive Officer, John R. Wolf, on May 30, 2000. Mr. Wolf filed an action against the Company claiming that his termination was wrongful. Mr. Wolf also filed an action for declaratory relief and injunctive relief relating to his attempt to exercise stock options. The Company believes it has claims against Mr. Wolf relating to loans made by the Company to him, and has filed an action against Mr. Wolf on that basis. The Company's action also seeks a declaration that the Company had cause to terminate Mr. Wolf's employment. 7. Loss Per Share For the three months ended March 29, 2002 and March 30, 2001 0 and 5 warrants and 3,157 and 2,407 options to purchase shares of the Company's common stock were outstanding. These potential common shares were excluded from the computation of diluted earnings per share for both periods, because their inclusion would have an antidilutive effect. 8. New Accounting Pronouncements In June 2001, the FASB finalized FASB Statements No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires the Company to recognize acquired intangible assets apart from goodwill if they meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142 that the Company reclassify the carrying amounts of intangible assets and goodwill based on criteria in SFAS 141. SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. The Company has adopted SFAS 141 and 142 effective December 29, 2001 but has not yet determined how this will impact its future financial position and results of operations. Our previous business combinations were accounted for using the purchase method and the Company has no intangible assets acquired in connection with the business combinations that are required to be recognized separately from goodwill. The Company ceased amortization of goodwill effective as of December 29, 2001. As provided under SFAS 142, the initial testing of goodwill for possible impairment will be completed within the first six months of 2002 and final testing, if possible impairment has been identified, by the end of the year. As of March 31, 2002, the net carrying amount of goodwill is $5,985. 6 In accordance with SFAS 142, prior period amounts were not restated. The March 29, 2002 net loss adjusted for the exclusion of amortization of goodwill would have been $90 less than reported and there would have been no difference in basic or diluted earnings per share. The Company also has other intangible assets, consisting of patents and licenses, with a net carrying value of $9,669 as of March 29, 2002. The estimated useful life of these intangible assets is based on legal and contractual provisions that limit their useful lives. In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company believes the adoption of this statement will have no material impact on its financial statements. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which supersedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of". SFAS 144 addresses financial accounting and reporting requirements for the impairment or disposal of long-lived assets. This statement also expands the scope of a discontinued operation to include a component of an entity, and eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. The provisions of this statement are effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, although early adoption is permitted. The Company's adoption of SFAS 144 did not have a material impact on its financial position and results of operations. 7 PART 1 - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth the percentage of total revenues represented by certain items reflected in the Company's Statement of Operations for the period indicated and the percentage increase or decrease in such items over the prior period. In addition to historical information, this Quarterly Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is thus prospective. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, competitive pressures, changing economic conditions, those discussed in the Section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other factors, some of which will be outside the control of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should refer to and carefully review the information in future documents the Company files with the Securities and Exchange Commission. Percentage of Total Percentage Revenues for Change for Three Months Three Months March March 2002 29, 30, vs. 2002 2001 2001 ------ ------ ------ Total Revenues 100.0% 100.0% (9.8)% Cost of Sales 51.3 39.8 16.2 ------ ------ Gross Profit 48.7 60.2 (27.0) Costs and Expenses: General and Administrative 20.5 17.4 6.3 Marketing and Selling 34.1 39.2 (21.4) Research and Development 9.2 6.3 31.6 ------ ------ Total Costs and Expenses 63.8 62.9 (8.4) Operating Loss (15.1) (2.7) 411.3 Other Expense, Net (1.0) (0.8) 12.9 ------ ------ Loss Before Income Taxes (16.1) (3.5) 318.0 Income Tax Benefit (7.9) (2.0) 250.6 Minority Interest 0.3 .3 (6.4) ------ ------ Net Loss (8.5)% (1.8)% 334.2% ====== ====== 8 Revenues Revenues for the three-month period ended March 29, 2002 were $11.7 million, which is $1.3 million or 9.8% less than the $13.0 million in revenues for the three-month period ended March 30, 2001. The decrease was due to decreased sales of foreign subsidiaries that were closed in 2001, decreased average selling prices of the Company's Elastic silicone IOL, and decreased units sales of the Company's Elastimide silicone IOL and its Collamer IOL in the United States. The decreases in U.S. sales were partly offset by increased sales of the AquaFlow Glaucoma Device and STAARVISC II. Sales of the Company's Implantable Contact Lens (ICL) increased due to the approval of the product for sale in Canada. Cost of Sales Cost of sales increased to 51.3% of revenues for the three-months ended March 29, 2002 from 39.8% of revenues for the three-months ended March 30, 2001. The increase as a percentage of revenues is due to decreased revenues and to the higher unit costs of silicone IOLs as a result of lower production levels in 2001. General & Administrative General and administrative expense increased approximately $143,000 to 20.5% of revenues for the three-months ended March 29, 2002 from 17.4% of revenues for the three-months ended March 30, 2001. The increase as a percent of revenues was due primarily to lower overall revenues. Other reasons for the increase were increased utility expenses, increased insurance costs, and increased professional fees. Increases in general and administrative expenses were partially offset by the elimination of goodwill amortization as a result of the adoption of SFAS 142 during the quarter ended March 29, 2002. Goodwill amortization for the three-months ended March 30, 2001 was approximately $90,000. Marketing and Selling Marketing and selling expense decreased approximately $1.1 million to 34.1% of revenues for the three-months ended March 29, 2002 compared to 39.2% of revenues for the three-months ended March 30, 2001. The decrease in marketing and selling expense as a percentage of revenues was attributable to decreased revenues, decreased costs associated with the release, in 2001, of the Sonic WAVE Phacoemulsification System direct sales force, and the timing of certain trade shows. Research and Development Research and development expense for the first quarter ending March 29, 2002 increased approximately $258,000 to 9.2% of revenues compared to 6.3% of revenues at March 30, 2001. The increase as a percent of revenues was due to decreased revenues and to increased expenditures in the continued development and improvement of the Sonic WAVE Phacoemulsification System. 9 Other Expense, Net Other expense, net for the quarter ended March 29, 2002 was $120,000, or 1.0% of revenues, as compared to $106,000, or .8% of revenues, for the quarter ended March 30, 2001. The increase as a percent of revenues was due to decreased revenues. Income Tax Benefit Legislation enacted March 9, 2002 (HR 3090), enables the Company to carryback portions of its federal 2000 and 2001 losses to 1996, 1997 and 1998. Consequently, the federal net operating loss carryforwards from 2000 and 2001 will be $910 and $10,775. These carrybacks will result in refunds of approximately $959. During the quarter ended March 29, 2002, the Company recorded an income tax benefit and an income tax refund receivable for the carryback claim. Realization of deferred tax assets is dependent upon the Company's ability to generate sufficient future taxable income. Management believes that it is more likely than not that future taxable income will be sufficient to realize the recorded deferred tax assets, net of the existing valuation allowance of $4.3 million at March 29, 2002. Future taxable income is based on management's forecast of the operating results of the Company and there can be no assurance that such results will be achieved. Management continually reviews such forecasts in comparison with actual results and expected trends. In the event management determines that sufficient future taxable income may not be generated to fully realize the net deferred tax assets, the Company will increase the valuation allowance by a charge to income tax expense in the period of such determination. Liquidity and Capital Resources Cash and cash equivalents for the quarter ended March 29, 2002 decreased by approximately $89,000 relative to the fiscal year ended December 28, 2001 and were used to fund operations and pay down notes payable. During the quarter, inventories decreased by $1.3 million relative to the fiscal year ended December 28, 2001. Inventories decreased due to better inventory management and a continued emphasis on lowering overall inventory quantities. On March 29, 2002 the Company's line of credit was amended. The amended terms extend the maturity date to March 31, 2003, provide as additional collateral 66% of the common stock of STAAR Surgical AG and 100% of the Company's interest in Circuit Tree Medical, Inc. Additionally, the bank at its option, may request collateral in the form of the Company's interest in its subsidiaries in Australia and Canada. The interest rate is prime plus a spread from 1% to 4% plus a commitment fee of .25% to 1% based on the Company's ratio of funded debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) at each fiscal quarter on a trailing 12-month basis. The agreement requires the Company to satisfy certain financial tests, which include positive and negative covenants and also requires the maintenance of minimum cash balances. As of March 29, 2002, the Company had a current ratio of 2.0:1, net working capital of $16.8 million and net equity of $45.6 million compared to December 28, 2001 when the Company's current ratio was 1.9:1, its net working capital was $17.1 million, and its net equity was $46.4 million. The Company expects to be profitable in the future and believes that cash flow from operations and available credit facilities, together with its current cash balances, will provide adequate economic resources to fund existing operations. All sales by the Company are denominated in U.S. dollars or the currency of the country of origin and, accordingly, the Company does not enter into hedging transactions with regard to any foreign currencies. Currency fluctuations can, however, increase the price of the Company's products to its foreign customers which can adversely impact the level of the Company's export sales from time to time. The majority of the Company's cash equivalents are bank accounts, and the Company does not believe it has significant market risk exposure with regard to its investments. We are also exposed to the impact of interest rate changes. For example, based on average bank borrowings of $10 million during a three-month period, if the interest rate indices on which our bank borrowing rates are based were to increase 100 basis points in the three-month period, interest incurred would increase and cash flow would decrease by $25,000. 10 PART II - ITEM 1 LEGAL PROCEEDINGS Not applicable PART II - ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable PART II - ITEM 3 DEFAULTS UPON SENIOR SECURITIES Not applicable PART II - ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable PART II - ITEM 5 OTHER INFORMATION Not applicable PART II - ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 3.1 Certificate of Incorporation, as amended(1) 3.2 By-laws, as amended(2) 4.5 Stockholders' Rights Plan, dated effective April 20, 1995(2) ___________________ (1) Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, as filed on March 28, 2000 (2) Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 29, 2000, as filed on March 29, 2001 11 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 8, 2002 by: /s/ JOHN BILY --------------------------------- John Bily Chief Financial Officer and Duly Authorized Officer (Principal accounting and financial Officer for the quarter) 12 -----END PRIVACY-ENHANCED MESSAGE-----