8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 16, 2009

STAAR Surgical Company

__________________________________________

(Exact name of registrant as specified in its charter)

Delaware	0-11634	95-3797439
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
1911 Walker Ave, Monrovia, California		91016
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 626-303-7902

Not Applicable

______________________________________________

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On March 16, 2009, STAAR Surgical Company (the "Company") published a press release reporting its financial results for the quarter and fiscal year ended January 2, 2009 (the Press Release"), a copy of which is attached to this Report as Exhibit 99.1 and is incorporated herein by this reference.

Item 7.01 Regulation FD Disclosure.

On March 16, 2009 the Company held a conference call to discuss the financial results for the quarter and fiscal year ended January 2, 2009.  An archive of the webcast of the conference call has been posted on the Company's website at www.staar.com. A transcript of the conference call is furnished as Exhibit 99.2 to this report and is incorporated herein by this reference.

Forward Looking Statements

All statements in this report that are not statements of historical fact are forward-looking statements, including statements about any of the following: projections of earnings, revenue, sales, cash or other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; strategies or objectives; prospects for appeal of the adverse verdict in the Parallax litigation; continued growth of the ICL, TICL or other products in the U.S. or international markets; expected cost savings; our future performance; statements of belief; and any statements of assumptions underlying any of the foregoing.

These statements are based on expectations and assumptions as of the date of this report and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include the need to satisfy the forthcoming judgment in the Parallax case or post an appeal bond and the resulting effect on our liquidity, our limited capital resources and limited access to financing, our belief that our auditors are likely to qualify their report on our audited 2008 financial statements with a statement expressing doubt about our ability to continue as a going concern, the need to defend other litigation similar to the Parallax case and to satisfy judgment in the event of an adverse ruling in that case, for which we have taken no reserve, the effect the global recession may have on sales of products, especially products such as the ICL used in non-reimbursed elective procedures, the challenge of managing our foreign subsidiaries, the risk that we will not succeed in introducing improved products that restore the profitability of our U.S. IOL product line, our ability to resolve FDA concerns over the clinical study for the Toric ICL and to overcome negative publicity resulting from warning letters and other correspondence from the FDA Office of Compliance, the willingness of surgeons and patients to adopt a new product and procedure, and the potential effect of recent negative publicity about LASIK on the demand for refractive surgery in general in the U.S.  We also refer readers to the “Risk Factors” section of our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on November 11, 2008, and our Annual Report on Form 10-K filed with the Commission on March 12, 2008.

STAAR currently lacks the cash to satisfy the judgment expected to result from the $4.9 million verdict in the Parallax case (the "Judgment"), or to fund the bond necessary to pursue appeal, and the court has not yet determined whether or for how long it will stay execution of the Judgment. If STAAR is unable to satisfy the Judgment or post an appeal bond before the expiration of any discretionary stay of the court, STAAR could be required to petition for protection under federal bankruptcy laws, which could further impair its financial position and liquidity, and would likely result in a default of its other debt obligations. STAAR assumes no obligation to update its forward-looking statements to reflect future events or actual outcomes and does not intend to do so.

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 hereunto duly authorized.

STAAR Surgical Company
March 17, 2009	By:	/s/ Barry G. Caldwell
		Barry G. Caldwell
		President and Chief Executive Officer

Exhibit Index

Exhibit No.                                Description

99.1                      Press release of the Company dated March 16, 2009.

99.2                      Conference call of the Company held on March 16, 2009.

EX-99.1

Exhibit 99.1

CONTACT:	Investors	Media
	EVC Group	EVC Group
	Douglas Sherk, 415-896-6820	Christopher Gale 646-201-5431
	Michael Pollock, 415-896-5860

STAAR SURGICAL REPORTS 14% FOURTH QUARTER REVENUE GROWTH

Cash Used for Operating Activities Declines to Less Than $1 Million

 Gross Margin Increases to 57.1%

 Programs Implemented to Yield Additional Cost Savings During 2009 & 2010

First Quarter Sales Off to Strong Start

MONROVIA, CA, March 16, 2009 — STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today reported financial results for the fourth quarter and full year ended January 2, 2009.    The financial results for both periods include the operating performance of STAAR Japan, which STAAR acquired at the beginning of fiscal year 2008.

Fourth Quarter Highlights

Financial Highlights

   -    Total sales grew 14% year-over-year to $18.2 million due to strong sales of STAAR Japan of $3.7 million; 19% growth excluding impact of currency; total sales excluding Japan declined 9%

-    International sales grew 23% year-over-year, 30% excluding impact of currency

-    U.S. sales declined by 6% while operating expenses, excluding other charges, declined by 21%

-    Gross margin improved 700 basis points from the year ago period to 57.1%

-    Operating loss increased by 127% due to patent impairment charge and litigation verdict, reduced by 41%, excluding these other operating expenses

-    Cash used for operating activities during the quarter, including Japan, decreased to $991,000 and $514,000 excluding Japan; legal costs paid during the quarter total $600,000

“Our fourth quarter performance, though below our original expectations, capped a year of significant achievements for STAAR Surgical,” said Barry G. Caldwell, President and CEO.  “For the full year, we grew revenue 26%, increased gross margin by more than 600 basis points excluding acquisition accounting charges and reduced cash used for operating activities by $6.4 million or 57%, excluding Japan.  During the fourth quarter, we grew sales by 14%, reduced our cash burn from operations by approximately 81%, excluding Japan, to approximately $500,000 and implemented additional programs to enhance our profitability prospects in 2009.  Though it is data for only the first two months of 2009, and we cannot be certain that current trends will continue, we have generated operating profits before non-cash charges during this period.”

“At year’s end we implemented a new U.S. sales force structure designed to maximize our Collamer material positioning for both ICLs and IOLs, as well as improve efficiencies.  We expect that the implementation of this structure should yield us approximately $1 million in additional cost savings during 2009.”

“Gross margin increased 700 basis points from the fourth quarter of 2007, and outside of Japan and excluding special charges we decreased year over year operating expenses by sixteen percent or $1.8 million,” added Mr. Caldwell.  “Our global Visian ICL fourth quarter sales declined slightly compared to the year ago period due primarily to two factors.  First, we significantly reduced the practice of taking higher volume bulk sales during 2008 in the U.S. which was a larger factor in comparison to the fourth quarter of 2007.  Also during the fourth quarter, our international distributors were all making efforts to reduce their inventory levels in this weakened economy as compared to their historical year-end inventory build.  Aside from these two developments, our Visian ICL sales momentum remains strong and through the first two months both global and U.S. Visian ICL sales have grown in excess of 25% for the first quarter of 2009.”

“We also continued to make progress with our IOL product line sales during the fourth quarter,” Mr. Caldwell continued. “While total IOL sales increased 47% due to the strong contribution from Japan, our U.S. IOL sales decreased by only five percent as compared to a 26% decline in the fourth quarter of 2007.  Our seven point plan to restore profitability to the US IOL business remains on track.  In fact, at this point, we believe we are positioned to grow U.S. IOL sales in the first quarter as a result of our new NTIOL products and our new pricing strategy that assists doctors in this difficult economic environment.”

“In addition, we have begun a Centers of Excellence project which is designed to take advantage of our key competencies in Japan and the U.S.  In Japan the organization has demonstrated a real excellence in delivery systems for IOLs.  Japan will become our Center of Excellence for lens delivery research and development.  The U.S. organization has demonstrated an excellence in developing and manufacturing lens materials and designs.  The U.S. will become our Center of Excellence for the manufacturing of lenses.  Both of these moves should enhance our ability to introduce new technologies while reducing the cost of our IOLs significantly beginning in 2010.

“Our strong operational progress during the fourth quarter and first two months of 2009 has been overshadowed by the $4.9 million jury verdict in favor of Parallax Medical Systems, Inc. subsequent to year end.  The next step in this case will be the formal entry of a judgment on the jury verdict by the judge hearing the case, which we expect will be completed before the end of March.  We will use the 15-day filing extension for our 2008 10-K so that we can better assess the effects of the final judgment on our liquidity and capital resources,” Mr. Caldwell concluded.  

Financial Performance for the Fourth Quarter and Full Year  Ended January 2, 2009

Total product sales for the quarter were $18.2 million, a 14% increase over the $15.9 million reported for the fourth quarter of 2007.   The increase in sales was led by strong sales of STAAR Japan, which were $3.7 million in the quarter. Outside of Japan, international sales decreased 10% primarily due to changes in currency which negatively impacted international and total fourth quarter sales by $804,000 but also due to soft distributor sales of ICLs and IOLs.   Total U.S. sales for the fourth quarter were $4.5 million, a six percent decrease from the fourth quarter of 2007.    U.S. Visian ICL sales were $1.0 million, flat with the level recorded for the comparable period of 2007.

Total product sales for 2008 were $74.9 million, a 26% increase over the $59.4 million reported for 2007. The increase in sales was led by strong international product sales, which grew 41% and included $12.7 million in sales from STAAR Japan, which exceeded the Company’s goal for this market.  Outside of Japan, total international product sales grew 9% due to the $1.6 million favorable effect of currency and a 26% increase in Visian ICL sales.  Total U.S. sales for 2008 were $18.9 million, down four percent from $19.7 million in 2007.  U.S. Visian ICL sales were $4.9 million, up 18% over $4.1 million in 2007.

Gross profit margin for the fourth quarter was 57.1%, compared to 50.1% in the fourth quarter of 2007.  Gross profit margin for 2008 was 53.6%, compared with 49.3% for 2007.  Excluding purchase accounting charges recorded in the first quarter of 2008, gross profit margin was 55.6% for the year.  The significant improvement in gross profit margin for the quarter is due to sales of preloaded IOLs in Japan, which yield higher average selling prices than in other countries.  The improvement for the year is due to increased sales of Visian ICL and TICLs and sales of preloaded IOLs in Japan.  Each one of STAAR’s reporting sales entities increased its gross margin percentage for the year as compared to 2007.

General and administrative expenses for the quarter were $4.3 million, representing a 27% increase over the $3.4 million incurred in the fourth quarter of 2007.  The increase was due to incremental G&A costs of STAAR Japan of $1.1 million.  Otherwise, G&A expenses were flat to Q4 of 2007.  General and administrative expenses for 2008 were $15.7 million, representing a 21% increase over the $13.0 million incurred in 2007. The increase resulted from incremental G&A costs of STAAR Japan of $3.7 million, partially offset by decreased costs in the U.S.

Marketing and selling expenses for the fourth quarter were $6.4 million, a one percent decrease from the fourth quarter of 2007.  The decrease was due to lower expenses in the U.S., Europe and Australia offset by the incremental costs of STAAR Japan of $1.2 million.  Marketing and selling expenses for 2008 were $27.1 million (including $4.1 million for Japan), representing a 14% increase over the $23.7 million incurred in 2007.  Changes in currency had a $295,000 favorable effect on marketing and selling expenses for the quarter and a $560,000 unfavorable effect for the full year 2008.

Research and development expenses for the quarter were $2.0 million, including $637,000 for Japan, which represents a 15% increase over the $1.7 million incurred in the fourth quarter of 2007.   Research and development expenses for 2008 were $7.9 million, which represents an 18% increase over the $6.7 million incurred in 2007.  The increase is due to the incremental costs of STAAR Japan ($2.2 million), partially offset by cost reductions in the U.S.

Included in other operating expenses for the quarter is a $1 million non-cash expense associated with the impairment of certain patents which have been determined to have minimal fair value and a reserve of $4.9 million for the jury verdict in favor of Parallax Medical Systems, Inc. subsequent to year end.  Also included in other operating expenses for the full year is the $3,850,000 loss on settlement of preexisting distribution arrangement recorded in connection with the purchase of STAAR Japan.

For the quarter ended January 2, 2009, net loss was $9.5 million or $0.32 per share, compared with $4.3 million or $0.15 for the fourth quarter of 2007.  The per share loss associated with the patent impairment charge and the jury verdict was $0.03 and $0.17, respectively.  Non-cash expenses for the quarter were $2.6 million.  For the year ended January 2, 2009, the net loss was $23.2 million or $0.79 per share, compared with $16.0 million or $0.57 for the year ended December 28, 2007.  The net loss per share associated with other operating expenses was $0.38.  Total non-cash expenses, including those associated with STAAR Japan were $11.0 million during 2008, versus $2.1 million during 2007.

At January 2, 2009, cash and cash equivalents were $5.0 million, compared to $10.9 million at December 28, 2008.  During the quarter the Company used $991,000 of cash for operating activities compared with $3.4 million in the first quarter of 2008, $2.8 million in the second quarter of 2008 and $1.1 million in third quarter of 2008 and $1.7 million in the fourth quarter of 2007.  Cash used in operating activities for the year ended January 2, 2009 was $8.2 million compared with the $11.2 million reported for the prior year.  STAAR Japan used $477,000 and $3.4 million in cash for operating activities for the three and 12 months ended January 2, 2009, respectively.  Excluding Japan, for the full year, cash used in operating activities has declined 58% from the amount used during 2007.  

Conference Call

The Company will host a conference call and webcast on Monday, March 16, 2009 at 4:30 p.m. Eastern Time to discuss the Company’s fourth quarter and current corporate developments.  The dial-in number for the conference call is 800-218-0713 for domestic participants and 303-262-2052 for international participants.

A taped replay of the conference call will also be available beginning approximately one hour after the call’s conclusion and will be available for seven days.  This replay can be accessed by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers, both using passcode 11125535#.  To access the live webcast of the call, go to STAAR Surgical’s website at www.staar.com.  An archived webcast will also be available at www.staar.com.

About STAAR Surgical

STAAR Surgical is a leader in the development, manufacture and marketing of minimally invasive ophthalmic products employing proprietary technologies. STAAR's products are used by ophthalmic surgeons and include the Visian ICL, a tiny, flexible lens implanted to correct refractive errors, as well as innovative products designed to improve patient outcomes for cataracts and glaucoma.  Manufactured in Switzerland by STAAR, the ICL is approved by the FDA for use in treating myopia, has received CE Marking and is sold in more than 40 countries. Collamer® is the brand name for STAAR’s proprietary collagen copolymer lens material. More information is available at www.staar.com.

Safe Harbor

All statements in this press release that are not statements of historical fact are forward-looking statements, including statements about any of the following:  projections of earnings, revenue, sales, cash or other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; strategies or objectives; prospects for appeal of the adverse verdict in the Parallax litigation; continued growth of the ICL, TICL or other products in the U.S. or international markets; expected cost savings; our future performance; statements of belief; and any statements of assumptions underlying any of the foregoing.

These statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include the need to satisfy the forthcoming judgment in the Parallax case or post an appeal bond and the resulting effect on our liquidity, our limited capital resources and limited access to financing, the need to defend other litigation similar to the Parallax case and to satisfy judgment in the event of an adverse ruling in that case, for which we have taken no reserve, the effect the global recession may have on sales of products, especially products such as the ICL used in non-reimbursed elective procedures, the challenge of managing our foreign subsidiaries, the risk that we will not succeed in introducing improved products that restore the profitability of our U.S. IOL product line, our ability to resolve FDA concerns over the clinical study for the Toric ICL and to overcome negative publicity resulting from warning letters and other correspondence from the FDA Office of Compliance, the willingness of surgeons and patients to adopt a new product and procedure, and the potential effect of recent negative publicity about LASIK on the demand for refractive surgery in general in the U.S.

STAAR currently lacks the cash to satisfy the judgment expected to result from the $4.9 million verdict in the Parallax case (the “Judgment”), or to fund the bond necessary to pursue appeal, and the court has not yet determined whether or for how long it will stay execution of the Judgment.  If STAAR is unable to satisfy the Judgment or post an appeal bond before the expiration of any discretionary stay of the court, STAAR could be required to petition for protection under federal bankruptcy laws, which could further impair its financial position and liquidity, and would likely result in a default of its other debt obligations. STAAR assumes no obligation to update its forward-looking statements to reflect future events or actual outcomes and does not intend to do so.

Use of Non-GAAP information

This news release presents selected items from the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows as reported in accordance with U.S. generally accepted accounting principles (“GAAP”), and also on a non-GAAP basis after excluding data reported by STAAR Japan.

The Company completed the acquisition of the remaining interests in STAAR Japan on December 29, 2007, the first day of its 2008 fiscal year.  Prior to the acquisition, the Company reported its 50% ownership interest in STAAR Japan as an equity investment and did not incorporate STAAR Japan’s financial data in the Company’s financial statements.  As a result, the Company’s financial results in 2008 have been significantly affected by both non-recurring charges resulting from the accounting treatment of the transaction and by the consolidation of the results of STAAR Japan from the first quarter of 2008 forward.  STAAR’s management believes that it is important for investors to be able to identify the trends in its core business, including expense reduction, revenue enhancement and gross profit improvement, and that these trends can be discerned only by a comparison of 2007 financial data with non-GAAP 2008 data that excludes the newly added results from STAAR Japan.  Since acquisition of the remaining interests in STAAR Japan, the Company’s management has used this non-GAAP information internally to measure its progress compared to 2007 in achieving positive cash flow and returning to profitability.  The Company’s management currently believes that this information will enhance investors’ overall understanding of its core performance when financial statements include comparisons to periods preceding the STAAR Japan acquisition.  Going forward, the Company must achieve positive cash flow and profitability as a consolidated enterprise with STAAR Japan, and accordingly the Company cautions investors to consider both the GAAP financial statements as well as the non-GAAP financial information. The table below shows the following information from which this non-GAAP measure is derived:  the statement of operations for STAAR Japan, Inc. in relevant periods, the statement of operations for the Company reported in accordance with GAAP for the same periods, and the effect of excluding the data for STAAR Japan, Inc.

When assessing the effectiveness of its initiatives to enhance long-term performance by reducing expenses, management may eliminate the effect of significant non-recurring expenses in order to discern underlying trends.  In the 2008 fiscal year, the Company’s results were significantly affected by the following non-recurring expenses classified as “other expense”:  a $1.5 million purchase accounting charge related to inventory purchased in the acquisition of STAAR Japan, Inc.; a $3.8 million charge for the settlement of a pre-existing distribution arrangement in connection with the STAAR Japan, Inc. acquisition, an impairment charge related to reversing the valuation of a patent from which STAAR does not expect to derive significant value, and the effect of an expected $4.9 million court judgment that will occur in 2009 but is accrued in fiscal year 20008.  Because the effect of these charges can overwhelm the effect of meaningful trends in the Company’s business performance, management considers both GAAP expenses and non-GAAP expenses excluding these non-recurring items.  The Company believes that this non-GAAP expenses measure is also helpful to investors in discerning underlying trends.  The following table shows the cumulative effect of the excluded non-recurring items.

The Company conducts a significant part of its activities outside the U.S.  It receives sales revenue and pays expenses principally in U.S. dollars, Swiss francs, Japanese yen and euros.  The exchange rates between dollars and non-U.S. currencies can fluctuate greatly and can have a significant effect on our results when reported in U.S. dollars.  When preparing its financial statements in conformance with GAAP, the Company translates foreign currency sales and expenses to dollars at the weighted average of exchange rates in effect during the period.  As a result, the Company’s reported performance may be significantly affected by currency fluctuations. In order to compare the Company’s performance from period to period without the effect of currency, the Company will apply the same average exchange rate applicable in the prior period, or the “constant currency” rate to sales or expenses in the current period as well.  Because changes in currency are outside of the control of the Company and its managers, management finds this non-GAAP measure useful in determining the long term progress of its initiatives and determining whether its mangers are achieving their performance goals.  The Company believes that the non-GAAP constant-currency sales results measures provided in this press release are similarly useful to investors to give insight on long term trends in the Company’s performance without the external effect of changes in relative currency values.  The table below shows sales results calculated in accordance with GAAP, the effect of currency, and the resulting non-GAAP measure expressed in constant currency.

(Tables to Follow)

STAAR Surgical Company

Condensed Consolidated Statements of Operations

(In 000's except for per share data)

Unaudited

	Three Months Ended						Year Ended
	January 2,			December 28,			January 2,			December 28,
	2009			2007			2009			2007
Net sales	$	18,157		$	15,885		$	74,894		$	59,363
Cost of sales		7,797			7,921			34,787			30,097
Gross profit		10,360			7,964			40,107			29,266
General and administrative:		4,289			3,370			15,730			12,951
Marketing and selling		6,425			6,500			27,053			23,723
Research and development		1,974			1,724			7,938			6,711
Other operating expenses		5,923			—			9,773			—
Total selling, general and administrative expenses:		18,611			11,594			60,494			43,385
Operating loss		(8,251	)		(3,630	)		(20,387	)		(14,119	)
Other expense, net		(579	)		(157	)		(1,285	)		(1,037	)
Loss before provision (benefit) for income taxes		(8,830	)		(3,787	)		(21,672	)		(15,156	)
Income tax provision (benefit)		630			504			1,523			843
Net loss	$	(9,460	)	$	(4,291	)	$	(23,195	)	$	(15,999	)
Basic and diluted loss per share	$	(0.32	)	$	(0.15	)	$	(0.79	)	$	(0.57	)
Weighted average shares outstanding		29,496			29,388			29,474			28,121

STAAR Surgical Company

Global Sales

(in 000's)

Unaudited

	Three Months Ended							Year Ended
	January 2,		December 28,					January 2,		December 28,
	2009		2007		% Change			2009		2007		% Change
Geographic Sales
United States	$	4,460	$	4,730		-5.7	%	$	18,927	$	19,721		-4.0	%
Germany		5,864		6,260		-6.3	%		25,124		23,731		5.9	%
Japan		3,878		141		2650.4	%		13,485		423		3087.9	%
Other		3,955		4,754		-16.8	%		17,358		15,488		12.1	%
Total International Sales		13,697		11,155		22.8	%		55,967		39,642		41.2	%
Total Sales	$	18,157	$	15,885		14.3	%	$	74,894	$	59,363		26.2	%
Product Sales
IOLs	$	8,550	$	5,816		47.0	%	$	32,926	$	23,379		40.8	%
ICLs	$	4,389	$	4,639		-5.4	%	$	19,069	$	15,368		24.1	%
Other		5,218		5,430		-3.9	%		22,899		20,616		11.1	%
Total	$	18,157	$	15,885		14.3	%	$	74,894	$	59,363		26.2	%

STAAR Surgical Company

Condensed Consolidated Balance Sheets

(in 000's)

Unaudited

	January 2,		December 28,
	2009		2007
Cash and cash equivalents	$	4,992	$	10,895
Short-term investments - restricted		179		150
Accounts receivable trade, net		8,422		6,898
Inventories		16,668		12,741
Prepaids, deposits, and other current assets		2,009		1,610
Total current assets		32,270		32,294
Property, plant, and equipment, net		5,974		5,772
Intangible assets, net		5,611		3,959
Goodwill		7,538		7,534
Advance payment for acquisition of Canon Staar		-		4,000
Other assets		1,189		620
Total assets	$	52,582	$	54,179
Accounts payable	$	6,626	$	4,823
Deferred income taxes - current		282		102
Obligations under capital leases - current		989		822
Line of credit		2,200		-
Other current liabilities		11,366		5,541
Total current liabilities		21,463		11,288
Notes payable - long-term, net of discount		4,414		4,166
Obligations under capital leases - long-term		897		1,311
Deferred income taxes - long-term		1,335		570
Other long-term liabilities		1,678		619
Total liabilities		29,787		17,954
Series A redeemable convertible preferred stock		6,768		-
Stockholders' equity - net		16,027		36,225
Total liabilities, redeemable convertible preferred stock and equity	$	52,582	$	54,179

STAAR Surgical Company

Condensed Consolidated Statements of Cash Flows

(in 000's)

Unaudited

	Year Ended
	January 2,			December 28,
	2009			2007
Cash flows from operating activities:
Net loss	$	(23,195	)	$	(15,999	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment		2,797			2,001
Amortization of intangibles		1,866			481
Amortization of discount		248			26
Loss on extinguishment of debt		-			215
Fair value adjustment of warrant		(7	)		(182	)
Loss on disposal of property and equipment		48			307
Equity in operations of joint venture		-			280
Deferred income tax		238			493
Stock-based compensation expense		1,513			1,456
Common stock issued for services		-			125
Loss on settlement of pre-existing distribution arrangement		3,850			-
Change in pension accounting		72			179
Other		151			32
Changes in working capital:
Accounts receivable		(891	)		(210	)
Inventories		1,125			861
Prepaids, deposits and other current assets		708			330
Accounts payable		(1,870	)		(637	)
Other current liabilities		5,119			(942	)
Net cash used in operating activities		(8,228	)		(11,184	)
Cash flows from investing activities:
Cash acquired in acquisition of Canon Staar, net of acquisition costs		2,215			-
Advance payment on acquisition of Canon Staar Joint Venture		-			(4,000	)
Deferred acquisition costs of Canon Staar		-			(197	)
Acquisition of property, plant and equipment		(1,092	)		(691	)
Proceeds from sale of property, plant and equipment		167			72
Purchase of short-term investments		(212	)		-
Dividend received from joint venture		-			117
Net change in other assets		43			24
Net cash provided by (used in) investing activities		1,121			(4,675	)
Cash flows from financing activities:
Proceeds from notes payable		-			9,000
Repayments of notes payable		-			(4,000	)
Repayment of note issued in connection with purchase of minority interest in subsidiary		-			(972	)
Borrowings under lines of credit		3,880			1,812
Repayments of lines of credit		(1,940	)		(3,610	)
Repayment of capital lease lines of credit		(983	)		(692	)
Net proceeds from the public sale of equity securities		-			16,613
Proceeds from the exercise of stock options		40			584
Net cash provided by financing activities		997			18,735
Effect of exchange rate changes on cash and cash equivalents		207			261
(Decrease) increase in cash and cash equivalents		(5,903	)		3,137
Cash and cash equivalents, at beginning of the period		10,895			7,758
Cash and cash equivalents, at end of the period	$	4,992		$	10,895

STAAR Surgical Company

GAAP Reconciliation Table

2-Jan-09

																2008 vs. 2007
		Q4 2008														As Reported						Ex-Japan
Statement of Operations	As Reported			Japan			Other Expenses			Ex-Japan and Other			Q4 2007			$ Change			% Change			$ Change			% Change
Sales	$	18,157		$	3,678		$	-		$	14,479		$	15,885		$	2,272			14	%	$	(1,406	)		-9	%
Cost of Sales		7,797			968			-			6,829			7,922			(125	)		-2	%		(1,093	)		-14	%
Gross Profit		10,360			2,710			-			7,650			7,963			2,397			30	%		(313	)		-4	%
Gross Profit Margin		57.1	%		73.7	%		0.0	%		52.8	%		50.1	%		6.9	%		14	%		2.7	%		5	%
General and Administrative		4,289			1,091			-			3,198			3,370			919			27	%		(172	)		-5	%
Marketing and Selling		6,425			1,165			-			5,260			6,500			(75	)		-1	%		(1,240	)		-19	%
Research and Development		1,974			637			-			1,337			1,724			250			15	%		(387	)		-22	%
Other Operating Expenses		5,923			-			5,923			-			-			5,923			0	%		-			0	%
Total Selling, General, and Administrative		18,611			2,893			5,923			9,795			11,594			7,017			61	%		(1,799	)		-16	%
Operating Loss		(8,251	)		(183	)		(5,923	)		(2,145	)		(3,631	)		(4,620	)		127	%		1,486			-41	%
Other Expense, Net		(579	)		(79	)		-			(500	)		(157	)		(422	)		269	%		(343	)		218	%
Loss Before Income Taxes		(8,830	)		(262	)		(5,923	)		(2,645	)		(3,788	)		(5,042	)		133	%		1,143			-30	%
Income Tax Provision (Benefit)		630			(268	)		-			898			504			126			25	%		394			78	%
Net Loss	$	(9,460	)	$	6		$	(5,923	)	$	(3,543	)	$	(4,292	)	$	(5,168	)		120	%	$	749			-17	%
Loss Per Share	$	(0.32	)	$	0.00		$	(0.20	)	$	(0.12	)	$	(0.15	)	$	(0.17	)		120	%	$	0.03			-18	%

																2008 vs. 2007
	2008															As Reported						Ex-Japan
Statement of Operations	As Reported			Japan			Other Expenses			Ex-Japan and Other			2007			$ Change			% Change			$ Change			% Change
Sales	$	74,894		$	12,731		$	-		$	62,163		$	59,363		$	15,531			26	%	$	2,800			5	%
Cost of Sales		34,787			3,711			1,524			29,552			30,097			4,690			16	%		(545	)		-2	%
Gross Profit		40,107			9,020			(1,524	)		32,611			29,266			10,841			37	%		3,345			11	%
Gross Profit Margin		53.6	%		70.9	%		0.0	%		52.5	%		49.3	%		4.3	%		9	%		3.2	%		6	%
General and Administrative		15,730			3,690			-			12,040			12,951			2,779			21	%		(911	)		-7	%
Marketing and Selling		27,053			4,098			-			22,955			23,723			3,330			14	%		(768	)		-3	%
Research and Development		7,938			2,164			-			5,774			6,711			1,227			18	%		(937	)		-14	%
Other Operating Expenses		9,773			-			9,773			-			-			9,773			0	%		-			0	%
Total Selling, General, and Administrative		60,494			9,952			9,773			40,769			43,385			17,109			39	%		(2,616	)		-6	%
Operating Loss		(20,387	)		(932	)		(11,297	)		(8,158	)		(14,119	)		(6,268	)		44	%		5,961			-42	%
Other Expense, Net		(1,285	)		(103	)		-			(1,182	)		(1,037	)		(248	)		24	%		(145	)		14	%
Loss Before Income Taxes		(21,672	)		(1,035	)		(11,297	)		(9,340	)		(15,156	)		(6,516	)		43	%		5,816			-38	%
Income Taxes		1,523			(268	)		-			1,791			843			680			81	%		948			112	%
Net Loss	$	(23,195	)	$	(767	)	$	(11,297	)	$	(11,131	)	$	(15,999	)	$	(7,196	)		45	%	$	4,868			-30	%
Loss Per Share	$	(0.79	)	$	(0.03	)	$	(0.38	)	$	(0.38	)	$	(0.57	)	$	(0.22	)		38	%	$	0.19			-34	%

Summary of Other Expenses Included in Statement of Operations	Amount		Period Recorded
Purchase accounting charge related to inventory	$	1,524		Q1
Settlement of preexisting distribution arrangement		3,850		Q1
Patent impairment charges		1,023		Q4
Lawsuit verdict		4,900		Q4
	$	11,297

													Q4 2008 vs. Q4 2007
	2008												As Reported						Ex-Japan
Cash Flow		Q4		Japan			Ex-Japan			2007			$ Change			% Change			$ Change			% Change
Cash Used in Operating Activities		(991	)		(477	)		(514	)		(2,671	)		1,680			-63	%		2,157			-81	%
Cash Provided by (Used in) Investing Activities		(541	)		(178	)		(363	)		(4,442	)		3,901			-88	%		4,079			-92	%
Cash Provided by (Used in) Financing Activities		(161	)		32			(193	)		3,780			(3,941	)		-104	%		(3,973	)		-105	%
Effect of Exchange on Cash		(12	)		307			(319	)		32			(44	)		-138	%		(351	)		-1097	%
Increase (Decrease) in Cash		(1,705	)		(316	)		(1,389	)		(3,301	)		1,596			-48	%		1,912			-58	%

													2008 vs. 2007
	2008												As Reported						Ex-Japan
Cash Flow	As Reported			Japan			Ex-Japan			2007			$ Change			% Change			$ Change			% Change
Cash Used in Operating Activities		(8,228	)		(3,418	)		(4,810	)		(11,184	)		2,956			-26	%		6,374			-57	%
Cash Provided by (Used in) Investing Activities		1,121			2,624			(1,503	)		(4,675	)		5,796			-124	%		3,172			-68	%
Cash Provided by (Used in) Financing Activities		997			1,849			(852	)		18,735			(17,738	)		-95	%		(19,587	)		-105	%
Effect of Exchange on Cash		207			499			(292	)		261			(54	)		-21	%		(553	)		-212	%
Increase (Decrease) in Cash		(5,903	)		1,554			(7,457	)		3,137			(9,040	)		-288	%		(10,594	)		-338	%

										Q4 2008 vs. Q4 2007
		Q4 2008								As Reported						Ex-Currency
Sales in Constant Currency	As Reported		Effect of Currency			Ex-Currency		2007		$ Change			% Change			$ Change			% Change
US		4,460		-			4,460		4,730		(270	)		-6	%		(270	)		-6	%
International		13,697		(804	)		14,501		11,155		2,542			23	%		3,346			30	%
Total		18,157		(804	)		18,961		15,885		2,272			14	%		3,076			19	%

									2008 vs. 2007
	2008								As Reported						Ex-Currency
Sales in Constant Currency	As Reported		Effect of Currency		Ex-Currency		2007		$ Change			% Change			$ Change			% Change
US		18,927		-		18,927		19,721		(794	)		-4	%		(794	)		-4	%
International		55,967		1,640		54,327		39,642		16,325			41	%		14,685			37	%
Total		74,894		1,640		73,254		59,363		15,531			26	%		13,891			23	%

EX-99.2

Exhibit 99.2

STAAR SURGICAL, #11125535

STAAR SURGICAL FOURTH QUARTER 2008 EARNINGS

CONFERENCE CALL

March 16, 2009 4:30 PM ET

Chairperson: Barry Caldwell (Mgmt.)

Operator: Good afternoon ladies and gentlemen, thank you so much for standing by.  Welcome to the STAAR Surgical Fourth Quarter 2008 Earnings conference call.  During today’s presentation, all parties will be in a listen-only mode.  Following the presentation, the conference will be opened for questions.  If you do have a question, please press the star followed by the one on your touch-tone phone.  Once you make that choice, if you decide you’d like to withdraw your question, pressing the star followed by the two will remove your line from the queue.  If you’re using speaker equipment to listen today, please note you’ll need to lift up your handset prior to making your selection.  And as a reminder, the conference is being recorded today on Monday the 16th of March, 2009.

I’ll now turn the conference over to Mr. Doug Sherk with the EVC Group.  Please go ahead.

Doug Sherk: Well thank you, Operator, and good afternoon everyone.  Thank you for joining us this afternoon for the STAAR Surgical conference call to review the company’s progress and financial results for the fourth quarter and full year 2008, which ended on January 2nd, 2009.  The news release announcing the results crossed the wire this afternoon shortly after the market closed, and is available at STAAR’s website at www.staar.com.

Additionally, we have arranged for a taped replay of this call, which may be accessed by phone.  A replay will become available approximately one hour after the call’s conclusion, and will remain available for seven days.  The Operator will provide the dial-in information at the conclusion of today’s call.  In addition, today’s call is being broadcast live, and along with an archived replay, will be available at STAAR’s website at www.staar.com.

Before we get started, during the course of this conference call the company will make forward-looking statements.  We caution you that any statement that is not a statement of historical fact is a forward-looking statement.  This includes any projections of earnings, or revenues, sales, cash or other financial statements, any statements about plans, strategies or objectives of management for future operations, any statements about the effect of the jury verdict against us at recent litigation, our intent to challenge that verdict, both by post trial motions, and, if necessary, by appeals, or the outcome of future litigation, any statements regarding expectations regarding expectations for the success of the ICL or other products in the US and international markets, any statements concerning proposed new products or government approval of new products, any statements regarding future economic conditions or performance, statements of belief, and any statements of assumptions underlying any of the forgoing.  These statements are based on expectations and assumptions as of the date of this conference call, and are subject to numerous risk and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Page 1

These risks are described in the Safe Harbor Statement in today’s press release, and in the Risk Factor section of our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on November 11th, 2008, and our Annual Report on Form 10-K filed with the Commission on March 12th, 2008.  Investors or potential investors should read these risks.  STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes, and does not intend to do so.

In addition, today’s presentation includes certain financial measures used to better understand our business, but have not been prepared in accordance with Generally Accepted Accounting Principles.  An explanation and reconciliation of these non-GAAP measures has been provided in today’s press release by the company, which is available on the website at www.staar.com.

Now I’d like to turn the call over to Barry Caldwell, President and Chief Executive Officer of STAAR Surgical.

Barry Caldwell: Thank you, Doug, and good afternoon everyone.  Thank you for joining us today to review our fourth quarter and full year 2008 financial and operational results.  With me today is Deborah Andrews, our Chief Financial Officer.  After my opening remarks, Deborah will cover in more detail the highlights of the quarter, as well as our progress during the first quarter.  Then I’ll come back to add a few additional comments about recent developments.  We’ve got a lot to cover today, so let’s get started.

At the beginning of 2008, we laid out five key metrics upon which you could judge our performance during the course of the year.  During the fourth quarter, we met three of the five metrics.  For the first three quarters, we met all five.  So, though not perfect, a pretty good score overall for the year.

While the fourth quarter experienced some impact from the challenging world economic environment, the first quarter of 2009 has shown continuous improvement in our progress to profitability.  Now I’d like to update you on how we performed against the five key metrics during the fourth quarter of 2008.

The first metric is to reduce our operating cash burn, and again, we produced positive results as a result of our rising margins, and cost cutting efforts.  During the fourth quarter we continued to focus on reducing operational expenses, both domestically and abroad, and on an apple to apple basis, generated a reduction of 1.8 million, or 16% from prior year’s fourth quarter spending.

Cash used in operations in the fourth quarter was under $1 million.  We reduced our cash use in operations, excluding Japan, which was acquired in January 2008, by 81% as compared to the fourth quarter of 2007.  For the year, the cash used in operations, excluding Japan, was $5 million, as compared to over $11 million in 2007.

Page 2

Our second measure is to drive quarterly improvement in our overall gross margin, and we just missed that in fourth quarter.  During the quarter, gross margin increased to 57.1%, which is a 600 basis point improvement from the fourth quarter of last year.  However, we fell slightly short of the 57.7 gross margin achieved during the third quarter.  That’s largely due to the overall—lower overall sales growth in our Visian ICL products.

For the year, our gross margin was 53.6% as reported, which includes purchase accounting charges from the Japan acquisition.  Excluding this $1.5 million adjustment, the gross margin for the year was 55.6% as compared to 49.3% in 2007.

The third metric was to generate the strong international revenue growth seen in 2007.  End user demand remains strong.  During the fourth quarter, international sales increased by 23%, which was 30% when you exclude the impact of currency.  For the year, international experienced an overall 41% revenue growth.  The key impact of the weakened economy was inventory reduction in several key markets where distributors were conserving cash during the fourth quarter by reducing inventory purchases, as compared to the fourth quarter of 2007 when they were in their typical yearend inventory build mode.  But again, end user demand remains strong.

Our fourth metric that we gave you to evaluate our progress during 2008 was achieving $12 million in sales from STAAR Japan.  During the quarter, STAAR Japan contributed 3.7 million in sales, and for the full year, STAAR Japan operations recorded 12.7 million in sales.

This was a very important acquisition for the company, and you may recall, it was necessary for us to own 100% of STAAR Japan in order to control the ICL technology worldwide.  I want to congratulate the entire team for working together in order to overcome the challenges of an acquisition like this.  These efforts were led by David Bailey, our President of International Operations, and embraced—embraced by the entire management team at STAAR Japan.  We expect overall profitability and positive cash flows in 2009, and results so far indicate we’re well on track for that.

Finally, our fifth metric was to grow Visian ICL sales in the US.  While we consistently achieved this metric in each of the first three quarters, we fell short in fourth quarter.  US Visian ICL sales were basically flat during the fourth quarter.  While flat is not good, it is excellent compared to the estimated 40% decline for the total refractive market during the fourth quarter.

Certainly the news has not been good for refractive procedures during the fourth quarter.  LCA-Vision has already reported a 51% decline in procedures for the quarter, and AMO has basically reported a 40% decline.  For the year, the Visian ICL sales in the US increased by 18%, while the market declined by about 35%.  As a result, using the market share data for procedures, we believe that we entered 2008 with a 0.4% share of refractive procedures, and during the fourth quarter, we achieved a 1% share of these procedures.

Page 3

Further, the true demand trends for the ICL in the US were better than sales indicate because of our strategic decision early in the year to reduce bulk sales.  For the fourth quarter, the number of bulk orders was at, by far, the lowest level for the year, against a very strong comp during the fourth quarter of 2007 when we were accepting bulk orders.  As a matter of fact, overall, our sales to non-bulk, or singles, as we call them, increased by 13% during the fourth quarter.

In summary, though we stumbled a bit during the fourth quarter on a few of our metrics, we were successful on all five for the full year.  And while you’ve heard this before from me, and you’re going to likely hear it again, we still have work to do.  It’s important to note that so far in 2009, our progress has continued toward our goal to profitability.

Now I’d like to have Deborah review some of the fourth quarter financial highlights and operational highlights, then I’ll come back to provide some updates on some other key events, which will then be followed by your questions.  Deborah, I’ll turn it over to you.

Deborah Andrews: Thanks, Barry.  Good afternoon everyone.  I’d like to start off this afternoon reviewing our cash situation.  As Barry mentioned in his opening remarks, we’ve been aggressively managing our cash position all year by carefully cutting costs, and we continued to do so in the fourth quarter.  During the quarter, we used just 991,000 of cash for operating activities.  Excluding Japan, we used 514,000.  We had cash expenses of 600,000 for legal fees during the fourth quarter, so non-Japan operations would’ve generated cash were it not for the legal fees.

Each quarter during 2008, we’ve lowered our cash use for operating activities, and we finished the year with just under 5 million in cash, although 2 million of this cash is available only in Japan.

Cash used in operating activities for the year ended January 2nd, 2009, was 8.2 million compared to 11.2 million reported for the year ended December 28th, 2007.  STAAR Japan used $477,000 and 3.4 million in cash for operating activities for the three months and year ended January 2nd, 2009 respectively.

Excluding cash used by STAAR Japan, cash used in operating activities was 4.8 million, a 57% reduction over 2007.  As Barry mentioned earlier, STAAR Japan was expected to use cash in 2008, but is expected to be cash flow positive in 2009.

Turning to our P&L, our gross profit margin as compared to last year has improved by 430 basis points.  Compared to last year, the increase was mostly attributable to higher margin Visian ICL sales, specifically, higher margin US ICL sales, and higher margin TICL sales in international, along with cataract sales in Japan where higher ASPs prevailed.  In the fourth quarter, gross margins flattened due to the slowdown in ICL sales Barry mentioned.

Page 4

Improved gross margins and reduced operating expenses are the two key factors behind our improved cash utilization during the year.  For example, during the fourth quarter, we recorded 4.3 million in G&A expenses.  Japan expenses totaled 1.1 million.  Excluding Japan, our fourth quarter G&A expenses were 5% under last year’s level of 3.4 million, even including legal expenses.  More impressive were the decline in sales and marketing expenses during the fourth quarter, which were down 19%—when Japan’s costs are excluded, and the decline in R&D costs, which were down 22% when Japan is excluded.

Of course the big impact to our reporting bottom line in the fourth quarter is the 5.9 million in other operating expenses, resulting from the Parallax litigation verdict reached earlier this month, and the 1 million non-cash charge associated with the impairment of certain patents in our portfolio.

Based on our financial position at this time, as a result of the verdict, we will likely receive a going concern opinion from our auditors.  We will be filing a 15 day extension for our 2008 10-K so we can fully assess the effects of the verdict on our liquidity and capital resources.  During this time, we expect the final judgment to be filed.

During our fourth quarter call for 2007, we announced that we were implementing a management task team to fine 5 to 6 million in cost reductions, and manufacturing efficiencies.  Subsequently, during 2008, we reduced operating expenses by 2.6 million, and achieved 3.3 million improvement in our global gross profit, excluding Japan.  For 2009, we will continue to aggressively pursue cost reductions in our business, without hindering our ability to grow the business.

At the beginning of the year, we implemented a new US sales force structure, designed to maximize our Collamer material positioning for ICLs, and IOLs, as well as improved go-to-market efficiencies.  We expect the implementation of this structure should yield us approximately 1 million in additional cost savings in 2009.

In addition, as we reported in our news release this afternoon, we’ve begun a Centers of Excellence Project, which is designed to take advantage of our key competencies in both Japan and the US.  STAAR Japan has demonstrated the core competency in delivery systems for IOLs, while the US has broad experience in optics material and design.  Japan will become the STAAR Center of Excellence for delivery systems, while the US will be the Center of Excellence for optics material design and manufacturing.  The actions taken as a part of this project should enhance our ability to introduce new technologies, while reducing the cost of our IOLs significantly beginning in 2010.

Page 5

Additionally, we’ve created a 2009 budget that resulted from challenges to all uses of cash and is focused on the bottom line; achieveing profitability and positive cash flow in 2009.  Through February 6, we’re off to a good start with respect to these goals.

I’d like to now turn the call back over to Barry.

Barry Caldwell: Thanks, Deborah.  I’d like to cover three recent developments in our business before we open the call up for questions.  First I’d like to speak about two compliance tests which the company has successfully passed.  During the last two weeks of February, the FDA conducted a routine audit of our facilities here in Monrovia.  Though our objective, of course, is to not have any observations from such a visit.  I’m very pleased to report they noted only three minor observations, which we believe can be quickly addressed.  I think this reflects the continuous improvement, which the company has been diligently pursuing in this area for some time.  I’d like to congratulate John Santos, our Head of Quality and Regulatory, and the entire quality and regulatory team on this successful review, and challenge them to continue to focus on improvements.

Additionally, with the acquisition of the business in Japan, our finance team has been challenged during the year with the project to become SOX compliant in Japan.  We did use outside consultants for assistance, which cost us about $300,000 during 2008, and will not be repeated in 2009.  I am happy to report that we’ve successfully passed this test without any significant deficiencies.  I want to congratulate the entire finance teams in both Japan and the US, and in particular, our global controller here in Monrovia, and our controller in Japan.

The second development which has been mentioned is the judgment that Deborah noted earlier, which we reported on March 3rd.  Clearly, we vehemently disagree with the jury’s verdict, and believe there are several legal arguments to pursue as part of a vigorous appeal.  The judgment has not yet been entered by the court.  While 4.9 million is the maximum amount of damages that the plaintiffs in this case can recover, as a result of the post trial motions that we anticipate filing, the judge could choose to reduce the amount of either or both of the compensatory and punitive damages awarded by the jury.  Because the legal proceedings are ongoing, we will not be answering any specific questions about those proceedings today.

We aren’t making any predictions about the possibilities of reduced judgment; however, upon the entry of the judgment in this case, we will be able to refine the wide range of options we’re currently examining at this point in time.  Unfortunately, again, today we won’t be able to offer any further comment on the judgment or our strategy until there are further developments to report.

Third, I’d like to update you on the approval process for the Toric ICL here in the US, and the ICL in Japan.

Page 6

First to the US.  The FDA examiner who had been reviewing this process retired at yearend, which we had previous noted.  The submission was transferred to a new examiner in early January, and then transferred again to a third reviewer the first week of February.  We did receive the second report of the third party auditor, which the FDA allowed to be released the third week of February.  The FDA had two additional questions to the third party auditor, which were answered today to the FDA.  Once the FDA has reviewed the two answers, we should be allowed to submit our corrective action plan.

The FDA stated that it should take them about three weeks to review our most recent answers, and then they’ll call us for a one day inspection by the local FDA office.  Once that inspection is completed, the local office will issue a simple e-mail report, and the FDA would be in a position to begin the clinical trial review.

In Japan, we continue to move forward with the combined application for approval of the ICL and TICL based on the clinical trials completed in Japan.  The data is under active review, and as a part of that review we expect a routine, good clinical practice audit to occur this month.  Following that we would expect an expert review, with a final determination on approvability by the middle of this year.

Now, we’re getting ready to go to the question and answer session, but I would like to, after that session, come back and give you our key metrics for 2009, upon which we’d like for you to judge our performance.

So at this point, Operator, we can open the line for questions.

Operator: All right, certainly.  Thank you, sir.  Ladies and gentlemen, at this time we will begin our question and answer session.  As a reminder, if you do have a question at this time, please press the star followed by the one on your touch-tone phone.  Once you make that choice, if you decide you’d like to withdraw your question, pressing the star followed by the two will remove your line from the queue.  If you’re using speaker equipment today, please remember you’ll need to lift up your handset prior to making your selection.

Our first question is from the line of Joanne Wuensch with BMO Capital Markets.  Please go ahead.

Joanne Wuensch: Hi.  Thank you for taking the question.  Where to begin?  Okay, Deborah, you talked about your ’09 budget.  Could you outline for us what you think your use of cash could be throughout the year?  And this leads right into the next question, so I’m going to ask it now.  You talked about a going concern opinion; that doesn’t sound good.  What does that mean exactly?  And I suspect that [inaudible] in cash would lead into the results of what a going concern opinion could lead to.

Barry Caldwell: Okay, why don’t you try to take it first and then I’ll comment.  The last part, Joanne, you cut out.  Could you restate that?

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Joanne Wuensch: Yes, I mean essentially I’m asking two different questions which are linked.  One is what does the ’09 budget look like with the cash, and what does it mean for the going concern opinion?

Deborah Andrews: Well the—our ’09 budget is to be cash flow positive in all four quarters of 2009.

Barry Caldwell: Yes.

Deborah Andrews: At least [inaudible].

Barry Caldwell: And I don’t think, Joanne, that…

Deborah Andrews: From operating activities anyways.

Barry Caldwell: And that’s not really the basic link to a potential going concern.

Joanne Wuensch: Okay.

Deborah Andrews: Although our ’09 budget would show profits and cash flow, the judgment itself is significantly beyond—you know—what our plans were for ’09 in terms of cash flows.

Joanne Wuensch: All right, so, but can you give us some more information, or help me understand what it would encapsulate then?  Are we looking—please?

Deborah Andrews: The going concern [inaudible].

Barry Caldwell: What’s your—would you state your question again, Joanne?  Sorry.

Joanne Wuensch: What are they looking for in the going concern opinion?

Deborah Andrews: Well they want to see that you have sufficient cash flow to cover the judgment and any other requirements over the next 15 months, let’s say, through the end of first quarter of 2010.

Barry Caldwell: And Deborah earlier stated that we are extending the filing for 15 days.  It’s likely that we’ll get a going concern, but at this point in time that’s not a final decision.  We’re going through several potential options, considering all of those options in order to protect the interest of our shareholders, employees, and customers.

But I would say this, a couple of comments, Joanne.  I know here at STAAR, the company several years ago went through a going concern, and it was quite traumatic for the company.  I think, number one, in today’s environment, auditors are scrutinizing particularly small companies much more closely, and going concerns are, I won’t say routine, but there are certainly more going concerns being issued today than there were five, six, seven years ago.

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Secondly, we feel quite confident about where the business is today, and it is about exactly where we thought it would be, and we feel very confident about our plans in 2009.  So with both of those considerations in mind, we don’t believe that a going concern will be a major obstacle for the company in 2009.

Joanne Wuensch: Okay.

Deborah Andrews: But I think, Joanne, you know, considering that we have 4.9 million in cash now, and the jury verdict is 4.9 million, that pretty much—you know—automatically puts us in a—you know—difficult situation with our auditors.  They can rely on our projections for the year, but only to a certain extent.  And—you know—so as Barry said, we believe that will probably be the case, but that’s not certain at this point in time.  We need a little bit of time to evaluate our—you know—liquidity situation, and that’s what—you know—we’re in the process of doing.

Barry Caldwell: And certainly without the verdict, we did not think this would be the case, and we’ve been planning that way accordingly throughout the audit and the year in process.

Joanne Wuensch: All right.  Okay, that’s helpful to know.  Can you give us some granularity on what you saw in US Visian sales?  I mean you’ve bucked the trend of the laser vision correction businesses, which is great, but could you give us an idea as time has moved forward month by month by month, are you seeing a weakening in demand?

Barry Caldwell: You know, Joanne, we have not, and I believe in our press release we stated that the Visian ICL sales through the first two months of this year are up over 25%, both globally and in the US.  So even though our fourth quarter overall sales were flat—you know—most of that was due to the—to our bulk order decision.  Our sales in fourth quarter of the Visian ICL, only 5% of those were related to bulk orders, whereas that number has been driven down throughout the year from 29% to 16% to 13%, so we’ve been driving that out of the comparables that we’ve had to run against against 2007.  And as we said, if you take the bulk out for fourth quarter, our single users, the ones that buy based upon demand and don’t have a bulk opportunity, those did increase 13%.

Joanne Wuensch: Okay.  If you had to put odds on the Toric ICL being approved this year, what would they be?

Barry Caldwell: Let me see, odds… and the FDA… and Las Vegas.  All those seem to go together, right?  I—you know—the data that’s been resubmitted in terms of the clinical results is the same that was looked at a couple of years ago.  It’s not new results to the FDA.  But what it is is clean results.  It’s clean, audited, all the I’s are dotted, all the T’s are crossed, and that’s what’s different.

I feel quite confident, and I still will be disappointed if we don’t have approval by the middle of this year in the US for the Toric ICL.

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Joanne Wuensch: Okay, thank you very much.

Barry Caldwell: Thank you.

Operator: All right, thank you.  Our next question is from the line of Jack Fraser with Seamark Capital.  Please go ahead with your question.

Barry Caldwell: Hi, Jack

Jack Fraser: Good afternoon, guys.  Actually I think this button was from me trying to let you know that the press release had not come out, so we started the call blind, actually.  So I’ll circle back into queue, and come back to you.

Barry Caldwell: Okay, do you have it now, Jack?

Jack Fraser: We do now.  It came out after you guys started, actually.  Thanks.

Barry Caldwell: Okay, thank you.

Operator: All right, thank you.  Moving on.  Our next question is from the line of Rick D’Auteuil with Columbia Management.  Please go ahead.

Rick D’Auteuil: Yes, this is more on the communication front.  Barry, I think you were interviewed a couple times in the fourth quarter—you know—maybe mid, even maybe two thirds of the way through the fourth quarter, and had pretty strong optimism, not only about what you’ve restated today about being profitable in all four quarters of ’09, but having at least flow break even in Q4.  You didn’t achieve it, so it sort of implies something happened at least in the month of December.  What happened?

Barry Caldwell: Well—you know—yes, I think first of all, Rick, you’re right.  And secondly, as we’d said all along, our fourth quarter goal was to make a buck in cash at the operating income line.  We—and that would be excluding the non-cash expenses that you typically see.  Our revenues fell a little bit short for fourth quarter, as we’ve recognized.  We didn’t see, maybe we should have, we did not see the inventory management of our key distributors being an issue fourth quarter as compared to last year, but it clearly was.

Second, in December our expenses were higher than we anticipated, and some of this was the legal expenses with the delay in the trial.

Rick D’Auteuil: Okay, so can you—and year-to-date—you know—you feel better about things, so do you think that destocking, or whatever was going on in the distributor base is behind you now?

Barry Caldwell: Yes, we think so.  As a matter of fact—you know—as I say, yes, outside the US where distributor inventories become an issue through the first two months, our Visian ICL sales are up over 25%.  So we’re certainly seeing that.  We haven’t seen any slow—any slowdown in the demand at the physician level in terms of procedures they’re doing, so that’s also encouraging to us.

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Rick D’Auteuil: Well what about, I mean you’re focusing on Visian, and I understand that, but what about—you know—the IOL business?

Barry Caldwell: Well, you know, okay, yes you’re right.  I thought the question was more around the ICL.  Sorry.  The IOL business was extremely strong in Japan in the fourth quarter.  As a matter of fact, our worldwide IOL sales increased by 47% during the quarter.  Japan is doing extremely well the first two months of 2009.  As a matter of fact, their IOL sales have increased by over 35% during the first two months.  We’ve seen in the US the first two months, that we’ve gotten back to ground zero, and we think we’ve got a shot at actually seeing growth of IOL sales in the US during the first quarter.

Rick D’Auteuil: Are you—what do you attribute the gains in Japan to, one?  And then, two, back to the US, we had expected with some, some better technology that we’d see improved reimbursement or improved revenues and margins, have you now kind of gotten away from the commodity products and fully converted your domestic IOL business?  So two questions, Japan, what do you attribute the benefits to, and then back to the US?

Barry Caldwell: Right, Rick, well good questions, Rick.  Thank you.  First of all, in Japan, I think a couple of factors there have been key to our success in Japan.  One is the technology, and that’s the pre-loaded IOL technology, which you’ll recall, is a part of our US plan later in 2009.  But I think second is—you know—in 2008, it was a huge transition year for the organization in Japan.  During most of the year, in sales and marketing we had duplicate staffs, and that means staff from the Canon days, while we were, while we were in the process of hiring our own group there.  They’re now in place, and that’s why we’re so encouraged by the quick start to the first two months Japan’s gotten off to.  So I think those are the two key reasons in Japan.

Now to the US.  We have certainly seen a decrease in our decline in our IOL sales quarter by quarter through 2008.  And as I said, now through the first two months, we’re basically at the bottom.  We—we’re where we were through the first two months of last year, so that is quite encouraging.  We have seen increases in our average selling price.  We still have one NTIOL product we’ve yet to get to market, and that product is—we’re waiting for an FDA approval on a sterilization, I’m sorry, on a cap change that we made to the Collamer bottle, which we actually made a few years ago, and had not properly reported to the FDA.  So we’re going through that process with them right now.  As a matter of fact, we returned answers to them of questions on Friday.  So getting that to commercialization will be very helpful.

It will also be very helpful to us for the CAST team, because they’re waiting for that, for the product; that’s the Collamer Accommodating Study Team, who will meet next month during the ASCRS.  We’ve got to get that aspheric, single piece Collamer lens to them so they can set the beginning stages of understanding where that product stands in terms of accommodation today.  So hopefully that helped to answer your question there, Rick.

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Rick D’Auteuil: But are there still commodity priced margined IOLs that STAAR is selling today?  There are, aren’t…?

Barry Caldwell: We’ve been in the process of—and it depends upon what you call generic, but I mean you’re exactly right that STAAR has historically been at the bottom of the food chain of pricing.  I think it’s probably fair to say today that STAAR still, though at a higher level, we’re at the lower end of, in terms of pricing, what our competition is able to get.  And I do think today that that’s causing physicians to take another look at STAAR IOLs, because as you can imagine, physicians in the US are being challenged by the economic conditions everywhere in their practice, and particularly if they own an ASC, being able to get a new technology IOL that’s reimbursed for an additional $50 than a normal lens, at a better price than they’re able to get at the competition is attractive to them; maybe more attractive to them today than it was a year ago.  And it’s clearly giving us more trials and first starts in new centers that we haven’t been in before.

Rick D’Auteuil: Thank you.

Barry Caldwell: Thank you, Rick.

Operate: All right, thank you.  Our next question is from Larry Haimovitch with HMTC.  Please go ahead with your question.

Larry Haimovitch: Good afternoon.

Barry Caldwell: Hi, Larry.

Larry Haimovitch: Several questions.  I’d actually buzzed in earlier because I was trying to get the press release, which I guess came out late.  So one of my questions to Deborah was what was the cash, but now I have the press release.  Deborah, on the going concern, your cash ended the year a little lower than I thought is was going to be, so I’m just wondering would the auditors have had a going concern without the lawsuits.  Take those away for a minute, were they—had you had an indication from them before the verdict came out that they were leaning that way anyway?

Deborah Andrews: No, but we think that we had a good strategy for avoiding going concern—you know—this year.  We knew—we actually, although the cash was low, it was pretty close to our target for the year.  We knew that we would be low heading into to 2009.  Certainly we didn’t think—we didn’t consider that we would have enough cash available for a judgment like this.

Larry Haimovitch: Right.

Deborah Andrews: Or a verdict like this.

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Larry Haimovitch: Right.

Deborah Andrews: And that’s unfortunate.  But we are—but we were on target at the year—at the end of the year, and do believe that those—you know—the trend that we saw of declining cash flows in 2007, or 2008, which we’ve demonstrated, will continue and have continued into 2009, such that we would be able to avoid a going concern opinion.

Larry Haimovitch: So basically take away the verdicts for a minute, or the verdict, and another one to come, what you’re saying is is that you think you could’ve convinced the auditors that, look, we’re going to be cash flow positive for ’09, therefore we really don’t want to see a going concern on the financial statements.  Is that what essentially you just told me?

Barry Caldwell: Yes, I think that’s exactly what she’s saying, Larry.  This is Barry, of course.

Larry Haimovitch: Yes.

Barry Caldwell: And we have had active discussions with them.  We had a plan in process, we thought, that was doable.  I think the other thing that’s been important for us with our auditors and our relationship, is that during 2008 we hit—you know—very close to exactly where we said we’d be almost every quarter.  So we’ve built a very good reputation, if you would, with the auditors from the last several quarters of being on target with our projections.  So if they were looking at our projections for 2009, it certainly gives us more credibility.

Larry Haimovitch: Yes.  Thanks.  Okay, a question on Japan.  Forgive the skepticism, but so many companies that I’ve seen over the years—you know—they’ll have some very, very strong growth in a couple quarters, or in a year, and particularly maybe in a geographic area, and then the next year we find out—you know—the year-over-year comparison isn’t so good that, oh, well, you know, we had stocking orders, or you know, there was unusual situation, and that’s why things were so good.  Barry, is there anything going on in Japan except just good blocking and tackling, your own organization?  Is there anything that we should be concerned about that this is really not sustainable?  [Talk over], Barry, is a great example.  I mean the ICLs were—sales were inflated by some of these bulk sales.  Now you’ve had to live with those comparisons.  Thankfully it looks like you’re done with them, but that’s the kind of thing I’m concerned about.

Barry Caldwell: Yes, good questions.  I think what we’ve seen during 2008 from Japan has been continuous improvement every quarter.  And obviously their fourth quarter was outstanding at $3.7 million overall, and the start they’ve got to—through—during 2009 through two full months of the third quarter, is, as I said, the IOLs have grown over 35% compared to a year ago.  So I think there’s been a lot of good blocking and tackling.  The motivation level in Japan is very high, and we’re very fortunate to have that organization in place.  We’re very fortunate that the work that took place in 2008 was successful, because as we all know, things happen during acquisitions, and whatever happened, the team was able to come together, solve the issues and move forward.  So, no, I feel very confident about those—the sales results in Japan and the consistency and the continued improvement.

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Larry Haimovitch: Okay, so bottom line, this should be sustainable, perhaps not at 35% every quarter, but we should expect Japan likely to continue to be a solid performer?

Barry Caldwell: Yes, and we planned that way, and as Deborah pointed out, we also have planned for profitability in Japan in ’09.

Larry Haimovitch: Yes.  Okay, and then one more question.

Deborah Andrews: Just look at their margins, they’re fantastic at 70%.

Larry Haimovitch: So that leads a little bit to my next question, which is the ICL sales in Q4, as you talked about, were down.  Could—and I think you reviewed geographically what the performance was, but could you just do that again, please?

Barry Caldwell: You mean between US and international?

Larry Haimovitch: Yes, yes.

Barry Caldwell: The US sales were basically flat, and the international sales were down—I’m sorry, the international ICL sales were down—where’s my number?  I want to say…

Larry Haimovitch: Must be 25, 30% or so?

Deborah Andrews: 6—7%.

Barry Caldwell: 7%.

Larry Haimovitch: That doesn’t seem to make sense to me because the whole—the whole—we’re talking the year now?

Barry Caldwell: I’m talking for the quarter.

Larry Haimovitch: You’re talking for the quarter.  I’m sorry, okay.  So 5.4% for the quarter for the entire ICLs, and US is flat and international is down 7…?

Deborah Andrews: Well US is down slightly.

Barry Caldwell: That’s point…

Deborah Andrews: 0.9%

Barry Caldwell: 0.9%

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Larry Haimovitch: Okay, so I think we can understand a little bit the US market given that the economy just fell off a cliff in Q4, and as you pointed out, Barry, LASIK has just plummeted.  Is that the main reason Europe would be slower, because you had such a tremendous performance in Europe for so many quarters; back to back to back to back?

Barry Caldwell: Really good question, Larry, and part of the analysis we did, as we looked at six of our top markets, and these six markets all grew by 10% during 2008 overall versus 2007, but if you look at their sales in fourth quarter, because of this stocking situation, meaning they were basically destocking fourth quarter of 2008, and they were stocking in fourth quarter 2007, if you look at their fourth quarter sales as a percent of their overall sales for the year, in 2007, in these six countries, 34% of their sales were in the fourth quarter last year.  This year, those same six countries, only 23% of their sales were in the fourth quarter.  So it was more of a typical quarter for them rather than more of an inventory building quarter.

Larry Haimovitch: Right, and that speaks to my earlier question, which sometimes you get these quarters which are very, very strong, and then you find out later, oh, well they were building inventory.

Barry Caldwell: Yes, well, you know, inventory—depending upon cash situations, those typically come more at the end of the year than they do in other quarters.

Larry Haimovitch: Yes, yes, right.  Okay, one more quick question on the product sales other.  What does that mainly constitute, and why was that down; 5.2 versus 5.4?

Deborah Andrews: That’s mainly sales in Germany.

Larry Haimovitch: Oh was it Germany, that’s Domilens pretty much?

Deborah Andrews: That’s right.  And they sell everything—you know—outside of IOLs, they sell everything—you know—except the kitchen sink.

Barry Caldwell: Yes, and let me comment that, Larry, because that’s a really good question, and a lot of times we just kind of skimmed over, or not even mentioned.  In Germany, as you know, we’ve got a new General Manager there, and we’ve really, he’s really done a good job, along with Dave, with really analyzing that business, and a lot of that other business is very low margin stuff.  I mean very low margin stuff.  And a lot of the past considerations were that we were—we were selling some very low volume things in accounts because we were getting higher volume IOL sales, or other products there. And as we analyzed account by account, we found a lot of accounts where that’s just not true.  So a part of their efforts during the end of ’08 and even more so in 2009 is to—is to first try to raise the price on that business through a reasonable gross margin.  If not, we’re just walking away from it.

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So what you would expect to see n Domilens  in 2009, is not so much driven by the revenue line, it’s driven by the gross margin line, and what operating income we can get out of that business because of the strategic decisions we’re making.

Larry Haimovitch: Okay, thanks for all the good answers and I’ll get back in queue.

Barry Caldwell: Thank you, Larry.

Operator: All right, thank you.  Our next question is from the line of Tyson Halsey with Halsey Advisory and Management.  Please go ahead.

Tyson Halsey: Hi, Barry.

Barry Caldwell: Hi, Tyson.

Tyson Halsey: Congratulations on getting the company to the cusp of profitability.  I wanted to ask some simple questions to perhaps alleviate some of the nervous Nellies, because, you know, selling begets selling, and you know, I feel like we just hit an air pocket and we dropped about 1,000 feet, and I think a lot of people are still a little shaken up, if you know what I mean.

Barry Caldwell: Yes.

Tyson Halsey: Anywho… So here’s my question, and you know, if there’s a question I ask that you don’t feel comfortable, just say next or let’s take it offline, but this one’s really pretty simple.  It seems to me there’s been two major ophthalmic companies in the last nine months that have been bought out; one being AMO, and the other one called Alcon.  And also, eyeonics was bought out in the last nine months.  What kind of multiples of revenues were those?  Is that three times?  Is that about a fair comparable?

Barry Caldwell: Yes, I think it’s fair.  Of course there are a lot of other factors involved, and the eyeonics, I think was 10X, as an example, whereas AMO, maybe a 2X.

Tyson Halsey: Okay, I got a next question.  I’m going to write that down; 10X sounds good to me.  [Talk over] I spoke over the weekend, and I said, jeez, you know, you said why don’t—you know, if you’re worried about STAAR why don’t you sell, and I said are you kidding me, I think the stock’s worth 10.  They have this great columnar, they’ve got this ICL; the TICL, they’ve got the ASCRS, AAO, I’ve gotten to know everybody, I’ve gotten to know the products.  They have the technology; it’s just a matter of their executing.

Anyway, my next question is—you know—I think on the upside—you know—I see 10—you know—$10 stock, on the downside—you know—the liability seems to be around the going concern, which relates specifically to the legal case, and I wanted to know what you think is a maximum liability—if you can answer this, what the maximum liability is of the Stewart and Moody case?  And if you can’t answer it, just say I can’t answer.

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Barry Caldwell: Well why don’t we go with what we know.  I don’t want to speculate anything about the Moody case.

Tyson Halsey: I wouldn’t want you to speculate either.

Barry Caldwell: Well, so let’s just take the Stewart case for example, or Parallax case.  That’s, at this point, a $5 million judgment.

Tyson Halsey: Right.

Barry Caldwell: What’s the valuation of the company; a verdict, I’m sorry, it’s not a judgment, it’s still a verdict at this point.  But—you know—what do you consider the overall value of the company?  If you say it’s 100 million, it’s a 5% problem we have.

Tyson Halsey: Right, if it’s taken out.

Barry Caldwell: Right.

Tyson Halsey: I mean your—STAAR Surgical has 72 million in trailing revenues, multiple of three is 210 million, so you could write a check, if you were bought out, for $15 million; walk away from your liability, and hopefully with a smaller liability.  Is that right?

Barry Caldwell: Yes, that’s right.  Yes.

Tyson Halsey: Okay, next question.  I’m going to try to save you time.  What would be the maximum you’d pay just to get rid of this litigation and not get sued again?  And if you can’t answer it, don’t.

Barry Caldwell: I can’t answer it.

Tyson Halsey: Okay, not a problem.  Who had the better contract, David Bailey or Herb Stewart?

Barry Caldwell: Wow, that’s a really tough question because…

Tyson Halsey: Okay, why don’t you pass on that?  Let me ask you another one.

Deborah Andrews: Herb had a seven-year contract.

Tyson Halsey: I don’t know who got paid what, I’m not privy to their contract, it was just kind of an open-ended question.  Let me ask you another one.  How much money has STAAR Surgical spent in the lawsuits that have been between Jay, Scott, and Herb?  Round numbers over the last three years and maybe on the last quarter?

Barry Caldwell: I think we already stated that we spent 600,000 in cash the fourth quarter and I think that’s as far as I’ll go.

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Tyson Halsey: Okay, next question.  Would it be safe to say that if we didn’t have those litigations we’d be profitable by now?  Skip it.  Next question.  This is kind of a comment about life.  I had an attorney who once said if you don’t want to get sued, don’t ever piss anybody off.  And I remembered that.  I’ve paid a lot of money to attorneys, and that’s just one of those things in life.  My question is how much time did Dave Bailey spend talking to Herb Stewart and Scott Moody about an amicable resolution; face to face, knee to knee, maybe go out for a beer?  If you don’t know, you don’t know, and that’s okay.

Barry Caldwell: Well of course I wasn’t here, but I’d like to come back to where you first started, if you don’t mind, Tyson?

Tyson Halsey: Oh, sure, sure.  I’m just, I’m like eighth in line so I’m just trying to throw out my questions real quick.

Barry Caldwell: And that is the cusp of profitability.  That’s a true statement, and I’m very proud of the people here at STAAR, because we’ve worked very hard for the last five quarters to get to where we are.  And yes, we get obstacles thrown at us.  It seems like that’s the history here at STAAR.  Somebody told me it’s the karma of STAAR, but I’ll tell you what, we’ve got a great team of folks, and we’ve got great technologies here, and we’re going to succeed.  I’m very confident [talk over].

Tyson Halsey: And that’s why I own the stock.

Barry Caldwell: And we are turning the corner, and we see it happening every day.  So whether we’ve got a going concern in 2009, or whatever label you want to put to us, it’s not going to stop us because we’re going to keep moving forward.

Tyson Halsey: Well that’s why I invested in this stock.  You know, can you tell me about the mediation process that you have engaged with regard to these guys to get rid of this nagging legal battle; a waste of, what I think is probably your valuable talent, because you have demonstrated bringing this company to the cusp of profitability?

Barry Caldwell: I think, as probably most people know, in cases like this there is required mediation, and we certainly did go through that before trial, and I won’t comment any further.

Tyson Halsey: Okay.  Well I’d certainly be willing to help if you guys flew me out first class and—you know—I took a couple people out for a Diet Coke or something like that, and said, come on, let’s go home to our wives and families and get this past us.  But do you think that Dave Bailey would take a salary cut, or that the Board could possibly loan the company money so that we could avoid a going concern?

Barry Caldwell: You know, Tyson, I do appreciate all your questions, and we are taking very serious our situation and we’re considering all potential options to protect the interest of our shareholders, our employees, and our customers, and…

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Tyson Halsey: That’s great.  I’m sorry if I asked a hard question.  I’m just trying to help by asking provocative ones.

Barry Caldwell: No, no, but I think, if you don’t mind, let me get you back in the queue because you’ve asked about eight questions now and we’ve got folks waiting.

Tyson Halsey: Listen, I understand.

Deborah Andrews: Well let me just [inaudible] though…

Tyson Halsey: Thank you for your time.  Excuse me?

Deborah Andrews: If there are options that can be taken to avoid the going concern, we will take them.

Tyson Halsey: Awesome.  That’s great.  I’m an owner.  I’m a buyer probably.

Barry Caldwell: Thank you.

Operator: All right, thank you.  Wayne Schroeter, Private Investor.  Please go ahead.

Wayne Schroeter: Yes, two questions really.  The first is, and I think relates to what was just being talked about; the other case.  Is there a date, and is that on the docket yet somewhere?

Barry Caldwell: Yes there is, Wayne.  It’s currently scheduled for May 25th.

Wayne Schroeter: Okay.  Shareholders meeting should just be just before that, right?

Barry Caldwell: That’s—I forget the date, but around the same time.

Wayne Schroeter: Okay.  Second question is when you’re talking about these—the growth increases, like 47% increase in Japan, 25 in the first two months of this year, are you generally referring to over the previous months, or this quarter last year?

Barry Caldwell: Most of the comparisons all along, Wayne, are to the prior year at the same point in time.  So the numbers regarding the first two months of 2009 would be compared to the first two months of 2008.

Wayne Schroeter: Okay.  Okay, those are my questions.  Thank you very much.

Barry Caldwell: Thank you.

Operator: All right, thank you.  And Jack Fraser with Seamark Capital.  Please go ahead.

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Jack Fraser: Hi, guys.  A couple of housekeeping questions first.  So just to make sure I understand, Deborah, the 600,000 in expenses currently incurred in the fourth quarter for legal, was that carried in G&A?

Deborah Andrews: Yes.

Jack Fraser: It was?  Okay.

Deborah Andrews: And that’s cash paid in the fourth quarter.

Jack Fraser: And that was cash paid in the fourth quarter?

Deborah Andrews: Yes.

Jack Fraser: Okay.  And do we—have you attempted to look at a breakout between those expenses between the Herb Stewart case and the Scott Moody case, how that 600 would break out, or is that all for the Parallax case?

Deborah Andrews: To be honest, they bill the—you know, they bill it under one case.

Jack Fraser: I understand.

Deborah Andrews: Billed under one case up until now.

Barry Caldwell: And it’s really hard to split out, Jack, because a lot of the deposition costs, et cetera, were in both cases.

Jack Fraser: Yes.  I guess what I’m driving at is just there’s a portion of the 600 that’s probably front-end loaded if you will; getting ready for going to actual trial.

Deborah Andrews: Definitely.

Barry Caldwell: Oh, absolutely.

Deborah Andrews: Yes, that’s pre-trial, definitely.

Barry Caldwell: Yes, absolutely.

Jack Fraser: Okay.  Are you yet comfortable, Deborah, in sort of round number ballparking what you think legal will look like in Q1?

Deborah Andrews: Let’s see.

Barry Caldwell: Do we know through February what we incurred?

Deborah Andrews: Yes.  I would say around… I don’t know, maybe around 500,000.

Jack Fraser: Okay.  Okay, that’s helpful.

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Deborah Andrews: All right.

Jack Fraser: And that’s cool.  That’s fine, thank you.  And then I want to get into the technical handling from an accounting point of view of what is coming through as a current liability from the jury verdict.  And I’m—so I’m guessing that that’s going to be carried as a current [ph].  My question is, and do I have that right, by the way?

Deborah Andrews: Yes.

Jack Fraser: My question is in the event that you elect to go to appeal, and I would certainly be one of those that would be right behind you on that, and the potential liability of any payments to Herb would become probably due at the end of an appeal process, which could well exceed a year, would that liability change classification, or would the auditors require you to carry this as a current liability even though it was patently obvious it would not be paid in any upcoming current term, in fact, maybe not even for up to three years?

Deborah Andrews: Yes, Jack, I mean that’s a really good question.  The answer is I don’t know, and you know, I don’t know that we could say with certainty the likelihood of when that would be; what the appeal timing is, so.

Jack Fraser: Okay.

Deborah Andrews: That’s something I guess I’d have to get back to you on.

Jack Fraser: Because it seems, it would seem pretty obvious to even the auditors that if it were to be a year, or two, or three event, we’re talking a very different point in the history and evolution of STAAR and the new products, and the gross margins, and the gross profit dollars available, and all the rest of it, so it would change, seemingly, the status of the threat behind the going concern terminology.

And just, lastly, you know, it sounds as if the current thinking is to aggressively pursue on appeal.  As someone whose read—you know—a good chunk of the legal documents, I certainly would stand behind that.  Is there—I mean—you know—Larry asked the question, and then Tyson tried to—I mean is there a circumstance where—you know—you would just feel like, okay, we’re just not going to go to appeal?  Because I mean it just seems to me, for one, that—you know—it’s going to take a pretty steep reduction to even really contemplate—you know—this dialogue due to the—you know—some significant errors that were incurred?

Barry Caldwell: I think, Jack, you make some very good points.  Underlying in some of your questions here about our total litigation cost, it does point out that, number one, most of the cost related to the Moody case have already been incurred by the company.  And secondly, our current estimate for cost of an appeal in the Parallax case is about $300,000.  And the appeal process involves paperwork, and judges, and attorneys, and not juries.  So we are evaluating, as I said earlier, all potential options in order to protect your interests, and our employees, and our customers, and we’ll continue to look at it that way.

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Jack Fraser: Okay.  And lastly, I’d be remiss if I didn’t congratulate all of you on what was, from an operating standpoint, a pretty superb year in a very, very tough environment.  Thanks a lot.

Barry Caldwell: Thank you, Jack.

Deborah Andrews: Thank you, Jack.

Operator: All right, thank you.  And there are no further questions at this time, please continue with any closing comments.

Barry Caldwell: Great.  Thank you, Operator, and now please don’t hang up, because as we did last year, I’d like to provide you with the key operating metrics that we’re going to be focusing on during 2009, and which we’d like for you to judge our performance.

First, and Deborah already mentioned this, but our first metric is to generate positive cash flow from operating activities during every quarter of the year.  And we say that, though, while we recognize first quarter’s always our most challenging from a cash utilization perspective, and that won’t be any different this year, but it is our goal to achieve for all four quarters.

Secondly, second metric would be to improve our gross margin percent of revenue each and every quarter.

Third metric, successfully implement the cost reduction efforts we’ve reported to you today, and others as they become apparent.  The two we’ve reported to you today is the US sales organization, and the Centers of Excellence Projects.

Fourth is to gain key regulatory approvals for our Visian Toric ICL in the US, and both Visian ICL products in Japan.

And our fifth metric would be to increase our overall share of the refractive market in some key markets that we’re focused on.  Those would be the US, Korea, China, India, Spain, Germany, and Latin America, and throughout the year we’ll be reporting to you on our progress there.

Again, we want to thank you for being on the call, and for your interest in STAAR Surgical, and if you have any additional questions, please feel free to call Deborah or I, and we look forward to reporting to you our progress on our first quarter earnings call.  Thank you, and good evening.

Operator: All right, thank you, sir.  Ladies and gentlemen, this concludes the STAAR Surgical Fourth Quarter 2008 Earnings conference call.  If you’d like to listen to a replay of today’s conference in its entirety, you can do so by dialing 1-800-405-2236, or 303-590-3000, input the access code 11125535.  ACT would like to thank you very much for your participation today, and you may now disconnect.  Have a very pleasant rest of your day.

END

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