|
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | ||
| | For the quarterly period ended: September 27, 2013 | ||
| | Or | ||
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
| | For the transition period from to | ||
Delaware | 95-3797439 | | ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
¨ Large accelerated filer | þ Accelerated filer | ¨ Non-accelerated filer (Do not check if a smaller reporting company) | ¨ Smaller reporting company |
| | PAGE |
| | NUMBER |
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PART I FINANCIAL INFORMATION | | |
| | |
Item 1. | Financial Statements (Unaudited). | 3 |
| | |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. | 14 |
| | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 22 |
| | |
Item 4. | Controls and Procedures. | 22 |
| | |
PART II OTHER INFORMATION | | |
| | |
Item 1. | Legal Proceedings. | 22 |
| | |
Item 1A. | Risk Factors. | 22 |
| | |
Item 4. | Mine Safety Disclosures. | 22 |
| | |
Item 5. | Other Information. | 22 |
| | |
Item 6. | Exhibits. | 22 |
2 | ||
| | | September 27, 2013 | | | December 28, 2012 | |
ASSETS | | | | | | | |
| | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 23,351 | | $ | 21,675 | |
Accounts receivable trade, net | | | 9,467 | | | 8,543 | |
Inventories, net | | | 11,880 | | | 11,673 | |
Deferred income taxes | | | 483 | | | | |
Prepaids, deposits and other current assets | | | 2,703 | | | 2,183 | |
Total current assets | | | 47,884 | | | 44,074 | |
Property, plant and equipment, net | | | 6,512 | | | 5,439 | |
Intangible assets, net | | | 1,567 | | | 2,142 | |
Goodwill | | | 1,786 | | | 1,786 | |
Deferred income taxes | | | 732 | | | 187 | |
Other assets | | | 1,056 | | | 1,131 | |
Total assets | | $ | 59,537 | | $ | 54,759 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
Current liabilities: | | | | | | | |
Line of credit | | $ | 5,050 | | $ | 5,850 | |
Accounts payable | | | 4,536 | | | 5,129 | |
Deferred income taxes | | | 439 | | | 439 | |
Obligations under capital leases | | | 393 | | | 829 | |
Other current liabilities | | | 6,052 | | | 5,702 | |
Total current liabilities | | | 16,470 | | | 17,949 | |
Obligations under capital leases | | | 211 | | | 488 | |
Deferred income taxes | | | 1,690 | | | 885 | |
Asset retirement obligations | | | 374 | | | 707 | |
Pension liability | | | 2,971 | | | 2,988 | |
Total liabilities | | | 21,716 | | | 23,017 | |
| | | | | | | |
Commitments and contingencies (Note 12) | | | | | | | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Common stock, $0.01 par value; 60,000 shares authorized; 36,955 and 36,423 shares issued and outstanding at September 27, 2013 and December 28, 2012 | | | 370 | | | 364 | |
Additional paid-in capital | | | 168,056 | | | 162,251 | |
Accumulated other comprehensive income | | | 574 | | | 1,580 | |
Accumulated deficit | | | (131,179) | | | (132,453) | |
Total stockholders’ equity | | | 37,821 | | | 31,742 | |
Total liabilities and stockholders’ equity | | $ | 59,537 | | $ | 54,759 | |
3 | ||
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 27, 2013 | | September 28, 2012 | | September 27, 2013 | | September 28, 2012 | | ||||
| | | | | | | | | | | | | |
Net sales | | $ | 17,106 | | $ | 15,866 | | $ | 53,271 | | $ | 47,316 | |
Cost of sales | | | 5,047 | | | 4,690 | | | 15,939 | | | 14,194 | |
| | | | | | | | | | | | | |
Gross profit | | | 12,059 | | | 11,176 | | | 37,332 | | | 33,122 | |
| | | | | | | | | | | | | |
General and administrative | | | 4,140 | | | 3,450 | | | 12,021 | | | 10,942 | |
Marketing and selling | | | 5,527 | | | 5,507 | | | 16,471 | | | 15,536 | |
Research and development | | | 1,684 | | | 1,582 | | | 4,736 | | | 4,640 | |
Medical device tax | | | 45 | | | | | | 149 | | | | |
Other general and administrative expenses | | | 490 | | | 728 | | | 2,004 | | | 1,980 | |
| | | | | | | | | | | | | |
Operating income (loss) | | | 173 | | | (91) | | | 1,951 | | | 24 | |
| | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income | | | 9 | | | 7 | | | 23 | | | 14 | |
Interest expense | | | (38) | | | (65) | | | (134) | | | (227) | |
Gain (loss) on foreign currency transactions | | | 226 | | | 191 | | | (38) | | | 9 | |
Other income, net | | | 130 | | | 87 | | | 360 | | | 610 | |
Other income, net | | | 327 | | | 220 | | | 211 | | | 406 | |
| | | | | | | | | | | | | |
Income before provision (benefit) for income taxes | | | 500 | | | 129 | | | 2,162 | | | 430 | |
Provision (benefit) for income taxes | | | (25) | | | 219 | | | 888 | | | 779 | |
Net income (loss) | | $ | 525 | | $ | (90) | | $ | 1,274 | | $ | (349) | |
| | | | | | | | | | | | | |
Net income (loss) per share - basic | | $ | 0.01 | | $ | (0.00) | | $ | 0.03 | | $ | (0.01) | |
Net income (loss) per share - diluted | | $ | 0.01 | | $ | (0.00) | | $ | 0.03 | | $ | (0.01) | |
| | | | | | | | | | | | | |
Weighted average shares outstanding - basic | | | 36,750 | | | 36,292 | | | 36,552 | | | 36,206 | |
Weighted average shares outstanding - diluted | | | 39,284 | | | 36,292 | | | 38,482 | | | 36,206 | |
4 | ||
| | Three Months Ended | | | Nine Months Ended | | |||||||
| | September 27, 2013 | | September 28, 2012 | | September 27, 2013 | | September 28, 2012 | | ||||
Net income (loss) | | $ | 525 | | $ | (90) | | $ | 1,274 | | $ | (349) | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Foreign currency translation | | | (92) | | | 201 | | | (986) | | | 15 | |
Pension liability adjustment, net of tax | | | (5) | | | (12) | | | (21) | | | (36) | |
Other comprehensive income (loss) | | | (97) | | | 189 | | | (1,007) | | | (21) | |
Comprehensive income (loss) | | $ | 428 | | $ | 99 | | $ | 267 | | $ | (370) | |
5 | ||
| | Nine Months Ended | | ||||
| | September 27, 2013 | | September 28, 2012 | | ||
Cash flows from operating activities: | | | | | | | |
| | | | | | | |
Net income (loss) | | $ | 1,274 | | $ | (349) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | |
Depreciation of property and equipment | | | 1,325 | | | 989 | |
Amortization of intangibles | | | 334 | | | 525 | |
Deferred income taxes | | | (220) | | | 114 | |
Fair value adjustment of warrant | | | (27) | | | (217) | |
Loss on disposal of property and equipment | | | 172 | | | 47 | |
Change in net pension liability | | | 124 | | | 187 | |
Stock-based compensation expense | | | 2,924 | | | 2,317 | |
Accretion of asset retirement obligation | | | 9 | | | | |
Other | | | 157 | | | 40 | |
Changes in working capital: | | | | | | | |
Accounts receivable | | | (1,423) | | | 910 | |
Inventories | | | (707) | | | (734) | |
Prepaids, deposits and other current assets | | | (614) | | | 85 | |
Accounts payable | | | (389) | | | (444) | |
Other current liabilities | | | 489 | | | 236 | |
Net cash provided by operating activities | | | 3,428 | | | 3,706 | |
| | | | | | | |
Cash flows from investing activities: | | | | | | | |
Release of restricted cash | | | | | | 129 | |
Acquisition of property and equipment | | | (2,984) | | | (1,161) | |
Net cash used in investing activities | | | (2,984) | | | (1,032) | |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
Repayment of capital lease obligations | | | (675) | | | (619) | |
Proceeds from exercise of stock options | | | 2,723 | | | 1,102 | |
Net cash provided by financing activities | | | 2,048 | | | 483 | |
| | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (816) | | | 14 | |
| | | | | | | |
Increase in cash and cash equivalents | | | 1,676 | | | 3,171 | |
Cash and cash equivalents, at beginning of the period | | | 21,675 | | | 16,582 | |
Cash and cash equivalents, at end of the period | | $ | 23,351 | | $ | 19,753 | |
6 | ||
7 | ||
| | | September 27, | | | December 28, | |
| | | 2013 | | | 2012 | |
Raw materials and purchased parts | | $ | 1,647 | | $ | 1,946 | |
Work-in-process | | | 2,999 | | | 1,318 | |
Finished goods | | | 7,968 | | | 8,945 | |
| | | 12,614 | | | 12,209 | |
Less: inventory reserves | | | 734 | | | 536 | |
| | $ | 11,880 | | $ | 11,673 | |
| | | September 27, | | | December 28, | |
| | | 2013 | | | 2012 | |
Prepaid vendors | | $ | 1,522 | | $ | 1,044 | |
Prepaid insurance | | | 361 | | | 628 | |
Value added tax (VAT) receivable | | | 402 | | | 307 | |
Other current assets | | | 418 | | | 204 | |
| | $ | 2,703 | | $ | 2,183 | |
| | | September 27, | | | December 28, | |
| | | 2013 | | | 2012 | |
Machinery and equipment | | $ | 15,825 | | $ | 14,734 | |
Furniture and fixtures | | | 3,384 | | | 3,483 | |
Leasehold improvements | | | 6,585 | | | 5,281 | |
| | | 25,794 | | | 23,498 | |
Less: accumulated depreciation | | | 19,282 | | | 18,059 | |
| | $ | 6,512 | | $ | 5,439 | |
| | September 27, 2013 | | | | | | December 28, 2012 | | ||||||||||
| | | Gross Carrying Amount | | | Accumulated Amortization | | | Net | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net | |
Amortized intangible assets: | | | | | | | | | | | | | | | | | | | |
Patents and licenses | | $ | 10,678 | | $ | (10,014) | | $ | 664 | | $ | 10,786 | | $ | (9,875) | | $ | 911 | |
Customer relationships | | | 1,584 | | | (911) | | | 673 | | | 1,835 | | | (917) | | | 918 | |
Developed technology | | | 1,007 | | | (777) | | | 230 | | | 1,166 | | | (853) | | | 313 | |
Total | | $ | 13,269 | | $ | (11,702) | | $ | 1,567 | | $ | 13,787 | | $ | (11,645) | | $ | 2,142 | |
8 | ||
| | | September 27, 2013 | | | December 28, 2012 | |
Accrued salaries and wages | | $ | 1,962 | | $ | 1,950 | |
Accrued bonuses | | | 985 | | | 500 | |
Accrued severance | | | 776 | | | 499 | |
Customer credit balances | | | 190 | | | 324 | |
Accrued insurance | | | 196 | | | 515 | |
Accrued audit fees | | | 384 | | | 396 | |
Accrued tax preparation fees | | | 343 | | | 119 | |
Accrued income taxes | | | 411 | | | 451 | |
Other(1) | | | 805 | | | 948 | |
| | $ | 6,052 | | $ | 5,702 | |
| | | Three Months Ended September 27, 2013 | | | Three Months Ended September 28, 2012 | | | Nine Months Ended September 27, 2013 | | | Nine Months Ended September 28, 2012 | |
Service cost | | $ | 81 | | $ | 122 | | $ | 284 | | $ | 364 | |
Interest cost | | | | | | 34 | | | 52 | | | 102 | |
Expected return on plan assets | | | (25) | | | (28) | | | (73) | | | (81) | |
Amortization of unrecognized transitional obligation | | | | | | 4 | | | 4 | | | 12 | |
Amortization of prior service cost | | | | | | | | | | | | (1) | |
Recognized actuarial gain | | | (69) | | | (1) | | | (50) | | | (4) | |
| | $ | (13) | | $ | 131 | | $ | 217 | | $ | 392 | |
9 | ||
| | | Three Months Ended | | | Nine Months Ended | | ||||||
| | | September 27, 2013 | | | September 28, 2012 | | | September 27, 2013 | | | September 28, 2012 | |
Numerator: | | | | | | | | | | | | | |
Net income (loss) | | $ | 525 | | $ | (90) | | $ | 1,274 | | $ | (349) | |
| | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | |
Weighted average common shares and denominator for basic calculation: | | | | | | | | | | | | | |
Weighted average common shares outstanding | | | 37,108 | | | 36,495 | | | 36,860 | | | 36,378 | |
Less: Unvested restricted stock | | | 358 | | | 203 | | | 308 | | | 172 | |
Denominator for basic calculation | | | 36,750 | | | 36,292 | | | 36,552 | | | 36,206 | |
Weighted average effects of dilutive equity-based compensation awards: | | | | | | | | | | | | | |
Employee stock options and restricted stock | | | 1,612 | | | | | | 1,188 | | | | |
Warrants | | | 922 | | | | | | 742 | | | | |
Denominator for diluted calculation | | | 39,284 | | | 36,292 | | | 38,482 | | | 36,206 | |
| | | | | | | | | | | | | |
Net income (loss) per share basic | | $ | 0.01 | | $ | (0.00) | | $ | 0.03 | | $ | (0.01) | |
Net income (loss) per share - diluted | | $ | 0.01 | | $ | (0.00) | | $ | 0.03 | | $ | (0.01) | |
| | Three Months Ended | | Nine Months Ended | | ||||
| | September 27, 2013 | | September 28, 2012 | | September 27, 2013 | | September 28, 2012 | |
Options and restricted stock | | 1,001 | | 3,183 | | 1,091 | | 1,813 | |
Warrants | | | | 605 | | | | 806 | |
Total | | 1,001 | | 3,788 | | 1,091 | | 2,619 | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | | September 27, | | | September 28, | | | September 27, | | | September 28, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
United States | | $ | 2,993 | | $ | 3,038 | | $ | 9,388 | | $ | 9,428 | |
Japan | | | 4,040 | | | 4,237 | | | 13,427 | | | 12,187 | |
China | | | 2,275 | | | 2,444 | | | 6,575 | | | 6,691 | |
Korea | | | 1,982 | | | 1,755 | | | 5,851 | | | 5,379 | |
Spain | | | 1,012 | | | 808 | | | 3,466 | | | 1,850 | |
Other | | | 4,804 | | | 3,584 | | | 14,564 | | | 11,781 | |
Total | | $ | 17,106 | | $ | 15,866 | | $ | 53,271 | | $ | 47,316 | |
10 | ||
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 27, | | September 28, | | September 27, | | September 28, | | ||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
ICLs | | $ | 10,725 | | $ | 9,111 | | $ | 32,616 | | $ | 26,321 | |
IOLs | | | 5,322 | | | 6,052 | | | 17,533 | | | 19,185 | |
Core products | | | 16,047 | | | 15,163 | | | 50,149 | | | 45,506 | |
Other Surgical Products | | | 1,059 | | | 703 | | | 3,122 | | | 1,810 | |
Total | | $ | 17,106 | | $ | 15,866 | | $ | 53,271 | | $ | 47,316 | |
| | | Three Months Ended | | | Nine Months Ended | | ||||||
| | | September 27, 2013 | | | September 28, 2012 | | | September 27, 2013 | | | September 28, 2012 | |
Employee stock options | | $ | 576 | | $ | 660 | | $ | 2,068 | | $ | 1,850 | |
Restricted stock expense | | | 283 | | | 170 | | | 718 | | | 433 | |
Consultant compensation | | | 47 | | | 8 | | | 138 | | | 34 | |
Total | | $ | 906 | | $ | 838 | | $ | 2,924 | | $ | 2,317 | |
11 | ||
| | Three Months Ended | | Nine Months Ended | | ||||
| | September 27, 2013 | | September 28, 2012 | | September 27, 2013 | | September 28, 2012 | |
Expected dividend yield | | 0 | % | 0 | % | 0 | % | 0 | % |
Expected volatility | | 58.43 | % | 80.28 | % | 71.69 | % | 79.48 | % |
Risk-free interest rate | | 1.32 | % | 0.63 | % | 0.69 | % | 0.82 | % |
Expected term (in years) | | 4.12 | | 5.21 | | 4.12 | | 5.21 | |
| | Options Shares (000’s) | | Restricted Shares (000’s) | | Warrants Shares (000’s) | |
| | | | | | | |
Outstanding at December 28, 2012 | | 3,376 | | 205 | | 1,470 | |
Granted | | 560 | | 153 | | | |
Exercised | | (515) | | (17) | | | |
Forfeited or expired | | (30) | | | | (70) | |
Outstanding at September 27, 2013 | | 3,391 | | 341 | | 1,400 | |
Exercisable at September 27, 2013 | | 2,198 | | | | 1,400 | |
12 | ||
| | Termination Benefits | | Other Associated Costs | | Total | | |||
Liability at December 28, 2012 | | $ | 504 | | $ | 293 | | $ | 797 | |
Costs incurred and charged to expense | | $ | 376 | | $ | 1,629 | | $ | 2,005 | |
Cash payments | | $ | (105) | | $ | (1,867) | | $ | (1,972) | |
Liability at September 27, 2013 | | $ | 775 | | $ | 55 | | $ | 830 | |
| | | | | | | | | | |
Total costs incurred to date | | $ | 1,276 | | $ | 4,425 | | $ | 5,701 | |
Total costs expected to be incurred | | $ | 1,592 | | $ | 4,608 | | $ | 6,200 | |
13 | ||
14 | ||
15 | ||
16 | ||
| | Percentage of Net Sales for Three Months | | Percentage of Net Sales for Nine Months | | ||||
| | September 27, | | September 28, | | September 27, | | September 28, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
Net sales | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Cost of sales | | 29.5 | | 29.6 | | 29.9 | | 30.0 | |
Gross profit | | 70.5 | | 70.4 | | 70.1 | | 70.0 | |
| | | | | | | | | |
General and administrative | | 24.2 | | 21.7 | | 22.5 | | 23.1 | |
Marketing and selling | | 32.3 | | 34.7 | | 30.9 | | 32.8 | |
Research and development | | 9.8 | | 10.0 | | 8.9 | | 9.8 | |
Medical device tax | | 0.3 | | | | 0.3 | | | |
Other general and administrative expenses | | 2.9 | | 4.6 | | 3.8 | | 4.2 | |
| | 69.5 | | 71.0 | | 66.4 | | 69.9 | |
Operating income (loss) | | 1.0 | | (0.6) | | 3.7 | | 0.1 | |
Other income, net | | 1.9 | | 1.4 | | 0.4 | | 0.9 | |
Income before provision (benefit) for income taxes | | 2.9 | | 0.8 | | 4.1 | | 0.9 | |
Provision (benefit) for income taxes | | (0.1) | | 1.4 | | 1.7 | | 1.6 | |
Net income (loss) | | 3.0 | % | (0.6) | % | 2.4 | % | (0.7) | % |
17 | ||
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | |||||
| | | September 27, | | | September 28, | | 2013 | | | September | | September | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 27, 2013 | | 28, 2012 | | vs. 2012 | |
Net sales | | $ | 17,106 | | $ | 15,866 | | 7.8 | % | $ | 53,271 | | 47,316 | | 12.6 | % |
| | | | | | | | | | | | | | | | |
ICL | | | 10,725 | | | 9,111 | | 17.7 | | | 32,616 | | 26,321 | | 23.9 | |
IOL | | | 5,322 | | | 6,052 | | (12.1) | | | 17,533 | | 19,185 | | (8.6) | |
Other | | | 1,059 | | | 703 | | 50.8 | | | 3,122 | | 1,810 | | 72.5 | |
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September | | | September | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 27, 2013 | | | 28, 2012 | | vs. 2012 | |
Gross Profit | | $ | 12,059 | | $ | 11,176 | | 7.9 | % | $ | 37,332 | | $ | 33,122 | | 12.7 | % |
Gross Profit Margin | | | 70.5 | % | | 70.4 | % | | | | 70.1 | % | | 70.0 | % | | |
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September 27, | | | September 28, | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 2013 | | | 2012 | | vs. 2012 | |
General and Administrative | | $ | 4,140 | | $ | 3,450 | | (20.0) | % | $ | 12,021 | | $ | 10,942 | | (9.9) | % |
Percentage of Sales | | | 24.2 | % | | 21.7 | % | | | | 22.5 | % | | 23.1 | % | | |
18 | ||
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September | | | September | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 27, 2013 | | | 28, 2012 | | vs. 2012 | |
Marketing and Selling | | $ | 5,527 | | $ | 5,507 | | (0.4) | % | $ | 16,471 | | $ | 15,536 | | (6.0) | % |
Percentage of Sales | | | 32.3 | % | | 34.7 | % | | | | 30.9 | % | | 32.8 | % | | |
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September | | | September | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 27, 2013 | | | 28, 2012 | | vs. 2012 | |
Research and Development | | $ | 1,684 | | $ | 1,582 | | (6.4) | % | $ | 4,736 | | $ | 4,640 | | (2.1) | % |
Percentage of Sales | | | 9.8 | % | | 10.0 | % | | | | 8.9 | % | | 9.8 | % | | |
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine Months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September 27, | | | September 28, | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2013 | | | 2013 | | | 2012 | | vs. 2012 | |
Other General and Administrative Expenses | | $ | 490 | | $ | 728 | | 32.7 | % | $ | 2,004 | | $ | 1,980 | | (1.2) | % |
Percentage of Sales | | | 2.9 | % | | 4.6 | % | | | | 3.8 | % | | 4.2 | % | | |
19 | ||
| | | Three Months Ended | | Fav/ (Unfav) % Change | | | Nine months Ended | | Fav/ (Unfav) % Change | | ||||||
| | | September 27, | | | September 28, | | 2013 | | | September | | | September | | 2013 | |
| | | 2013 | | | 2012 | | vs. 2012 | | | 27, 2013 | | | 28, 2012 | | vs. 2012 | |
Other Income, Net | | $ | 327 | | $ | 220 | | 48.6 | % | $ | 211 | | $ | 406 | | (48.0) | % |
20 | ||
Fiscal Year | | | September 27, 2013 | | | December 28, 2012 | |
2013 | | $ | 167 | | $ | 916 | |
2014 | | | 312 | | | 318 | |
2015 | | | 145 | | | 152 | |
2016 | | | 7 | | | 8 | |
Total minimum lease payments | | $ | 631 | | $ | 1,394 | |
Less: interest | | | 27 | | | 77 | |
Total lease obligation | | $ | 604 | | $ | 1,317 | |
| | | | | | | |
Current | | $ | 393 | | $ | 829 | |
Long-term | | $ | 211 | | $ | 488 | |
21 | ||
ITEM 1. | LEGAL PROCEEDINGS |
22 | ||
ITEM 1A. | RISK FACTORS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
3.1 | Certificate of Incorporation, as amended to date.(1) |
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3.2 | Amended and Restated By-laws. (2) |
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4.2 | 1991 Stock Option Plan of STAAR Surgical Company.(4) |
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4.3 | 1998 STAAR Surgical Company Stock Plan, adopted April 17, 1998.(5) |
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4.4 | Form of Certificate for Common Stock, par value $0.01 per share.(6) |
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4.5 | Amended and Restated 2003 Omnibus Equity Incentive Plan, and form of Option Grant and Stock Option Agreement.(3) |
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10.96 | Letter of the Company dated August 7, 2013 to Stephen Brown, Vice President of Finance, and Chief Financial Officer, regarding compensation.(7) |
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31.1 | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * |
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31.2 | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * |
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32.1 | Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * |
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101 | Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended September 27, 2013, formatted in XBRL, are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text. * |
(1) | Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2007, as filed with the Commission on March 12, 2008. |
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(2) | Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 15, 2013. |
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(3) | Incorporated by reference to the Company’s Proxy Statement for its Annual Meeting of Stockholders held on May 13, 2013, filed with the Commission on March 26, 2013. |
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(4) | Incorporated by reference to the Company’s Registration Statement on Form S-8, File No. 033-76404, as filed with the Commission on March 11, 1994. |
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(5) | Incorporated by reference to the Company’s Proxy Statement for its Annual Meeting of Stockholders held on May 29, 1998, filed with the Commission on May 1, 1998. |
23 | ||
(6) | Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form 8-A/A, as filed with the Commission on April 18, 2003. |
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(7) | Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on September 9, 2013. |
* | Filed herewith. |
| Management contract or compensatory plan or arrangement. |
24 | ||
| STAAR SURGICAL COMPANY | ||
| | | |
Date: November 1, 2013 | By: | /s/ STEPHEN P. BROWN | |
| | Stephen P. Brown | |
| | Chief Financial Officer | |
| | (on behalf of the Registrant and as it’s | |
| | principal financial officer) | |
25 | ||
Date: November 1, 2013 | | /s/ BARRY CALDWELL |
| | Barry Caldwell |
| | |
| | President, Chief Executive Officer, and |
| | Director (principal executive officer) |
Date: November 1, 2013 | | /s/ STEPHEN P. BROWN |
| | Stephen P. Brown |
| | |
| | Chief Financial Officer |
| | (principal financial officer) |
Dated: November 1, 2013 | | /s/ BARRY CALDWELL |
| | Barry Caldwell |
| | |
| | President, Chief Executive Officer, |
| | and Director (principal executive officer) |
| | |
Dated: November 1, 2013 | | /s/ STEPHEN P. BROWN |
| | Stephen P. Brown |
| | |
| | Chief Financial Officer |
| | (principal financial officer) |
Income Taxes
|
9 Months Ended | |
---|---|---|
Sep. 27, 2013
|
||
Income Tax Disclosure [Abstract] | ||
Income Tax Disclosure [Text Block] | Note 11 Income Taxes STAAR is subject to income taxes in the U.S. and numerous foreign jurisdictions. In evaluating STAAR’s ability to recover the deferred tax assets within a jurisdiction from which they arise, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. In projecting future taxable income, STAAR begins with historical results and incorporates assumptions including overall current and projected business and industry conditions, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates STAAR uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide, STAAR considers three years of cumulative operating results. Valuation allowances, or reductions to deferred tax assets, are recognized if, based on the weight of all the available evidence, it is more likely than not that some portion or all of the deferred tax asset may not be realized. STAAR Surgical Company acquired its remaining ownership interest in STAAR Japan in 2008. Based on management's assessment of all available evidence at the time, including STAAR Japan’s history of cumulative losses, STAAR concluded it was more likely than not that the net deferred tax assets would not be realized, and accordingly, a full valuation allowance was established. As of December 28, 2012, STAAR Japan’s valuation allowance was approximately $1.0 million. During 2011 and 2012, STAAR was engaged in a global restructuring strategy to consolidate global manufacturing into the U.S. to reduce costs, improve gross profit, enable use of $122.5 million in net operating loss carryforwards in the U.S., and reduce income taxes in foreign jurisdictions. At the time, STAAR manufactured its products in three facilities one of each located in the U.S., Switzerland and Japan. Since that time, STAAR has developed and begun implementing a plan to consolidate its manufacturing into a single site at its Monrovia, California location, to be completed by the middle of 2014. During 2013, STAAR completed the transfer of the manufacturing operations in Japan to the U.S. An important change in connection with this global restructuring strategy was the conversion of STAAR Japan from a traditional principal manufacturer with unlimited manufacturing and inventory risk to a limited-risk distributor, or LRD. As an LRD, STAAR Japan has no risks of manufacturing and very limited risk of maintaining inventory. This conversion was accomplished by contractually shifting these risks from STAAR Japan to STAAR AG, another wholly owned subsidiary of STAAR, as part of this global restructuring strategy. STAAR Japan, although legally converted to an LRD at the end of 2012, continued to sell off its on-hand inventory from the end of 2012 through the first six months of 2013; consequently, it retained that inventory risk and functioned substantively as a principal entrepreneur during that period. Beginning in the third quarter of 2013, STAAR Japan began to operate as an LRD, both legally and economically, for STAAR AG. STAAR AG contractually assumed full principal manufacturing responsibility for its LRD (STAAR Japan), thereby allowing STAAR Japan to completely transfer the risks of being a principal manufacturer to STAAR AG. As a result of this change to an LRD, in the normal course of business, STAAR Japan no longer bears the risks of manufacturing its inventory and operates as a limited-risk distributor for STAAR AG. STAAR AG has engaged STAAR U.S. as its contract manufacturer for all of STAAR AG’s territory, including for Japan and China. Also, beginning in the third quarter of 2013, STAAR AG began selling inventory to STAAR Japan in order for STAAR Japan to market and distribute the products in its territory, principally in Japan and China, as an LRD. As a limited-risk distributor, STAAR Japan is contractually guaranteed to earn a fixed return on its net sales. The rate of return is consistent with what a limited-risk distributor would earn in a distribution agreement of similar risks and responsibilities with an unrelated party as determined by formal transfer price studies conducted by STAAR in connection with its global manufacturing consolidation strategy. As a result of this change from a principal manufacturer to a limited-risk distributor with a guaranteed return, STAAR Japan has achieved a three-year cumulative pretax income in the third quarter of 2013, as measured from the beginning of the fourth quarter of 2010 through the end of the third quarter of 2013. Based on these results and management’s consideration of all available positive and negative evidence, including the projected pretax income that STAAR Japan is contractually guaranteed to earn as an LRD, management concluded that, at September 27, 2013, it is more likely than not that STAAR Japan’s deferred tax assets would be realized. Accordingly, STAAR Japan fully released its remaining valuation allowance against net deferred tax assets based on the weight of positive evidence that existed at September 27, 2013. This release amounted to approximately $433,000 of income tax benefit recorded in the consolidated financial statements for the three and nine months ended September 27, 2013 (as translated using the Japanese Yen exchange rate on September 27, 2013). The valuation allowance as of December 28, 2012 of $1.0 million was reduced to $433,000 primarily due to the utilization of STAAR Japan’s net operating loss carryover during the nine months ended September 27, 2013. |
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