STAAR SURGICAL CO

Previous wording

Management believes that there have been no significant changes during the three months ended March 29, 2024 to the items that we disclosed as our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023.

Current wording

Management believes that there have been no significant changes during the six months ended June 28, 2024 to the items that we disclosed as our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023.

Previous wording

Net sales for the three months ended March 29, 2024 increased 5% from the same period of 2023. The increase in net sales was primarily due to increased ICL sales of $6.5 million, slightly offset by decreased other product sales of $2.7 million. Changes in foreign currency unfavorably impacted net sales by $1.0 million.

Current wording

Net sales for the six months ended June 28, 2024 increased 6% from the same period of 2023. The increase in net sales was primarily due to increased ICL sales of $12.8 million, slightly offset by decreased other product sales of $2.3 million. Changes in foreign currency unfavorably impacted net sales by $2.3 million.

Previous wording

Total ICL sales for the three months ended March 29, 2024 increased 9% from the same period of 2023, with unit increase of 2%. The APAC region sales increased by 9%, with unit decrease of 1%, due to sales growth in India up 10%, Japan up 11% and China up 10%. The EMEA region sales increased 11% with unit growth up 22%, due to sales increases in our distributor markets up 35%, partially offset by direct markets down 5%. The Americas region sales increased 12%, with unit growth up

Current wording

Total ICL sales for the three months ended June 28, 2024 increased 7% from the same period of 2023, with unit increase of 3%. The APAC region sales increased by 6%, with unit increase of 2%, due to sales growth in China, Japan, Korea and other APAC distributors. The EMEA region sales increased 10% with unit growth up 17%, due primarily to sales increases in our distributor markets. The Americas region sales increased 14%, with unit growth up 14%, primarily due to sales growth in the U.S. Changes in foreign currency unfavorably impacted ICL sales by $1.3 million for the three months ended June 28, 2024.

Previous wording

Other product sales, includes cataract intraocular lenses (“IOLs”), delivery systems and normal recurring sales adjustments such as sales return allowances. As a result of third-party materials and supply chain challenges that affected our cataract IOLs and associated delivery devices, we have phased out sales of our cataract IOLs as we focus on growing our ICL business. During 2023, we stopped manufacturing cataract IOLs, and we do not plan to sell cataract IOLs in 2024. We do not expect this decision to have a significant impact to revenue growth in future years. Other product sales for the three months ended March 29, 2024, decreased 93% from the same period of 2023, due primarily to a reduction in cataract IOL sales and decreased sales of cataract IOL injector parts. Other product sales represented 0.3% and 3.9% of our total sales for the three months ended March 29, 2024 and March 31, 2023, respectively.

Current wording

Other product sales, includes cataract intraocular lenses (“IOLs”), delivery systems and normal recurring sales adjustments such as sales return allowances. As a result of third-party materials and supply chain challenges that affected our cataract IOLs and associated delivery devices, we have phased out sales of our cataract IOLs as we focus on growing our ICL business. During 2023, we stopped manufacturing cataract IOLs, and we do not plan to sell cataract IOLs in 2024. Other product sales for the three months ended June 28, 2024 decreased 55% from the same period of 2023, due primarily to changes in sales return allowances. Other product sales for the six months ended June 28, 2024 decreased 107% from 2023 due primarily to a reduction in cataract IOL sales and decreased sales of cataract IOL injector parts.

Previous wording

Gross profit for the three months ended March 29, 2024 increased 6.0%, from the same period of 2023. Gross profit margin increased to 78.9% of revenue for the three months ended March 29, 2024 compared to 78.3% of revenue for the three months ended March 31, 2023, due primarily to product and country mix of ICL sales.

Current wording

Gross profit for the three and six months ended June 28, 2024 increased 10.9% and 8.7%, respectively, from the same period of 2023. Gross profit margin increased to 79.2% of revenue for the three months ended June 28, 2024 compared to 76.6% of revenue for the three months ended June 30, 2023, due primarily to changes in reserves related to cataract IOLs recognized in the three months ended June 30, 2023. Gross profit margin increased to 79.1% of revenue for the six months ended June 28, 2024 compared to 77.4% of revenue for the six months ended June 30, 2023, due primarily changes in reserves related to cataract IOLs recognized in the six months ended June 30, 2023.

Previous wording

General and administrative expenses for the three months ended March 29, 2024 increased 28.3% from the same period of 2023 due to increased outside services, facility costs and salary-related and payroll tax expenses.

Current wording

General and administrative expenses for the three months ended June 28, 2024 increased 30.6% from the same period of 2023 due to increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses, facility costs and outside services. General and administrative expenses for the six months ended June 30, 2023 increased 29.5% from the same period of 2023 due to increased outside services, bonus and stock-based compensation expenses, salary-related and payroll tax expenses and facility costs.

Previous wording

Selling and marketing expenses for the three months ended March 29, 2024 increased 1.3% from the same period of 2023 due to increased salary-related and payroll tax expenses, trade shows and sales meetings expenses and bonus and stock-based compensation expenses, offset by decreased advertising and promotional activities and commission expenses.

Current wording

Selling and marketing expenses for the three months ended June 28, 2024 decreased 10.7% from the same period of 2023 due to decreased advertising and promotional activities and bonus and stock-based compensation expenses, partially offset by increased salary-related and payroll tax expenses. Selling and marketing expenses for the six months ended June 28, 2024 decreased 5.3% from the same period of 2023 due to decreased advertising and promotional activities and bonus and stock-based compensation expenses, partially offset by increased salary-related and payroll tax expenses, trade shows and sales meetings expenses and travel and entertainment related expenses.

Previous wording

Research and development expenses for the three months ended March 29, 2024 increased 29.8% from the same period of 2023, due mainly to increased salary-related and payroll tax expenses and bonus and stock-based compensation expenses.

Current wording

Research and development expenses for the three and six months ended June 28, 2024 increased 19.6% and 24.3% from the three and six months ended June 30, 2023, respectively, due mainly to increased salary-related and payroll tax expenses and bonus and stock-based compensation expenses, partially offset by decreased clinical expenses associated with U.S. post-approval clinical activities.

Previous wording

The decrease in other income, net for the three months ended March 29, 2024 and March 31, 2023, respectively, was due mainly to higher foreign exchange losses.

Current wording

Other expense, net increased for the three and six months ended June 28, 2024 and June 30, 2023, primarily due to higher foreign exchange losses.

Previous wording

The effective tax rates for the three months ended March 29, 2024 and March 31, 2023 were (51.0)% and 42.6%, respectively. Our effective tax rates differ from the U.S. federal statutory rate of 21%, primarily due to the income tax expense generated in foreign jurisdictions.

Current wording

The effective tax rates for the three months ended June 28, 2024 and June 30, 2023 were 28.6% and 28.6%, respectively. The effective tax rates for the six months ended June 28, 2024 and June 30, 2023 were 50.3% and 33.6%, respectively. Our effective tax rates differ from the U.S. federal statutory rate of 21%, primarily due to the income tax expense generated in foreign jurisdictions.

Previous wording

A summary of cash flows for the three months ended March 29, 2024 and March 31, 2023 was as follows (in thousands):

Current wording

A summary of cash flows for the six months ended June 28, 2024 and June 30, 2023 was as follows (in thousands):

Previous wording

For the three months ended March 29, 2024 net cash provided by operating activities consisted of $16.8 million in working-capital changes and $8.2 million in non-cash items, partially offset by the net loss of $3.3 million. For the three months ended March 31, 2023 net cash used in operating activities consisted of $14.3 million in working-capital changes, partially offset by $6.5 million in non-cash items and net income of $2.7 million.

Current wording

For the six months ended June 28, 2024 net cash provided by operating activities consisted of $19.9 million in non-cash items and net income of $4.0 million, partially offset by $12.7 million in working-capital changes. For the six months ended June 30, 2023 net cash used in operating activities consisted of $39.4 million in working-capital changes, partially offset by $19.2 million in non-cash items and net income of $8.8 million.

Previous wording

For the three months ended March 29, 2024, net cash provided by investment activities was $16.2 million which consisted of $21.4 million of proceeds from the sale or maturity of investments AFS, partially offset by $5.2 million in purchases of property, plant and equipment. For the three months ended March 31, 2023, net cash provided by investment activity was $9.9 million which consisted of $40.3 million of proceeds from the sale or maturity of investments AFS, partially offset by $27.4 million in purchases of investments AFS and $2.9 million in purchases of property, plant and equipment.

Current wording

For the six months ended June 28, 2024, net cash used in investment activities was $4.5 million which consisted of $20.2 million in purchases of investments AFS and $11.4 million in purchases of property, plant and equipment, partially offset by $27.2 million of proceeds from the sale or maturity of investments AFS. For the six months ended June 30, 2023, net cash provided by investment activity was $20.1 million which consisted of $68.6 million of proceeds from the sale or maturity of investments AFS, partially offset by $42.6 million in purchases of investments AFS and $5.9 million in purchases of property, plant and equipment.

Previous wording

Net cash provided by financing activities for the three months ended March 29, 2024 was $4.1 million which consisted of $5.3 million of proceeds from the exercise of stock options, partially offset by $1.2 million to repurchase of employee common stock for taxes withheld. For the three months ended March 31, 2023, net cash used in financing activities was $1.4 million which consisted of $1.8 million to repurchase of employee common stock for taxes withheld.

Current wording

Net cash provided by financing activities for the six months ended June 28, 2024 was $4.2 million which consisted of $5.7 million of proceeds from the exercise of stock options, partially offset by $1.4 million to repurchase of employee common stock for taxes withheld. For the six months ended June 30, 2023, net cash used in financing activities was $0.1 million which consisted of $2.0 million of proceeds from the exercise of stock options, offset by $2.0 million to repurchase of employee common stock for taxes withheld.