STAAR SURGICAL CO

Previous 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.

Current wording

Management believes that there have been no significant changes during the nine months ended September 27, 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 June 28, 2024 increased 7% from the same period of 2023. The increase in net sales was primarily due to increased ICL sales of $6.3 million. Changes in foreign currency unfavorably impacted net sales by $1.4 million.

Current wording

Net sales for the three months ended September 27, 2024 increased 10% from the same period of 2023. The increase in net sales was primarily due to increased ICL sales of $8.0 million. Changes in foreign currency unfavorably impacted net sales by $0.3 million.

Previous 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.

Current wording

Net sales for the nine months ended September 27, 2024 increased 8% from the same period of 2023. The increase in net sales was primarily due to increased ICL sales of $20.8 million, slightly offset by decreased other product sales of $2.0 million. Changes in foreign currency unfavorably impacted net sales by $2.6 million.

Previous 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.

Current wording

Total ICL sales for the three months ended September 27, 2024 increased 10% from the same period of 2023, with unit increase of 6%. The APAC region sales increased by 9%, with unit increase of 4%, due to sales growth in China, Japan, India and Korea. The EMEA region sales increased 12% with unit growth up 12%, due primarily to sales increases in our distributor markets. The Americas region sales increased 14%, with unit growth up 16%, primarily due to sales growth in the U.S. Changes in foreign currency unfavorably impacted ICL sales by $0.3 million for the three months ended September 27, 2024.

Previous wording

Total ICL sales for the six months ended June 28, 2024 increased 8% from the same period of 2023, with unit increase of 3%. The APAC region sales increased by 7%, with unit increase of 1%, due to sales growth in China, Japan, Korea and other APAC distributors. The EMEA region sales increased 10% with unit growth up 20%, due primarily to sales increases in our distributor markets. The Americas region sales increased 13%, with unit growth up 13%, primarily due to sales growth in the U.S. Changes in foreign currency unfavorably impacted ICL sales by $2.2 million for the six months ended June 28, 2024.

Current wording

Total ICL sales for the nine months ended September 27, 2024 increased 9% from the same period of 2023, with unit increase of 4%. The APAC region sales increased by 8%, with unit increase of 2%, due to sales growth in China, Japan, Korea, other APAC distributors and India. The EMEA region sales increased 11% with unit growth up 17%, due primarily to sales increases in our distributor markets. The Americas region sales increased 13%, with unit growth up 14%, primarily due to sales growth in the U.S. Changes in foreign currency unfavorably impacted ICL sales by $2.5 million for the nine months ended September 27, 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. 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.

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 September 27, 2024 decreased 33% from the same period of 2023, due primarily to decreases in cataract IOL sales. Other product sales for the nine months ended September 27, 2024 decreased 150% 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 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.

Current wording

Gross profit for the three and nine months ended September 27, 2024 increased 7.6% and 8.3%, respectively, from the same period of 2023. Gross profit margin decreased to 77.3% of sales for the three months ended September 27, 2024 compared to 79.2% of sales for the three months ended September 29, 2023, due primarily to higher cost per unit as we reduced overall production volume which resulted in less absorption of fixed overhead. Gross profit margin increased to 78.5% of sales for the nine months ended September 27, 2024 compared to 78.0% of sales for the nine months ended September 29, 2023, due changes in reserves related to cataract IOLs recognized in the nine months ended September 29, 2023, and product and geographical sales mix; partially offset by increased period costs associated with manufacturing projects.

Previous 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.

Current wording

General and administrative expenses for the three months ended September 27, 2024 increased 12.6% from the same period of 2023 due to increased facility costs and salary-related and payroll tax expenses, partially offset by a decrease in bonus and stock-based compensation expenses. General and administrative expenses for the nine months ended September 29, 2023 increased 23.6% from the same period of 2023 due to increased outside services, facility costs, salary-related and payroll tax expenses and bonus and stock-based compensation expenses.

Previous 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.

Current wording

Selling and marketing expenses for the three months ended September 27, 2024 was comparable to 2023 due to increased salary-related and payroll tax expenses, as well as costs and charges associated with the opening of our new experience center, offset by decreased advertising and promotional activities and bonus and stock-based compensation expenses. Selling and marketing expenses for the nine months ended September 27, 2024 decreased 3.6% 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, travel and entertainment related expenses and costs and charges associated with the opening of our new experience center.

Previous 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.

Current wording

Research and development expenses for the three months ended September 27, 2024 increased 26.4% due mainly to purchases of in-process research and development related to external AI tools for measurement and lens size selection and increases in salary-related and payroll tax expenses, partially offset by decreased clinical expenses associated with U.S. post-approval clinical activities. Research and development expenses for the nine months ended September 27, 2024 increased 25.0% due mainly to increased salary-related and payroll tax expenses, purchases of in-process research and development related to external AI tools for measurement and lens size selection and increased bonus and stock-based compensation expenses, partially offset by decreased clinical expenses associated with U.S. post-approval clinical activities.

Previous wording

The following table presents our other expenses, net (dollars in thousands):

Current wording

The following table presents our other income, net (dollars in thousands):

Previous 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.

Current wording

Other income, net increased for the three and nine months ended September 27, 2024 and September 29, 2023, primarily due to higher foreign exchange gains.

Previous 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.

Current wording

The effective tax rates for the three months ended September 27, 2024 and September 29, 2023 were 24.2% and 28.6%, respectively. The effective tax rates for the nine months ended September 27, 2024 and September 29, 2023 were 34.1% and 31.9%, 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 six months ended June 28, 2024 and June 30, 2023 was as follows (in thousands):

Current wording

A summary of cash flows for the nine months ended September 27, 2024 and September 29, 2023 was as follows (in thousands):

Previous 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.

Current wording

For the nine months ended September 27, 2024 net cash provided by operating activities consisted of $32.0 million in non-cash items primarily related to stock-based compensation expenses and net income of $14.0 million; partially offset by $31.0 million in working-capital changes primarily related to the capitalization of cloud-based software and changes in accounts receivable. For the nine months ended September 29, 2023 net cash used in operating activities consisted of $61.3 million in working-capital changes primarily related to changes in accounts receivable and inventories; partially offset by $30.3 million in non-cash items primarily related to stock-based compensation expenses and net income of $13.6 million.

Previous 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.

Current wording

For the nine months ended September 27, 2024, net cash used in investment activities was $39.7 million which consisted of $61.2 million in purchases of investments AFS and $17.7 million in purchases of property, plant and equipment, partially offset by $39.1 million of proceeds from the sale or maturity of investments AFS. For the nine months ended September 29, 2023, net cash provided by investment activities was $52.0 million which consisted of $119.4 million of proceeds from the sale or maturity of investments AFS, partially offset by $52.3 million in purchases of investments AFS and $15.1 million in purchases of property, plant and equipment.

Previous 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.

Current wording

Net cash provided by financing activities for the nine months ended September 27, 2024 was $5.8 million which consisted of $7.4 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 nine months ended September 29, 2023, net cash provided by financing activities was $7.0 million which consisted of $9.3 million of proceeds from the exercise of stock options, partially offset by $2.1 million to repurchase of employee common stock for taxes withheld.