Good day, ladies and gentlemen. Thank you for standing by. Welcome to the STAAR Surgical First Quarter 2013 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. (Operator Instructions) This conference is being recorded today, Wednesday, May, 1, 2013. At this time, I would like to turn the conference over to Doug Sherk, with the EVC Group. Please proceed.

Thank you, operator, and good afternoon, everyone. Thank you for joining us for the STAAR Surgical conference call and webcast to review the company’s financial results for the first quarter which ended on March 29, 2013. The news release announcing the first quarter results crossed the wire about half an hour ago and is available at STAAR’s website at www.staar.com. Today’s call is also being broadcast live via webcast. In addition, a slide presentation will accompany remarks by management. To access both the webcast and the presentation slides, go to the Investor Relations section of STAAR’s website at www.staar.com. If you are listening via telephone to today’s call, I would like to review the slides that accompanying management’s remarks, please navigate to the live webcast as I have just reviewed and choose the no-audio/slides-only option. In addition, an archived replay and slides will be available on the STAAR website. 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 remarks about the corporation’s projections, expectations, plans, beliefs and prospects. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Those risks and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the Safe Harbor statement in today's press release as well as STAAR’s public periodic filings with the SEC including a discussion in the Risk Factors section of our 2012 Annual Report on Form 10-K. Investors or potential investors should read these risks. STAAR assumes no…

Thanks, Barry. Good afternoon everyone. There are six areas on which I will focus my comments. Gross margin expansion, operating expenses, impact to foreign currency, income tax for the quarter and the year, non-GAAP adjusted net income, cash and the impact of manufacturing consolidation on our operating results for the year. Now first, looking at our gross margin. Our gross profit margin for the quarter was 70.3% consistent with the first quarter of 2012 and a 250 basis point improvement over the fourth quarter of 2012. Gross margin expansion was limited by a large increase in low margin IOL injector system sales to a third party supplier for build-up of their acrylic pre-loaded product supply and which appear in our other product sales category. These injector system sales were the driving factor in the increase of other product sales which increased from $546,000 to $1 million during the quarter and negatively impacted gross margins by approximately 170 basis points during the quarter. We expect these sales to decrease significantly in Q2 and going forward, so the negative impacts on margins will become less of an issue. If not for these shipments during the first quarter, our gross margin would have been 72%. Now in terms of our operating expenses, our operating expenses for the first quarter including manufacturing consolidation expenses increased 9% to 11.6 million. Key contributors to the expense increase include, manufacturing consolidation which were $901,000 for the quarter, this is somewhat higher than we have projected for the quarter and $346,000 over the expenses reported in Q1 2012 due to increased tax professional fees and Japan wind-down costs. These costs which will continue to be a factor in Q2 should decrease significantly in the second half of the year. Sales and marketing expenses which increased $623,000 driven by…

Thank you, Deborah. I’d like to take a few minutes to discuss the competitive landscape we see in the ophthalmic medical device sector which seems to have changed more in the past six months than in previous years. First on the refractive side, LASIK surgery seems to be facing difficult negative pressure and most market data shows that LASIK procedures are declining in most major markets. The VISIAN ICL is growing on the other hand and increasing market share against LASIK in nearly all of those markets. Even some of our larger competitors are seeing new challenges today. For example, Abbott reported their AML revenues for the quarter declined with a modest decline in the refractive sales driven by continued soft market conditions. Novartis reported their total ophthalmic surgical business declined during the quarter, while their refractive business grew only 2%. Lenses which attempt to compete for refractive share which are the anterior segment of the eye, all seem to be facing some new clinical challenges. Keep in mind, the VISIAN ICL lens is implanted in the posterior segment of the eye and it’s not experiencing any of these clinical challenges I’m about to review. There is mounting clinical evidence that anterior segment phakic IOLs are not in the right place in the eye. Several months ago, Novartis sent out dear doctor letters, warning about the necessary precautions needed regarding endothelial cell count and the routine monitoring of patients. We can now count up the 12 markets in which the Novartis Cache lens is no longer available. There is conflicting information in the markets whether the product will return or not. There was also some very challenging clinical data presented at the recent ASCRS Meeting regarding high levels of ex plants of both the uptick and Abbott phakic IOLs due…

Matthew O’Brien – William Blair & Company: Good afternoon. Thank you for taking the questions. Barry, we could start with guidance for the year on the top-line. First of all, do I understand it correctly the 8% to 10% is a reported number and if – hadn’t gone against you, potentially would you have taken that – that range up a little bit?

That’s a good question Matt, because obviously VIAN has an impact in our conservative approach to this and as I said, first quarter the average value is 92 and it’s up to 97 or so now and it’s been up to 99. So that still concerns us. I think we might look at it little differently. I think you are right if the VIAN headwinds were not facing us and still look more difficult. Matthew O’Brien – William Blair & Company: Okay, so would it been above the 10% not at the high end of the range?

I think that’s fair. Matthew O’Brien – William Blair & Company: And then, Deborah, I was curious with your OpEx performance in the quarter and then the thoughts going forward, I noted then increasing year-over-year then on an absolute basis compared to Q4 has down pretty significantly. Can you help us understand what’s going on there and then specifically on the bottom-line should we annualize this $0.08 number that you deliver in the quarter maybe lower to little bit just because the yen and use that as a baseline going forward?

I guess that’s a fair approach, that’s a conservative approach to take in terms of annualizing the number. In comparison to the fourth quarter OpEx, what we didn’t have in the first quarter was a big trade show which we will have – which we did have in the fourth quarter and we will have in Q2, Q3 and Q4 going forward. So that’s a big difference in the expense. But we also as we said have some puts and takes the Spain distribution expense is going to go away or went away in March of this year and we won’t have that going forward and we had that. So I think, if you just – apples-to-apples it’ll probably similar in terms of overall dollars. Matthew O’Brien – William Blair & Company: Okay, just too specific, I mean something north of $0.30 for the year seems reasonable on the bottom-line?

On the non-GAAP. Matthew O’Brien – William Blair & Company: Gotcha, okay and then, with respect to CentraFLOW in India and Korea, I mean you still put up some pretty good performance there, but do you get any sense for – sense that they may be waiting a little bit for that technology to come along…

That’s a really good question, Matt and as we rolled it out in other markets we looked at out, it may have a minor impact, but I don’t think it’s much. Now I will say this, I will surprise that in Korea, actually our distributors already advertising the technology to physicians. So that’s a first time that’s been tried. So that could have an additional impact and I think first of all, our top line guidance is driven by, I want to see those two approvals, once we get those, I do think we are going to penetrate Korea more quickly than we did Europe and Middle East and a few other markets. So I think it’ll be very helpful very quickly, but I’d like to get those approvals in and done and then we can talk a little more aggressively. Matthew O’Brien – William Blair & Company: Okay, thanks. I’ll hop back in queue.

Your next question comes from the line of Raymond Myers from Benchmark. You may proceed. Raymond Myers – Benchmark: Thank you. Barry, something you might give us more detail about the improved economics of V5 preloaded CentraFLOW versus the V4 that you were selling year or two ago. The cumulative gains of both CentraFLOW and the preloaded technology would seem to be quite a significant lead in the economics to the physicians practice and to STAAR. Can you lay that out for us?

Yeah, I think that is a really good point. We did show an increase of 5% on price during the quarter. As you know the CentraFLOW technology has about a 10% premium. Some of the distributors are passing that on others are not. But that 10% added even at and customer price say it’s 80 bucks for example that is well worth it to a surgeon eliminating that visit, that step, that breaking a schedule to have to go to a TI procedure. So there is value at both ends in terms of that technology. Now with the version five, we do expect to put about a 5% price increase on that product and there is surgical savings time with that product plus, reliability in the delivery of the ICL and these were things that we ask surgeons to judge when they view the product at the recent ASCRS Meeting. And I think for those who attended the breakfast meeting we had in San Francisco, you heard Dr. Merton say and his hands, and he is an experienced surgeon, in his hands it will save 30% of the procedure time and time for surgeons is money. Time for ASCs is money, time for hospitals is money. So it’s well worth I think the incremental 5% cost to the product that they’ll see. Now I think in a surgeon that does much less procedures than a Dr. Merton for example, the savings and procedure time will even be much more. Raymond Myers – Benchmark: Great. Next could you describe the demand for monovision lenses to aid with (inaudible) for the ICL, I think that was mentioned in the presentations at the conference a couple weeks ago where Merton was presenting?

There are a few surgeons and with our version six, we are looking at different optics we could put on the ICL to help visual results from multiple plains of vision whether that’s a multi focal type design optic or whether it is an enhanced new type optic that gives multiple levels of visual results. We do think that’s a nice opportunity for us going forward to incorporate into our technology and make it much easier for both the surgeon and the patient and that’s in our version six which as you know we are still exploring those optical designs. Raymond Myers – Benchmark: Okay, it sounds intriguing. Finally, could you discuss your experience with transitioning to direct distribution in Spain, I saw that the sales have increased nicely in Spain and I don’t recall their economy doing anything positive. To what do you attribute the improvement and describe that transition to direct?

It is challenging for a company of our size with all the different things we have going on in the business particularly to consider Project Comet and that consolidation effort takes a lot of work from a lot of disciplines within the company but likewise it takes a lot of effort to turn the market from being a distributor model to a direct sales model and we had a team of several members of our executive management team along with a lot employees throughout multiple functions within the company working on this. So it takes a good amount of time and effort. Now to the results, I am pleased with the results so far. That’s why we are looking at adding more people more quickly in Spain. It is a challenged market in terms of the economy, no doubt about that. What’s more intriguing to me in our first quarter results in Spain is not 156% in revenue because remember, we are going to get almost a doubling if the units are just the same. What’s intriguing to me is that 37% increase in units that’s what’s interesting. So by going direct if we can drive the ICL units, more efficiently more effectively that’s the test we really whether it’s successful or not. And so far it had to say, we are pleased, but we are still monitoring it very closely. Raymond Myers – Benchmark: Okay, I’ll get back in queue and maybe ask some more later. Thank you

Thank you.

(Operator Instructions) Your next question is from the line of Jim Sidoti from Sidoti & Company. You may proceed. Jim Sidoti – Sidoti & Company: Good afternoon, can you hear me?

Hi, Jim, yes we can. Jim Sidoti – Sidoti & Company: Okay, so, I believe you said on a constant currency basis the IOL sales were up 10% compared to flat on a reported basis. But on ICL, it was the same constant currency and reported. Is that because more IOLs is sold in Japan?

Yeah there is two factors there. One is the high, high percent of overall sales in Japan of IOLs, but secondly you may recall in our prepared comments that 70% of the ICLs in Japan now are CentraFLOW technology, well, since it’s not approved in Japan, surgeons have the ability to prescribe it and we can’t ship it from Japan because it’s not an approved product. So they actually order that product from Switzerland and it’s shipped in US dollars. So there is not a yen impact on 70% of the ICL sales in Japan. Jim Sidoti – Sidoti & Company: Okay, so even if they are sold in Japan, the currency doesn’t affect that?

Yes. Jim Sidoti – Sidoti & Company: All right. And then the other sales in the quarter about $1 million, you said what, can you just go over again what that was and I assume that it won’t come back in the next couple quarters?

Yes, the last two quarter, we’ve seen an increase in this other category. And it’s a category that we’ve expected to continue to decline and we have been driving it down because it’s a host of a miscellaneous of unfocused products. However within this category also falls the injector systems that we sell to the third party who will then use those injector systems for their product sales of the same product that we market. And this is the KS IOL product of which I am speaking. So, as you know, we are both way behind and needs for product and as we said, 900,000 backlog at the end of first quarter. So they are trying to build the inventory of these preloaded acrylic IOLs. So they are buying more injector systems from us today, then we are getting lenses to sell to offset that. And those gross margins are very low. I want to say they are plus or minus around 20%. Deborah is shaking her head. Yes, so you can see the impact that it has on the gross margin as she reported we would have been 72% gross margin for the quarter if not for that, but that’s the biggest driver Jim, in that other category are those injector systems we are selling to the third-party supplier. Jim Sidoti – Sidoti & Company: And you expect that to continue for the rest of the year at that rate?

No we do not and as a matter of fact, we already have set the number for second quarter and we’ll do so for the rest of the year as we move along. Now, if there is more supply to product available, then we’ll sell more injector systems, but that will mean we’ll have more IOLs to sell to offset that diluted gross margin. Jim Sidoti – Sidoti & Company: All right and that supply constraint is what you are referring to that might slowdown sales in the Europe in the back of the year?

Yes, right. Jim Sidoti – Sidoti & Company: So, just for modeling purposes, we should probably expect Q1 will be the best quarter at least for the next two or three quarters?

Well, I would agree with you based on the base of business we have, but let’s not forget the nanoFLEX Toric IOL. Now I don’t expect Q2, we are going to see a lot from it, but we are beginning commercialization now but I think as that product gets out into the market Q3 we’ll see a little more in Q4, I’m expecting a nice little bump from the nanoFLEX Toric IOL. Jim Sidoti – Sidoti & Company: All right and then my last question was on the R&D spend that was down in the quarter. Is a timing issue and should we expect that to come back or…?

Yeah, it’s more of a timing issue and that we transferred the R&D activities from Japan here. So there is still a couple of people we need to add into the organization. I think if you model that in 10% to 11% that’s going to be pretty close to where we should end up. Jim Sidoti – Sidoti & Company: Okay, all right, thank you.

Thank you, Jim.

Your next question is a follow-up from the line of Raymond Myers from Benchmark. You may proceed. Raymond Myers – Benchmark: Yeah, thanks for letting me follow-up. A very quite a few products are starting to be shipping from Monrovia either already or expected in the second quarter here. So my question is, when should we start to anticipate some noticeable contribution from the shipments of these products from the US?

Q3, 2014 and I think I’ve been pretty consistent in trying to say that though we blend into our comments a little bit here today that you might start to see some additional tax benefit as the US turns profitable but it really – this year 2013, what I say.

Yeah, 2014

Okay, yeah this year, for our comments, we might see a little bit of that but if I were you and me as putting a budget together I am not modeling any of that for this year, but I am expecting it in 2014. Raymond Myers – Benchmark: Okay, that’s it. Thank you.

Thank you, Ray.

Your next question comes from the line of Larry Hemowich from HMPC. You may proceed. Larry Hemowich – HMPC.: Good afternoon,

Hi, Larry. Larry Hemowich – HMPC.: I guess it would be more for Deborah than you Barry. At the Analyst Meeting you had at ASCRS, there was talk about a 10% effective tax rate in 2014. I think you are using, you will start using up your net – your tax loss carry forwards, is that why the tax rate is 10% and why isn’t not zero, was that because of overseas income?

Exactly. Exactly, Larry. Yeah, and like I said so, in the same basis as this year, we estimate our tax rate for the full year would be 10% overall and so that would begin effective for the first quarter if that’s the case. So, yeah and because it’s really have to do with the mix of income. Larry Hemowich – HMPC.: And also you had mentioned that meaning gross margins ticking up pretty nicely from where we are at. Should we expect that gross margin to tick up progressively each quarter pretty much maybe not totally evenly but continue to tick up as the benefits of the manufacturing consolidation come into play and if the average for the year 2014 was projected and I realize obviously it’s very early to give hard guidance. But if it’s 80% for the year, does that mean exiting 2014 could even be better than 80%, we started let’s say 75% and end up at 85% and average for the year at 80%?

I don’t think so, Larry. I think our objective is to get to 80%. I am not going to get into 80% for the year.

During the year 2014, we’d expect to see a quarter at 80%. I don’t know exactly when that will be, the other driver besides Comet is continued mix. So that means that, ICLs at a higher margin where 59% of our sales during the first quarter. Last year it was 55%. So we continue on that kind of trend, I mean that’s going to continue to contribute 200 or 300 basis points every year just on mix. Larry Hemowich – HMPC.: So, let me make sure I hear you are saying so, I thought when we talked at in San Francisco that we are talking about an average gross margin for the year of 80%. Now I think I am hearing something slightly different.

No, I think what we said is, that in 2014, we’ll be nearing 80% gross margin. Larry Hemowich – HMPC.: Okay, average for the year?

Well, but then it’s going to be – yeah the average would be nearing. Larry Hemowich – HMPC.: Okay.

But we expect it will hit 80% at least a quarter during the year. I don’t know what quarter it might be first quarter, it might be fourth quarter. Larry Hemowich – HMPC.: Well, I would think, I would only think Barry that the gross margin would be getting better as the benefits of the manufacturing consolidation.

That’s sure, Larry. Larry Hemowich – HMPC.: Okay, that’s good. Thanks.

And at this time, there are no other questions I would turn the call back over to management for your closing remarks.

Great. Thank you very much for participating in our call today and if you are able to join us on any of these investor trips we have or our Annual Shareholders Meeting, we certainly welcome you and we look forward to providing you an update on our progress during our second quarter call. Thank you and good evening.

And ladies and gentlemen, this concludes your presentation. You may now disconnect.