Good day, ladies and gentlemen and welcome to the Fourth Quarter 2013 STAAR Surgical Earnings Conference Call. My name is Britney and I’ll be the operator for today. At this time all participants are on a listen-only mode. Later, we will a conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to your host for today, EVC Group, Doug Sherk. Please proceed.

Thank you operator. 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 fourth quarter which ended on January 3, 2014. The news release announcing the fourth quarter results crossed the wire about half an hour ago and is available on 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 and would like to review the slides that accompany management’s remarks, please navigate to the live webcast as I’ve 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, expectation, 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. These 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 the 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 obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition to supplement the GAAP numbers, we have provided non-GAAP adjusted net income and diluted net income per share information that excludes manufacturing consolidation expenses, Spain distribution transition expenses, gains or losses on foreign currency, fair market value adjustments for warrants and stock-based compensation expense. We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in our financial release which is available on our website and in our slide presentation. Now, I’d like to turn the call over to Barry Caldwell, President and Chief Executive Officer of STAAR Surgical.

Thank you Doug and good afternoon everyone. We want to thank you for joining us on the call today. With me is Steve Brown our Chief Financial Officer. I’ll start our agenda this afternoon with an overview of the fourth quarter results against our four key metrics; Steve will then offer a detailed look at key fourth quarter and full year financial results; I’ll come back and discuss some of the key operating milestones including an update on our Toric ICL rescheduled FDA panel meeting and then cover the metrics that we’d establish for 2014. Upon conclusion, we’ll open the call for your questions. We had a successful fourth quarter, providing a strong finish to 2013 as we continue to grow revenues. The traction of our Visian ICL is increasing globally. We are expanding the product approvals to new markets and then rapid cadence of new products in our pipeline continues, additionally the benefits of our manufacturing consolidation, our position to create a positive impact on our 2014 results and for several years to come. The two significant headwinds we faced all year, those being the value of the yen and IOL supply constraints, once again did have an impact on our financial performance during the quarter. Let me start by reviewing our key 2013 metrics which we established a year ago and have updated quarterly throughout the year. These metrics are focused on revenue, gross margin expansion, profitability and manufacturing consolidation progress. With the exception of our gross margin target for the year, we met each of our metrics in the first three quarters. Now let’s review our performance during the fourth quarter stacks up against these, one-by-one, first; revenue growth. We raised, you may recall, our annual revenue growth metric at the mid-point of the year to 12%…

Thanks Barry and good afternoon everyone. There are four areas on which I will focus my comment; revenue, gross margin, expansion, 2013 key financial results and our shelf registration which we filed earlier today. As Barry discussed, the continuing decline in the value of the yen resulted in a negative impact to our revenue of $1.1 million for the quarter. Most of this $983,000 negatively impacted IOL sales for the quarter. For the full year, the negative impact of foreign currency was $3.8 million and impacted IOLs by $3.2 million. Annual sales in constant currency grew 19% to $76 million from $63.8 million in 2012. The average value of the yen to the dollar for 2013 was 97.6 compared to 79.8 in 2012. There was also a negative impact on gross profit for the year of $1.9 million and a positive impact on our operating expenses of $2.1 million. We sell injectors to third-party to be used in our preloaded IOLs, some of which are sold back to start for sales and customers. During the fourth quarter, the company determined that a more appropriate accounting for these injectors would be the reduce cost of goods sold rather than the previous accounting treatment as revenue. Therefore fourth quarter injector sales of $476,000 were recorded as a reduction to cost of goods sold rather than revenue and this accounting treatment will be followed on a go forward basis. Including the $476,000 received for IOL injectors, total revenues would have been $19.4 million for the quarter and $72.7 million for the full year. These injector sales were not material during the first nine months of 2013. Gross profit margin for the quarter was 68.5% compared to 67.8% in the fourth quarter of 2012 a 70 basis point expansion. The product mix in the…

Thank you, Steve. We continue to see very positive progress in our regulatory submissions worldwide. We are being told by the agency that approval of CentraFLOW technology in Japan is just a matter of days away. We also believe we would remain on track for approval of CentraFLOW in China at mid year. These new approvals will be important to our growth plans in the Asia Pacific region for 2014. As said earlier we expect to receive CE Mark approval in April for the preloaded ICL. This will make delivery of the ICL more convenient and decrease the surgical time for the procedure. This is important to our overall growth plans in Europe for 2014. Regarding our Visian, Toric ICL lens that was originally scheduled to be at the February 14th FDA Ophthalmic Device Panel meeting, that meeting has now been rescheduled for Friday, March 14th. We’ve been informed the FDA will make this public Friday on their website. Now typically, the executive summaries are available only 48 hours before the scheduled penal meeting. So now we’re in a little bit of an unusual situation as both executive summaries have been published on the FDA website in anticipation of that previously planned February 14 meeting. We did exchange executive summaries with the FDA prior to Christmas, so we’ve seen these for a quite a while. And if you have followed our story the past five years, I think you’d agree that were no surprises in the summary. The same questions regarding the submission have been previously discussed. Since the documents are out there, we wanted to make a few comments, so hopefully you can understand that we will not comment any further until after the panel meeting presentations. First, let’s remember that the Toric ICL study protocol was approved over…

Thank you. (Operator Instructions) And your first question comes from the line of Chris Cooley with Stephens. Please proceed.

Good afternoon everyone. Can you hear me okay?

Yes, Chris.

Super; two questions. First, could you maybe give us some additional color regarding your assumptions behind the guidance? And explicitly when looking at revenue and at the gross margin, I think you want to set a conservative bar but it almost, if I’m doing the math right, it looks like something is going negative here on the IOL side. So, I just want to make sure I’m not missing some potential headwinds and also it looks like it would imply some further degradation to margins. So I want to make sure I understand the assumptions there. And then the second question I would have would just be in regards to maybe a quick update on the timeline for CentraFLOW as well as V6a and V6b. And congrats by the way for doing the panel, back on Q this quickly, it’s a great win.

Good. I am really shocked Chris, if you would say I am more conservative than you. But let me say that I think we learned our lesson from -- I learned my lesson from 2012 and that is not to get out in front and always leave a little bit in the tank for something that’s going to happen. And usually that something that’s going to happen is not something you know about. Now remember we are still going to have headwinds from the yen in 2014. When you look at, it will take really every quarter of next year even if we stay at the current 102 rate for the yen, we are going to battling that value throughout the whole year. Also there are several approvals which could happen, which could increase our number, but they could also not happen, so we don’t have those baked into our numbers. I think on the gross margin line you got to remember that we don’t see the benefit from Comet until the second half of this year. During the first half, our Swiss facility will remain open and continue to manufacture. So are there possibilities that we could do better than these metrics we’ve outlined, absolutely yes. Does our team think we are going to do better than that, yes, but there is always something that can pop its ugly head up. Now you refer IOLs on the revenue line that it indicates a decline, we did has reported short decline in IOLs in 2013. So if we get better yen values, if we get more supply and we did see an increase in supply fourth quarter from a third-party manufacturer of acrylics, if that improves then yes we’ll do better than that line. But at this point in time until we see it we don’t believe and I don’t put it in the metric.

Understood

Okay. So secondly on CentraFLOW and I think we said Japan we’re expecting any day.

I am sorry. I meant -- if I can interrupt you, I just meant here in the States?

Okay. So as an update we did have a meeting with the agency in December, back in Washington on CentraFLOW, it was a very positive meeting. There are some things that we need to do. Now I will readily admit those things were put on our back burden as we were putting 110% efforts for the panel meeting for Toric. So we don’t spend any time or any work on some of the things we need to do for CentraFLOW. So once the panel meeting is finished and we can send resources on the CentraFLOW, we will do that. Now one of the things we’ll be doing is looking at a retrospective study of sizing outside the U.S. and that’s something the agency wants to see. So we’re going to have to go into some of surgeons who didn’t plan a lot of ICLs and go through their data several years based upon their sizing methodology and what their results were clinically. On the V6A and the V6B nothing has changed in those regards. We’re continuing to make progress on both of those products in our R&D team. The V6A optic, we decided upon and actually we spent quite a bit of money $500,000, $600,000, $700,000 something like that just recently on equipment for laying the optics for the V6A. So we think we’re still basically on target for that which could be at the end of this year or beginning of next year. The V6B which opens up an expanded market above age 45, we will -- our objective is to have the optic determined by that lens by the end of March, end of first quarter. And that would trail by 12 months, the V6A launch.

If I may, just to clarify and then I’ll get back in queue, when would we start to see initial clinical data on the V6A, (inaudible) will see first? Thanks so much, I’ll get back in queue.

Sure. On the V6A it depends what our regulatory agency requires, of course we will do some of our own clinical trials before we actually launch the product. But we could see some of those as early as EFCRS meeting. It’s possible if we are able to stay on target that we would have presentations in our booth on some of that data at EFCRS.

Thank you.

And your next question comes from the line of Matthew O’Brien with William Blair. Please proceed. Matthew O’Brien - William Blair: Good afternoon. Thanks for taking the questions. I was just hoping to follow-up on Chris’s question a little bit on guidance. It seems to me like the 8 to 10 total company number that you’re putting out there, if you exclude the movement in yen and then also the adjustment in the IOL business that that would probably be something closer to 10 to maybe even 10% to 13% growth, is that a fair way of characterizing it?

Well I think as, yes Matt, as long as there is some headwind some new headwind that comes up, to jump to minus. Matthew O’Brien - William Blair: Okay.

As we put the metric out there we’re trying to anticipate there is something we don’t know that to could hit us. Matthew O’Brien - William Blair: Right, but just fundamentally I mean the shift from IOLs and sales down to cost of goods should be just under a couple of 100 basis points alone?

Couple of 100 basis -- improvement you mean? Matthew O’Brien - William Blair: It would have been a couple of 100 basis points higher maybe a $1.5 million higher total revenue adjusting for that change given that it was about a $500,000 adjustment this quarter?

No, no, the first three quarters it was a minimal. First three quarters was less than the fourth quarter total. Matthew O’Brien - William Blair: Yes, I understand that. What I'm saying is that the $500,000 that you mentioned in Q4, we can follow-up offline if you want to, but it seems like that adjustment you said it's going to continue going forward so you're pulling revenue out of 2014, put it down in cost of goods. And so what I guess I'm asking is that $500,000 in Q4, would it have been a higher amount here in 2014. And the revenue number, the growth number has taken a hit because of that?

Of course it's all dependent upon the ability of our third-party manufacturing to make IOLs that go with those objectors. So it would be higher, if they are able to produce at a much higher level. We think they will be able to, but as I said earlier, I'm not going to project that until we actually see it. Matthew O’Brien - William Blair: Okay. And then to follow-up on the Visian outlook going forward I mean you said about 20% this year, can you just give us a sense for how much of that's coming from the mix you're mentioning CentraFLOW is now 67% of your sales and your shipments in December. How much of that 20% comes from mix versus geographic growth versus any new product launches. It sounds like you don't have anything in there for new product launches? And then specifically do you have anything in your guidance for the Toric approval in the U.S.?

There is nothing in the metrics we put out there, products that are not approved today. Matthew O’Brien - William Blair: Okay. And then the mix side, the benefit there versus geographic growth?

Well, it's 67% that's pretty high the key remaining market to hold it would be China in that volume. And so we'll start to see that in the second half of this year. And then the final key market to drop would be the U.S. and we don't anticipate that in 2014. Matthew O’Brien - William Blair: Okay. And if I can just do more real quick, it look like India and Japan in key forward stop downsizing understand the reasoning for that on the ICL side of things, but I mean do you get a sense on both geographies and kind of ramping up right now. It’s the CentraFLOW or pausing in anticipation with CentraFLOW?

Well, two different issues there with those markets. It has been reported by a lot of different sources that the Japan market had a significant decline in 2013 and overall refracting procedures. Now it’s been reported as high as 50%. Market [spilled] data is not out yet and we won’t see that yet for several weeks or for the full year, but we do think that Japan market was down Now I will say we have seen a rebound so far this year, getting CentraFLOW approval in Japan will help us overall because then we will be able to actively market the product and the centers that have been using CentraFLOW will be able to have inventory at revenue available for their patients, they won’t have to order on a name patient basis as they get to in the past. With India there was a slight stall in the market fourth quarter, but you see our price did very well based upon the CentraFLOW introduction. And we have seen good growth so far in the first quarter in India, so we have seen that rebound as well. Matthew O’Brien - William Blair: Great, thank you.

Thank you.

(Operator Instructions). And your next question comes from the line of Jason Mills with Canaccord Genuity. Please proceed.

Thank you. Hi, there. Can you hear me okay.

Yes, Jason.

Good afternoon, thanks for taking the question. I have a several but I would try to limit it here for the operator instructions. First on China fantastic year really all in for you in China with the ICL and a strong quarter in the fourth quarter. Love your commentary Barry on the sustainability of this growth and sort of also the visibility that you have, whether or not that’s improved quarter-to-quarter, obviously in 2012 it bounced around it didn’t in 2013, have you done anything to enhance your visibility or your ability to sort of smooth out from a seasonal perspective or quarter-to-quarter perspective China and what should we expect there as we move forward quarterly in 2014?

Okay good yes. First thanks for explaining the 2012, first I thought you are setting a trap question for me there.

No.

Good because China has been hard to estimate. And we are as you said we are also pleased with our results in China in 2014, but we also know it’s the largest refractive market out there and there is a lot of opportunity for us in China. So we are very much looking forward as are the surgeons in China for CentraFLOW approval at the mid year term. We have, we hired more people in China during 2013. It has helped to get us more visibility and feedback on what the market is doing. So we do feel better about it overall. Plus I think Jason if anything happened in the China market again like it did in 2012 I think we are better prepared to react to that. For example in 2012 there was tremendous amount of negative press about [leasing] it just carried on for weeks and stall the whole refractive market. But we hired someone in China who specializes on our social media work there and we think if that were to happen in that market we are better prepared to be able to react to communicate to potential refractive patients better than we have in the past.

And then -- just staying on China per se Barry, relative to your guidance for the ICL in 2014, I guess not only in China hit the three largest ICL markets, how are you viewing growth expectations in those three markets relative to that overall growth expectation? And I would guess China, for example would be higher growth reaching on near than the average for the entire world? Just give us a sense there? And I had one other follow-up.

Yes, well certainly in our metric that we put out there ICL 20% growth, overall we would expect in that metric a little less growth than we had this year, seeing that the sales were at a higher level and the comparables are higher. So on a percentage wide basis, it wouldn’t be as high. However, if China comes through with CentraFLOW at mid-year that changes that metric, if Toric ICL becomes available in the U.S. that changes that metric for the U.S. We’re very pleased with our results in U.S. in fourth quarter. And we continue to watch that very closely, because overall, according to market scope procedures, total refractive procedures, I’m sorry laser refractive procedures were down 1% in the fourth quarter in the U.S., while they showed that Phakic IOL type procedures were up 20%. Of course we know we were up more than that, but that's the first time since I have watched that data that I have seen that kind of performance.

That's helpful. And one more and I will get back in queue. Follow-up on Chris’ question with the CentraFLOW in U.S., it seems fairly obvious given the current mix in your business that that has been a really transcended technology addition to the ICL, which itself has done well globally as CentraFLOW is clearly been important. So as it relates to the U.S. and understanding that you are planning to develop more resources to it, post panel, can you give us a sense just qualitatively I guess in broad stroke terms what you expect for timelines and what you expect the FDA to require of you so that you can eventually provided that and important technology to U.S. patients maybe including myself?

Well we can think you some place. But really good question. I think the two pacing items there are going to be for us is just retrospective clinical evidence on sizing and complications from different methodologies for sizing and then secondly at least as we continue to discuss with the FDA they still currently believe that a clinical study will be required to get approval in the U.S. Now we don’t yet know how long that would be or how many eyes. We have suggested that protocol to the FDA, but I think before that can get started we’ve got to fulfill the sizing data information that they’re asking for. So as I look today I don’t see that as a 2015 product. That could change, but as I look at it today I don’t see available in 2015.

That’s helpful color, thanks. I’ll get back in the queue.

Thank you.

(Operator Instructions). And there are no further questions. I will now turn the call back over to Barry Caldwell for further remarks.

Great. Thank you operator. And I’d like to thank all of you for participating in our call today. As I said we planned to do this again on April 28th, from the floor of the ESCRS meeting in Boston. And you’ve to be there, we’d like to provide you a live show of how this thing is done. And if you have any questions or want follow-up please feel free to contact us. Thank you and have a good evening.