Welcome to the STAAR Surgical Second Quarter 2014 Financial Results Conference Call and Webcast. My name is Denise and I will be the operator for today. (Operator Instructions). I would like to turn the conference over to Doug Sherk, EVC Group. Doug Sherk – EVC Group: Thank you Denise and good afternoon everyone. Thank you for joining us for the STAAR Surgical conference call to review the company’s financial results for the second quarter which ended on July 4th, 2014 as well as recent corporate developments. The news release detailing the second quarter results was issued just after 4 PM Eastern Time today and it's now available on STAAR’s website at www.staar.com. In addition to the slide presentation will accompanying management’s remarks during today’s call. 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’re listening via telephone to today’s call and would like to review the slides with the company management’s remarks, please navigate to the live webcast which I have just reviewed and choose the no audio slides only option. In addition an archived replay of the event 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 analyses 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 2013 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 consolidated expenses, same distribution transition expenses, gains or losses on foreign currency, fair market value adjustments for warrants, stock-based compensation expense and FDA TICL panel expenses. 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 with that outlay I would like to turn the call over to Barry Caldwell, President and Chief Executive Officer of STAAR Surgical.

Thanks Doug. Good afternoon everyone. Thank you for joining us on the call and webcast this afternoon for review of our second quarter results as well as an update on our performance for the first six months of 2014, an expectations for the remainder of the year. With me today on the call remotely is Steve Brown, our CFO; Deborah Andrews, our Chief Accounting Officer is with me here in Monrovia. Before we review the agenda I would like apologize for any inconvenience from our delay of this call by one day but we felt that it was important that senior management be in Japan for the funeral services of the Hideo Watanabe, President of STAAR Japan. Hideo joined STAAR three years ago and though he had no previous ophthalmic medical device experience he quickly gained the respect of our customers and our employees. He led the efforts on the manufacturing transfer of IOLs from Japan to the U.S. and the return to growth of IOL sales in the very important Japan market. Hideo leaves a wife and three sons. He loved his family, he was very proud of them as well as a deep desire and love for fishing. He will be missed. He was a friend to all of us and a strong leader. Hideo reported directly to Don Todd, our President of the Asia-Pacific region. Don and other members of our management team will be present in Japan until we make a final decision on future organizational changes. With that I will begin our discussion on the business this afternoon with an overview of the second quarter results against the five key metrics we established at the beginning of this year. Steve will then offer a detailed look at the key second quarter and first half financial…

Thanks Barry. Good afternoon everyone. There are several other areas on which I will focus my comments, GAAP and non-GAAP P&L results, gross margins, operating expenses and our tax provisions. First let’s look at the P&L results, as Barry said revenue increased by 10% as reported and 11% in constant currency. Gross profit increased by 8%. I will review the gross profit profile and operating expenses in a moment. The GAAP net loss for the second quarter of 2014 was $1.8 million or $0.05 on a per diluted share basis, compared with a net income of $278,000, or $0.01 on a per diluted share basis, in the second quarter of 2013. On a non-GAAP basis adjusted net income for the quarter was 291,000 or $0.01 per diluted share SG&A compared to the adjusted net income of $1.8 million or $0.05 per diluted share reported in the second quarter of 2013. On a GAAP basis for the first half we lost $0.08 a share as compared with net income of $0.02 a share in the first half of 2013. This has been mainly driven mainly by additional investments in R&D and sales and marketing as well as increased costs in general administration. On a non-GAAP basis we were in $0.05 and the adjusted income is compared to $0.13 during the first half of 2013. We continue to see improvements in our cost to manufacture of ICLs in the United States. It is not however yet at the level we experienced our facility in Switzerland. As this improvement continues we will begin to see the consolidation benefits in our cost of goods. There were three key headwinds to our gross margin during the quarter which had a total negative impact of 450 basis points. First the geographic mix of IOL sales during…

I would like to update several activities in the operational area, we will review the process of correcting the observations cited in the FDA warning letter. We will go through the preloaded ICL European approval and opportunity there. The development progress on the version 6A ICL, the regulatory approvals that are in various stages of progress and our plans for our largest participation ever at the upcoming ESCRS Meeting in London during September. Let’s first address the warning letter. We thought it would be helpful for our investors to understand the history of our FDA, GMP facility inspection results over the past eight years. We have had a total of nine FDA inspections at the three facilities in which we have manufactured products for the U.S. market during that period. Off those nine inspections six resulted in no observations. The other three inspections resulted in a total of seven observations all of which were successfully addressed with the agency. As you can see two of the three GMP inspections at our Monrovia facility resulted in no observations. The last inspection prior to the one in the first quarter was in January of 2012 at which time there were no observations. First we have taken and continue to take very seriously each observation in the warning letter and the corrective actions required. We believe our actions illustrate this approach. As you can see in the time line we have made four (indiscernible) responses to the FDA compliance branch. On April 11th, our initial response to the 483 observations. On May 12th, our first monthly progress report to the agency. By the way this was a proactive commitment we made to the agency that we would provide an update on our progress each month at this stage. On June 13, we had…

(Operator Instructions) Our first question comes from Matthew O’Brien with William Blair. Please proceed. Matthew O’Brien – William Blair: I was hoping just for a clarification on the guidance for the year, Barry, it sounds like the top line number in aggregate is going to be around that 8% to 10% level? But the other metrics most likely will fall a little bit shorter. What you’ve outlined is that the right way to think about it?

First of all and one of the reasons that we try to change the language here at annual objective is that a lot of folks interpret our metrics to be guidance. We don’t intend them to be guidance, we set them up every year as key objectives for our business and as I said they are not always meant to be slam-dunk. On the revenue side though we will continue to measure ourselves against the 8% to 10% growth I think what we have tried to say is that we see the opportunity in the second half for growth at a higher level than what we see in the first half and the first half was 11% as we reported and 13% in constant currency. I think the only one that we’re saying that we think we can’t get to at this point unless something happens that we currently don’t see is hitting that gross margin metric of 300 basis points of improvement but we will continue to measure ourselves against that same measure each quarter. Matthew O’Brien – William Blair: Okay, I mean that’s one where it's a little confusing when I look at your ICL number and again I know it's just a target but just to get to the 20% for the year you would assume something caused you 25% growth in the back half I’m just not sure how to reconcile that versus what we have seen in the first half.

I think couple of things that you’ve to look at is that we’re expecting a higher growth in the APAC region, you saw during the second quarter that growth was not as high as it normally has been. A couple of key reasons there, one is in the China market and actually our distributor for China was here on Monday and so I met with Jack. He has seen 28% out the door sales so far this year. And they are not tracking that at this point and one of the reasons was during the second quarter they did not bring in as much inventories they typically would because there was some anticipated tax advantage to not having done that during the second quarter. And I will give you a data point that really does illustrate this. One of the things we use is a measure of our ICL business is our Toric business because it's an on-demand order, in other words we don’t have any one that has a consignment of Toric ICLs because there is so many SKUs. So China in the second quarter Toric ICLs grew 45% whereas our myopic ICL actually declined 10%. The myopic ICL that’s where the few distributors that do carry inventory that’s where they would purchase for their inventory. So obviously you can see in the numbers that they were down during the second quarter. So we’re expecting to see an uptick in our Asia-Pacific regions. Korea is making some pretty heavy investments. I was just in Korea few weeks ago, we went through the investments they plan the second half on the marketing side. They are in the process of engaging though I did not know for a pretty famous actresses in Korea who has had ICL to become spokesmen for the product and then we have also got our preloaded ICL for Europe. So we expect those things to continue to help us. The continued expansion and penetration of CentraFLOW technology in the markets give us a price increase. So all those factors, you’re right it will be tight but we still see in our planning the path to get there. Matthew O’Brien – William Blair: Along those lines when I was looking at the performance in the ICLs in the quarter, I think you started to allude to this but excluding Toric growth myopic was basically flat or up just slightly, is that math correct and then are you saying it's really more of an inventory adjustment that is the reason for the softness?

That’s really good math, Matt. Toric’s were up 19%, this is globally, and myopic ICL was only up 1%. Matthew O’Brien – William Blair: Okay and it's just more of a function of the inventory adjustments from some of your distributors?

Exactly. So the myopic ICL that’s the only one that distributor can have inventory of and that’s why I say, we look at the Toric on a week to week, month to month basis. It really tells what the trend of ICL procedures are. Matthew O’Brien – William Blair: Okay. And then last one for me and I apologize, on just the orders here as far as the number of questions but the warning letter – you provided some visibility into how everything transpired but what are the next steps from here and then specifically if you had approval for Toric tomorrow how long could you supply the market with your inventory?

Allow me to take the last one first. The next day, as I said we built over 6500 Toric ICLs those are all for the U.S. market, they are the U.S. product, they are not be used in any other market. So we have the inventory, we are ready to go. And as you know we have also trained surgeons as well. We will train more and continue to train. So if we had approval tomorrow next week we would be able to ship product. On the side of the warning letter, we have our next monthly update which would be mid-August and we do continue to supply additional information but we’re also tracking. We have put out some goals and objectives to the compliance office here in Los Angeles and said here is what we’re going to do and we’re going to report every month whether we did these things or not. So we have a list of things that we’re continuing to do throughout and across all of our product lines. It's anticipated that ones they have totaled reviewed our submission that they will most likely come back for a follow-up on it. And we don’t have any evidence of what timing on that would be at this point. We have asked if a face to face meeting was necessary and at this point they have said no.

Ladies and gentlemen our next question from Chris Cooley with Stephens. Please proceed. Chris Cooley – Stephens: I just want to follow-on to Matt’s question I have one quick follow-up, when we think about the ICL growth in the quarter you alluded in your press release that increase pricing gave you 300 basis points there and as Matt picked up on as well, you have definitely benefited from the exports of CentraFLOW. So help us think about not so much, I understand these drivers but I guess if I ask it a little bit different way, can you grow double digits in the ICL if the AsiaPAC region doesn’t come back. I guess I’m also kind of curious a little bit about how much stocking you think you might get? I’m assuming here in the current quarter now that the preloaded got approved in Europe a little bit earlier than anticipated. Just was really surprised by what looks to be the lowest growth rate you have had since the fourth quarter of ’12 in that ICL space here during the period and I just got one follow-up. Thanks.

Sure. Well with the APAC region specifically the one area we think will continue to be a drag on us and that region is Japan. Procedures in Japan refractive procedures overall just continue to have a challenge and that’s both on the lasik side and the ICL side as well. Patients don’t come in the door, it's kind of hard to do the procedures. But we do see and have pretty good visibility to the other major markets in APAC, Korea, China, and India those three markets and we do see good growth on the Horizon. I was in India just about a month ago, the CentraFLOW product has gone very well there. It's been very well accepted and I will give you a story, I will give you his name Dr. Reddy who is a very prominent surgeon in India. We sat with Dr. Reddy for an hour or so and he has a son who has been in his practice within for the last 4 or 5 years and his son is going to move out to a different town and open his own practice and he asked his dad what excimer laser should I buy? And his dad told him, son, with the CentraFLOW technology and the preloaded ICL that’s where refractive procedures are going and I wouldn’t suggest you invest in excimer laser. Now that’s an example of one I know but Dr. Reddy is a well-respected surgeon globally and he has done a lot of refractive procedures. He almost sounded like any (indiscernible) with some of the things Chris you have heard him say. So we do see a lot of momentum and so – as I said to Matt, it's going to be tight but in our projections as we currently see them today we believe we can get there and that remains our annual objective. Chris Cooley – Stephens: Understood. And then could you maybe just revisit the V6A for us a little bit here. I understand it's up two diopters of accommodation there but what gives you confidence as you go into the CE Mark process here in the fourth quarter that you can really get this lens up on the market in the first half of next year I mean think the majority of us haven't seen a lot of data around this lens, so any color there would be greatly beneficial as to why you guys have confidence not only in the design but then also it's a timing from an approval process. Thanks so much.

So I think to start with Chris, first, we’ve taken a proven platform, the ICL platform over 450,000, these have be implanted. And we’re taking a well-known optic and extended depth of focus optic. This has been on the market for quite a while. Now we have added some new technology to it as well. We have done all of the bench work on these products and we’re currently manufacturing product. So the product is not much more challenging to make than a Toric ICL is. So we feel very good about what we have seen, we’re going to do these confirmatory studies for which we’re recruiting patients now. If we’re able to match the product we have made with the patients that have already been recruited then we may have a shot though it's a slim window here. We may have shot to get some implanted prior to the ESCRS meeting and if we do then we will have some data there to discuss. If we don’t make it for the London meeting then as I said we will do it in October at the American Academy of Ophthalmology in Chicago. Chris Cooley – Stephens: Could I also traditionally just have – ask what are the primary end points, what kind of data will we see when we let’s say hopefully the ESCRS and – so that we can kind of engage the performance of this lens. I mean what would your benchmark is against – help us just think about what kind of data we will be able to see?

I will tell you, if I can take that one offline we will go through the protocol with you. I don’t have it in front of me but it's a well-established protocol and well detailed.

And next question comes from Jason Mills with Canaccord Genuity. Please proceed. Jason Mills – Canaccord Genuity: I want to start just another question on the ICL procedure volume data much appreciated in the press release but I think engage the demand as well and I’m just curious the comps that you’ve faced – you will face from a ICL procedure standpoint in the second half of the year. You went through some of the other drivers many of which are ones that perhaps could benefit you from a stocking perspective and the Toric ICL data was very helpful. From just a talk [ph] standpoint wondering what the procedural volume comps will take for you by region in the second half of the year.

Yes, so the third quarter comp is kind of low but then the – our fourth quarter usually has a pretty good spike and that’s mainly because of Korea and the high season which starts in January. So we have taken that into account. For example our third quarter ICL sales last year were 10.7 million and over 12 million that we did this quarter you can see that on a comparative basis that’s we should be able to beat that. Jason Mills – Canaccord Genuity: So I guess I’m asking is just from procedure volume more so than revenue just trying to tease out in stocking [ph] areas the fluctuations, just in-market demand and how was it last year on a year-over-year basis so that we can kind of see the group last year third quarter globally, I can’t remember what it was – I am actually looking for you to help me do my job.

We do see a little downturn in the European markets particularly during July and some of August but it starts to rebound toward the end of the quarter and then a larger increase during the fourth quarter. Other markets, there isn't except for Korean in fourth quarter. There isn't a lot of seasonality compared to comps. Jason Mills – Canaccord Genuity: Okay I can go into with you a little bit more offline. In United States beyond the Toric ICL approval which you’re waiting for, can you talk a little bit about and give us an update on your thinking for CentraFLOW and V6A, regulatory pathways and processes to get there here in the U.S.?

V6A there is nothing to talk about on that yet. That’s going to be a wait and see and as you know with these new products the Europe is the first market that you go after but on CentraFLOW you may recall back in December we had a meeting with the agency and we have been working on a protocol as well as trying to get some sizing data together for the agency and I believe by the end of this week we’re supposed to have some of that sizing data for the agency and at which time we’re going to request another face to face meeting to see if the protocol we have in place now is meeting the needs they have. Jason Mills – Canaccord Genuity: So you expect to have to do a clinical trial there?

We do and you know the agency has said that we would, though I in the slimmest of terms still hold out. Maybe there is a chance we won't have to. I mean you that is getting stronger and stronger. The longer we wait with over 70,000 successful implants to-date.

Our next question comes from Jim Sidoti with Sidoti & Company. Please proceed. Jim Sidoti – Sidoti & Company: I just want to be clear with the warning letter, is it affecting your ability to manufacture or sell nay devices you have now and do you think it's delaying the approval for Toric at all?

First answer is no. I mean there is nothing in the warning letter that stops us from manufacturing and shipping all the previous approved products that are made here in the U.S. So, no, we continue to make, there is no recall issue and I think if you look at the general categories there is a lot of documentation in there as well as the software and shelf life issue. We have been working on all of the documentation on the – in terms of design control and I believe we feel like we have supplied them with all of their needs on that category. On the calculator software you may recall that, a third party calculator. It was not ours but the agency deems since our website is tied to it that indeed we were endorsing it and we should have validated the software which we did not. So we stopped using that calculator. We went to a manual basically a manual system for our customers and they had to call us and we have submitted for – well you may recall first in the Toric ICL submission there is a calculator system in there and the agency even in the panel meeting pointed that out as a bright spot, that looked good. That calculator would be used for the Toric and the myopic ICL but in addition to that we separately filed a myopic ICL software calculator system which is under review by the agency and that was the point that we made in terms of just in the last few weeks, we got some additional questions on the software calculator. So they are continuing to review our submissions. In terms of how we collected, complaint that on bolting [ph] we have changed that. We are now doing…

I believe we brought on four new sales reps, maybe 4 or 5, I don’t recall, Jim off the top of my head I can give you the data.

It was four and there was one back up [ph].

So we have added five reps. We also had to bring one of the specialist in from the field that help on the myopic ICL manual calculator system that we implanted. So the cost of that plus getting them up and going and train and the whole sales force retrained too on Toric. Jim Sidoti – Sidoti & Company: Okay and how large is the U.S. sales force now?

That would be about, I’m going to guess but I can give you the correct numbers about 25 direct and about 10 independent reps. It's a total of 35 bodies.

(Operator Instructions). Our next question comes from Jan Wald with Benchmark Company. Please proceed. Jan Wald – Benchmark Company: Maybe the best thing to help me and I apologize to everybody else on the call if you have already talked about this but there is a lot of moving parts of the company, you just talked a little bit what the rest of 2014 will look like in terms of spend. But how should we look out and understand R&D and SG&A expenses going forward. Will R&D come down? What you have the 6a kind of in hand or do you have new products that you’re looking, that will keep that R&D at the same level or maybe expand it and what’s going to happen with SG&A? Are you there? Do you have expand more? If you wouldn’t mind.

Let me first talk to the SG&A line, there should start to appear a lot of leverage in our P&L from what we have already invested in those areas. We’re not expecting major investments and we’re expecting though to invest in more consumer education on the ICL so I think the spending we will have in those areas will be reflected more of creating demand through those kinds of avenues rather than adding people. Around the G&A line I should specifically the one thing that is difficult to manage is your stock compensation expense. And I think that was about 700,000 more during the quarter than in the year ago period because stock price is higher now than it was in the year ago period. On R&D though and part of the reason we’re spending more in R&D right now is we see these opportunities. You work on projects and when something starts to hit and particularly something like the V6A where you see a lot of opportunity in. We have been investing more in that area than we initially thought. Now right behind it we have got the V6B coming and at this point in time we would see an additional investment next year in that product. In general what we try to do on the R&D line and we have been going through a strategic planning process the last several weeks here is we’re looking to hold our R&D spending at about 11% rate overall, 10% to 11% but 11% as a stretch. Now if our sales do better than that then obviously we will have more money to invest in R&D, no matter how good the project is you can only invest so much. So that’s kind of the guideline we’re trying to hold ourselves to.

We have no further questions. I would now turn the call back over to management for closing remarks. Please proceed.

Thank you operator and thanks all of you for your participation on our call today. We look forward to providing you updates on our progress and also reporting our third quarter earnings. Thank you and have a good evening.

This concludes today’s conference. You may now disconnect. Have a great day.