Good day, ladies and gentlemen. Thank you for standing by. Welcome to the STAAR Surgical Third Quarter 2015 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. [Operator Instructions] This call is being recorded today, Wednesday, October 28, 2015. At this time, I would like to turn the conference over to Mr. Brian Moore with EVC Group.

Thank you, operator. Good afternoon, everyone. Thank you for joining us on the STAAR Surgical conference call this afternoon to review the company’s financial results for the third quarter, which ended on October 2, 2015. Joining me on the call today are Caren Mason, President and CEO of STAAR Surgical and Steve Brown, CFO. The news release detailing the third quarter results was issued just after 4:00 p.m. Eastern Time and is now available on STAAR’s website at www.staar.com. Before we get started, let me quickly remind you that 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 company’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. The 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. STAAR sees 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. We believe that these non-GAAP numbers provide meaningful supplemental information, that are helpful in assessing our historical and future performance. Also, in order to compare our performance from period to period without the effect of currency fluctuations, we apply the same average exchange rate application to the prior period or at constant currency rate to sales. A table reconciling the GAAP information to the non-GAAP information is included in today’s financial release, which is available on our website. Now, I would like to turn the call over to Caren Mason, President and Chief Executive Officer of STAAR Surgical.

Thank you, Brian and good afternoon everyone. I will begin our discussion with general commentary on the state of the business. Steve will then review key third quarter fiscal year 2015 financial results before we open the call for your questions. When I first joined STAAR’s Board of Directors in June of 2014, I was a bit skeptical when encouraged to make my way to London to experience an extraordinary Experts Meeting in European Congress. As it turned out, I was unable to clear my schedules to attend. This year, although no longer skeptical, I was still unsure about the designation of extraordinary. Before this year’s Experts and ESCRS meetings in Barcelona, we welcomed Dr. Jon Hayashida and Dr. Keith Holliday to STAAR who head our Clinical and Medical Affairs and R&D departments respectively. The timing was good in that they are both ophthalmic industry veterans and they were anxious to attend and learn and properly position the significance of this meeting and the takeaways in their planning. As it turns out, all three of us were stunned by the exceptional and very unique commitment by leading surgeons to share the ICL superlatives and challenges with each other and any surgeons willing to engage at the Experts Meeting, at the ESCRS and at working group special sessions we conducted. At the Experts Meeting, topics included over two decades of ICL proven safety; Collamer, a unique material for long-term safety; literature review of Visian ICL safety; long-term clinical outcomes of the Visian ICL; clinical ground rounds learning from our mistakes in challenging cases. At the ESCRS, between educational symposia, training and instructional courses, posters and papers, there were over 40 opportunities to learn about the ICL at the ESCRS. Topics there included 20 years of preserving the cornea for the future,…

Thank you, Caren and good afternoon everyone. I will start the financial overview with top line results by product end markets. First, for our ICL product line total sales were $12.9 million for the third quarter of 2015, increasing by 21% from the prior year period with units increasing 21% as well. We experienced strong performance with sales and units increasing by double digits in each regional market. EMEA ICL sales were $4.8 million during the third quarter, an increase of 25% compared to the prior year period with strong unit growth of 37%. Sales in Germany tripled over the prior year period due to the conversion of the market from the former distributor to direct selling, which began July 1, 2015 and increased unit growth of 44%. The increase in average selling price in Germany offset approximately one-third of the $1.1 million impact on EMEA sales from the weakening of the euro against the U.S. dollar. In other key markets in EMEA, unit sales were similarly strong with the Middle East up 67%, France up 38%, Latin America up 33% and Spain up 16%. Asia-Pacific ICL sales were $6.4 million during the third quarter, an increase of 21% compared to the prior year period, with unit growth of 13%. Korea ICL sales increased 54% compared to the prior year period when sales were first impacted by negative LASIK media coverage. Korea sales continued to recover as September year-to-date sales are now 7% behind prior year compared to being 21% behind the prior year through June. China ICL sales increased 20% due to the adoption of the CentraFLOW technology introduced in December 2014 and a price increase of 4% in July 2015. North America ICL sales were $1.7 million during the third quarter, up 14% from the prior year period…

[Operator Instructions] Our first question comes from Chris Cooley from Stephens. Your line is open.

Thank you. Can you hear me, okay.

Yes. We can. Hi Chris.

Hi Caren and Steve. Thank you for taking the questions. Just two from me and I will hop in queue, one very impressive growth there on the ICL during the quarter, congratulations on that.

Thank you.

Could you tell us if there were any new relationships that might have contributed to any of your international growth during the quarter. And then as a follow-on, in your prior call you had hinted about evaluating or restructuring the cataract business broadly defined, noticing that’s weak again here middling all of that due to the currency, but could you may be update us on your thoughts as it pertains to the cataract segment of your business as well? Thanks so much.

Sure, Chris. With regard to ICL growth, there wasn’t one significant large account that would account for example, let’s say multiple markets of growth. What there was during the third quarter, I believe is the renewed confidence by our distributors and by our surgeons and our ability to deliver on time. You saw that the Toric ICL in the third quarter beat the record of the second quarter. So none of this growth was – could really be attributed to unusual levels of buying or stocking. So this is very, very healthy growth trend wise. Current customers and new customers, new surgeons in all of our markets excited about of the ICL and certainly the CentraFLOW and its proven performance. We do believe some of it came from a very outstanding experience at our Experts Meeting where 50% of the surgeons who attended to learn very in-depth understanding of our ICL products were new to that meeting. So I think from the ICL standpoint, we have very healthy growth with our large business opportunities currently in development and underway, but not contributing as of yet to the current ICL growth. In terms of the IOL, we are really going in 2016 we are going to address the premium IOL market, what segments we currently address in the major markets. Mostly today, as you know, we have a growth story in Japan. We have some business in Europe that is healthy. We had a reduction in business in Germany. There maybe some opportunity for us to win some of that back going direct. And there is also certainly the business in the U.S. And that business of course is handled by our manufacturing representative group. So for us, when we look at the competitiveness of the IOL, we look at directionally where IOL is going in terms of being premium, of presbyopic correction outside the U.S. being promised. It makes us take a very hard look at how we want to participate and compete. Our Collamer material, by the way, could be in consideration for presbyopic IOL in the future, so all of the above is under consideration.

Thank you.

You are welcome.

[Operator Instructions] Our next question comes from Jim Sidoti from Sidoti.

Good afternoon. Can you hear me?

Yes, Jim.

Great. I know in the last call you mentioned the price increase was going to start to take effect around now. Do you think there was some buying ahead of that in the quarter?

Hi, Jim, this is Steve. We did a thorough analysis of it. And the only buy in was in the markets in the Middle East, where we had the largest price increase. That buy in was only about 10% of their normal quarterly purchase.

Okay. So, no significant stocking ahead of the price increase?

No, there was not. And if you remember, Jim, we mentioned in the last call, for Toric ICLs, there can be no stocking, because you order those lenses for a patient specific eye. And in our two largest markets where the spherical ICL could be stocked, China and Korea, China, there was already a price increase that took place and in Korea, we were not doing yet a price increase.

Right. Can you give us an update on Korea? I know a year ago was when the negative publicity came out and you were going to start to do some direct to consumer advertising, can you let us know what the environment there is like now?

Sure. I have had the opportunity to meet with our Korean distributor in Lisbon and Barcelona and we remain in contact. He tells us that in this past quarter, as you may have seen, South Korea, from a consumer basis has started to pick up again. People are out and about. They are probably making up for lost time with the isolation around MERS. In terms of the LASIK business in Korea, I won’t comment there in terms of any recovery, but will tell you that more normal buying patterns are what we are experiencing right now from our Korean distributor.

Alright. And then China, can you just expand on why you decided to exit that market for IOLs?

Yes. We just didn’t have the size to make sense of the sale in China. There is a lot to cover. And being that, we were selling through distributors. The profitability of selling IOLs in that market just was not up to snuff.

Okay. How about back in – at the factory, do you think all the manufacturing initiatives have been worked out now or do you have enough capacity to respond to the typical pickup in the fourth quarter?

We have enough capacity to respond to an uptake. And if you recall, coming out of the second quarter, we had significantly reduced our backorders. Coming out of the third quarter, there is an insignificant number of backorders.

Alright. And then finally, I know you are reluctant to update us on the FDA, but I assume there has been continuous back and forth with the FDA and have any of the 483 from last year to earlier this year have been resolved?

No. There has really been one way communication to the FDA since February with our initial response to both the warning letters and 483 observations in terms of what our plan would be for remediation and a complete overhaul of our quality system and a building of culture of quality. What we do and when we said we met our internal metrics, it means that all the promises that we have made to the FDA in terms of what we would deliver and when is largely on track and that in terms of the remediation dollars that we have allocated over and above that are incremental to our normal spending are on plan. So, we continue to do what we promised to do. And we have had some consultative support in terms of taking a look at our progress. And we continue to adjust along the way to make sure that we are very closely and adeptly meeting what the expectations would be for us to get back into full compliance.

And Caren, now that you have been there for I guess about six months or so, do you think that STAAR can be a profitable company without a Toric approval in the U.S.?

Actually, if you were to do some adjusting right now, you would find us already profitable in the fact that if you take out the incremental spending of $1 million a quarter, if you add in some of the currency challenges that we have and you take a look at the hold on spending and what we have been able to do, you would have a profitable picture already today. So, yes, I absolutely believe this company can be profitable.

Alright, thank you. You are welcome.

At this time, I am showing no further questions. I would like to turn the call back over to Ms. Caren Mason, President and CEO of STAAR Surgical.

I think there might be someone on the line. If you could double check, please.

We do have a question now from Brian Weinstein from William Blair. Your line is open.

Thank you, operator. Hi, Brian.

Hey, good afternoon. This is Matt Larew on for Brian here. I appreciate you sneaking me in here at the end. First one, Caren, you know that the second quarter here where you have discussed the multitude of constructive initiatives you are taking to address quality and manufacturing. I was wondering if you can give a sense of what stage you are in, in terms of transitioning from the evaluation and consultancy stage into the hiring and actual action phases of some of those programs?

Okay. In terms of consultants, that’s really been totally the quality and regulatory side, because of the massive commitment that we made and the timeframe to do it. And a lot of those jobs I think are down to 6 consultants from a much larger grouping. We have hired from that consulting group as well as outside some really outstanding talent that have become employees. In terms of all our other major initiatives, consultants are really not involved. These are our internal people. I mean, we made some good hires there as well. So, in every one of those major initiatives that we have been addressing, we are meeting or exceeding our timelines in terms of what we expect for performance and for return on that investment in 2016 and beyond.

Okay, thanks Caren. Then Steve, one for you, I think you said that 71 basis points of the gross margin impact came from some of the higher ASPs in the third quarter there. Just curious what percentage of markets you had already converted over to the higher ASP versus those that were going to take effect on October 1?

Yes. The higher average selling prices, in terms of gross profit margin that was an add of 73 basis points, but the price increases took place October 1. So, those higher average selling prices didn’t have anything to do with the price increase other than the one we took in China in July.

Got it, thanks. That’s all for me. Appreciate it.

At this time, I would like to turn the call back over to Ms. Caren Mason, President and CEO of STAAR Surgical.