UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 22, 2003
STAAR SURGICAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 0-11634 95-3797439
(State or other jurisdiction) (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
1911 Walker Avenue, Monrovia, California 91016
(Address of principal executive offices) (Zip Code)
(626) 303-7902
(Registrant's telephone number, including area code)
Item 4. Changes in Registrant's Certifying Accountant
STAAR Surgical Company ("STAAR") filed a Current Report on Form 8-K on
August 25, 2003 (the "Report") regarding its change in certifying accountant
from McGladrey & Pullen, LLP ("McGladrey") to BDO Seidman, LLP ("BDO"),
effective August 22, 2003. BDO had been STAAR's principal independent accountant
between 1993 and May 30, 2003.
During the period of McGladrey's engagement, a disagreement as to
accounting principles and financial statement disclosure arose among McGladrey,
STAAR and BDO, which disagreement was not resolved to the satisfaction of
McGladrey. The disagreement concerned the treatment of certain promissory notes
of former officers and directors (the "Notes") that were issued to STAAR in
connection with the exercise of stock options, and which STAAR has always
accounted for as full-recourse notes. The disagreement was described in detail
in the Report, and in the letter from McGladrey filed as Exhibit 16.1 to
Amendment No. 1 to the Report.
On September 12, 2003, STAAR submitted a request for guidance to the
Office of the Chief Accountant of the Securities and Exchange Commission ("OCA")
as to the appropriateness of STAAR's continuing its historical accounting
treatment of the Notes.
After several conferences with STAAR, BDO and McGladrey, on October 29,
2003 OCA gave STAAR guidance on certain individual issues, but informed STAAR
that it considered the appropriate overall treatment of the Notes to be highly
dependent on the specific facts and circumstances and, accordingly, believed
that STAAR and its independent auditors are in the best position to determine
the appropriate accounting treatment. OCA advised STAAR that management and its
independent auditors should consider, among other things, the following:
o the form of the Notes when issued;
o any extensions of the term of the Notes;
o any "forgiveness" of the Notes or interest thereon, and
o the lack of accrual of interest income.
The guidance on individual issues included the following:
o OCA would not object to the Company's conclusion that the lack of
recovery of all the principle and interest on certain Notes due to
bankruptcy is not a forgiveness.
o OCA would not object to the theory that the "forgiveness" of certain
interest amounts on Notes that were repaid early is not a true
forgiveness as contemplated by EITF 0023 Issue 50 if, in fact, the
Company received fair value equal to the interest forgiven in the
exchange. However, the determination of whether the amounts exchanged
were fair value is an audit determination that the Company and its
auditors must make.
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o With respect to certain Notes that the borrower repaid with stock in
settlement of litigation, OCA would not object to the conclusion that
the Notes were not forgiven, provided STAAR and its auditors concluded
that the amount of interest forgone on the Notes was equal to the amount
STAAR believed would otherwise be paid in cash for a settlement or
damages.
STAAR and BDO have reviewed the facts and circumstances of the Notes in
light of OCA's statements, and have determined that the Notes were accounted for
appropriately, except with regard to interest income as noted below, and no
other adjustments to historical financial statements will be required.
During the course of these discussions with OCA, it was noted that
interest income on the Notes was recorded on a cash basis rather than on the
accrual basis required by generally accepted accounting principles (GAAP). The
Company has determined that this is an accounting error which will require
restatement of its financial statements for the years ended December 29, 2000,
December 28, 2001, and January 3, 2003, the first quarter ended April 4, 2003,
and the second quarter ended July 4, 2003.
The effect of the restatements will be to increase (decrease) net income
and earnings per share in each of the periods as follows:
Three Months Ended Year Ended
------------------------------- --------------------------------------------------------
July 4, April 4, January 3, December 28, December 29,
2003 2003 2003 2001 2000
------------- ------------- -------------- ----------------- -----------------
Net income $(53,104) $(211,065) $379,906 $(166,862) $(290,332)
Earnings per share $(0.00) $(0.01) $0.02 $(0.01) $(0.02)
The Company will also record an adjustment of $708,964 to increase
retained earnings at December 31, 1999 for unaccrued interest income for the
years 1991-1999. While the adjustments impact components of stockholders' equity
(retained earnings and notes receivable from officers and directors), the
adjustments have no impact on total stockholders' equity. These estimates of
management have not been audited by BDO, and are subject to change.
This Report on Form 8-K contains statements which constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements include comments regarding the intent, belief or
current expectations of STAAR and its management. The words "anticipates,"
"expects," "intends," "plans," variations thereof and similar expressions are
intended to identify forward-looking statements. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements. These
risks and uncertainties include the possibility of adjustments to STAAR's
historical financial reports and the magnitude of those adjustments, if
required, and the factors discussed in STAAR's other documents filed with the
Securities and Exchange Commission.
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
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(c) Exhibits. The following is a list of exhibits filed as a part of this
report.
Exhibit Number Description
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*16.1 Letter of McGladrey & Pullen, LLP regarding change in
independent auditors.
*Previously filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STAAR SURGICAL COMPANY
Date: November 5, 2003 By: /s/ John Bily
_____________________________
John Bily
Chief Financial Officer
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