<SUBMISSION>
<ACCESSION-NUMBER>0000898430-03-003103
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20030404
<FILING-DATE>20030519
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>STAAR SURGICAL COMPANY
<CIK>0000718937
<ASSIGNED-SIC>3851
<IRS-NUMBER>953797439
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0101
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-11634
<FILM-NUMBER>03710121
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1911 WALKER AVE
<CITY>MONROVIA
<STATE>CA
<ZIP>91016
<PHONE>8183037902
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1911 WALKER AVE
<CITY>MONROVIA
<STATE>CA
<ZIP>91016
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML><HEAD>
<TITLE>Form 10-Q</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <HR noshade size=4 color="black" ><br> <p style=' margin-bottom:0pt;text-align:center; margin-top:0pt;'><b><font SIZE=4>UNITED STATES</font></b><br><b><font SIZE=4>SECURITIES AND EXCHANGE COMMISSION</font></b></p> <p
style=' margin-bottom:0pt;text-align:center; margin-top:0pt;'><b><font SIZE=2>WASHINGTON, D.C. 20549</font></b></p> <HR noshade width=120 color="black" > <p style=' margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font SIZE=4>FORM
10-Q</font></b></p> <HR noshade width=120 color="black" > <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2><font face=Wingdings>x</font></font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.5in;'><b><font size=2>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p> <p style=' margin-bottom:0pt;text-align:center;
margin-top:12pt;'><b><font size=2>For the quarterly period ended: April 4, 2003</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font SIZE=2>OR</font></b></p> <p
style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2><font face=Wingdings>o</font></font></b></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.5in;'><b><font size=2>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font size=2>For the transition period from __________ to __________</font></b></p> <p style='
margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font size=2>Commission file number: 0-11634</font></b></p> <HR noshade width=120 color="black" > <p style=' margin-bottom:0pt;text-align:center; margin-top:8pt;'><b><font SIZE=5>STAAR
SURGICAL COMPANY</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:0pt;'><b><font size=1>(Exact name of registrant as specified in its charter)</font></b></p> <HR noshade width=120 color="black" > <p style='
margin-bottom:0pt; margin-top:0pt;'><font size=1>&nbsp;</font></p>
<table width="100%" cellspacing=0 cellpadding=0>
<tr>
<td width="50">&nbsp;</td>
<td align=center valign=top width="280"><b><font size=2>Delaware</font></b><br> <b><font size=1>(State or other jurisdiction of</font></b><br> <b><font size=1>incorporation or organization)</font></b><br></td>
<td align=center width="280">&nbsp;</td>
<td align=center valign=top width="280"><b><font size=2>95-3797439</font></b><br> <b><font size=1>(I.R.S. Employer</font></b><br> <b><font size=1>Identification No.)</font></b></td>
<td width="50">&nbsp;</td></tr></table><br> <p style=' margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font size=2>1911 Walker Avenue</font></b><br><b><font size=2>Monrovia, California</font></b><br><b><font
size=2>91016</font></b><br><b><font size=1>(Address of principal executive offices)</font></b><br><b><font size=1>(Zip Code)</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:12pt;'><b><font size=2>(626)
303-7902</font></b><br><b><font size=1>(Registrant&#146;s telephone number, including area code)</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days. YES <font face=Wingdings>x</font> NO <font face=Wingdings>o</font></font></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Indicate by a check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). YES <font face=Wingdings>o</font> NO <font face=Wingdings>x</font></font></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>The registrant has 17,059,233 shares of common stock, par value $0.01 per
share, issued and outstanding as of May 12, 2003.</font></p> <br><HR noshade size=4 color="black" > <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=1>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:left'><font size=2>
</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>
<a name="toc"></a></font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font
SIZE=2>INDEX</font></b></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:center;'><b><font SIZE=1>PAGE</font></b><br> <u><b><font SIZE=1>NUMBER</font></b></u><b><u></u></b></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><b><font SIZE=2>PART I </font></b></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td colspan="3" valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><b><font SIZE=2>FINANCIAL INFORMATION</font></b></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 1</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Financial Statements</font></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><u><font size=2>
<a href="#tx245_1">Condensed Consolidated Balance Sheets</a></font></u>
<a href="#tx245_1"><font size=2> - April 4, 2003 and January 3, 2003</font></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>1</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top height="15" > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top height="15" > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top height="15" > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top height="15" > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top height="15" > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_2"><u><font size=2>Condensed Consolidated Statements of Operations</font></u><font size=2> - Three Months Ended April 4, 2003 and March 29, 2002</font></a></p> </td>
<td width="8%" valign=bottom height="15" > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>2</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_3"><u><font size=2>Condensed Consolidated Statements of Cash Flows</font></u><font size=2> - Three Months Ended April 4, 2003 and March 29, 2002</font></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>3</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_4"><u><font size=2>Notes to the Condensed Consolidated Financial Statements</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>4</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 2</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_5"><u><font size=2>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>10</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 3</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_6"><u><font size=2>Quantitative and Qualitative Disclosures About Market Risk</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>22</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 4</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_7"><u><font size=2>Controls and Procedures</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>22</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><b><font SIZE=2>PART II</font></b></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td colspan="3" valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2><b>OTHER INFORMATION</b> </font></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 1</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_8"><u><font size=2>Legal Proceedings</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 2</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_9"><u><font size=2>Changes in Securities and Use of Proceeds</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 3</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_10"><u><font size=2>Defaults Upon Senior Securities</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 4</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_11"><u><font size=2>Submission of Matters to a Vote of Security Holders</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 5</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_12"><u><font size=2>Other Information</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr>
<tr style='height:.05in'>
<td width="11%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="11%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Item 6</font></p> </td>
<td width="1%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>
<a href="#tx245_13"><u><font size=2>Exhibits and Reports on Form 8-K</font></u></a></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>23</font></p> </td> </tr> </table> <br>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td valign=bottom > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><b>
<a href="#tx245_14"><u><b><font SIZE=2>SIGNATURES</font></b></u></a></b></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>25</font></p> </td> </tr>
<tr style='height:.05in'>
<td valign=top style=' height:.05in'> <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'>&nbsp;</p> </td>
<td width="8%" valign=bottom style=' height:.05in'> <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:0pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><b>
<a href="#tx245_15"><u><b><font SIZE=2>CERTIFICATIONS</font></b></u></a></b></p> </td>
<td width="8%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:right;'><font size=2>26</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:left'><font size=2>
</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>
<a name="tx245_1">PART 1 &#150; FINANCIAL INFORMATION</a></font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>ITEM 1 &#150; FINANCIAL STATEMENTS</font></b></p> <p style=' margin-bottom:0pt;text-align:center;
margin-top:12pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b><br><b><font SIZE=2>CONDENSED CONSOLIDATED BALANCE SHEETS</font></b><br><b><font size=2>(In thousands, except par value)</font></b></p> <p style=' margin-bottom:0pt;
margin-top:0pt;'><font size=1>&nbsp;</font></p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>January 3,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>(Unaudited)</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><b><font SIZE=2>ASSETS</font></b></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Current assets:</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Cash and cash equivalents</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>399 </font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,009</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Accounts receivable, net</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,634</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,992</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Inventories</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,603</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,761</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Prepaids, deposits, and other current assets</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>3,118</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,845</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total current assets</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>21,754</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>21,607</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Investment in joint venture</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>568</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>462</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Property, plant and equipment, net</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>7,090</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>7,438</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Patents and licenses, net</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>8,803</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9,038</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Goodwill</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,427</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,427</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Other assets</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>365</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>393</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total assets</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>45,007</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>45,365</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><b><font size=2>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</font></b></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Current liabilities:</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Notes payable</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,246</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,845</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Accounts payable</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,918</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,394</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Other current liabilities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,773</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,386</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total current liabilities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>14,937</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>14,625</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Other long-term liabilities</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>89</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>89</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total liabilities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>15,026</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>14,714</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Minority interest</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>124</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>100</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Commitments and contingencies</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Stockholders&#146; equity:</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Preferred stock, $.01 par value; 10,000 shares authorized; none issued</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Common stock, $.01 par value; 30,000 shares authorized; issued and outstanding 16,962 at April 4, 2003 and January 3,
2003</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>170</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><br> <font size=2>170 </font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Additional paid-in capital</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>75,027</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>74,977</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Accumulated other comprehensive loss</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(35</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(111</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Accumulated deficit</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(42,168</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(41,421</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>32,994</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>33,615</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Notes receivable from officers and directors</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(3,137</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(3,064</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total stockholders&#146; equity</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>29,857</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>30,551</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total liabilities and stockholders&#146; equity</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="8%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>45,007</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>45,365</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Note: The amounts presented in the January 3, 2003 balance sheet are derived from the audited
financial statements for the year ended January 3, 2003. See accompanying notes to the condensed consolidated financial statements.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>1</font></p>
<p Style='page-break-before:always'>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_2">STAAR SURGICAL COMPANY AND SUBSIDIARIES</a></font></b><br><b><font SIZE=2>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</font></b><br><b><font size=2>(In thousands, except per share amounts)</font></b><br><b><font
size=2>(Unaudited)</font></b></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
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<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="18%" colspan="5" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Three Months Ended</font></b></p> </td>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
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<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>March 29,</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Sales</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>12,779</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,631</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Royalty and other income</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>47</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 100</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;'><font size=2>Total revenues</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>12,826</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,731</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
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<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Cost of sales</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,847</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,019</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Gross profit</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,979</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,712</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Selling, general, and administrative expenses:</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>General and administrative</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,287</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,402</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Marketing and selling</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,161</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,002</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Research and development</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,176</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,076</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total selling, general, and administrative expenses</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>7,624</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>7,480</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Operating loss</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(645</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (1,768</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
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<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Other income (expense):</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Equity in earnings of joint venture</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>106</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>12</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Interest income</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>336</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 18</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Interest expense</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(143</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(127</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Other expense</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(54</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(23</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total other income (expense)</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>245</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(120</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Loss before income taxes and minority interest</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(400</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (1,888</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Income tax expense (benefit)</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>329</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (932</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Minority interest</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>18</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 41</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Net loss</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(747</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (997</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Basic and diluted net loss per share</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(.04</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(.06</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Weighted average shares outstanding &#150; </font><br> <font size=2>Basic and diluted</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>16,962</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 17,159</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt;text-align:center; margin-top:18pt;'><font size=2>See accompanying notes to the condensed consolidated financial
statements.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>2</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_3">STAAR SURGICAL COMPANY AND SUBSIDIARIES</a></font></b><br><b><font SIZE=2>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</font></b><br><b><font size=2>(In thousands)</font></b><br><b><font size=2>(Unaudited)</font></b></p> <p
style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="16%" colspan="5" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Three Months Ended</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="5" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>March 29,</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Cash flows from operating activities:</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Net loss</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(747</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(997</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Adjustments to reconcile net loss to net cash provided by operating activities:</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Depreciation of property and equipment</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>488</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>521</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Amortization of intangibles</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>241</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>227</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Equity in earnings of joint venture</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(106</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(12</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Stock-based compensation expense</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>50</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>51</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Notes receivable reserve</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(83</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Minority interest</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>24</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>47</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Changes in working capital:</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Accounts receivable</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(642</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>270</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Inventories</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>158</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,250</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Prepaids, deposits, and other current assets</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(273</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(267</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Accounts payable</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>530</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(215</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Other current liabilities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>387</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(374</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:34.55pt;text-indent:-8.65pt;'><font size=2>Net cash provided by operating activities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>27</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>501</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Cash flows from investing activities:</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Acquisition of property and equipment </font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(140</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(165</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Increase in patents and licenses</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(6</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Decrease (increase) in other assets</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>28</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(50</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Proceeds from notes receivable and other</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Net cash used in investing activities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(114</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(215</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;'><font size=2>Cash flows from financing activities:</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Decrease in borrowings under notes payable</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(599</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(489</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Proceeds from stock options</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Net cash used in financing activities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(599</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(483</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Effect of exchange rate changes on cash and cash equivalents</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>76</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>108</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Decrease in cash and cash equivalents</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(610</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(89</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Cash and cash equivalents, at the beginning of the period</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,009</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>853</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Cash and cash equivalents, at the end of the period</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>399</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>764</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt;text-align:center; margin-top:18pt;'><font size=2>See accompanying notes to the condensed consolidated financial
statements.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>3</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_4">STAAR SURGICAL COMPANY AND SUBSIDIARIES</a></font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font size=2>April 4, 2003</font></b></p> <p
style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>1.</font></b></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Basis of Presentation</font></b></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly and its majority owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation. Assets and liabilities of foreign subsidiaries are translated at rates of exchange in effect at the close of the period. Revenues and expenses are translated at the weighted average of
exchange rates in effect during the period. The resulting translation gains and losses are deferred and are shown as a separate component of stockholders&#146; equity as accumulated other comprehensive loss. During the three months ended April 4,
2003 and March 29, 2002, the net foreign currency translation gain was $76,000 and $108,000, respectively. Net foreign currency transaction loss for the three months ended April 4, 2003 and March 29, 2002 was $56,000 and $3,000, respectively.
</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Investment in the Company&#146;s Japanese joint venture is accounted for using the equity method of accounting.</font><i><font size=2> </font></i></p> <p
style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. The financial statements for the three months ended April 4, 2003 and March 29, 2002, in the opinion of management, include all adjustments consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial condition and results of operations. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company&#146;s Annual Report on
Form 10-K for the year ended January 3, 2003. The results of operations for the three months ended April 4, 2003 and March 29, 2002 are not necessarily indicative of the results to be expected for any other interim period or the entire
year.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Each of the Company&#146;s reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks.</font></p> <p
style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>2.</font></b></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Geographic and Product Data</font></b></p> <p
style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company develops, manufactures and distributes medical devices used in minimally invasive ophthalmic surgery. Substantially all of the Company&#146;s revenues result
from the sale of the Company&#146;s medical devices. The Company distributes its medical devices in the cataract, refractive and glaucoma segments within ophthalmology. During the periods presented, revenues from the refractive and glaucoma segments
were less than 10% of total revenue, which is not significant enough for the Company to account for these products separately or to justify segmented reporting by product type.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>The Company markets and sells its products in over 39 countries and has manufacturing sites in the United States and Switzerland. Other than the United States and Germany, the Company does not conduct business in any
country in which its sales in that country exceed 5% of the Company&#146;s consolidated sales. Sales are attributed to countries based on the location of customers. The composition of the Company&#146;s sales to unaffiliated customers between those
in the United States, Germany, and other locations for each period is set forth below (in thousands):</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>4</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font
size=2>(Continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="77%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="17%" colspan="5" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Three Months Ended</font></b></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="5" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom nowrap > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>March 29,</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Sales to unaffiliated customers</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>United States</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>5,760</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>6,156</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Germany</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 5,028</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 3,692</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Other</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,991</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,783</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Total</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>12,779</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,631</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company sells its products internationally, which subjects the Company to
several potential risks, including fluctuating exchange rates (to the extent the Company&#146;s transactions are not in U.S. dollars), regulation of fund transfers by foreign governments, United States and foreign export and import duties and
tariffs and possible political instability.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>3.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Inventories</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Inventories are stated at the
lower of cost, determined on a first-in, first-out basis, or market and consisted of the following at April 4, 2003 and January 3, 2003 (in thousands):</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="77%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom nowrap > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>January 3,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Raw materials and purchased parts</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>842</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>710</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Work-in-process</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,162</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>798</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Finished goods</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9,599</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>10,253</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,603</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>11,761</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="77%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>4.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Intangible Assets</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company also has other
intangible assets consisting of patents and licenses, with a gross book value of $14.0 million and accumulated amortization of $5.2 million as of April 4, 2003. The Company capitalizes the costs of acquiring patents and licenses as well as the legal
costs of successfully defending its rights to these patents. Amortization is computed on the straight-line basis over the estimated useful lives, which are based on legal and contractual provisions, and range from 10 to 20 years. Amortization
expense for the quarters ended April 4, 2003 and March 29, 2003, was $241,000, and $227,000, respectively.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>5</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font
size=2>(Continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The weighted average amortization period for other intangible assets is approximately 15 years. The following table shows the estimated
amortization expense for these assets for each of the five succeeding years (in thousands):</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="80%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Fiscal Year</font></b></p> </td>
<td width="4%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="11%" colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="11%" colspan="2" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2003</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>676</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2004</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>676</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2005</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>676</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2006</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>676</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2007</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>676</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Total</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>3,380</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="80%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>5.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Notes Payable</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>On March 26, 2003, the Company
and its domestic lender executed an agreement to extend the maturity date of the Company&#146;s $3.0 million line of credit for one year to March 31, 2004. The line of credit bears interest at a rate equal to the prime rate (4.25% at April 4, 2003)
plus an interest margin of 5%. In addition, the Company is required to pay a commitment fee of 1.25% per annum of the unused amount of the line of credit. The line of credit is secured by a first priority lien on substantially all of the
Company&#146;s assets. It also requires the Company to comply with certain financial covenants including the maintenance of specified levels of liquidity, tangible net worth, operating cash flow and operating income. The operating cash flow and
operating income covenants commence in the third quarter of 2003. As of April 4, 2003, the Company was in compliance with the covenants of the agreement. Borrowings outstanding under the note as of April 4, 2003 and January 3, 2003, were
approximately $2.1 million and $2.8 million, respectively.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>6.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Reclassifications</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Certain reclassifications
have been made to the 2002 condensed consolidated financial statements to conform to the 2003 presentation.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>7.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Net Loss Per Share</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>For the three months ended
April 4, 2003 and March 29, 2002, options to purchase 3.5 million and 3.2 million shares, respectively of the Company&#146;s common stock were outstanding. These potential common shares were excluded from the computation of diluted earnings per
share for both periods, because their inclusion would have an antidilutive effect.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>6</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font
size=2>(Continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Pro forma net loss and loss per share for the quarters ended April 4, 2003 and March 29, 2002 had the Company accounted for stock
options issued to employees and others in accordance with the fair value method of SFAS 123 are as follows (in thousands, except per share data):</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="15%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="18%" colspan="5" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Three Months Ended</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="5" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>March 29,</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Net loss</font></p> </td>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>As reported</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(747</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(997</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Add:</font></p> </td>
<td width="61%" valign=bottom > <p style='margin-bottom:0;margin-top:2pt;'><font size=2>Stock-based employee compensation expense included in reported net loss, net of related tax effects</font></p><p
style='margin-bottom:0pt;margin-top:0pt;margin-left:0.12in;'></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Deduct:</font></p> </td>
<td width="61%" valign=bottom style='background:#CCEEFF; '> <p style='margin-bottom:0;margin-top:2pt;'><font size=2>Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax
effects</font></p><p style='margin-bottom:0pt;margin-top:0pt;margin-left:0.12in;'></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(245</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(471</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td width="15%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Net loss</font></p> </td>
<td width="61%" valign=bottom style='background:#CCEEFF; '> <p style='margin-bottom:0;margin-top:2pt;'><font size=2>Pro forma</font></p> <p style='margin-bottom:0pt;margin-top:0pt;margin-left:0.12in;'></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(992</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(1,468</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td width="15%" valign=top height="20" > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top height="20" > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top height="20" > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top height="20" > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top height="20" > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top height="20" > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top height="20" > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top height="20" > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top height="20" > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Loss per share:</font></p> </td>
<td width="61%" valign=bottom style='background:#CCEEFF; '> <p style='margin-bottom:0;margin-top:2pt;'><font size=2>Basic and diluted</font></p> <p style='margin-bottom:0pt;margin-top:0pt;margin-left:0.12in;'></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>As reported</font></p> </td>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (0.04</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (0.06</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td width="15%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=2>Pro forma</font></p> </td>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:8.65pt;text-indent:-8.65pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (0.06</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (0.09</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Due to the fact that the Company&#146;s stock option
programs vest over many years and additional awards are made each year, the above pro forma numbers are not indicative of the financial impact had the disclosure provisions of SFAS 123 been applicable to all years of previous option grants. The
above numbers do not include the effect of options granted prior to 1995 that vested in 1996 through first quarter 2003.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>8.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Supply Agreement</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In May&nbsp;1999, the Company
entered into a license and supply agreement with another manufacturer to license and re-sell one of the manufacturer&#146;s products. Under the terms of the agreement, the Company was committed to purchase the specified product for a total sum of
$3.2&nbsp;million over 18 months. In September&nbsp;2001, the supply agreement was amended reducing the minimum contractual amount that the Company is obligated to purchase from the manufacturer to $2.5 million over a 24-month period commencing
September&nbsp;1, 2001. The agreement, as amended, can be cancelled at the end of the 24-month period by either party upon four months written notice. Purchases under the agreement for the quarter ended April 4, 2003 were approximately
$290,000.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>7</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font
size=2>(Continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In December&nbsp;2000, the Company entered into a minimum purchase agreement with another manufacturer for the purchase of viscoelastic
solution. In addition to the minimum purchase requirement, the Company is also obligated to pay an annual regulatory maintenance fee. The agreement contains provisions to increase the minimum annual purchases in the event that the Seller gains
regulatory approval of the product in other markets, as requested by the Company. Purchases under the agreement during the quarter ended April 4, 2003 were approximately $142,000.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>As of April 4, 2003, estimated annual purchase commitments under these contracts are as follows (in thousands):</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'>&nbsp;</p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="78%" valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Fiscal Year</font></b></p> </td>
<td width="4%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="12%" colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="12%" colspan="2" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2003</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1,478</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2004</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>600</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2005</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>600</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>2006</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="9%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 200</font></p> </td>
<td width="4%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Total</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="9%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,878</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="78%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>9.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>New Accounting Pronouncements</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In
June&nbsp;2002, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Statement of Financial Accounting Standards (&#147;SFAS&#148;)&nbsp;No.&nbsp;146, &#147;Accounting for Costs Associated with Exit or Disposal Activities,&#148; which
addresses accounting for restructuring and similar costs. SFAS&nbsp;No.&nbsp;146 supersedes previous accounting guidance, principally Emerging Issues Task Force (&#147;EITF&#148;) Issue No.&nbsp;94-3. The Company will adopt the provisions of
SFAS&nbsp;No.&nbsp;146 for restructuring activities initiated after December&nbsp;31,&nbsp;2002. SFAS&nbsp;No.&nbsp;146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred.
Under EITF No.&nbsp;94-3, a liability for an exit cost was recognized at the date of a company&#146;s commitment to an exit plan. SFAS&nbsp;No.&nbsp;146 also establishes that the liability should initially be measured and recorded at fair value.
Accordingly, SFAS&nbsp;No.&nbsp;146 may&nbsp;affect the timing of recognizing future restructuring costs as well as the amount recognized. </font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In
November&nbsp;2002, the FASB issued Interpretation No.&nbsp;45, &#147;Guarantor&#146;s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others,&#148; an interpretation of FASB Statements
No.&nbsp;5, 57 and 107 and a rescission of FASB&nbsp;Interpretation No.&nbsp;34. This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees
issued. The interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the interpretation
are applicable to guarantees issued or modified after December&nbsp;31, 2002. The disclosure requirements are effective for financial statements of interim and annual periods ending after December&nbsp;31, 2002. No guarantees were entered into or
modified after December 31, 2002. Significant guarantees of the Company as of April 4, 2003 are disclosed in Note 8 of the consolidated financial statements.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font
size=2>In December&nbsp;2002, the FASB issued SFAS No.&nbsp;148, &#147;Accounting for Stock-Based Compensation -- Transition and Disclosure,&#148; which amends SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation.&#148;</font></p> <p
style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>8</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY</font></b><br><b><font SIZE=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b><br><b><font
size=2> (Continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>SFAS&nbsp;148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS&nbsp;148 amends the disclosure requirements of SFAS&nbsp;123 to require more prominent and more frequent disclosures in financial statements of the effects of stock-based compensation. The transition guidance and
annual disclosure provisions of SFAS&nbsp;148 are effective for fiscal years ending after December&nbsp;15, 2002. The interim disclosure provisions are effective for financial reports containing condensed financial statements for interim periods
beginning after December&nbsp;15, 2002. The adoption of SFAS&nbsp;148 did not have a material impact on the Company&#146;s financial position or results of operations. The Company has provided the interim disclosures required by SFAS&nbsp;148 in
Note 7 of the consolidated financial statements.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In January&nbsp;2003, the FASB issued FASB Interpretation No.&nbsp;46, &#147;Consolidation of Variable
Interest Entities,&#148; an interpretation of Accounting Research Bulletins (&#147;ARB&#148;) No.&nbsp;51, Consolidated Financial Statements (&#147;FIN 46&#148;). FIN 46 clarifies the application of ARB No.&nbsp;51 to certain entities in which
equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Company
does not believe the adoption of FIN 46 will have a material impact its financial position or results of operations.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font size=2>10.</font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><b><font size=2>Subsequent Event</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>On April 11, 2003, the
Company reached an agreement with a former officer and director of the Company, for the early repayment of his loan obligations to the Company totaling $659,000 plus accrued interest of $171,000. The notes, which would have matured on September 4,
2003, were paid in full on May 6, 2003.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>9</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_5">STAAR SURGICAL COMPANY AND SUBSIDIARIES</a></font></b></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><b><font SIZE=2>ITEM 2 - </font></b></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.68in;'><b><font size=2>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>The
matters addressed in this Item 2 that are not historical information constitute &#147;forward-looking statements&#148; 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. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and the Company can give no assurances that its expectations will
prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond the control of the Company. These factors include, without limitation, those described below under the heading
&#147;Factors That May Affect Future Results of Operations.&#148; The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the
date of this report or to reflect the occurrence of unexpected events. </font></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>The following discussion should be read in conjunction with the Company&#146;s financial statements and
the related notes provided under Item 1&#151; Financial Statements above. </font></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Results of Operations</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>The following table sets forth the percentage of total revenues represented by certain items reflected in the Company&#146;s statements of operations for the periods indicated and the percentage increase or decrease in
such items over the prior period.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'>&nbsp;</p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="17%" colspan="3" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><i><b><font size=1>Percentage of Total</font></b></i><br> <i><b><font size=1>Revenues for</font></b></i><br> <i><b><font size=1>Three
Months</font></b></i></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><i><b><font size=1>Percentage</font></b></i><br> <i><b><font size=1>Change for</font></b></i><br> <i><b><font size=1>Three Months</font></b></i></p> </td>

<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="3" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>April 4,</font></b><br> <b><font size=1>2003</font></b></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>March 29,</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>2003</font></b><br> <b><font size=1>vs.</font></b><br> <b><font size=1>2002</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Total revenues</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>100.0</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>%</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>100.0</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>%</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9.3</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=2>%</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Cost of sales</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>45.6</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>51.3</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(2.9</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Gross profit</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>54.4</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>48.7</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>22.2</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Costs and expenses:</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>General and administrative</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>17.8</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>20.5</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(4.8</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Marketing and selling</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>32.4</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>34.1</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4.0</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Research and development</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9.2</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9.2</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>9.3</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:25.9pt;text-indent:-8.65pt;'><font size=2>Total costs and expenses</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>59.4</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>63.8</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1.9</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Operating loss</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(5.0</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (15.1</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(63.5</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Other income (expense), net</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>1.9</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (1.0</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Loss before income taxes</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(3.1</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (16.1</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(78.8</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Income taxes</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2.6</font></p> </td>
<td width="3%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (7.9</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=2>)</font></p> </td>
<td width="10%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Minority interest</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>0.1</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>.3</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(55.1</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=2>)</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Net loss</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="6%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(5.8</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)%</font></p> </td>
<td width="7%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> (8.5</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=2>)%</font></p> </td>
<td width="10%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>(25.0</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF;'> <p ><font size=2>)%</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="3%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="10%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>10</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b><br> <b><font size=2>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS</font></b> OF<br> <b><font size=2>OPERATIONS (Continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>Revenues</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>Revenues for the three months ended April 4, 2003 were $12.8 million, which is $1.1 million or 9.3% greater than the $11.7 million in revenues for the three months ended March 29, 2002. Sales increases were realized
across all product lines, except in silicone intraocular lenses (IOLs) and the AquaFlow device. The most significant increases were the result of a 31% increase in distributed products in Germany, such as custom surgical packs and other cataract
products used in surgery, and a 37% increase in sales internationally of the Company&#146;s implantable contact lens (&#147;ICL&#153;&#148;). ICL unit volume increased 39% while average selling price (&#147;ASP&#148;) decreased 2% over the same
quarter last year. Revenues in international markets also benefited from the favorable impact of exchange rate changes relative to the U.S. dollar.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Total IOL
sales increased 1% over the first quarter of 2002 despite a 20% decrease in unit volume, primarily in the U.S. market, of the Company&#146;s single-piece silicone model as a result of problems with the lens delivery system. The decrease in sales of
the single-piece silicone model was offset by increased sales of Collamer IOLs (9% increase in volume partially offset by a 2% decrease in ASP), and other IOL models sold in international markets (increased volume and ASP). As a result of the
decreased IOL sales in the U.S., overall sales in that market declined 7%. The Company expects IOL sales to increase in the U.S. in the second half of the year as it resolves its delivery system issues.</font></p> <p style=' margin-bottom:0pt;
margin-top:12pt;'><i><b><font size=2>Gross Profit Margin</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Gross profit margin increased to 54.4% of revenues for the three months ended April 4, 2003
from 48.7% of revenues for the three months ended March 29, 2002. The increase in gross profit margin is principally due to the replacement of high cost IOL inventory with significantly lower cost IOL inventory. The high cost inventory resulted from
low manufacturing volumes during a period of restructuring. Gross profit margin also improved due to increased sales of the higher margin ICL in international markets and due to lower costs of custom packs and other cataract products sold in the
German market.</font></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>Other Income (Expense)</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Other income for the quarter ended
April 4, 2003 was $245,000, as compared to other expense of $120,000 for the quarter ended March 29, 2002. The increase in other income is the result of an increase in earnings in the Company&#146;s Japanese joint venture and due to accrued interest
income on notes of former officers of the Company. </font></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>Income Taxes</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The
Company recorded income taxes for the quarter ended April 4, 2003 of $329,000 based on the income of its German subsidiary. For the quarter ended March 29, 2002, the Company recorded a net income tax benefit of $932,000 based on legislation enacted
March 9, 2002 (HR 3090), which enabled the Company to carryback portions of its federal 2000 and 2001 losses to 1996, 1997 and 1998. </font></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>Liquidity and Capital
Resources</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Cash and cash equivalents at April 4, 2003 decreased by approximately $610,000 relative to January 3, 2003, as a result of the
Company&#146;s paying down its domestic notes payable.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>11</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b><br> <b><font size=2>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS</font></b> OF<br> <b><font size=2>OPERATIONS (Continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>During the quarter ended April 4, 2003, accounts receivable increased $642,000
relative to January 3, 2003. The increase in accounts receivable relates to extended terms given to certain international customers. Day&#146;s sales outstanding (DSO) were 47 days at April 4, 2003 compared to 45 days at January 3, 2003. The Company
expects to maintain DSO within a range of 45 to 50 days during the course of the 2003 fiscal year.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Accounts payable during the quarter ended April 4, 2003
increased $524,000 relative to the fiscal year ended January 3, 2003. The increase in accounts payable is due to the timing of insurance premiums and royalty payments internationally.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>Other current liabilities during the quarter ended April 4, 2003 increased $387,000 relative to January 3, 2003. The increase in other current liabilities is due to an increase in accrued salaries and wages and taxes
payable.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>On March 26, 2003, the Company and its domestic lender executed an agreement to extend the maturity date of the Company&#146;s $3.0 million line of
credit for one year to March 31, 2004. The line of credit bears interest at a rate equal to the prime rate (4.25% at April 4, 2003) plus an interest margin of 5%. In addition, the Company is required to pay a commitment fee of 1.25% per annum of the
unused amount of the line of credit. The line of credit is secured by a first priority lien on substantially all of the Company&#146;s assets. It also requires the Company to comply with certain financial covenants including the maintenance of
specified levels of liquidity, tangible net worth, operating cash flow and operating income. The operating cash flow and operating income covenants commence in the third quarter of 2003. As of April 4, 2003, the Company was in compliance with the
covenants of the agreement. Borrowings outstanding under the note as of April 4, 2003 and January 3, 2003, were approximately $2.1 million and $2.8 million, respectively.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>A subsidiary of the Company has a revolving credit facility with a Swiss bank, which, as amended in fiscal 2001, provides for borrowings of up to 4.5&nbsp;million Swiss Francs &#147;CHF&#148; ($3.3&nbsp;million based on
the exchange rate on April 4, 2003). The credit facility is divided into two parts: Part&nbsp;A provides for borrowings of up to CHF 3.0 million ($2.2 million based on the exchange rate on April 4, 2003) and does not have a termination date; Part B
provides for borrowings of up to CHF 1.5&nbsp;million ($1.1&nbsp;million based on the exchange rate on April 4, 2003). The loan amount under Part B of the agreement reduces by CHF 250,000 ($181,000 based on the exchange rate on April 4, 2003)
semi-annually beginning June&nbsp;30, 2002. The credit facility is secured by a general assignment of claims and includes positive and negative covenants, which among other things requires the subsidiary to maintain equity at or above CHF 15.8
million (approximately $11.5 million based on the exchange rate on April 4, 2003), prevents the subsidiary from entering into secured obligations except as already disclosed to the lender or guaranteeing the obligations of its subsidiaries or any
third party. The agreement also prevents payment on loans made to the subsidiary by the Company without prior consent of the lender.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The loan agreement
provides for borrowings on a current or fixed-term basis. The interest rate on current advances is 6.5%&nbsp;per annum at April 4, 2003 plus a commission rate of 0.25%, payable each quarter. The base interest rate for fixed-term advances follows
Euromarket conditions for loans of a corresponding term and currency plus an individual margin. The fixed-term rate at April 4, 2003 was 4.3%. There were no borrowings outstanding under the current account as of April 4, 2003. Fixed term advances at
April 4, 2003 were CHF 4.1&nbsp;million ($3.0&nbsp;million based on the exchange rate on April 4, 2003). </font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>12</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b><br> <b><font size=2>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS</font></b> OF<br> <b><font size=2>OPERATIONS (Continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>A subsidiary of the Company has a revolving credit facility with a German bank which
provides for borrowings of up to approximately 125,000 EUR ($134,000 at the exchange rate on April 4, 2003) at an interest rate of 8.5%. The loan, originally due February&nbsp;28, 2003, was extended on October&nbsp;8, 2002 to August&nbsp;31, 2003.
Payments in the amount of 50,000 EUR ($54,000 at the exchange rate on April 4, 2003) were due monthly beginning December&nbsp;31, 2001. The amended agreement reduced the monthly payment to 25,000 EUR ($27,000 at the exchange rate on April 4, 2003).
The bank also agreed to waive the September&nbsp;2002 and October&nbsp;2002 payments. There were no other changes to the original terms of the agreement. The loan is secured by an assignment of the subsidiary&#146;s accounts receivable and inventory
and is personally guaranteed by the subsidiary&#146;s president. There are no financial covenants included in the agreement and no borrowings outstanding as of April 4, 2003. </font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>The subsidiary of the Company negotiated another credit facility with a different German bank to replace the one that expires on August&nbsp;31, 2003. The new agreement, effective January&nbsp;13, 2003, provides for
borrowings of up to 210,000 EUR ($226,000 at the exchange rate on April 4, 2003) at an interest rate of 8.5%. The note is due November&nbsp;30, 2003 and is personally guaranteed by the subsidiary&#146;s president. The agreement includes a covenant
which prevents the subsidiary from paying dividends. Borrowings outstanding as of April 4, 2003 were 128,000 EUR ($138,000 at the exchange rate on April 4, 2003).</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font
size=2>The following table represents the Company&#146;s known contractual obligations at April 4, 2003.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'>&nbsp;</p>
<table width="100%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td valign=bottom > <p style='margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Contractual Obligations</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Total</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>Less</font></b><br> <b><font size=1>Than</font></b><br> <b><font size=1>1 year</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>1-3<br> Years</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>3-5<br> Years</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=bottom > <p style='text-align:center;margin-top:2pt;margin-bottom:0pt;'><b><font size=1>More</font></b><br> <b><font size=1>Than</font></b><br> <b><font size=1>5 Years</font></b></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td colspan="2" valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Long-term debt obligations</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Capital lease obligations</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>12</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 8</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Operating lease obligations</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 1,940</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 753</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 1,132</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>55</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom > <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Purchase obligations</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 2,878</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 1,478</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> 1,400</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom > <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-left:0.12in;text-indent:-0.12in;margin-top:2pt;margin-bottom:0pt;' ><font size=2>Other long-term liabilities</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>89</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2> &#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>89</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=bottom style='background:#CCEEFF; '> <p style='margin-top:2pt;margin-bottom:0pt;margin-left:17.3pt;text-indent:-8.65pt;'><font size=2>Total</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>4,919</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,235</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="5%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>2,629</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="3%" valign=bottom style='background:#CCEEFF; '> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>55</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>$</font></p> </td>
<td width="4%" valign=bottom style='background:#CCEEFF;'> <p style='text-align:right;margin-top:2pt;margin-bottom:0pt;'><font size=2>&#151;</font></p> </td>
<td width="2%" valign=bottom style='background:#CCEEFF; '> <p ><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td valign=top > <hr noshade width="100%" color="black" size=3> </td>
<td width="2%" valign=top > <p><font size=1>&nbsp;</font></p> </td> </tr> </table> <br> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>As of April 4, 2003, the Company had a current ratio of 1.5:1, net working
capital of $6.8 million and net equity of $29.9 million compared to January 3, 2003 when the Company&#146;s current ratio was 1.5:1, its net working capital was $7.0 million, and its net equity was $30.6 million.</font></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company&#146;s liquidity requirements arise from the funding of its working capital needs, primarily inventory, work-in-process and accounts receivable. The Company&#146;s
primary sources for working capital and capital expenditures are cash flow from operations and borrowings under the Company&#146;s bank credit facilities. Any withdrawal of support from its banks could have serious consequences on the Company&#146;s
liquidity. The Company&#146;s liquidity is dependent, in part, on customers paying within credit terms, and any extended delays in payments or changes in credit terms given to major customers may have an impact on the Company&#146;s cash flow. In
addition, any abnormal product returns or pricing adjustments may also affect the Company&#146;s short-term funding.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>13</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Critical
Accounting Policies</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes, among others. Our estimates are based upon historical experiences, market
trends and financial forecasts and projections, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these
estimates under different assumptions or conditions. </font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company believes the following represent its critical accounting policies.</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><i><font size=2>Revenue Recognition</font></i><font size=2>. In
general, the Company supplies foldable IOLs on a consignment basis to customers, primarily ophthalmologists, surgical centers, hospitals and other eye care providers and recognizes sales when the IOLs are implanted. Sales of all other products,
including sales to foreign distributors, are generally recognized upon shipment, which is when title passes.</font></p> <p style=' margin-bottom:0pt; margin-left:0.72in; margin-top:8pt;'><font size=2>Revenue from license and technology agreements is
recorded as income, when earned, according to the terms of the respective agreements.</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font size=2>&#149;</font></b></font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><i><font size=2>Impairment of Long-Lived Assets. </font></i><font size=2>Intangible and other long lived-assets are reviewed for impairment whenever events such as product
discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable. In reviewing for impairment, the Company compares the carrying value of such assets to the estimated
undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference
between the assets&#146; fair value and their carrying value. </font></p> <p style=' margin-bottom:0pt; margin-left:0.72in; margin-top:8pt;'><font size=2>Goodwill, which has an indefinite life and was previously amortized on a straight-line basis
over the periods benefited, is no longer amortized to earnings, but instead is subject to periodic testing for impairment. Intangible assets determined to have definite lives are amortized over their remaining useful lives. Goodwill of a reporting
unit is tested for impairment on an annual basis or between annual tests if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying amount. As of April 4, 2003, the carrying value of goodwill
was $6.4 million.</font></p> <p style=' margin-bottom:0pt; margin-left:0.72in; margin-top:8pt;'><font size=2>The Company also has other intangible assets consisting of patents and licenses, with a gross book value of $14.0 million and accumulated
amortization of $5.2 million as of April 4, 2003. The Company capitalizes the costs of acquiring patents and licenses as well as the legal costs of successfully defending its rights to these patents. Amortization is computed on the straight-line
basis over the estimated useful lives, which are based on legal and contractual provisions, and range from 10 to 20 years.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>14</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Critical
Accounting Policies (continued)</font></b></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font size=2>&#149;</font></b></font></p> <p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><i><font
size=2>Deferred Taxes</font></i><font size=2>. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company&#146;s assets </font><font size=2>and
liabilities along with net operating loss and credit carryforwards. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset may not be realized.
The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and reflected in the financial statements in the period of enactment.</font></p> <p style='
margin-bottom:0pt; margin-left:0.72in; margin-top:8pt;'><font size=2>In 2002, due to the Company&#146;s recent history of losses, an increase to the valuation allowance was recorded as a non-cash charge to tax expense in the amount of $9.2 million.
As a result, the valuation allowance fully offsets the value of deferred tax assets on the Company&#146;s balance sheet as of April 4, 2003. If in the future, the Company determines it will be able to utilize all or part of the deferred tax assets
which have a valuation allowance of $18.2 million at April 4, 2003, we would reverse the valuation allowance, which would result in an income tax benefit.</font></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Our short and long-term success is subject to many factors
that are beyond our control. You should consider carefully the following risk factors, in addition to other information contained in this report. This Quarterly Report on Form l0-Q contains forward-looking statements, which are subject to a variety
of risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including those set forth below.</font></p> <p style=' margin-bottom:0pt;
text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>The Company may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>not be able to fund its future growth or react to competitive pressures if it lacks sufficient
funds.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company depends on external sources (banks and capital markets) for the funding it needs to operate the business. Unexpected conditions
have arisen and can continue to arise that could cause the Company to be in violation of its lender&#146;s financial covenants. The Company believes it has sufficient cash available through its bank credit facilities and cash from operations to fund
existing operations and that it could obtain alternate financing, if necessary, although this is not certain. The decision of any one of the Company&#146;s lenders not to renew its line of credit could have a material adverse affect on the Company
and the costs associated with obtaining alternate financing could be significant.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We have a history of losses.</font></b></i></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>We have reported losses in each of the last three fiscal years and have an accumulated deficit of $42.2 million as of April 4, 2003. If losses from operations continue, they could
adversely affect the market price for our common stock, and our ability to maintain existing financing and obtain new financing. Despite our restructuring efforts, there can be no assurance that we will receive the intended benefits from these
changes or that we will be successful in restoring the profitability of the Company.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>15</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We risk losses through
litigation.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>We are party to various claims and legal proceedings arising out of the normal course of our business. While there can be no assurance
that an adverse determination of any such matters could not have a material adverse impact in any future period, we do not believe, based upon information known to us, that the final resolution of any of these matters will have a material adverse
effect upon our consolidated financial position or results of operations and cash flows.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We have been in default of the terms of our domestic loans and
have been required to reduce our principal balances, limiting our access to credit.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>During recent periods, we have failed to comply with some of the
covenants in our principal domestic loan, including covenants that we maintain minimum levels of operating income, cash flow and tangible net worth. Accordingly, we have had to seek waivers from our lender or modifications of our lending agreement.
Among other things, we have agreed to monthly reductions of the balance of our principal domestic loan which reduced it from $7.0 million to $3.0 million. As of April 4, 2003, the principal balance on the loan was approximately $2.1 million. If we
fail to meet the covenants in our loans in the future, we may&nbsp;not be able to secure further waivers or amendments from our lenders, who may&nbsp;instead seek payment on their loans and, if we fail to pay, to foreclose on the collateral for
their loans. We have pledged substantially all of our assets as security for our existing loans. Our collateral pledge may&nbsp;make it more difficult for us to obtain additional financing on advantageous terms, if at all.</font></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>If we fail to keep pace with advances in our industry or fail to persuade physicians to adopt the new products we introduce, customers may</font></b></i><font
size=2>&nbsp;</font><i><b><font size=2>not buy our products and our revenue may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>decline.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font
size=2>Constant development of new technologies and techniques, frequent new product introductions and strong price competition characterize the ophthalmic industry. The first company to introduce a product to market usually gains a significant
competitive advantage. Our future growth depends, in part, on our ability to develop products to treat diseases and disorders of the eye that are more effective, safer, or incorporate emerging technologies better than our competitors&#146; products.
In addition, we must manufacture these products economically and market them successfully by persuading a sufficient number of eye care professionals to use them. For example, glaucoma requires ongoing treatment over a long period of time; thus,
many doctors are reluctant to switch a patient to a new treatment if the patient&#146;s current treatment for glaucoma remains effective. Sales of our existing products may&nbsp;decline rapidly if one of our competitors introduces a substantially
superior product, or if we announce a new product of our own. Similarly, if we fail to make sufficient investments in research and development or if we focus on technologies that do not lead to better products, our current and planned products could
be surpassed by more effective or advanced products.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Resources devoted to research and development may</font></b></i><font
size=2>&nbsp;</font><i><b><font size=2>not yield new products that achieve commercial success.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>We devote substantial resources to research and
development. The research and development process is expensive, prolonged and entails considerable uncertainty. Development of new implantable technology, from discovery through testing and registration to initial product launch, typically takes
between three and seven years. This period varies considerably from product to product and country to country. Because of the complexities and uncertainties associated with ophthalmic research and development, products we are </font></p> <p style='
margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>16</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>currently developing may&nbsp;not complete the development process or
obtain the regulatory approvals required for us to market such products successfully. These may&nbsp;take longer and cost more to develop and may&nbsp;be less successful than we currently anticipate. It is possible that few or none of the products
in our development pipeline will become commercially successful.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Failure of users of our products to obtain adequate reimbursement from third-party
payors could limit market acceptance of our products, which could impact our sales and profits.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Many of our products, in particular IOLs and products
related to the treatment of glaucoma, are used in procedures that are typically covered by health insurance, HMO plans, Medicare or Medicaid. These third-party payors have recently been trying to contain costs by restricting the types of procedures
they reimburse to those viewed as most cost-effective and capping or reducing reimbursement rates. These polices could adversely affect sales and prices of our products. Physicians, hospitals and other health care providers may&nbsp;be reluctant to
purchase our products if third-party payors do not adequately reimburse them for the cost of our products and the use of our surgical equipment. For example:</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font
size=2><b><font size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Major third-party payors for hospital services, including government insurance plans, Medicare, Medicaid and private
health care insurers, have substantially revised their payment methodologies during the last few years, resulting in stricter standards for reimbursement of hospital and outpatient charges for some medical procedures, including cataract procedures
and IOLs;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Numerous legislative proposals
have been considered that, if enacted, would result in major reforms in the United States&#146; health care system, which could have an adverse effect on our business;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font
size=2><b><font size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Our competitors may&nbsp;reduce the prices of their products, which could result in third-party payors favoring our
competitors;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>There are proposed and
existing laws and regulations governing product prices and the profitability of companies in the health care industry; and</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2><b><font
size=2>&#149;</font></b></font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>There have been recent initiatives by third-party payors to challenge the prices charged for medical products, which could affect our
profitability.</font></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Reductions in the prices for our products in response to these trends could reduce our profits. Moreover, our products may&nbsp;not be covered in the future by
third-party payors. The failure of our products to be so covered could cause our profits to decline.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Economic conditions and price competition
may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>cause sales of our products used in elective surgical procedures to decline and reduce our profitability.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>Some of our products are used in purely elective procedures. For example, many patients with refractive errors that could be successfully treated with ICLs can also obtain satisfactory vision with eyeglasses or
conventional contact lenses. Except in cases where ICLs offer the only acceptable outcome, it is likely that insurers, HMOs and government payors generally will not pay for ICL implantation and that the patient will bear the full cost of the
procedure. Individuals may&nbsp;be less willing to incur the costs of these procedures in weak or uncertain economic conditions, which could lead to a decline in the number of these procedures.</font></p> <p style=' margin-bottom:0pt;
margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>17</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Product recalls have been costly and
may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>be so in the future.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Implantable medical devices must be manufactured to the highest
standards and tolerances, and often incorporate newly developed technology. Despite all efforts at quality control and advance testing, from time to time defects or technical flaws in our products may&nbsp;not come to light until after the products
are sold or consigned. In such circumstances, the Company has previously made voluntary recalls of its products. Such voluntary recalls may&nbsp;take place again in the future. Mandatory recalls can also take place if regulators or courts require
them, even if the Company believes its products are safe and effective. Recalls result in lost sales of the recalled products themselves, and can result in further lost sales while replacement products are manufactured, especially if the
replacements must be redesigned. If recalled products have already been implanted, we may&nbsp;bear some or all of the cost of corrective surgery. Recalls also damage our reputation. The inconvenience caused by recalls and related interruptions in
supply, and the damage to our reputation, could cause some providers to discontinue using our products. The costs of recalls have severely impacted our revenues in recent periods.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><i><b><font size=2>We are subject to extensive government regulation, which increases our costs and could prevent us from selling our products.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>The research, development, testing, manufacturing and marketing of our products are subject to extensive governmental regulation. Government regulation includes inspection of and controls over testing, manufacturing,
safety and environmental controls, efficacy, labeling, advertising, promotion, record keeping, the sale and distribution of pharmaceutical products and samples and electronic records and electronic signatures. We are also subject to government
regulation with respect to the prices we charge and the rebates we offer to customers. Government regulation substantially increases the cost of developing, manufacturing and selling our products.</font></p> <p style=' margin-bottom:0pt;
text-indent:0.36in; margin-top:8pt;'><font size=2>In the United States, we must obtain approval from the FDA for each product that we market. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products
distributed outside of the United States are also subject to government regulation, which may&nbsp;be equally or more demanding. Our new products could take a significantly longer time than we expect to gain regulatory approval and may&nbsp;never
gain approval. If a regulatory authority delays approval of a potentially significant product, our market value and operating results may&nbsp;decline. Even if the FDA or another regulatory agency approves a product, the approval may&nbsp;limit the
indicated uses for a product, may&nbsp;otherwise limit our ability to promote, sell and distribute a product or may&nbsp;require post-marketing studies. If we are unable to obtain regulatory approval of our products, we will not be able to market
these products, which would result in a decrease in our sales. Currently, we are actively pursuing approval for a number of our products from regulatory authorities in a number of countries, including, among others, the United States, Australia,
Egypt, Taiwan, China, and the United Arab Emirates. Continued growth in our sales and profits will depend, in part, on the timely and successful introduction and marketing of some or all of these products.</font></p> <p style=' margin-bottom:0pt;
text-indent:0.36in; margin-top:8pt;'><font size=2>The clinical trials required to obtain regulatory approvals are complex and expensive and their outcomes are uncertain. We incur substantial expense for, and devote significant time to, clinical
trials, yet cannot be certain that the trials will ever result in the commercial sale of a product. Positive results from pre-clinical studies and early clinical trials do not ensure positive results in later clinical trials that form the basis of
an application for regulatory approval. We may&nbsp;suffer significant setbacks in clinical trials, even after earlier clinical trials show promising results. Any of our products may&nbsp;produce undesirable side effects that could </font></p> <p
style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>18</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>cause us or regulatory authorities to interrupt, delay or halt
clinical trials of a pharmaceutical or medical device candidate. We, the FDA or another regulatory authority may&nbsp;suspend or terminate clinical trials at any time if they or we believe the trial participants face unacceptable health
risks.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Noncompliance with applicable United States regulatory requirements can lead to fines, injunctions, penalties, mandatory recalls or seizures,
suspensions of production, denial or withdrawal of pre-marketing approvals, recommendations by the FDA against governmental contracts and criminal prosecution. The FDA also has authority to request repair, replacement or refund of the cost of any
device we manufacture or distribute. Regulatory authorities outside of the United States may&nbsp;impose similar sanctions for noncompliance with applicable regulatory requirements.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><i><b><font size=2>We face strong competition.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Our competitors, including Bausch &amp; Lomb, AMO, Alcon, Pharmacia &amp; Upjohn, Inc.
and CIBA Vision, have much greater financial resources than we do and some of them have large international markets for a full suite of ophthalmic products. Their greater resources for research, development and marketing, and their greater capacity
to offer comprehensive products and equipment to providers, make it difficult for us to compete. In recent periods, the Company has lost significant market share to some of its competitors.</font></p> <p style=' margin-bottom:0pt;
text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>The global nature of our business may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>result in fluctuations and declines in our sales and profits.</font></b></i></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Our products are sold in more than 39 countries. Revenues from international operations make up a significant portion of our total revenue, reaching 53% for the quarter ended April
4, 2003. The results of operations and the financial position of our offshore operations are generally reported in the relevant local currencies and then translated into United States dollars at the applicable exchange rates for inclusion in our
consolidated financial statements, exposing us to translation risk. During the quarter ended April 4, 2003, our most significant currency exposures were to the Euro, the Swiss Franc, and the Australian Dollar. The exchange rates between these and
other local currencies and the United States dollar may&nbsp;fluctuate substantially. In addition, we are exposed to transaction risk because some of our expenses are incurred in a different currency from the currency in which our revenues are
received. Fluctuations in the value of the United States dollar against other currencies have had in the past, and may&nbsp;have in the future, a material adverse effect on our operating margins and profitability.</font></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Economic, social and political conditions, laws, practices and local customs vary widely among the countries in which we sell our products. Our operations outside of the United
States are subject to a number of risks and potential costs, including lower product margins, less stringent protection of intellectual property and economic, political and social uncertainty in some countries, especially in emerging markets. Our
continued success as a global company depends, in part, on our ability to develop and implement policies and strategies that are effective in anticipating and managing these and other risks in the countries where we do business. These and other
risks may&nbsp;have a material adverse effect on our operations in any particular country and on our business as a whole. We generally price our products in U.S. dollars, and as a result changes in exchange rates can make our products more expensive
in some offshore markets and reduce our revenues. Inflation in emerging markets also makes our products more expensive there and increases the credit risks to which we are exposed. We have experienced currency fluctuations, inflation and volatile
economic conditions, which have impacted our profitability in the past in several markets, including Germany, Austria, South Africa, France, Sweden, Norway, Canada and Australia, and we may&nbsp;experience such impacts in the future.</font></p> <p
style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>19</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We depend on proprietary technologies, but
may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>not be able to protect our intellectual property rights adequately.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>We have numerous
patents and pending patent applications. We rely on a combination of contractual provisions, confidentiality procedures and patent, trademark, copyright and trade secrecy laws to protect the proprietary aspects of our technology. These legal
measures afford limited protection and may&nbsp;not prevent our competitors from gaining access to our intellectual property and proprietary information. Any of our patents may&nbsp;be challenged, invalidated, circumvented or rendered unenforceable.
Furthermore, we cannot assure you that any pending patent application held by us will result in an issued patent or that if patents are issued to us, the patents will provide meaningful protection against competitors or competitive technologies.
Litigation may&nbsp;be necessary to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of our proprietary rights. Any litigation could result in substantial expense, may&nbsp;reduce our
profits and may&nbsp;not adequately protect our intellectual property rights. In addition, we may&nbsp;be exposed to future litigation by third parties based on claims that our products infringe their intellectual property rights. This risk is
exacerbated by the fact that the validity and breadth of claims covered by patents in our industry may&nbsp;involve complex legal issues that are not fully resolved.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font
size=2>Any litigation or claims against us, whether or not successful, could result in substantial costs and harm our reputation. In addition, intellectual property litigation or claims could force us to do one or more of the following: to cease
selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue; to obtain a license from the holder of the intellectual property right alleged to have been infringed, which
license may&nbsp;not be available on reasonable terms, if at all; or to redesign our products to avoid infringing the intellectual property rights of a third party, which may&nbsp;not be costly and time-consuming or impossible to
accomplish.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We obtain some of the components of our products from a single source, and an interruption in the supply of those components could reduce
our revenue.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>We obtain some of the components for our products from a single source. The loss or interruption of any of these suppliers could cause
our revenue and profitability to decline and harm our customer relations.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Most of our products have single- site manufacturing approvals, exposing us to
risks of business interruption.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The validation of a second manufacturing site is expensive both in terms of time and money and, therefore, has not
been done. If there were to be a natural disaster, fire, or other serious business interruption at one of our manufacturing facilities, it could take a significant amount of time to validate a second site and replace lost product. We could lose
customers to competitors, thereby reducing sales and profitability.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>We may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>not successfully
develop and launch replacements for our products that lose patent protection.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Most of our products are covered by patents that give us a degree of
market exclusivity during the term of the patent. We also earn revenue by licensing some of our patented technology to other ophthalmic companies. The legal life of a patent is 20 years from application. Patents covering our products will expire
within the next 1 to 15 years. Upon patent expiration, our competitors may&nbsp;introduce products using the same </font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>20</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>Factors That
May</font></b><font size=2>&nbsp;</font><b><font size=2>Affect Future Results of Operations (continued)</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>technology. As a result of this possible increase in competition, we
may&nbsp;need to charge a lower price in order to maintain sales of our products, which could make these products less profitable. If we fail to develop and successfully launch new products prior to the expiration of patents for our existing
products, our sales and profits with respect to those products could decline significantly. We may&nbsp;not be able to develop and successfully launch more advanced replacement products before these and other patents expire.</font></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>The Company depends on key employees.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>The Company depends on the continued
service of its senior management and other key employees. The loss of a key employee could hurt the business. The Company could be particularly hurt if key employees went to work for competitors. The Company&#146;s future success depends on its
ability to identify, attract, train and motivate other highly skilled personnel. Failure to do so may&nbsp;adversely affect future results.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>Our
activities involve hazardous materials and emissions and may</font></b></i><font size=2>&nbsp;</font><i><b><font size=2>subject us to environmental liability.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>Our manufacturing, research and development practices involve the controlled use of hazardous materials. We are subject to federal, state and local laws and regulations in the various jurisdictions in which we have
operations governing the use, manufacturing, storage, handling and disposal of these materials and certain waste products. Although we believe that our safety and environmental procedures for handling and disposing of these materials comply with
legally prescribed standards, we cannot completely eliminate the risk of accidental contamination or injury from these materials. Remedial environmental actions could require us to incur substantial unexpected costs, which would materially and
adversely affect our results of operations. If we were involved in a major environmental accident or found to be in substantial non-compliance with applicable environmental laws, we could be held liable for damages or penalized with
fines.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><b><font size=2>The market price of our common stock is likely to be volatile.</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in;
margin-top:8pt;'><font size=2>Our stock price could be subject to significant fluctuations in response to factors such as quarterly variations in operating results, operating results which vary from the expectations of securities analysts and
investors, changes in financial estimates, changes in market valuations of competitors, announcements by us or our competitors of a material nature, additions or departures of key personnel, future sales of common stock and stock volume
fluctuations. Also, general political and economic conditions such as recession or interest rate fluctuations may&nbsp;adversely affect the market price of our stock.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font
size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>21</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>ITEM 3 &#150;

<a name="tx245_6">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</a></font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>In the normal course of business, our operations are exposed to risks
associated with fluctuations in interest rates and foreign currency exchange rates. The Company manages its risks based on management&#146;s judgment of the appropriate trade-off between risk, opportunity and costs. Management does not believe that
market risks are material to the results of operations or cash flows of the Company, and, accordingly, does not generally enter into interest rate or foreign exchange rate hedge instruments.</font></p> <p style=' margin-bottom:0pt;
text-indent:0.36in; margin-top:8pt;'><i><font size=2>Interest rate risk</font></i><font size=2>. Our $5.2 million of debt is split between domestic borrowings of $2.1 million and borrowings of our international subsidiaries of $3.1 million. Our
domestic borrowings are linked to the prime interest rate and, thus, our interest rate expense will fluctuate with rate changes in the U.S. The majority of our international borrowings bear an interest rate that is linked to Euro market conditions
and, thus, our interest rate expense will fluctuate with changes in those conditions. If interest rates were to increase or decrease by 1% for the year, our annual interest rate expense would increase or decrease by approximately $60,000.</font></p>
<p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><font size=2>Foreign currency risk</font></i><font size=2>. Our international subsidiaries operate in and are net recipients of currencies other than the U.S. dollar and, as such,
we benefit from a weaker dollar and are adversely affected by a stronger dollar relative to major currencies worldwide (primarily, the Euro and Australian dollar). Accordingly, changes in exchange rates, and particularly the strengthening of the US
dollar, may&nbsp;negatively affect our consolidated sales and gross profit as expressed in U.S. dollars. Additionally, approximately 60% of our debt is denominated in Swiss Francs and as such, we are subject to fluctuations of the Swiss Franc as
compared to the U.S. dollar in converting the value of the debt in U.S. dollars. The U.S. dollar value of the debt is increased by a weaker dollar and decreased by a stronger dollar relative to the Swiss Franc.</font></p> <p style='
margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>ITEM 4 &#150;
<a name="tx245_7">CONTROLS AND PROCEDURES</a></font></b></i></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>(a)</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><font size=2>Evaluation of disclosure controls and procedures.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font
size=2>Within the 90&nbsp;days prior to the filing date of this report, the Chief Executive Officer and the Chief Financial Officer of the Company, with the participation of the Company&#146;s management, carried out an evaluation of the
effectiveness of the Company&#146;s disclosure controls and procedures pursuant to Exchange Act Rule&nbsp;13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that, as of the date of the evaluation,
the Company&#146;s disclosure controls and procedures are effective in making known to them material information relating to the Company (including its consolidated subsidiaries) required to be included in this report.</font></p> <p style='
margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity&#146;s disclosure objectives. The
likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because
of human failures such as simple errors or mistakes or intentional circumvention of the established process.</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>(b)</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.360000014305115in;'><font size=2>Changes in internal controls.</font></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><font size=2>There were no
significant changes in the Company&#146;s internal controls or in other factors that could significantly affect internal controls, known to the Chief Executive Officer or the Chief Financial Officer, subsequent to the date of the
evaluation.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>22</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_8">STAAR SURGICAL COMPANY AND SUBSIDIARIES</a></font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><b><font size=2>PART II &#150; OTHER INFORMATION</font></b></p> <p
style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font SIZE=2>ITEM 1</font></b></i></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font SIZE=2>LEGAL
PROCEEDINGS</font></b></i></p> <p style=' margin-bottom:0pt; text-indent:0.36in; margin-top:8pt;'><i><font size=2>Mario Pelegrina v. Andrew F. Pollet, John R. Wolf, Peter J. Utrata, Volker D. Anhaeusser, Joseph Priske, William Huddleston, Carl
Manisco, individuals, Pollet</font></i><font size=2>&nbsp;</font><i><font size=2>&amp; Richardson, a California corporation, and Iotech, Inc., a California corporation, Defendants, and STAAR Surgical Company, Nominal Defendant</font></i><font
size=2>, Court of Chancery of the State of Delaware, Case No.&nbsp;18556. In December&nbsp;2000, Mario Pelegrina filed this shareholder derivative suit against us and certain named directors and officers. Mr.&nbsp;Pelegrina alleges that these
directors and officers breached their fiduciary duties by engaging in self-dealing and waste of our assets. Because this is a shareholder derivative action, we are a putative plaintiff and stand to receive any damages that may&nbsp;be awarded.
Mr.&nbsp;Pelegrina took no steps to prosecute the action until May 2002, when the Court of Chancery requested a status report on the litigation. On October 9, 2002, we filed a motion to dismiss the action and began preparing a brief in support of
the motion. On April 24, 2003, the Court of Chancery dismissed the action without prejudice.</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font SIZE=2>ITEM 2</font></b></i></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font size=2>
<a name="tx245_9">CHANGES IN SECURITIES AND USE OF PROCEEDS</a></font></b></i></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Not applicable</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font
SIZE=2>ITEM 3</font></b></i></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font size=2>
<a name="tx245_10">DEFAULTS UPON SENIOR SECURITIES</a></font></b></i></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Not applicable</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font SIZE=2>ITEM
4</font></b></i></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font size=2>
<a name="tx245_11">SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</a></font></b></i></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Not applicable</font></p> <p
style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font SIZE=2>ITEM 5</font></b></i></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font size=2>
<a name="tx245_12">OTHER INFORMATION</a></font></b></i></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>Not applicable</font></p> <p style='margin-bottom:0;margin-top:12pt;text-indent:0in;'><i><b><font SIZE=2>ITEM
6</font></b></i></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0in;text-indent:0.540000021457672in;'><i><b><font size=2>
<a name="tx245_13">EXHIBITS AND REPORTS ON FORM 8-K</a></font></b></i></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><b><font size=2>(a)</font></b></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><i><b><font
size=2>Exhibits</font></b></i></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>3.1</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Certificate of Incorporation, as
amended.(1)</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>3.2</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>By-laws, as amended.(2)</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>4.5</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Stockholders&#146; Rights Plan, dated effective April 20, 1995.(2)</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>4.7</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Amendment No. 1 to Stockholders&#146; Rights Plan, dated April 21, 2003.</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>10.95</font></p> <p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Second Amended and Restated Revolving Line of Credit between the Company and Wells
Fargo Bank, dated March 26, 2003.(3)</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>10.96</font></p> <p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Second Amended and Restated
Revolving Line of Credit Note, dated March 26, 2003.(3)</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><font size=2>99.1</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Certification
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><b><font size=2>______________</font></b></p> <p
style='margin-bottom:0;margin-top:3pt;margin-left:0.08in;text-indent:0in;'><font size=2>(1)</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Incorporated by reference from the Company&#146;s Annual Report on
Form 10-K for the year ended December 31, 1999, as filed on March 30, 2000.</font></p> <p style='margin-bottom:0;margin-top:3pt;margin-left:0.08in;text-indent:0in;'><font size=2>(2)</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Incorporated by reference from the Company&#146;s Annual Report on Form 10-K for the year ended December 29, 2000, as filed on March 29, 2001.</font></p> <p
style='margin-bottom:0;margin-top:3pt;margin-left:0.08in;text-indent:0in;'><font size=2>(3)</font></p> <p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><font size=2>Incorporated by reference to the Company&#146;s Current Report on
Form 8-K filed with the Commission on March 31, 2003.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>23</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font SIZE=2>STAAR SURGICAL COMPANY AND SUBSIDIARIES</font></b></p> <p style=' margin-bottom:0pt; margin-top:12pt;'><i><b><font size=2>EXHIBITS AND
REPORTS ON FORM 8-K - Continued</font></b></i></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0in;'><b><font size=2>(b)</font></b></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.36in;'><i><b><font size=2>Reports on Form
8-K</font></b></i></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>On May 6, 2003, the Company filed a Current report on Form 8-K, furnishing under Item 12 its earnings release dated May 1, 2003 and a transcript of a conference call
held May 1, 2003.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp; </font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>24</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_14">SIGNATURES</a></font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>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.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'>&nbsp;</p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="44%" colspan="2" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font SIZE=2>STAAR SURGICAL COMPANY</font></p> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>Date:&nbsp;&nbsp;May 19, 2003</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>by:&nbsp;</font></p> </td>
<td width="40%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:center;'><br> <font size=2>/s/ J</font><font SIZE=1>OHN </font><font SIZE=2>B</font><font SIZE=1>ILY</font></p> </td> </tr>
<tr>
<td width="49%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td> </tr>
<tr>
<td width="49%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="7%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="4%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="40%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;text-align:center;'><b><font size=1>John Bily</font></b><br> <b><font size=1>Chief Financial Officer and</font></b><br> <b><font size=1>Duly Authorized Officer</font></b><br>
<b><font size=1>(Principal accounting and financial</font></b><br> <b><font size=1>Officer for the quarter)</font></b></p> </td> </tr> </table> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p
style='margin-bottom:0pt;text-align:center'><font
size=2>25</font></p>
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 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>
<a name="tx245_15">Certification</a></font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>I, David Bailey, certify that:</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>1.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>I have reviewed this quarterly report on Form 10-Q of STAAR Surgical Company;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font
size=2>2.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font
size=2>3.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font
size=2>4.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>a)</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font
size=2>designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this quarterly report is being prepared;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>b)</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>evaluated the
effectiveness of the registrant&#146;s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the &#147;Evaluation Date&#148;); and</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>c)</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>presented in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation Date;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>5.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant&#146;s auditors and the audit committee of
registrant&#146;s board of directors (or persons performing the equivalent function):</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>a)</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant&#146;s ability to record, process, summarize and
report financial data and have identified for the registrant&#146;s auditors any material weaknesses in internal controls; and</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>b)</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls; and</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>6.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>26</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="44%" colspan="2" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>Date:&nbsp;&nbsp;May 19, 2003</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>by:&nbsp;</font></p> </td>
<td width="40%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;text-align:center;'><br> <font size=2>/s/ D</font><font SIZE=1>AVID </font><font SIZE=2>B</font><font SIZE=1>AILEY</font></p> </td> </tr>
<tr>
<td width="49%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td> </tr>
<tr>
<td width="49%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="7%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="4%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="40%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;text-align:center;'><b><font size=1>David Bailey</font></b><br> <b><font size=1>President, Chief Executive Officer,</font></b><br> <b><font size=1>Chairman and
Director</font></b><br> <b><font size=1>(principal executive officer)</font></b></p> </td> </tr> </table> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>27</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>Certification</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>I, John Bily, certify that:</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>1.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>I have reviewed this quarterly report on Form 10-Q of STAAR Surgical
Company;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>2.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly
report;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>3.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
report;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>4.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font
size=2>a.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>b.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
&#147;Evaluation Date&#148;); and</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>c.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>presented in this quarterly report
our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>5.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant&#146;s auditors and the audit committee of
registrant&#146;s board of directors (or persons performing the equivalent function):</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>a.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant&#146;s ability to record, process, summarize and
report financial data and have identified for the registrant&#146;s auditors any material weaknesses in internal controls; and</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.72in;'><font size=2>b.</font></p><p
style='margin-bottom:0pt;margin-top:-11pt;margin-left:1.08in;'><font size=2>any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls; and</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>6.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The registrant&#146;s other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font
size=2>28</font></p>
<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>
 <p style=' margin-bottom:0pt; margin-top:0pt;'>&nbsp;</p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="44%" colspan="2" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>Date:&nbsp;&nbsp;May 19, 2003</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>by:&nbsp;</font></p> </td>
<td width="40%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>/s/ J</font><font SIZE=1>OHN </font><font SIZE=2>B</font><font SIZE=1>ILY</font></p> </td> </tr>
<tr>
<td width="49%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td> </tr>
<tr>
<td width="49%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="7%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="4%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'>&nbsp;</p> </td>
<td width="40%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><b><font size=1>John Bily</font></b><br> <b><font size=1>Chief Financial Officer (principal</font></b><br> <b><font size=1>accounting and financial officer)</font></b></p>
</td> </tr> </table> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <br><p style='margin-bottom:0pt;text-align:center'><font size=2>29</font></p>
</BODY></HTML>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>3
<FILENAME>dex47.htm
<DESCRIPTION>AMENDMENT NO 1 TO STOCKHOLDERS RIGHTS PLAN
<TEXT>
<HTML><HEAD>
<TITLE>Amendment No 1 to Stockholders Rights Plan</TITLE>
</HEAD>
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<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Exhibit 4.7
</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMENDMENT NO. 1 TO </B></FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>STOCKHOLDER&#146;S RIGHTS PLAN </B></FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">This Amendment No. 1 to Stockholders&#146; Rights Plan (this &#147;Amendment&#146;), dated as of April 21, 2003, is made by STAAR Surgical
Company, a Delaware corporation (the &#147;Company&#148;). </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">RECITALS </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">A. On April 20, 1995,
the Board of Directors of the Company authorized and declared a dividend distribution of one Right for each share of Common Stock outstanding at the close of business on April 20, 1995 pursuant to the Stockholders&#146; Rights Plan of the Company,
dated as of April 20, 2003 (the &#147;Plan&#148;). The Plan was approved by the stockholders of the Company on June 6, 2003. </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">B. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Plan. </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">C. Section 26(a) of the Plan provides that, as long as the
Rights are redeemable, the Company may supplement or amend the Plan in its sole discretion without the consent of holders of Rights or holders of Common Stock. </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">D. The board of directors of the Company has determined that it is in the best interest of the Company and its stockholders to amend the
Plan as set forth below: </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">AMENDMENT </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Plan is hereby amended as follows: </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1. Section 1(a)(ii) of the Plan is hereby amended and restated
to read in its entirety as follows: </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">&#147;(ii) any Person who or which, together with Affiliates and Associates of such Person, would be an Acquiring Person solely by reason of (A) being the Beneficial Owner of shares of Voting Stock of the Company, the Beneficial
Ownership of which was acquired by such Persons pursuant to any action or transaction or series of related actions or transactions approved by the Board of Directors before such Person otherwise became an Acquiring Person or (B) a reduction in the
number of issued and outstanding shares of Voting Stock of the Company pursuant to a transaction or a series of related transactions approved by the Board of Directors; provided, however, that in the event such Person described in the </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">-1- </FONT></P>


<p Style='page-break-before:always'>
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<P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">foregoing
clause (ii) does not become an Acquiring Person by reason of subclause (A) or (B) of said clause (ii), such Person shall nonetheless become an Acquiring Person in the event such Person thereafter acquires Beneficial Ownership of an additional one
percent (1%) of the Voting Stock of the Company, unless the acquisition of such additional Voting Stock would not result in such Person becoming an Acquiring Person by reason of subclause (A) or (B) of subclause (ii).&#148; </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2. Section 1(h) of the Plan is hereby deleted from the Plan in
its entirety. </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3. Section 3(a) of the Plan is
hereby amended and restated in its entirety to read as follows: </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>&#147;(a) Provision of Rights Certificate</B>. &#147;Until the earlier of (i) the close of business on the tenth (10th) day after the Stock Acquisition Date (or, if the tenth (10th) day after the
Stock Acquisition Date occurs before the Record Date, the close of business on the Record Date), or (ii) the close of business on the tenth (10th) business day is first published or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding (the earlier of (i) or (ii) being herein referred
to as the &#147;<I>Distribution Date</I>&#148;), (x) the Rights will be evidenced (subject to the provisions of <I>paragraph (b)</I> of this <I>Section 3</I>) by the certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of <I>Exhibit A</I> hereto (the &#147;<I>Rights Certificates</I>&#148;), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of rights per share of Common Stock has been made pursuant to <I>Section 11(p)</I> hereof, at the time of distribution of the
Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with <I>Section 14(a)</I> hereof) so that Rights Certificates representing only whole number of Rights are distributed and cash is paid in
lieu of any fractional </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">-2- </FONT></P>


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<P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4. In Section 7(a), the words &#147;April 20, 2003&#148; is hereby replaced with the words &#147;April 20, 2006.&#148; </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5. Section 11(a)(ii) of Plan is hereby amended and restated in
its entirety to read as follows: </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">&#147;(ii) Reduction in Purchase Price in the Event of Stock Acquisition. In the event that any Person shall, at any time after the Rights Declaration Date (as defined in the WHEREAS clause at the beginning of this Plan), become an
Acquiring Person, unless the event causing such person to become an Acquiring Person is an acquisition of shares of Common Stock pursuant to a tender offer or an exchange offer for all outstanding shares of Common stock at a price and on terms
determined by at least a majority of the members of the Board of Directors who are not officers of the Company, after receiving advice from one or more investment banking firms, to be (a) at a price which is fair to stockholders (taking into account
all factors which such members of the Board deem relevant including, without limitation, prices which could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value) and (b) otherwise in the
best interests of the Company and its stockholders (a &#147;Qualifying Tender Offer&#148;), then, subject to the last sentence of Section 23(a) and except as otherwise provided in this Section 11, each holder of a Right (except as provided in
Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof, the number of shares of Common Stock as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of shares of Common
Stock for which a Right was exercisable immediately prior to the first occurrence of the Section 11(a)(ii) Event and (y) dividing that product by fifty percent (50%) of the current market price (as determined pursuant to Section 11(d) hereof) per
share of the Common Stock on the date of the occurrence of such Section 11(a)(ii) Event.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">6. Section 25 of the Plan is hereby amended by replacing the name and address of Pollet, Skousen &amp;Woodbury, a law corporation with the following: </FONT></P><P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#147;Sheppard, Mullin, Richter &amp; Hampton
LLP </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">333 South Hope St. </FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Los Angeles, California 90071 </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Attention: Peter M. Menard, Esq.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">-3- </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">7. Section
26(c) of the Plan is hereby deleted. </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">8. Exhibit
A to the Plan, the Form of Rights Certificate (the &#147;Certificate&#148;), is hereby amended as follows: </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a) The legend of the Certificate is amended by replacing the words &#147;April 20, 2003&#148; with the words &#147;April
20, 2006.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b) The first
paragraph of the Certificate after the legend is amended by replacing the words &#147;April 20, 2003&#148; with the words &#147;April 20, 2006.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(c) The sixth paragraph of the Certificate after the legend is amended and restated in its entirety to read as follows:
</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#147;Subject to the provisions
of the Rights Plan the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.001 per Right at any time prior to the earlier of the close of business on (i) the tenth (10th) day following the
Stock Acquisition Date (as such time period may be extended pursuant to the Rights Plan) and (ii) the Final Expiration Date. After the expiration of the redemption period, the company&#146;s right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to ten percent (10%) or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company.&#148; </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">-4- </FONT></P>


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<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In witness
whereof, this Amendment No. 1 to Stockholders&#146; Rights Plan is executed by the Company and the Rights Agent as of the date first set forth above. </FONT></P><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><DIV STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>STARR SURGICAL</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>COMPANY</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="2%"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;D<SMALL>AVID</SMALL>
B<SMALL>AILEY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD></TR>
<TR>
<TD><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">David Bailey</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">President and Chairman of the Board</FONT></P></TD></TR>
</TABLE></DIV><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><DIV STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMERICAN STOCK</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>TRANSFER</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>&amp; TRUST COMPANY</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="2%"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;H<SMALL>ERBERT</SMALL> J.
L<SMALL>EMMER&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Name: HERBERT J. LEMMER</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Title: Vice President</FONT></P></TD></TR>
</TABLE></DIV><P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">-5- </FONT></P>

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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>dex991.htm
<DESCRIPTION>CERTIFICATIONS
<TEXT>
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<TITLE>Certifications</TITLE>
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  <p style=' margin-bottom:0pt;text-align:right; margin-top:8pt;'><b><font size=2>Exhibit 99.1</font></b></p> <p style=' margin-bottom:0pt;text-align:center; margin-top:16pt;'><b><font size=2>Certification pursuant to
18 U.S.C. Section 1350,</font></b><br><b><font size=2>As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</font></b></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>In connection with the filing of the Quarterly
Report on Form 10-Q for the quarterly period ended April 4, 2003 (the &#147;Report&#148;) by STAAR Surgical Company (&#147;Registrant&#148;), each of the undersigned hereby certifies that:</font></p> <p
style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>1.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, and</font></p> <p style='margin-bottom:0;margin-top:6pt;text-indent:0.36in;'><font size=2>2.</font></p><p style='margin-bottom:0pt;margin-top:-11pt;margin-left:0.72in;'><font size=2>The information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant as of and for the periods presented in the Report.</font></p> <p style=' margin-bottom:0pt; margin-top:0pt;'><font
size=2>&nbsp;</font></p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="44%" colspan="2" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br > <br > </p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>By:&nbsp;</font></p> </td>
<td width="40%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>/</font><font size=2>s/</font><font size=2> </font><font SIZE=2>D</font><font SIZE=1>AVID </font><font SIZE=2>B</font><font SIZE=1>AILEY</font></p> </td>
</tr>
<tr>
<td width="49%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Dated May 19, 2003</font></p> </td>
<td width="7%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="40%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><b><font size=1>David Bailey</font></b><br> <b><font size=1>President, Chief Executive Officer,</font></b><br> <b><font size=1>Chairman and Director</font></b><br> <b><font
size=1>(principal executive officer)</font></b></p> </td> </tr> </table> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p>
<table align=center width="65%" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="44%" colspan="2" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br > <br > </p> </td>
<td width="7%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>By:&nbsp;</font></p> </td>
<td width="40%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><br> <font size=2>/s/ J</font><font SIZE=1>OHN </font><font SIZE=2>B</font><font SIZE=1>ILY</font></p> </td> </tr>
<tr>
<td width="49%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="7%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p><font size=1>&nbsp;</font></p> </td>
<td valign=top > <hr noshade width="100%" color="black" size=1> </td> </tr>
<tr>
<td width="49%" valign=bottom > <p style='margin-bottom:0pt;margin-top:0in;'><font size=2>Dated May 19, 2003</font></p> </td>
<td width="7%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="4%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><font size=1>&nbsp;</font></p> </td>
<td width="40%" valign=top > <p style='margin-bottom:0pt;margin-top:0in;'><b><font size=1>John Bily</font></b><br> <b><font size=1>Chief Financial Officer (principal</font></b><br> <b><font size=1>accounting and financial officer)</font></b></p>
</td> </tr> </table> <p style=' margin-bottom:0pt; margin-top:0pt;'><font size=2>&nbsp;</font></p> <p style=' margin-bottom:0pt; margin-top:8pt;'><font size=2>A signed original of this written statement required by Section 906 has been provided to
STAAR Surgical Company and will be furnished to the Securities and Exchange Commission or its staff upon request.</font></p>
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