<SEC-DOCUMENT>0001144204-17-059934.txt : 20171229
<SEC-HEADER>0001144204-17-059934.hdr.sgml : 20171229
<ACCEPTANCE-DATETIME>20171117154553
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-17-059934
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20171117

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			STAAR SURGICAL CO
		CENTRAL INDEX KEY:			0000718937
		STANDARD INDUSTRIAL CLASSIFICATION:	OPHTHALMIC GOODS [3851]
		IRS NUMBER:				953797439
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1228

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1911 WALKER AVE
		CITY:			MONROVIA
		STATE:			CA
		ZIP:			91016
		BUSINESS PHONE:		6263037902

	MAIL ADDRESS:	
		STREET 1:		1911 WALKER AVE
		CITY:			MONROVIA
		STATE:			CA
		ZIP:			91016

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	STAAR SURGICAL COMPANY
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<IMG SRC="logo_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">November 17, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>[VIA EDGAR]</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Kevin J. Kuhar</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Accounting Branch Chief</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Office of Electronics and Machinery</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">United States Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">100 F Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 1in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Re:</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>STAAR
Surgical Company</B></FONT></TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Form 10-K for the fiscal year ended December
30, 2016</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Filed March 2, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Form 10-Q for the quarter ended June
30, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Filed August 2, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>File No. 000-11634</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dear Mr. Kuhar:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This letter responds to the comment letter
dated November 3, 2017 regarding the comments of the staff of the Division of Corporation Finance (the &ldquo;Staff&rdquo;) of
the Securities and Exchange Commission (the &ldquo;SEC&rdquo;) with respect to the above referenced (i) Annual Report on Form 10-K
for the fiscal year ended December 30, 2016 of STAAR Surgical Company (&ldquo;STAAR&rdquo; or the &ldquo;Company&rdquo;) and (ii)
Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 of the Company. For the convenience of the Staff, we have reproduced
the Staff&rsquo;s comment in bold type and have followed such comment with the Company&rsquo;s response.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Form 10-Q for the Quarterly Period Ended June 30, 2017</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Note 12 &ndash; Commitments and Contingencies</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U STYLE="text-decoration: none">&nbsp;</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U></U></B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Stockholders Securities Litigation: Todd Action, page
13</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 13.5pt"></TD><TD STYLE="width: 18pt"><B>1.</B></TD><TD><B>We note that on June 20, 2017 you entered into a stipulation agreement in potential settlement of this class action lawsuit
for $7 million, as filed with the U.S. District Court of the Central District of California. Please provide us with your analysis
of ASC 450-20-25 and ASC 450-20-30 in determining that no loss contingency accrual relating to this action was required as of June
30, 2017. Clearly explain to us why the loss contingency was not probable and estimable as of that date.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Background</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 8, 2014, a putative securities class action lawsuit
was filed by Edward Todd against STAAR and three officers in the U.S. District Court for the Central District of California (the
&ldquo;<I>Todd</I> complaint&rdquo;). The Company reviewed the Company&rsquo;s applicable insurance policies and provided notice
of the <I>Todd </I>complaint to the Company&rsquo;s insurance carriers. On October 20, 2014, plaintiff amended its complaint, dismissed
two Company officers, added one other officer, reduced the alleged class period to November 1, 2013 through September 29, 2014,
and demanded compensatory damages and attorneys&rsquo; fees. On January 5, 2017, the court granted plaintiff&rsquo;s motion for
class certification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<IMG SRC="logo_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 20, 2017, plaintiff filed an unopposed ex parte application
for preliminary approval of a class action settlement in the amount of $7.0 million, which included a Settlement Stipulation agreement.
The settlement discussions included the Company&rsquo;s insurance carriers who agreed to pay 100% of the $7.0 million full and
final settlement. As part of the settlement terms, the settlement funds would be directly deposited by the insurance carriers to
an escrow account administered by a court-approved third party who would wire the funds to the plaintiff. On July 10, 2017, the
court preliminarily granted the plaintiff&rsquo;s settlement application. By July 28, 2017, (before the Company filed its Quarterly
Report on Form 10-Q for the period ended June 30, 2017), the Company&rsquo;s insurance carriers had wired the settlement funds
into the escrow account. The settlement amount and the fact that the insurance carriers would cover the full settlement amount
was disclosed in Note 12 of the Company&rsquo;s Quarterly Report on Form 10-Q for the period ended June 30, 2017. On October 23,
2017, the court granted plaintiff&rsquo;s application for final approval of the settlement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Loss Contingency Analysis</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">ASC 450-20-25-2, <I>Loss Contingencies</I>, requires that an
estimated loss from a loss contingency be accrued if: (i) it is probable that a liability has been incurred at the date of the
financial statements, and (ii) the amount of the loss can be reasonably estimated. As a result of the Settlement Stipulation agreement,
the Company determined that a loss of $7.0 million was both probable and reasonably estimable and should be accrued in accordance
with ASC 450-20-25 as of June 30, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company entered into the Settlement Stipulation agreement
with the plaintiff with the understanding and acknowledgement from its insurance carriers that the insurance carriers would cover
the settlement amount and thus the Company had a corresponding simultaneous insurance recovery that was realizable as of June 30,
2017. Based upon the unique circumstances of this settlement, the Company respectfully submits that the settlement simultaneously
met both the conditions of 450-20-25-2 and 450-30-25-1. The insurance carriers were directly involved and included in settlement
discussions with the Company and the plaintiff&rsquo;s counsel, and the insurance carriers agreed to and paid the $7.0 million
settlement directly to the court-authorized escrow account. As contemplated by the terms of the settlement, the settlement proceeds
paid by the insurance carriers were wired directly from the carriers to the court-authorized escrow account by July 28, 2017, prior
to the filing of the Company&rsquo;s Quarterly Report on Form 10-Q for the period ended June 30, 2017. As a result of the facts
and circumstances, the Company offset the loss contingency against the insurance recovery in its Statement of Operations and also
offset the insurance receivable and settlement accrual in its Balance Sheet as of and for the period ended June 30, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">After filing its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2017, the Company reexamined its accounting for the settlement in response to the Staff&rsquo;s November 3, 2017
comment letter and determined the receivable and payable should have been separately reported within current assets and current
liabilities (rather than offset) as of June 30, 2017. Consequently, the Company recorded the liability associated with the settlement
and the corresponding insurance receivable of $7.0 million as of September 29, 2017 in the consolidated balance sheet in its Quarterly
Report on Form 10-Q for the quarter ended September 29, 2017. On October 23, 2017, the Company relieved both the receivable and
the payable related to this settlement pursuant to the final approval by the court. These entries, or lack thereof, did not result
in any impact to the consolidated statements of operations, consolidated statements of cash flows or working capital for the second
or third quarters of 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<IMG SRC="logo_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company performed a comprehensive assessment of the error
related to the reporting of the settlement receivable and insurance recovery payable in the Company&rsquo;s current assets and
current liabilities as of June 30, 2017. The Company&rsquo;s assessment considered both quantitative and qualitative factors and
the effect of the error, including an analysis of whether the error had a material impact on any trend in the Company&rsquo;s reported
results. Consistent with the guidance provided in SAB 99, other applicable Staff guidance and related requirements, including ASC
250-10-45-27, the Company evaluated the error by quantifying its effect on the previously issued financial statements and related
disclosures for the period ended June 30, 2017. In particular, ASC 250-10-45-27 notes that in determining materiality for the purpose
of reporting the correction of an error, amounts shall be related to the estimated income for the full fiscal year and also to
the effect on the trend of earnings. This guidance also provides that changes that are material with respect to an interim period
but not material with respect to the estimated income for the full fiscal year or to the trend of earnings shall be separately
disclosed in the interim period. Given that there is no impact to the Company&rsquo;s statement of operations, statement of cash
flows, or working capital, management concluded that the untimely accrual of the loss and the related offsetting insurance receivable
had no material impact on the Company&rsquo;s income for the full fiscal year and had no effect the trend of earnings on a running-quarter
or year-over-year basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Based on the Company&rsquo;s analysis conducted in accordance
with SAB 99, the Company concluded that although the error was quantitatively significant to the consolidated balance sheet at
June 30, 2017, the error was immaterial when viewed in light of all quantitative and qualitative factors, including the absence
of any effect on (i) the Company&rsquo;s consolidated statements of operations, consolidated statements of cash flows, or earnings-per-share,
(ii) working capital, bank or lease financial covenants, or analyst&rsquo;s estimates (iii) trends and the surrounding facts and
circumstances relating to the error. Additionally, the settlement amount and the fact that the insurance carriers would cover the
full settlement amount was disclosed in Note 12 of the Company&rsquo;s Quarterly Report on Form 10-Q for the period ended June
30, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, the Company separately considered the effect of
the error on its internal control over financial reporting and on its disclosure controls and procedures. Management noted that
that effective controls provide reasonable, not absolute, assurance and that the error identified in connection with the matter
described herein was immaterial based on all quantitative and qualitative factors, including the absence of any impact to the Company&rsquo;s
consolidated statement of operations, its consolidated statement of cash flows and net income (loss) per share. Based on this assessment,
management concluded that the Company&rsquo;s internal control over financial reporting and disclosure controls and procedures
were effective at the reasonable assurance level as of June 30, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 13.5pt"></TD><TD STYLE="width: 18pt"><B>2.</B></TD><TD><B>Describe to us your legal right to recoveries from your insurance carriers for any losses relating to this action. Provide
us with your separate analysis of the likelihood of the realization of such recoveries. Support any conclusion that recovery is
probable, specifically addressing any discussions to date with the insurance carriers, your history of similar claims with the
insurance carriers and whether they have contested any such claims. Refer to ASC 450-30-25 and ASC 450-30-50.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Legal Right to Recoveries from Insurance Carriers</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Promptly after the <I>Todd </I>complaint was filed, the Company
analyzed its insurance agreements and concluded that the terms of its insurance agreements obligated its insurance carriers to
respond and pay all liabilities (legal fees, expenses, and possible settlements or judgments) against the Company and the named
defendants, up to the amount of each insurance carrier&rsquo;s respective coverage limit and subject to the requirement that the
Company pay the first $500,000 in expenses related to the complaint (the self-insurance retention limit). The initial $500,000
in costs were expensed by the Company as incurred during 2014 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In July 2014, the Company&rsquo;s primary insurance carrier
responded to the Company&rsquo;s notice of the <I>Todd </I>complaint and acknowledged that the Company&rsquo;s insurance program
provided coverage for STAAR and the individual defendants for the allegations contained in the <I>Todd </I>complaint. The Company&rsquo;s
legal right to recovery was probable, and was validated when the insurance carriers funded the escrow account to satisfy the settlement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<IMG SRC="logo_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Likelihood of Realization of Recoveries </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company determined the likelihood of the realization of
recoveries from the Company&rsquo;s insurance carriers was probable as of June 30, 2017, with the filing of the Settlement Stipulation
agreement with the court on June 20, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The initial $10 million in coverage from the Company&rsquo;s
insurance program that applied to the <I>Todd</I> complaint was provided by CNA Financial Corporation (&ldquo;CNA&rdquo;), an A,
XV-rated insurance company, and Argonaut Insurance Company (&ldquo;Argo&rdquo;), an A, XII-rated insurance company. The Company&rsquo;s
insurance carriers attempted to settle the <I>Todd</I> complaint, and the insurance carriers actively participated in settlement
discussions with plaintiff and the Company. Prior to the Company accepting the $7.0 million settlement proposal, the Company had
obtained written notification the claim was covered under their insurance policies and the insurance carriers agreed to pay the
proposed settlement in full.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Conclusion that Recovery is Probable </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company concluded the payment of the $7.0 million settlement
by the Company&rsquo;s insurance carriers was probable as of June 30, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In accordance with the Company&rsquo;s insurance policies, the
Company&rsquo;s insurance carriers were involved in the settlement discussions and agreed with plaintiff&rsquo;s counsel on the
settlement amount. Prior to reaching agreement on the settlement amount, the Company&rsquo;s insurance carriers affirmed they would
fully fund the settlement. Counsel for defendants obtained the express consent to the terms of the Settlement Stipulation agreement
before it was executed, including the provision that the insurance carriers would fund the settlement. In court filings, the parties
affirmed that the Company&rsquo;s insurance carriers agreed that they would fully fund the $7.0 million settlement amount. On June
20, 2017, plaintiff sought preliminary approval of the proposed settlement. The Settlement Stipulation agreement filed with the
court by plaintiff provided, among other things, that the $7.0 million settlement amount would be &ldquo;wired on behalf of all
Defendants and Released Persons out of insurance proceeds from STAAR&rsquo;s Insurance Policies into the Settlement Escrow Account
no later than fifteen (15) business days after &hellip; the Court entering the Preliminary Approval Order.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Based on the above, as of June 30, 2017, the Company concluded
that it was probable that the Company&rsquo;s insurance carriers &ndash; well-established, financially stable institutions &ndash;
would honor their contractual commitments, which they had continuously affirmed during the course of the settlement discussions,
and fully fund the $7.0 million settlement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 10, 2017, the court granted plaintiff&rsquo;s application
for preliminary approval of the settlement. By July 28, 2017, the Company&rsquo;s insurance carriers directly funded the entire
$7.0 million settlement, as agreed, to the escrow account noted above established by the plaintiff&rsquo;s counsel and authorized
by the court, which was prior to the date the Company filed its Quarterly Report on Form 10-Q for the period ended June 30, 2017.
On October 23, 2017, the court granted plaintiff&rsquo;s application for final approval of the settlement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company updated its disclosure regarding this matter in
its Quarterly Report on Form 10-Q for the quarter ended September 29, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>History of Similar Claims with the Insurance Carriers</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The express terms of the Company&rsquo;s insurance policies
support coverage for the claims settled in the <I>Todd </I>complaint. The insurance carriers acknowledged that the insurance policies
covered the claims in the <I>Todd </I>complaint. After the Company paid its $500,000 self-insurance retention limit, CNA promptly
assumed its contractual obligations under its insurance policy and, starting in 2016, began paying all expenses (legal fees and
other expenses) arising from the <I>Todd</I> complaint. CNA and Argo agreed to fully pay the $7.0 million settlement proposal before
counsel for defendants accepted the settlement proposal and funded the amount as of July 28, 2017, to the escrow account established
by the plaintiff&rsquo;s counsel and authorized by the court (prior to the filing of the Company&rsquo;s Quarterly Report on Form
10-Q for the period ended June 30, 2017).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<IMG SRC="logo_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Have Insurance Carriers Contested Claims</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The insurance carriers never contested any claims submitted
for the <I>Todd </I>complaint, and never requested that the Company contribute to the settlement. Coverage was confirmed in 2014
and the insurance carriers never contested any claims for expenses, legal fees or otherwise, submitted arising from the <I>Todd</I>
complaint. The Company&rsquo;s insurance carriers funded the full amount of the settlement by July 28, 2017 to the escrow account
established by the plaintiff&rsquo;s counsel and authorized by the court.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If you have any questions or comments with regard to these responses
or other matters, please call the undersigned at (626) 303-7902, ext. 2252.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 61%; padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 39%; padding: 0; text-underline-color: black; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Very truly yours,</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>/s/ Deborah Andrews</U></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deborah Andrews</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-underline-color: black; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Financial Officer</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">cc:</TD><TD STYLE="text-align: justify">Dennis Hult, Securities and Exchange Commission</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Caleb French, Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Daniel Morris, Special Counsel, Securities
and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Samuel J. Gesten, Chief Legal Officer&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Joel H. Trotter, Latham &amp; Watkins LLP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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