STAAR Surgical Co (STAA) 2003 Q4 法說會逐字稿

Good afternoon ladies and gentlemen and welcome to the STAAR Surgical fourth quarter of 2003 earnings conference call. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. (Operator Instructions). As a reminder, this conference is being recorded today, Wednesday, March 3rd of 2004. I would now like to turn the conference over to Mr. Doug Sherk. Please go ahead.

Thank you operator and good afternoon everyone. This is Doug Sherk with the EBC Group. Thank you for joining us this afternoon for the STAAR Surgical conference call to review the financial results for the fourth quarter and full year that ended January 2, 2004. The news release reviewing the fourth quarter and full year results crossed the wire this afternoon shortly after the market closed. If you have not received a copy of the release and would like one, please call our office at 415-896-6820 and we will get one to you immediately. Additionally we have arranged for a taped replay of this call, which may be accessed by phone. The replay will take effect approximately one hour after the call's conclusion and remain in effect through 11:59 PM Pacific time on Friday, March 5th. The dial-in number to access the replay is 800-405-2236, or for international callers, 303-590-3000, and both numbers need a passcode of 568126-pound sign. This call is being broadcast live with an archived replay also available. To access the webcast, go to STAAR's web site at www.STAAR.com. The webcast archive of the call will be available until the company releases its first-quarter 2004 results sometime in late April.

Before we get started, during the course of this conference call, the Company will make projections or other forward-looking statements regarding future events, including statements about its domestic sales, the expected timing for its submission of a formal request for a re-audit of its manufacturing facilities, as well as the timing for an audit of the Dow (ph) plant in Switzerland, the expected timing of the FDA approval for implantable contact lenses and the Company's beliefs about its revenue and net earnings for the full year ending December 31, 2004. We wish to caution that such segments are just predictions and involve results and uncertainties. Actual results may differ materially. Factors that may affect the actual results are detailed in the Company's filings with the SEC, including its most recent filing of the form 10-Q and 10-K. In addition, the factors underlying the Company's forecast or dynamics are subject to change, and therefore, the forecasts are to be assumed to be realistic only as of the date they're given. The Company does not undertake to update them, however, they may choose to do so from time to time, and if they do so, they will submit the update to the investing public. I'd now like to turn the call over to David Bailey, President and Chief Executive Officer of STAAR Surgical.

Thanks a lot Doug and welcome to the call. As you are all well aware, we received the expedited FDA panel review for Visian ICL mid-2003, which caused a huge additional work load (ph) for the entire organization and staff. This event alone made the fourth quarter very challenging for us, coming as it did toward the end of what had been end an eventful year for the Company. During 2003, we have laid the foundations for our future entry into the U.S. safety protractive implant market. However, as we work closely with the FDA of calling (ph) the successful panel recommendation, we have painfully discovered some shortcomings in our internal quality system which we're working diligently to address. As we have discussed with you previously, these issues will need to be resolved before we can move to the next level and bring our innovative technology to the market. This is obviously the key focus of current activity at STAAR.

During the year, we made significant progress in a number of strategic objectives. The exciting steps we took to further develop our VisianICL, including the expedited review, should not be allowed to overshadow some of the other operational milestones we've achieved this year. During 2003, for example, we strengthened our ability to focus solely on running the Company by resolving all of outstanding legacy litigation involving staff. We strengthened our financial position by paying down $2.9 million in debt and by collecting all material outstanding loans due to the Company. We continued to pour strong international sales growth with the ICL. We launched the world's first preloaded IOL (ph) in Europe and we achieved seven consecutive quarters of improving gross margin. The fourth quarter results were in line with what we had communicated to you on January 7th with total product sales in quarter four of '03 of $12.75 million. We achieve 50.4 million in sales for the full year. The ICL and the Toric ICL continued to grow during 2003 with 31 percent revenue growth versus 2002. We have seen a solid start to 2004, even without the benefit of new approvals and the confusion which arose in international markets as a result of the FDA awarding letter. We believe that in Europe, we're beginning to see market share gains at the expense of both the PRL and the (indiscernible) lens. This growth seems to be underpinned by the superiority of our VisianToric lens.

Our U.S. trial for the VisianToric lens continues to progress well and we expect to achieve our target number of implants by the end of March or very early in April, dependent upon patients' schedules. We now have 18 (ph) lenses implanted in the full 125 implants scheduled. We already have 35 patients with six months or more of follow-up in this study and we will use this (indiscernible) to support and further strengthen our submissions for approval of the VisianToric lens in Canada and Korea.

In the U.S., sales declined a disappointing 5 percent versus the fourth quarter of 2002. This decline was primarily due to our bare (ph) silicon (ph) business. Unlike Europe where we're benefiting from sales of the superb new preloading silicon IOL system, filling out of our Japanese joint venture, the U.S. has yet to benefit from the launch of this state of the art system. Although our specialty (indiscernible) lens sales increased, this could not make up for the base silicon decline. It is clear we face continued challenges with this part of our business.

Regarding AquaFlow, we (indiscernible) to stop the decline we had seen in the first half of the year. However, we did not accomplish this objective and suffered the consequent year-on-year decline of 19 percent. We would need to increase our efforts in sales and marketing and explore some changes in the product in order to reverse this decline. As you will appreciate, this has taken a back seat to preparing the U.S. Visian launch, including our audit interaction with the FDA. It is clear that for our U.S. cataract business to offset the silicon decline, we need continued growth of our specialty lenses, the (indiscernible) and the silicon Toric, along with the introduction of a Collamer three-piece lens with injector (ph). We've dedicated significant R&D resource to the resolution of this latter project and believe previously communicated timelines of a launch in early quarter three will be met. In the interim, we will use our increased sales capabilities and coverage to grow auxiliary cataract products, such as our Viscoelastic and (indiscernible) disposables.

In our international cataract business, we're focused on the preloaded where (indiscernible) is high and sales are building. Over the long-term as we carry out the technology transfer from our Japanese joint venture, the preloaded will have a very positive impact on gross margins.

Our fourth quarter net loss per share was 19 cents and our pro forma net loss per share for the full year was 43 cents. Quarter four was impacted by the previously forecasted increase in spending for the U.S. sales and marketing. Approximately 1 million of the 1.5 million in total increase was directly related to the pending ICL approval and anticipated rollout. The increased spending covered several initiatives, including the recruitment and training of application specialists to profit physician training on the ICL. New hires included a dedicated refractive team (ph) that will be instrumental in the launch and the appointment of a director of education to manage all of the training courses and the application specialists. We also created standardized training materials (indiscernible) active presentations and course handout materials to be used for introducing surgeons to the surgical technique and the product. This department will be a crucial component of the VisianICL launch in the U.S. market.

We also established a new the direct geographic region in the U.S. that had not been targeted for sometime. We added seven direct reps to that region, including four new employees and three previously indirect reps who have now joined the new (indiscernible). The new reps are now trained and combined with the experienced sales personnel from former indirect territories, we expect to see rapidly increasing presence in the newly expanded regions.

We are also active in developing marketing campaigns for our patented Collamer lens material, (indiscernible) and also in anticipation of the introduction of the Collamer based Visian ICL in the US. During the AAO (ph) meeting, we introduced our new company logo, as well as a new branding campaign that we believe will successfully link the branding of the Collamer IOL with the VisianICL. In addition, all of the marketing and patient education materials for the physician practice implementation packages that will promote the VisianICL to patients (indiscernible) launch have been created. We believe we are well positioned to continue to gain the support of surgeons once the VisianICL has been approved by the FDA. In addition, we're also beginning to provide some of these educational materials to the international markets where they have been well-received. Interest in the lens remains high. Through February 21st 2004, a total of 360 physicians have been trained in the VisianICL technique. We expect to train an additional 380 physicians during 2004, bringing our year-end total to 740. Of these 740, 680 will require proctoring from the application specialist during their first procedures. So now we continue to exceed our capacity for our courses. We will be able to increase the number of courses we offer once the device is approved. Until then, we are limited to offering mini (ph) fellowships in one of our clinical trial sites using only enrolled student patients. The (indiscernible) we had 26 physicians attending the live surgery with Dr. Steven Smith (ph) where he went through the standardized didactic and the web laps (ph). Doctors Slade and Delaney (ph) will be teaching the course in Phoenix this upcoming weekend with 47 physicians enrolled. When we get final FDA approval, we will expand the venues to accommodate larger numbers.

All of that said, I would like to give you an update on the progress we have made to resolve the compliance issues noted in the FDA's warning letter dated December 19th. One significant factor which we have become well of last week is an indication that the FDA will want to audit our manufacturing facility in (indiscernible) Switzerland before final approval of these products. The last audit of the Nidau (ph) facility took place in 2002 and the FDA audit is usually carried out every two years. Although this has not yet been officially confirmed, we strongly believe that this will now need to take place during the next two months. Working with the FDA, both in L.A. and Washington, has been very productive for STAAR and will leave our company all of the stronger in the long-term. Extended FDA involvement in Nidau should not be therefore be viewed negatively. It will, however, almost certainly extend the previous expectations for the approval timeline that we discussed with you in January. Even so, we do not believe that the later approval date will have a material impact on the rollout and the sales success with the product. As we have stated earlier, interest in the ICL is very high and the technology is here to stay. Our clinical and in-market results are outstanding. And based on our interpretation of the recent (indiscernible) AMA panel meeting results, Visian is much superior to the nearest competition.

Since our panel approval in October, we've gathered more patient data on full year results from the U.S. clinical trial and this data continues to reinforce both the safety and efficacy of the VisianICL. We also expect to bring the VisianICL Toric lens to the U.S. sometime next year. The long-term prospects for this overall market segment remains exceptionally healthy.

Since we spoke with you on January 7th, here is what we have accomplished towards our goal of implementing an action plan that fully satisfies both ourselves and the FDA. On February 12th, we met with the local FDA district before submitting our first formal progress report to all departments, both central and local. The meeting lasted approximately 1 hour, during which we reviewed our progress, engaged our corrective action plan and updated them on the structural changes we were making within the organization to ensure more effective self-regulation. The district confirms that they would work with us to accommodate and expedite every audit while ordering (ph) an official request from the company. Currently (ph), we began planning pre-audits by external companies contracted by STAAR who specialize in these types of audits. The pre-audit of the Nidau, Switzerland facility took place during the week of February 23rd and the Monrovia pre-audit is taking place this week. Once both audits are successfully completed, any recommendations implemented and STAAR's Board of Directors is confident we have a fully company, we will request re-audit by the FDA local office. The emphasis is on a successful re-audit in a timely manner, rather than a premature re-audit.

At the same time, we have also continued to hold productive questions with the ODE (ph) regarding labeling as well as our formal response that was submitted on January 14 for the issues raised during the clinical ICL audit. They confirmed we're still under expedited review. We've also made several internal organizational changes this year. We hired a new head of R&D who will report directly to myself. We have also appointed a new head of manufacturing who will be responsible for all production within our Southern California facilities. He will also report directly to me, as well as the head of production in (indiscernible), Switzerland. We expect these changes to significantly strengthen our ability to assure quality manufacturing on a global scale and to maintain full future FDA compliance. We upgraded our complaints department in both Monrovia and Switzerland by adding additional clinical employees who will be responsible for handling the interaction of doctors. We believe that we are now probably reporting all issues as required by the FDA.

We have also completed a root cause analysis of our Collamer single-piece lens as we provided by the FDA's warning letter that determine the origin of some of the complaints that we've received. This analysis indicated that of more than 160,000 implants, there were 26 complaints indicating a post-surgical refractive change, but that this could be prevented by making a minor modification to surgical technique, indicating therefore that the complaints have nothing to do with our Collamer material per se. As a result, we will work with the FDA to supplement the labeling of this product. We do not expect to have, nor has there been any product return to us as a result of this analysis and the letter we wrote to customers. As you can see from the above, our response to the warning letter has been broad-based, far-reaching and is ongoing. We took the decision to reorganize and in some instance, strengthen certain key areas of the organization and we look forward to reporting our continued progress. Concurrently, we continue to build and fund the rest of the organization in anticipation of the loss of the VisianICL in the U.S. market. I would now like to turn the call over to John for an overview of our financial performance.

Thank you, David. During the fourth quarter of 2003, the company moved aggressively forward, preparing for the launch of the VisianICL in the U.S. market, working towards completion of the VisianToric ICL clinical submission, increasing the investment in and organizational effectiveness of R&D and finalizing with the SEC and our external auditors the accounting treatment of loans to former officers and directors. From a financial perspective, the fourth quarter has been a busy investment profit for STAAR, encompassing many activities which David previously summarized in his presentation.

I'd like to briefly go over the financial results, starting with net sales, recap for Q4 and full year 2003. Net sales for the fourth quarter were 12,753,000, a 402,000 and 3 (ph) percent below the prior year quarter of 13156 (ph). Excluding the impact of currency, sales were $1.3 million, or 10 percent below prior year quarter. On a product line basis, ICL sales increased to 20 percent, silicon IOL sales declined 30 percent, Toric IOL sales were flat, Collamer IOL sales increased 18 percent, STAAR (indiscernible) sales increased 8 percent and AquaFlow sales declined 34 percent. For the full-year, net sales were 50.4 million, up 5.3 percent versus 2002. U.S. sales declined 2.5 percent and international sales increased 13.1 percent. Excluding the impact of currency, net sales were $1.1 million, or 2.4 percent below prior year results.

On a product line basis, ICL sales grew 31 percent for the year, silicon lens declined 19 percent, Toric IOL sales increased 3 percent, Collamer IOL sales increased 20 percent, STAAR Vis (ph) sales increased 17 percent and AquaFlow sales declined 19 percent. Gross profit for the fourth quarter was 7.2 million, or 56.6 percent of sales. This compares with prior year gross profit of 6.7 million, or 51.1 percent. The 5.5 percent gross margin improvement is due to reduced cost structures resulting from better yields, efficiencies, increased volume and better management of excess and obsolete inventories, along with the reorganization of the Phacoemulsification manufacturing and repair organization.

Gross profit margins have improved for seven consecutive quarters. Gross margin for the full year 2003 was 55.1 percent versus a prior year 49.7 percent, or a 5.4 percent improvement. Gross profit for 2003 was 27.8 million, 4 million. or a 17 percent improvement over 2003 results. For the quarter, G&A expenses increased 341,000, or 16 percent. G&A expenses in the domestic entity were flat to prior year. International G&A increased due to accounts receivable reserves recorded in the quarter on distributor accounts which we ceased doing business. Additionally, there were some net work upgrades an installation in Nidau (ph), Switzerland and exchange rate -- a modest increase. G&A expenses for 2003 increased 384 percent -- $384,000, or 4 percent over 2003. Again, domestic G&A was flat to prior year and the issues noted in the quarter with the accounts receivable reserves accounted for the full-year increase in G&A. Promotional sales and marketing expenses increased 1.5 million, or 16 percent over the fourth quarter of 2002. In the U.S., promotion sales and marketing increased 990,000, almost entirely due to prelaunch activities for the ICL, including advertising, agency fees, increased headcount and associated recruiting costs. In international, promotion, sales and marketing expenses increased 560,000 due to salaries, trade show expenses and exchange rates. Exchange rates in international accounted for approximately half of that increase. For the full-year, promotion sales and marketing increased 2.7 million, or 16 percent over the prior year. In the U.S., promotion sales and marketing increased 1.4 million for ICL pre-launch activities as in the quarter, advertising agency fees headcount and associated recruiting costs were the main drivers. In the international business, promotion, sales and marketing increased 1.1 million, due primarily to the effect of exchange rates.

Research R&D spending increased 286,000, or 30 percent over the fourth quarter of 2002 and 1.1 million, or 27 percent over the full year 2002. During 2003, the company increased headcount and reorganized the R&D area. (indiscernible) and regulatory successfully submitted the ICL to the FDA ophthalmic devices panel.

Other charges -- there were no other charges or operating expenses in the fourth quarter of 2002, or for that matter, 2003. For the year-to-date period, other charges were 390,000 in 2003, which consisted of patent write-downs, offset by the reversal of reserves on notes to former officers and directors, most of which was subsequently collected. Other charges in 2002 were $1.5 million primarily related to subsidiary closures.

Other income and expense -- for the quarter, other expenses for the quarter were 826,000, or an increase of 719 over prior year quarter. Reduced equity and earnings for the Canna Star (ph) joint venture of 250,000 primarily due to the launch of rollout costs of the new preloaded injector. Additionally, the Company reserved for a note receivable for $430,000 relating to a 1990 investment in a surgical center in China. Some other expense for the year was 639,000, a decrease of the 147,000 over 2002. Interest expense was favorable by $0.25 million, exchange losses declined 350,000, partially offset by the note receivable reserve incurred in the fourth quarter, which I just described. Net loss per share for the fourth quarter of 2003 was 19 cents per share, compared to 58 cents per share in the fourth quarter of 2002. Excluding the impact of the fourth quarter 2002 of the write-down of the Company's deferred tax asset, the net loss per share would have been 6 cents per share. Net loss per share ended January 2, 2004 was 47 cents per share, compared to a 98 loss per share for the year ended January 3, 2003. Excluding the impact of other charges in 2003, net loss per share would have been 45 cents per share. Excluding the impact in 2002 of a write-down of the deferred tax assets and subsidiary closures, the net loss for 2002 would have been 43 cents per share.

Some quick balance sheet and cash flow highlights. During the fourth quarter, cash flow from operating activities was 2,267,000 negative, driven primarily by the net operating loss and an $800,000 increase in inventory. The increase in inventory is primarily due to the anticipated launch of the ICL. Cash used in investing activities was 629,000 negative and largely the purchase of property, plant and equipment. The net decrease in cash for the quarter was 2,575,000. For the year-to-date period, cash used in operating activities was 4,242,000 negative, due to an operating loss and a $1 million increase in inventory. Investing activities included 1.3 million purchase of property, plant and equipment and 3.27 million proceeds from the collection of notes receivable for a total cash generated of 2,151,000. Financing activities included paying down the Wells Fargo revolving line of credit for 2.9 million, net proceeds from a private placement of 8,948,000 and proceeds from the exercise of stock options of 1.649 million for a total cash generated from financing activities of $7,685,000. Cash increased 6,277,000 for the year with cash and cash equivalents of 7.286 million as of January 2, 2004.

I will spend just a brief minute on some guidance for 2004. The guidance for 2004 excludes all U.S. ICL revenue estimates, which at this point in time, are conditional upon a number of variables which are uncertain. I think David explained those variables clearly in his presentation, so the guidance is going to be excluding any U.S. ICL revenue. Without U.S. ICL revenue, the Company expects to achieve low double-digit revenue growth in 2004. Gross margins will continue, are expected to continue to improve over 2003, while sales and marketing and research and development will have modest growth in spending but will improve as a percent of sales. Based on these factors, the net loss for 2004 is anticipated to be approximately 50 percent last than was experienced in 2003. Thank you, and I will turn it back over to David.

Thank you, John. I would like to open up to questions, operator.

(Operator Instructions). Ryan Rauch, Suntrust Robinson Humphrey.

Good afternoon, guys. Just a couple of quick questions. David, can you provide us at least qualitatively how you felt your Switzerland audit went from this sort of the party audit firm that you recently hired? Can you just at least walk through, did you feel like it went well, or were there significant issues that you found or anything that might take a long time to fix?

I was actually in Switzerland for the audit purposely, along with some other people from over there. We hired an external firm that specialized (indiscernible) in inspectors. I was very pleased with the audit. You will always find issues, and that is the purpose. As I said in my preamble, the purpose of this is to dig out any and all issues and we certainly did that. In terms of the issues that we have to deal with, there's some work to do, but I'm very confident that we can address those and we are working on that immediately. So I was very pleased. We preempted the fact that there may be an audit which our sense of that is that there will be, as I indicated in my text. And I think we're going to be in good stead for that audit when it comes because of the audit that we had last week and the workload we'll do in the interim. So I'm very pleased that is behind us. We have some issues to deal with. The issues can be dealt with and will be dealt with, and we will be in a good position for re-audit at the right time.

Okay. And then how are your discussions, if you can give us any more detail with the ODE -- are you still feel good about what their questions relate to with the other part of the ICL approval?

I continue to believe, as we've said previously, that the compliance issues will be the (indiscernible) step in the approval process. Dialogue with ODE continues and we're feeling that the compliance -- no change on the previous comments -- the compliance issues will probably be the (indiscernible) determining step (ph) and we're focusing very much on those.

Okay. Just a couple more quick ones. When will your preloaded IOL be preapproved in the U.S.? And am I correct to assume, the sales trends you are pleased with the first couple months of the first quarter?

As I said in the text, we got off to a strong start this year with the ICL and international, so I'm very pleased with that. And despite the fact that we saw some repercussions from the warning letter, and yet we have had a strong first two months, I'm hopeful that will continue. So I am pretty pleased with that. We're looking for nice growth with the ICL this year in international and based on what we're seeing in the early weeks of the year, that is looking encouraging. I do believe that we're now starting to take some marketshare away from artisan and the PRL. That is on the base ICL, but the Toric ICL is also helping us in that regard. We have goal of getting over 50 percent market share in Europe medium-term and I am looking forward to if the trend that we're seeing at the moment continues, we'll be well underway. So I am very pleased with that.

I missed part of your question. The preloaded in the U.S., that is a little bit of a tricky regulatory path because it's the first time we've got the combination, so that is work in process. You will not see that this year. And it's not -- it is in the pipeline, but it's not a major priority at the moment. The major priority on R&D is helping with these compliance issues, doing the three-piece Collamer with an injector and improving our injection systems overall. So the preloaded will come to the U.S., but will not be this year.

Finally, how many direct salespeople do you now have and how many total proctors? I apologize if you gave it in your prepared remarks.

Hi, Ryan. We have six direct that were hired, plus the director of education. And then in the one region, we have gone to 7 directs, three of which had been previous indirects that have become directs in that regard. And then we actually have two other territories that I have been working with the indirects and we have sort of a hybrid where we have assisted the indirects in bringing in some additional hires to strengthen certain sales areas that they had identified.

That is all part of our efforts to make it a more marketing-driven company, but we will still have a hybrid sales force high-quality indirects and then high-quality directs.

Okay, thanks a lot.

JoAnn Lynch (ph), Harris Nesbitt.

Good afternoon, everybody. It takes two months to do the audit and you aren't going to give guidance on what revenue you made with the ICL. What is your thinking of the timing of the ICL?

Let me clarify on the 1-2 months. It takes longer to plan an international audit by the FDA because they have to (indiscernible) with the Swiss authorities. So that is why we're indicating a window of 1-2 months. So that is a little bit out of our control as was their decision to actually do the audit preapproval. And this is the problem with exact dates, because while some things are in our control, many others are out of our control. So given what has happened, exact dates I would want to stay away from, other than to say very firmly that we are working as hard as possible on the issues that are within our control so that they don't hold up the whole process.

What are you going to be doing what the six direct proctors, one director of education and the other indirect individuals to keep them, if you will, entertained until they have a product to sell?

I have to say that nobody at STAAR is being entertained at the moment. They're all working as hard as possible. Now with regard to the proctor force, the first thing I would say is that they have been heavily engaged in following up the interests with the ICL with the doctors who attended the course at the AAO (ph) that we had, and then they have also been organized -- organizing the courses I referred to, the next one of which is this weekend with 42 doctors attending. So that program, along with pulling together all of the materials that I talked about earlier, which will be ready for launch, keeps them fairly busy. They have also incidentally been helping us in-house in getting some of our compliance issues resolved because all of them are very experienced in the practice and have been helping with our review of complaint files and pulling all of that together. And then I think the last point is that there is a lot of interest in the Collamer IOL and the Collamer material as a result of the ICL. And so the proctors have been trained in the other products and are actively visiting and helping each of the region with following up on that interest and we have seen doctors and following up on their general interest in their ICL and their interest on other products.

So in other words, it's not a dedicated sales force for one product that potentially could have low morale at this stage. They are actively engaged.

They're very actively engaged. Nick, would you want to add anything?

Yes. They've actually been working with the field sales force, the indirect field sales force in this further identification of the key accounts that we're going to be going to with the ICL and then getting folks trained in the online ordering system, loading exercises with the ICL, things that are follow-ups to the training.

Considering your guidance for half of '03's net loss, what is your opinion on your current cash position?

Before I answer that, you mentioned about John's guidance not taking into account U.S. ICL. What I would comment on is that we stay with previous comments that we have made as it relates to the pricing and as it relates to the estimates that are already out there, which range from between 5 to 7000 unit sales. I'm not uncomfortable with that number, but given the uncertainty on timing, I would tend to err on the lower number as opposed to the higher number. I've given a range that I was comfortable with. I think the indication I would give at the moment is comfortable with prior guidance on pricing. On the unit, I would err towards the lower range that is out there.

Thank you. I had question on cash.

Sorry I just wanted cover that. We realize that cash is obviously a critical resource. We're carefully monitoring our expenses. Obviously ad John indicated, the preparations for the launch, both the ICL and the launch of the three-piece Collamer, in terms of this marketing campaign, have had a huge impact on our cash flow. During quarter four, we invested the build-out in the infrastructure ahead of the U.S. approval. I think that was the right decision, but it's going to force us over the coming months -- we've already actually started this as of January 1st -- to tighten up on expenditure in other areas to offset that cash flow and those investment decisions that we made. Obviously, this has been challenging because we're going to need to invest a certain degree in the to address the quality issues that we must resolve in order to get the ICL approval. The net net is we've tightened up in the other areas and it is our goal to manage cash on a go-forward basis so that we can launch both products using the reserves we have today. If that changes, we will indicate that.

Thank you very much.

John Calcagnini, CIBC World Markets.

Good afternoon. It is Chad for John, he's traveling. A couple of questions. In relation to the ICL and your discussions with the FDA as far as labeling, can you give us any color as far as what kind of diopter range you might be looking at yet, or is too early to say?

The diopter range (ph) will be the one that has been agreed by (indiscernible), which is minus 3 to minus -20.

Okay. And then, John, can you run through -- you ran through quickly on the quarter-over-quarter growth for the fourth quarter in the different product lines. Could you repeat the silicone and the Toric percentage?

Sure. We had ICL sales growth of 20 percent, silicone IOL sales declined 30 percent, Toric IOL sales were flat, Collamer IOL sales increased 18 percent, STAAR Visc (ph) was up 8 percent and Aquaflow sales declined 34 percent.

Okay. Last question -- obviously OpTek (ph) got FDA panel recommendation for its (indiscernible) IOL. Assuming that they get approval here fairly soon, can you comment about, talk a little bit more about your guy's strategy, if any, any change in strategy going forward upon their approval?

Picking up on the question you asked about the diopter range. As Helen said, we're going for the minus 3 to minus 20. That was the panel approval. The panel recommendation for the R (ph) design was minus 9 diopters to minus 20. We actually view or I view been the competitor's pending approval, but more importantly, the narrower range of approval as a very positive development for the (indiscernible) refractive market. We would anticipate that AMO, who has the marketing rights for the lens in the U.S., will put a fair amount of marketing muscle behind this product and we believe this will have a positive ramification in the development of the whole market. They have indicated a market worth $200 million a year and I would not disagree with that and with them pushing it, that is going to help. I think the narrower range is very interesting. The reason that came about was that although the (indiscernible) investigators were allowed to implant the lens in cases with as little as five diopters of myopia, they chose to implant the lens in only three eyes with less than or equal to minus seven of myopia. And in terms of the implants, they did only 33 eyes with less than or equal to minus 8. And that was out of a total of over 1000 implants. In comparison, our investigators were comfortable implanting all but 20 percent of our series in myops (ph) with less than or equal to minus 7 and one-third of our series with less than or equal to minus 8. And cases with as little as minus three diopters of myopia were included. And it was for those reasons that the FDA panel had sufficient data to document our safety and efficacy down to minus three with the ICL. And in contrast, they ended up with a minus 9. So I think it's very positive for the market overall. I think the wider range for the ICL gives us a much bigger market to go after. There's approximately eight times the number of my myopic eyes potentially to be treated in the ICL approval range then the R (ph) design approval range, but AMO's (ph) marketing also I think is only going to help develop the overall market. And as you can see from what we have indicated, we're in a very good position in terms of the launch, we have the educators in place, we have the marketing programs there, we are not going to change from where we were going in that regard.

Okay, thanks.

Kate Sheridan (ph), Pacific Growth Equities.

Hi, everybody. I guess the first one was -- I think I might have missed something when you were on JoAnn's question on timing. You had mentioned something about 1-2 months, and I know that the Swiss re-audit was in the next 1-2 months, correct? Were you talking about approval within the next 1-2 months or?

I was just talking about the re-audit, Kate, in that 1-2 months. And I was steering away from giving an absolute prediction on approval just simply because factors such as that are out of our control.

So 1-2 months plus whatever time FDA needs to consider their audit?

Correct.

Is that Swiss plant audit based on their flexibility, or is it based on what you are expecting within what you need to correct and then calling them for the re-audit, or is it just a time they have given you?

That is the way the process goes because they need to negotiate with the Swiss authorities to go into the facility, so it takes some time to set up.

All right. Dave, or maybe Nick, I'm not sure, now that you have a lot of physicians through the training process and that are still coming in, I am assuming there's been discussions with these people. Do you have a sense, particularly with the ones that have been trained, what kind of patients do they think that they can see? I've got to think somebody has been having conversations about what they think and what the expectation may be. I'm not you to say specifically. But if we could -- help us get a feel for those people -- we have talked to a few that are very optimistic, but what is the sense on types of patients, numbers of patients maybe on an annual basis that they think they can treat.

That's interesting Kate. Most of the practices that we've talked to have said that 7-12 percent of the patients that come through their offices that are initially interested in Lasik and the result of their marketing turned out to be non-candidates for Lasik, that they end up having to turn away right now. A lot of the higher volume refractive practices have actually been keeping a waiting list and I know several practices that have a waiting list of patients that might number as few as five patients and might number as high in two instances of over 300 the patients. And so it really runs the gamut, depending on the size of the practice in that regard.

Now converting those patients after the fact may or may not be that easy, but nonetheless, it is pretty encouraging to see practices that have up to 3200 patients or more that they have on a waiting list. If 7-12 percent of the patients coming through are non-candidates for Lasik, we have gone through in other instances and actually looked at those on a monthly basis and said -- how many of those -- I looked at one practice where 200 patients have come through in the month that were noncandidates for Lasik and 80 of those patients were actually candidates for -- this is one specific practice now -- and 80 of those folks were actually candidates for the ICL. Now those are patients that they are not capturing now at all. The other exciting for us is that given the range of approval that we're going to be expecting here, is that a lot of the practices are looking at possibly converting approximately 10-15 percent of their existing volume over because those candidates, the patients that they're working with right now on the lasik side perhaps require high percentages of retreatments and more chair time and they view the ICL as a good alternative for those.

Just to emphasize, we believe that to get anywhere near that kind of conversion, you need a state-of-the-art technology with state-of-the-art surgery with no induce to stigmatism. And with the range of approval, we're looking at the ICL. That is why we believe we will have such a really good chance of getting an effective share of that market. And obviously, that will increase as you get a Toric approval because as you go up the range of diopters, more and more patients have that astigmatism that you can treat.

Do you have a sense of within that same physician group, any discussion about candidates that are eligible for both, a good lasik candidate that maybe some might believe would just be to simply be a better procedure with an implant I guess? I can see the weeding out the ones that are not good lasik candidates for a number of reasons, obviously (indiscernible) refractive range, corneal thickness and stuff like that. But what about just the I've got patients that are eligible for both and I really think that in this category of patient, I would prefer to use in implant -- any of that kind of thing?

Sorry if I wasn't clear, the last statement I made was is that the average practices are looking at probably 10-15 percent of their existing volume to be really strong candidates for this particular procedure.

That would also be candidates for lasik?

Yes, initially. Obviously as surgeons get experienced with the procedure and feel comfortable with the results, that has the potential to expand because they can bring the range that -- the things that's nice about our extended range here is they have the ability to offer it to the lower diopter patients.

I think the key is without an alternative as we have seen in Europe before they had the alternative, they tend to push the limits of lasik. So once they have an alternative which is state-of-the-art, then there will be a certain conversion and then it will settle down as a complementary technology and the doctor will choose which one is better for that individual patient.

One last comment too is that the average price charged to the patient for lasik has risen in the last quarter of the year and continues to rise which bodes well for us with an alternative new technology that is obviously going to have some cost to the patients. With the advent of custom cornea and intra-lasik procedures, the cost of lasik to the patient has risen, so there is less of a barrier given this as an alternative.

Okay thanks. Dave, you mentioned, you talked about the marketshare gains. Is that just specific centers over in Europe. Could you talk a little bit more about maybe how many accounts you have won or where your marketshare is? You said 50 percent would be an ideal target?

I'd like to get to a 50 percent. It will take a little while to do that, Kate because we obviously have to reposition ourselves in Europe and then we have the Toric coming out, etc.. We're seeing some nice success in individual accounts with high-volume people in Europe. For competitive reasons, I don't want to give too much away, but I was over there for the audit and obviously I visited Germany and at the same time because that represents a big chunk of our business. And we're having some nice success, I am pleased. One thing that is helping is the AMO co-markets the artisan lens in Europe with OpTek (ph) and so they're busy stealing business away from one another, and that leaves fertile ground for us. And we're seeing some nice gains and we're seeing good adoption of the Toric ICL in some high-volume practices and that product, just the results are outstanding as we saw at the winter ESCRS (ph) meeting, which was in Barcelona in January. We had some presentations there. And the results we just so good with our product. And when you review the OpTek (indiscernible) panel, there was quite a lot of induced to stigmatism, and then over the three year, there was quite a lot of increasing astigmatism. Some of the conversions we've had in Europe is because the people who are using the artisan in a high-volume center have to do a lasik astigmatic procedure to correct that astigmatism. That adds cost, it reduces profitability and it increases hassle. So we go along and offer them a product where they can do one surgery to correct the two disorders and that becomes very attractive. So we've had some high-volume conversions because of that.

John, maybe you have -- your 20 percent increase in ICL, I'm guessing that's revenue contribution, do you have a unit growth?

I would say that would be roughly the same, David? I don't have units on my sheet.

We would expect (multiple speakers) to be parallel.

The remedy for ICL for the full year grew 31 percent. It was the Collamer sales that were up 20 percent.

I'm sorry yes.

The units would have been up about the same.

There is absolutely no currency in the ICL sales number that I quote.

Units up about the same and in the first few months, we're seeing a much higher figure rate of growth, Karen.

Lastly, just on Helen's comment on the minus 3 to minus 20 diopters, was that -- I know that's what you're going for and there was a question on sort of what you're seeing. Is there a comfort there or just in the labeling discussions that you have some visibility that that should come through for you?

(indiscernible) so we have no concern with this (indiscernible).

Okay, thank you.

Jayson Bedford, Adams, Harkness & Hill.

Good afternoon, guys. On the guidance, I know you have not assumed any impact from U.S. ICL sales, but you have assumed some ICL-related spending. I'm just wondering, upon approval, what is the incremental spend to launch the product, beyond your current guidance? I'm just trying to figure out the contribution margin upon approval?

We expend all of the money you needed in quarter four. He's all set to go, Jayson.

The lion's share, lets' say.

There was a lot of upfront costs which Nick absorbed in quarter four. We talked about the patient programs. There is some additional variables, but a lot of that was upfront expense to get ready.

So we've spent probably two-thirds of what we needed to spend in that regard in the fourth quarter. A lot of it now is just completion of the programs that we had already had well underway and that we primarily funded already.

Okay. So pretty much anything, any ICL sales float to the bottom line just less the cost of goods?

We have commission expense.

Okay, that's fair. You mentioned 740 physicians performing the procedure by year end, I think you mention some 80 need to be proctored. Is that implying that the other 60 don't need to go through that preceptorship process, and can they start performing the procedure immediately upon approval?

That is right, Jayson. I wanted to clarify, it is not 740, it would be 740 trained at the end of the year, 680 requiring proctoring. The other doctors would be in a position to begin doing surgery immediately.

What is the turnaround time in terms of approval? Can those guys start up the next week? Do you have any inventory build?

The difference between the 740 and the 680, they could start as soon as we got the inventory. The 680, the (indiscernible) determinant step is how quick Nick can get his proctors around with them to do two surgeries each.

We're going to have a proctoring requirement of 4-5 eyes, and so they will get the 4-5 eyes and we'll get the proctors in there to proctor them on those eyes.

So those 60 will have to go through that process.

No, the 60 will be ready to roll because they've already done -- they are mostly investigators.

Sounds good. Nick, maybe you can answer this. In terms of the average number of procedures for one of those 60 physicians per quarter or per month, what would you see kind of a run rate there?

That's a tough day question, Jayson.

It's so variable by individual physicians in the practices.

To be honest, a few of those 60 may only do a couple. And several of those 60 more than likely are some of these ones that have the waiting list of patients and they have a fair experience with the product right now and --

Okay.

So we a fair number to do.

Just switching gears, David, you mentioned there's some confusion in the international market due to the FDA warning letter. What has been the reception from your customers to the warning letters?

I think the confusion was caused by the interpretation, and some of the newswires picked it up (indiscernible) that the warning letter was talking about complications related to the ICL, and it wasn't. It was talking about complications related to our IOLs. And that was, for example, in Korea, we immediately had a reaction that said what is the problem with the ICL. We had to furnish explanation and information. Canada, where we have been selling toric ICLs under the waiver system stopped allowing their doctors to order those Toric ICLs relatively low volume, but they have stopped them doing that for a little while. And in discussions with them, how they managed to allay their concerns and they have now opened that up again. So we saw a little bit of interruption, but we managed to deal with most of that. As a consequence, we saw Korea not decline in the first eight weeks of the year, but roughly stay flat with the first eight weeks of last year. And we expect that to change now. And we saw a similar thing with Canada as a result of the Toric. So we have seen a little bit of an impact, but once we get to the people, we explain the situation and they realize that it wasn't related to complications with the ICL that it tends to move forward and open up again. So that's what I meant when I said understanding.

So it seems pretty specific to the international market?

Definitely, and the isolated incidents and we will be able to deal with it.

Okay, that is great. Thanks guys.

Larry Hamevich (ph), HMPC (ph).

Good afternoon, gentlemen. Nick, I wanted to just clarify your sizing of the market. I thought you said 7-12 percent -- in talking your to doctors -- I thought you said 7-12 percent of their lasik -- current lasik patients could automatically be seen as fakic (ph) IOL patients because they either have corneal pathologies which prevent them from doing lasik or they are above the ideal range for lasik, in terms of dioptic range. Was that correct?

I said actually -- of 7-12 percent of the patients as a result of their marketing that are coming into the practice, they are presently having to turn away because they cannot do anything with. And I said that they were looking at targeting 10 percent of their patients as patients of the existing lasik business patients that were patients that they would consider to be strong candidates of this that they would be offering this rough rate from the get-go.

So 7-10 percent of their patients who come in the door in response to a marketing campaign are being turned away because either their diopter range is too high particularly for custom lasik, or they have corneal pathologies?

Yes, cornea is too thin, pupil is too large.

What was the second thing, 10 percent?

10 percent of their existing, of cases that they would have traditionally done lasik on that they could see offering this right now as a very strong (multiple speakers).

So in other words, these two numbers sort of correlate pretty well. They're turning away 7-10 percent and they can see that 10 percent of their lasik business could be fakic (ph).

A lot of it is indicative of the attitude.

David, a question for you. I realize obviously with dealing with FDA that it's such a difficult thing. Qualitatively, can you kind of guide us a little bit on your thinking about -- basically you're saying be very conservative with the ICL in terms of what you put in your models. Are you taking a particularly conservative viewpoint here, given that it is so uncertain that you'd rather people not expect much and hopefully be pleasantly surprised sometime toward the end of the year or maybe fourth-quarter or something like that -- is that kind of your stance of let's take a very conservative view here and not plan for too much? And in addition to that, let's not budget for too much ICLs because then we might spend more money than we might otherwise do. Is that a fair way to characterize your thinking?

Not really, Larry. My thinking is more -- certain things are out of our control, even though other things we can deal with and we can managed in terms of time lines. So very difficult to put an absolute time line. And the emphasis, as I said in my opening remarks, is on a successful re-audit in a timely manner and we will push that as hard as we can, rather than a premature audit. So in terms of our modeling, we have sales forecasts that ran out from January and February and March. So I am not particularly trying to be conservative on the forecast thing because we have a set up on all of those scenarios so that we can watch our expenditure carefully. It really just is recognizing that some of these items are out of our control, and therefore, tine lines, despite our very, very best efforts, are unpredictable at times.

What could imagine as the best case scenario for you time-wise? If everything fell into place just as you kind of hoped in, if not your wildest dreams, at least some reasonable dreams, can could sort of bracket some times of when you could get an approval?

I really don't go there because it is so multifactorial. We're really just focused, the whole organization is focused, both in Switzerland and here, on getting us in a very strong position for re-audit and looking at every and all items, the items within the Company. Investors should remember that re-audit can cover any area, not just those areas that were covered in the original inspections. So we are really just focused on that because that is what we can control. And having had these audit, I'm very pleased we have the external people in, they have given us excellent direction, we had already completed a lot of things. We can now finesse our plan and we'll do that after this audit is complete this week. I'm very pleased with the way the organization has mobilized behind those efforts, I'm very pleased with the focus we've got and I am very pleased with the way and the extent the people are working to make sure that we get ready and that we can move forward as quickly as possible. The absolute day is very difficult.

Let me try a question a little bit different then. Between the international audit and the domestic re-audit, where do you have more concerns? What area do you think is a little scarier for you, a little riskier for you?

Well, the second audit here is underway as we speak, Larry. So it would be premature of me to comment on that.

So are you saying right now, you're in the midst of the domestic re-audit? Did I understand that correctly?

Yes, you understood it correctly. We're in the midst of an audit, but it is by a private external company that we have engaged to help us prepare for the formal FDA audit.

It's your dry run before the FDA actually comes in.

I just wanted to make that very clear.

Thank you for clarifying.

We're in the middle of that, yes.

So assuming that goes well, I would assume the next step domestically would be to call the FDA and say, folks, we are ready when you are. Is that correct?

As I said in my remarks, Larry, I'm not trying to avoid your question, I said we have done a lot of work, we then wanted these external companies in to see what else we needed to address. We need them to sit down and look at that and address it. And then when as a result of all of that we're comfortable that we are in compliance and that needs to cover other areas and we're audited by the FDA originally, then we will make that decision. And we are pushing as hard as possible -- and I think this words needs to be my last words on the subject -- we're up pushing as hard as possible internally to get to that to point as quickly and expeditiously as possible. But the emphasis is on a successful re-audit in a timely manner, rather than a premature audit.

I, understand. Just to clarify, and I'm sorry, I hope I'm not beating this horse to dad and making you completely crazy. I'm not trying to do that. Just understand this. So while you do this, this outside party comes in, does the audit for you, you do your internal work. At some point, you as an organization with you at the top, David, will say, okay, I think we're ready now for the FDA to come back. A, is that correct, and B, then you will pick up the phone and say hello FDA, we're ready for you when you're ready to come.

Absolutely right. We get a confirmation from the local office that when we do that, they will work with us to try and do that re-audit in an expeditious manner.

Assuming that that re-audit goes well and assuming then that the Switzerland audit goes well and assuming that Washington is finishing all of the labeling, at that point, you can get an approval?

Correct, yes.

I thought I understood all, David, but you know the FDA is very complicated and I just wanted to be sure 100 percent that I understood and thank you for taking the time to walk me through it.

No problem, Larry, and we're working hard to tick all of those things off.

Tyson Halsey, Halsey Advisory Management.

I have a couple of quick questions. The first has to do with the pricing of lasik. And you just said that it seems to be going up. And because there have been some conflicting reports as to whether or not the $400 lasik was perhaps a problem, and I've heard other things that suggest that lasik is really, all-in, is around $15, $1700. And I guess ultimately, the second part of that question is -- what do you think the per-procedure profit might be for doctors who are considering this, compared to, let's say, lasik?

You asked a couple of questions on different levels. I think to address the second question, actually, in terms of what the per-profit. There is different -- we targeted different groups of physicians, those that own their own ambulatory surgery centers, those that are accessing in ambulatory, somebody else's ambulatory surgery center and perhaps those that are choosing to do this in an in-office suite where we'll convert their laser suite to doing this. The profit obviously is directly related to which of those scenarios they fit and what their costs are involved in doing that, and ultimately from what are they going to ultimately charge to the patient on that. But I think it would be reasonable to say that on an average basis, probably would be over $1000.

There also was an argument the ICL may not have a huge market or a large market or has no market based on the assertion that it will be used repeatedly and that there is cumulative endothelial (ph) cell loss (ph). Is your expectation that you put in one time only and then perhaps down the road, there will be other procedures or modalities that will be utilized?

Nobody has ever hit me with there's no market for the ICL. The only debate is over how big the market is. And as I have said on previous occasions, what everybody seems to define as a niche is a nice market for STAAR Surgical. If you work the numbers that Nick talked about, and Nick is very close to it because he's seeing these surgeons everyday, that is significantly more than a niche. So from a market point of view, we are very confident that there is a nice market in the U.S. We also believe that it's good that a big player like AMO (ph) believes there is a market, and their numbers are a value of $200 million. And that's very nice and I don't think it is a niche. So just to pick up your point, we have not heard anybody arguing -- no market (ph). The only argument is over how big. And then as Nick said, I think -- I don't know if there's any such thing as $400 lasik. That is a bait and switch -- get you in the door and they will --

It's sort of the upsell, it's more of the classical consumer upsell in that regard type. We see very few, in fact, the market scope data and some of the other marketing data that is out there looked at a lasik price average of just under $1800 per eye on conventional lasik and an additional $360 per eye on custom lasik intralays (ph), which would get over the $2000 per eye range in that regard for custom lasik.

If you went -- I think it's fair to say -- if you went to a representative sample of our ICL trialists (ph), who also do lasik and (indiscernible), you to the large volume lasik people that we've talked to, their average price is more for lasik -- they charge more than $2100, and they are tending to push that up, if you think about some of the larger volume guys. So on average, it's two one (ph), but certain target populations, they charge us a lot more than that.

One last one, and this is very complex for people like myself. My understanding is that there is sort of bell curve distribution of myopia in the U.S. And when you talk about minus 9 to minus 20 and minus 3 to minus 20, I understand that there is a significant marketing differential. All things being equal and not the other restrictions applied to OpTek, how large is that market differential -- minus 3 to minus 20 versus minus 9 to minus 20.

It all depends on penetration, but I think the answer to that question is what I said earlier. Between those two approval range, minus 3 to minus 20, minus 9 to 20, there's eight times more patients in the minus 3 up to minus 9 then there is in the minus 9 to minus 20 range. As a rule of thumb, as you some down from minus 20, each group of patients is equal to everything else above it. So in minus 10, that is equivalent to the minus 11 to 12 (indiscernible) added up. So as you come down in myopia, each category on that bell curve is equal to the sum of all of the categories above it. But obviously, then the key question becomes what is the penetration. And as you go lower down, clearly, surgeons will choose lasik, so the penetration will be lower, but there's a lot more patients. So there's two factors there, Tyson.

Thank you both very much and good luck.

(Operator Instructions). Kate Sheridan, Pacific Growth Equity.

I know you guys probably want to wind up, and I'm sorry I'm opened up this can of worms on this whole 7, 12, 10 percent thing, but I just wanted to ask -- this is kind of a math question. I'm looking at this as two distinct opportunities. One is, currently 7-12 percent are having to walk away because there is no treatment for them.

Correct.

And then your second comment of -- we would be able to convert 10 percent of our patients that do have access to treatment, correct?

Yes.

So essentially, would it be safe to say we could look at the existing lasik procedures and assume they represent -- if this was sort of standard across the board with everybody, 88-93 percent, we would get 10 percent of that, plus the folks that aren't being treated?

That is assuming that the 7-12 percent are all candidates for ICL, which I made an example of a customer that I had talked to, and about 40 percent of those patients that fell into that 7-12 percent range for that one month that we looked at would've been candidates for an ICL. So you're not going to capture 100 percent of that 7-12 percent of those patients because some of those patients are going to fall out. There may be a patient that walks in that thinks that they're a candidate for lasik, and we find that they have a cataract. So they're not a candidate for the procedure, ICL or lasik.

So find the number that that represents, and we take 40 percent of that?

Again, that was just one example that, if we can capture, the point is that actually if we can capture 25 percent of that, that would be a very significant number, or cut it down even from that, that would be a very significant number for us.

It would also significantly improve the profitability of the practice because they've spent marketing dollars for us to pull those patients in, and then they don't have a treatment for them.

Thank you very much guys.

Mr. Bailey, there are no further questions. Please continue with your concluding remarks.

Thank you very much. We appreciate everybody's input. Overall, our goal is to build a strong and growing refractive implant franchise based on the Visian implantable contact lens and we're looking to build a business with revenues accounting for approximately 45 percent coming from that lens within a three-year horizon. The FDA approval is critical to that goal, it is the number one activity at STAAR at the moment, but in the meantime, we will also continue to build our cataract franchise by building on the insertion technology that we have. That is well underway in international where we will be focusing on the preloaded, and as we are successful in the U.S. to bring out the Collamer three-piece lens with its injection system, that will allow us to start growing in the domestic market again. We've achieved a lot in '03. We believe that against those objectives, we can achieve a lot more in '04 and we look forward to keeping you updated on progress. Thank you for attending the STAAR year-end call.

Ladies and gentlemen, this concludes the STAAR Surgical fourth quarter of 2003 earnings conference call. If you'd like to listen to a replay of today's conference, you may dial 303-590-3000, or you make dial 1-800-405-2236 and enter the access number of 568126.