IRIDEX Reports Fourth Quarter and Full Year 2008 Financial Results

MOUNTAIN VIEW, Calif., March 10 /PRNewswire-FirstCall/ -- IRIDEX Corporation
(Nasdaq: IRIX) today reported its financial results for the fourth quarter and
full fiscal year ended January 3, 2009.

Revenues for the fourth quarter of 2008 were $12.1 million, a 14.1% decrease
from the $14.1 million reported for the fourth quarter of 2007. The company's
net loss was $6.5 million or $0.74 per diluted share for the fourth quarter of
2008 compared with a loss of $15.8 million or a loss of $1.82 per diluted
share in the fourth quarter of 2007. The fourth quarter results for 2008 and
2007 include an impairment charge of $5.4 million and $14.7 million,
respectively, for write down of goodwill and intangible assets acquired from
the AMS/Laserscope aesthetics acquisition which occurred in January 2007 and
represents $0.61 and $1.69 per diluted share, respectively.

Revenues for the fiscal year ended January 3, 2009 were $48.5 million,
compared with $55.5 million reported for 2007, a 12.6% decrease. Ophthalmology
sales remained constant, the decrease in total revenues for fiscal 2008 was
primarily attributable to a reduction in aesthetics sales resulting from the
global contraction of the aesthetics market. The company's net loss,
excluding the impact for the write down of goodwill and intangibles was $2.0
million or $0.23 per diluted share for the 2008 fiscal year compared with a
net loss of $7.6 million or $0.91 per diluted share in 2007. Including the
write down of goodwill and intangibles, the results were a net loss of $7.4
million or $0.84 per diluted share for 2008 compared with a net loss of $22.3
million and $2.69 per share for 2007.

Mr. Theodore A. Boutacoff, President and CEO stated, "2008 presented us with a
number of challenges. At the beginning of the year we set our goals to become
cash flow positive, pay the $6.3 million we owed American Medical Systems Inc.
(AMS), renegotiate our bank debt, and return the company to financial
stability. These tasks were made more challenging by the effects of the
global recession. We executed well and we achieved our objectives: in the
first quarter of 2008 we renegotiated our bank debt, in the third quarter of
2008 we made our final payment to AMS and in the fourth quarter of 2008 we
generated $2.3 million in cash from operations. Excluding payments to AMS, we
generated a total of $6.2 million in cash during 2008. We exited 2008 having
established financial stability and we are now better positioned to navigate
the current recession.

"Going forward, our primary financial focus will remain cash management, we
will closely monitor our revenues and manage our expenses accordingly; and we
expect a 5-10% improvement in gross margins as a result of us working through
a number of issues that were negatively impacting our margins in 2008. Our
dominant market focus will be our Ophthalmology business which we see as our
core competency and where we believe we can achieve long term sustainable
growth. Furthermore, our Ophthalmology business has historically been less
impacted during recessionary times due to demand for Ophthalmology treatments
being non-elective and reimbursable by insurance and because a significant
portion of our Ophthalmology business comes from recurring revenues,
consisting of disposable products and service. These recurring revenues for
2008 totaled 53% of our Ophthalmology sales. Including Aesthetics service
revenue, total recurring revenues represented 50% of total company revenues."

Gross margin for the fourth quarter of 2008 was 37.5% compared with 44.6%, for
the fourth quarter of 2007. Gross margin for the full year 2008 represented
40.6% of revenues, compared with 43.7% for 2007. Gross margins for the fourth
quarter of 2008 and for the full year 2008 were negatively impacted by:
amortization of intangible assets; expensing of previously capitalized
manufacturing overhead costs as a consequence of reducing inventory levels
during 2008; and increases in inventory reserves, primarily relating to
aesthetics inventory. The aggregate impact of these items for the fourth
quarter of 2008 was to reduce gross margin by 11.6% and for the full year 2008
by 8.3%.

Excluding the impairment charge for the write down of goodwill and intangible
assets, operating expenses for the fourth quarter 2008 were $5.5 million
compared with $7.3 million for 2007. A similar comparison for full year 2008
reflects operating expenses of $21.9 million compared to $33.7 million for
2007. Including the impairment charge, operating expenses for the fourth
quarter 2008 were $10.9 million compared with $22.0 million for 2007 and for
the full year 2008 $27.2 million compared to $48.4 million for 2007.

Liquidity and Capital Resources
As of January 3, 2009, the company had fully repaid AMS and had cash and cash
equivalents of $5.3 million, bank debt of $6.0 million and a working capital
balance of $9.2 million. In comparison, as of December 29, 2007, the company
had cash and cash equivalents of $5.8 million, not including restricted cash,
bank debt of $6.1 million net of restricted cash, owed $6.3 million to AMS as
a result of the AMS/Laserscope acquisition and had a working capital balance
of $7.7 million.

Use of Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
GAAP, this release contains non-GAAP financial measures that exclude the
effects of costs associated with the write down of goodwill and intangible
assets acquired in the AMS/Laserscope aesthetics acquisition in January 2007,
in the fourth quarter 2008 and the fourth quarter 2007. The Company believes
that the presentation of results excluding these write down charges provides
meaningful supplemental information to both management and investors that is
indicative of the Company's core operating results. Therefore, the Company
believes the non-GAAP financial measures facilitate comparison of operating
results across reporting periods.

The Company believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing the Company's performance
and when planning, forecasting, and analyzing future periods. The non-GAAP
financial measures also facilitate management's internal comparisons to the
Company's historical performance. The non-GAAP financial measures disclosed by
the Company should not be considered a substitute for or superior to financial
measures calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP should be carefully evaluated.

Conference Call
Interested parties may access the live conference call via telephone by
dialing (800) 366-8058 (US) or (303) 262-2190 (International), or visit the
Company's website at www.iridex.com. A telephone replay will be available
beginning on Tuesday, March 10, 2009 through Tuesday, March 17, 2009 by
dialing (800) 405-2236 (US) or (303) 590-3000 (International) and entering
Passcode 11127343#. In addition, later today an archived version of the
webcast will be available on the Company's website at www.iridex.com.

About IRIDEX
IRIDEX Corporation is a leading worldwide provider of therapeutic based laser
systems, disposable laser probes and delivery devices to treat eye diseases in
ophthalmology and skin disorders in the aesthetics market. IRIDEX products are
sold in the United States through a direct sales force and internationally
through a combination of a direct sales force and a network of approximately
100 independent distributors into 107 countries. For further information,
visit the company's website at http://www.iridex.com.

Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Act of 1934, as amended, relating to the company's growth strategy
and prospects, gross margins, revenues, and liquidity and capital resources.
Please see a detailed description of these risks contained in our Annual
Report on Form 10-K for the fiscal year ended December 29, 2007, and our
subsequent Form 10-Q reports filed with the Securities and Exchange
Commission. Forward-looking statements contained in this announcement are made
as of this date and will not be updated.

IRIDEX Corporation
Condensed Consolidated Statements of Operations
(In thousands, except pet share data)
(Unaudited)

Three Months Ended Twelve Months Ended
January 3, December 29, January 3, December 29,
2009 2007 2009 2007
---- ---- ---- ----

Revenues $12,145 $14,142 $48,528 $55,532
Cost of revenues 7,592 7,836 28,849 31,248
----- ----- ------ ------
Gross profit 4,553 6,306 19,679 24,284
----- ----- ------ ------

Operating expenses:
Research and
development 1,015 1,143 4,009 5,779
Selling, general
and administrative 4,485 6,190 17,842 27,930
Impairment of
goodwill and
intangible assets 5,364 14,690 5,364 14,690
----- ------ ----- ------
Total operating
expenses 10,864 22,023 27,215 48,399
------ ------ ------ ------

Loss from
operations (6,311) (15,717) (7,536) (24,115)
Legal settlement - 800 2,500
Interest and other
expense, net (81) (41) (507) (644)
--- --- ---- ----
Loss before income
taxes (6,392) (15,758) (7,243) (22,259)
Provision for
income taxes (111) (13) (127) (13)
---- --- ---- ---
Net loss $(6,503) $(15,771) $(7,370) $(22,272)
======= ======== ======= ========

Net loss per
share -basic and
diluted $(0.74) $(1.82) $(0.84) $(2.69)
====== ====== ====== ======

Shares used in
computing net loss
per share -basic
and diluted 8,824 8,679 8,824 8,293
===== ===== ===== =====

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

January 3, December 29,
2009 2007
---- ----
Assets (unaudited)
------
Current Assets:
Cash and cash equivalents $5,307 $5,809
Restricted cash - 3,800
Accounts receivable, net 8,199 8,876
Inventories, net 11,644 15,967
Prepaids and other current assets 540 1,051
--- -----
Total current assets 25,690 35,503
Property and equipment, net 832 1,621
Goodwill 0 3,239
Other intangible assets, net 1,474 5,944
Other long term assets 229 347
--- ---
Total assets 28,225 46,654
====== ======

Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
Accounts payable $2,415 $2,887
Bank line of credit 6,000 4,863
Accrued compensation 1,729 2,024
Accrued expenses 2,249 7,809
Accrued warranty 1,345 1,895
Deferred revenue 2,741 3,350
Bank term loan - 5,016
- -----
Total current liabilities 16,479 27,844
------ ------

Stockholders' Equity:
Convertible preferred stock, $.01 par value:
Authorized: 2,000,000 shares; Issued
and outstanding: 500,000 shares in 2008
and 2007 5 5
Common Stock, $.01 par value:
Authorized: 30,000,000 shares; Issued and
outstanding: 8,824,301 shares in 2008
and 2007 89 89
Additional paid-in capital 39,105 38,695
Accumulated other comprehensive loss (192) (88)
Treasury stock, at cost (430) (430)
Accumulated deficit (26,831) (19,461)
------- -------
Total stockholders' equity 11,746 18,810
------ ------
Total liabilities and stockholders' equity $28,225 $46,654
======= =======

SOURCE IRIDEX Corporation

Jim Mackaness, Chief Financial Officer of IRIDEX Corporation, +1-650-940-4700