##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number 001-10382
 SYNERGETICS USA, INC.
  Delaware
    
    20-5715943(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 3845 Corporate Centre DriveOFallon, Missouri
    
    63368(Address of principal executive offices)
    
    (Zip Code)
 (Registrants Telephone Number, Including Area Code)
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
 o þ




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##### 



PagePART I Financial InformationItem 1. Unaudited Condensed Consolidated Financial Statements
    
    
    2Balance Sheets as of October 31, 2010 and July 31, 2010
    
    
    2Statements of Income for the three months ended October 31,
2010 and October 31, 2009
    
    
    3Statements of Cash Flows for the three months ended October
31, 2010 and October 31, 2009
    
    
    4Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II Other InformationItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. [Removed and Reserved]
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25Trademark AcknowledgementsSignatures
    
    
    26Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



Part I  Financial Information
 
 Item 1  Unaudited Condensed Consolidated Financial Statements
Synergetics USA, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets
As of October 31, 2010 (Unaudited) and July 31, 2010
(Dollars in thousands, except share data)
 October 31, 2010
    
    
    July 31, 2010AssetsCurrent AssetsCash and cash equivalents
    
    $
    18,519
    
    
    $
    18,669Accounts receivable, net of allowance for
doubtful accounts of $293 and $282,
respectively
    
    
    9,132
    
    
    
    9,056Inventories
    
    
    13,421
    
    
    
    11,891Prepaid expenses
    
    
    530
    
    
    
    792Deferred income taxes
    
    
    658
    
    
    
    658Total current assets
    
    
    42,260
    
    
    
    41,066Property and equipment, net
    
    
    8,044
    
    
    
    8,044Intangible and other assetsGoodwill
    
    
    10,690
    
    
    
    10,690Other intangible assets, net
    
    
    12,180
    
    
    
    12,353Patents, net
    
    
    897
    
    
    
    870Cash value of life insurance
    
    
    72
    
    
    
    72Total assets
    

    $
    74,143
    
    
    $
    73,095Liabilities and stockholders equityCurrent LiabilitiesCurrent maturities of long-term debt
    
    $
    1,407
    
    
    $
    1,398Current maturities of revenue bonds payable
    
    
    116
    
    
    
    116Accounts payable
    
    
    1,844
    
    
    
    1,800Accrued expenses
    
    
    2,694
    
    
    
    2,624Income taxes payable
    
    
    254
    
    
    
    11Deferred revenue
    
    
    400
    
    
    
    400Total current liabilities
    
    
    6,715
    
    
    
    6,349Long-Term LiabilitiesLong-term debt, less current maturities
    
    
    784
    
    
    
    939Revenue bonds payable, less current maturities
    
    
    1,583
    
    
    
    1,612Deferred revenue
    
    
    18,630
    
    
    
    18,630Deferred income taxes
    
    
    1,264
    
    
    
    1,339Total long-term liabilities
    
    
    22,261
    
    
    
    22,520Total liabilities
    
    
    28,976
    
    
    
    28,869Commitments and contingencies (Note 8)Stockholders EquityCommon stock at October 31, 2010 and July 31,
2010, $0.001 par value, 50,000,000 shares
authorized; 24,842,441 and 24,772,155 shares
issued and outstanding, respectively
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    25,087
    
    
    
    24,905Retained earnings
    
    
    19,952
    
    
    
    19,319Accumulated other comprehensive income (loss):Foreign currency translation adjustment
    
    
    103
    
    
    
    (23
    )Total stockholders equity
    
    $
    45,167
    
    
    $
    44,226Total liabilities and stockholders equity
    
    $
    74,143
    
    

    $
    73,095
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##### Table of Contents



Synergetics USA, Inc. and Subsidiaries
 
 Consolidated Statements of Income
Three Months Ended October 31, 2010, and 2009
(Dollars in thousands, except share and per share data)
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Net sales
    
    $
    12,076
    
    
    $
    12,146Cost of sales
    
    
    5,053
    
    
    
    5,219Gross profit
    
    
    7,023
    
    
    
    6,927Operating expensesResearch and development
    
    
    719
    
    
    
    659Sales and marketing
    
    
    3,023
    
    
    
    3,259General and administrative
    
    
    2,252
    
    
    
    2,0305,994
    
    
    
    5,948Operating income
    
    
    1,029
    
    
    
    979Other income (expenses)Investment income
    
    
    32
    
    
    
    Interest expense
    
    
    (80
    )
    
    
    (168
    )Miscellaneous
    
    
    (7
    )
    
    
    (10
    )(55
    )
    
    
    (178
    )Income before provision for income taxes
    
    
    974
    
    
    
    801Provision for income taxes
    
    
    341
    
    
    
    259Net income
    
    $
    633
    
    
    $
    542Earnings per share:Basic
    
    $
    0.03
    
    
    $
    0.02Diluted
    
    $
    0.03
    
    
    $
    0.02Basic
weighted average common shares outstanding
    
    
    24,782,913
    
    
    
    24,458,089Diluted
weighted average common shares outstanding
    
    
    24,862,420
    
    
    
    24,496,554
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Synergetics USA Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
Three Months Ended October 31, 2010 and 2009
(Dollars in thousands, except share data)
 Three Months Ended
    
    
    Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Cash Flows from Operating ActivitiesNet income
    
    $
    633
    
    
    $
    542Adjustments to reconcile net income to net cash
provided by operating activitiesDepreciation
    
    
    285
    
    
    
    257Amortization
    
    
    196
    
    
    
    223Provision for doubtful accounts receivable
    
    
    4
    
    
    
    (4
    )Stock-based compensation
    
    
    70
    
    
    
    74Deferred income taxes
    
    
    (75
    )
    
    
    (86
    )(Gain) loss on sale of equipment
    
    
    
    
    
    
    (15
    )Changes in assets and liabilities(Increase) decrease in:Accounts receivable
    
    
    (13
    )
    
    
    1,086Inventories
    
    
    (1,490
    )
    
    
    179Prepaid expenses
    
    
    265
    
    
    
    9(Decrease) increase in:Accounts payable
    
    
    37
    
    
    
    (652
    )Accrued expenses
    
    
    65
    
    
    
    (34
    )Income taxes payable
    
    
    243
    
    
    
    16Net cash provided by operating activities
    
    
    220
    
    
    
    1,595Cash Flows from Investing ActivitiesProceeds on the sale of equipment
    
    
    
    
    
    
    15Purchase of property and equipment
    
    
    (285
    )
    
    
    (198
    )Acquisition of patents and other intangibles
    
    
    (50
    )
    
    
    (40
    )Net cash used in investing activities
    
    
    (335
    )
    
    
    (223
    )Cash Flows from Financing ActivitiesExcess of outstanding checks over bank balance
    
    
    
    
    
    
    354Net borrowings (repayments) on lines-of-credit
    
    
    
    
    
    
    (1,211
    )Principal payments on revenue bonds payable
    
    
    (29
    )
    
    
    (51
    )Principal payments on long-term debt
    
    
    
    
    
    
    (123
    )Payment on debt incurred for acquisition of trademark
    
    
    (146
    )
    
    
    (138
    )Tax benefit associated with the exercise of non-qualified stock options
    
    
    43
    
    
    
    Proceeds from the issuance of common stock
    
    
    69
    
    
    
    Net cash used in financing activities
    
    
    (63
    )
    
    
    (1,169
    )Foreign exchange rate effect on cash and cash equivalents
    
    
    28
    
    
    
    Net (decrease) increase in cash and cash equivalents
    
    
    (150
    )
    
    
    203Cash and cash equivalentsBeginning
    
    
    18,669
    
    
    
    160Ending
    
    $
    18,519
    
    
    $
    363
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Synergetics USA, Inc. and Subsidiaries
 
 Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular information reflects dollars in thousands, except share and per share information)
 Note 1. General
 Nature of business mission
 Basis of presentation:
 Note 2. Comprehensive Income
  Note 3. Summary of Significant Accounting Policies
 Reclassifications:
  Note 4. Marketing Partner Agreements
  5




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Codman & Shurtleff, Inc. (Codman)
 ®
 ®
  Three Months Ended
    
    
    Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Net Sales
    
    $
    2,107
    
    
    $
    885Percent of net sales
    
    
    17.4
    %
    
    
    7.3
    %
 Stryker Corporation (Stryker)
  ® ®
  Three Months Ended
    
    
    Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Net Sales
    
    $
    1,360
    
    
    $
    589Percent of net sales
    
    
    11.3
    %
    
    
    4.8
    %
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Note 5. Stock-Based Compensation
 Stock Option Plans
  Weighted
    
    
    WeightedAverage
    
    
    Average FairShares
    
    
    Exercise Price
    
    
    ValueOptions outstanding beginning of period
    
    
    576,695
    
    
    $
    1.71
    
    
    $
    2.08For the period August 1, 2010 through
October 31, 2010Granted
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    62,000
    
    
    $
    0.99
    
    
    $
    1.13Options outstanding, end of period
    
    
    514,695
    
    
    $
    1.80
    
    
    $
    2.20Options exercisable, end of period
    
    
    419,112
    
    
    $
    1.97
    
    
    $
    2.40
    Restricted Stock Plans
  7




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Weighted AverageGrant Date FairNumber of Shares
    
    
    ValueBalance as of July 31, 2010
    
    
    286,961
    
    
    $
    2.04Granted
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Balance as of October 31, 2010
    
    
    286,961
    
    
    $
    2.04
 Note 6. Fair Value Information
    Note 7. Supplemental Balance Sheet Information
 Inventories:
 October 31, 2010
    
    
    July 31, 2010Raw material and component parts
    
    $
    5,614
    
    
    $
    5,225Work in progress
    
    
    2,807
    
    
    
    2,050Finished goods
    
    
    5,000
    
    
    
    4,616$
    13,421
    
    
    $
    11,891
 Property and Equipment:
 October 31, 2010
    
    
    July 31, 2010Land
    
    $
    730
    
    
    $
    730Building and improvements
    
    
    5,930
    
    
    
    5,929Machinery and equipment
    
    
    6,554
    
    
    
    6,136Furniture and fixtures
    
    
    720
    
    
    
    736Software
    
    
    363
    
    
    
    363Construction in progress
    
    
    97
    
    
    
    23214,394
    
    
    
    14,126Less accumulated depreciation
    
    
    6,350
    
    
    
    6,082$
    8,044
    
    
    $
    8,044
 Other Intangible Assets
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Gross Carrying
    
    
    AccumulatedValue
    
    
    Amortization
    
    
    NetOctober 31, 2010Proprietary know-how
    
    $
    4,057
    
    
    $
    1,606
    
    
    $
    2,451Trademark
    
    
    5,923
    
    
    
    
    
    
    
    5,923Licensing agreement
    
    
    5,834
    
    
    
    2,028
    
    
    
    3,806Patents
    
    
    1,437
    
    
    
    540
    
    
    
    897$
    17,251
    
    
    $
    4,174
    
    
    $
    13,077
 July 31, 2010Proprietary know-how
    
    $
    4,057
    
    
    $
    1,544
    
    
    $
    2,513Trademark
    
    
    5,923
    
    
    
    
    
    
    
    5,923Licensing agreement
    
    
    5,834
    
    
    
    1,917
    
    
    
    3,917Patents
    
    
    1,387
    
    
    
    517
    
    
    
    870$
    17,201
    
    
    $
    3,978
    
    
    $
    13,223
   AmountFiscal Year 2011 (remaining 9 months)
    
    $
    440Fiscal Year 2012
    
    
    587Fiscal Year 2013
    
    
    587Fiscal Year 2014
    
    
    587Fiscal Year 2015
    
    
    587
  Pledged assets; short and long-term debt (excluding revenue bonds payable):
 Revolving Credit Facility:
  Non-U.S. Receivables Revolving Credit Facility
 9




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##### Table of Contents



Equipment Line of Credit:
  October 31, 2010
    
    
    July 31, 2010Note payable to the estate of the late
Dr. Leonard I. Malis, due in quarterly
installments of $159,904 which
includes interest at an imputed rate
of 6.0 percent; remaining balance
of $799,520 including the effects of
imputing interest, due December 2011,
collateralized by the
Malis® trademark
    
    $
    765
    
    
    $
    911Settlement obligation to Iridex
Corporation (Iridex), due in annual
installments of $800,000 which
includes interest at an imputed rate
of 8.0 percent; remaining balance of
$1,600,000 including the effects of
imputing interest, due April 15, 2012
    
    
    1,426
    
    
    
    1,426Total
    
    $
    2,191
    
    
    $
    2,337Less current maturities
    
    
    1,407
    
    
    
    1,398Long-term portion
    
    $
    784
    
    
    $
    939
 Note 8. Commitments and Contingencies
   10




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Note 9. Enterprise-wide Sales Information
  Three Months Ended
    
    
    Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Net SalesOphthalmic
    
    $
    7,976
    
    
    $
    7,522Neurosurgery  Direct
    
    
    487
    
    
    
    2,900Marketing Partners (Codman, Stryker)
    
    
    1,762
    
    
    
    OEM (Codman, Stryker, Iridex)
    
    
    1,837
    
    
    
    1,690Other
    
    
    14
    
    
    
    34Total
    
    $
    12,076
    
    
    $
    12,146Net SalesDomestic
    
    $
    8,470
    
    
    $
    8,489International
    
    
    3,606
    
    
    $
    3,657$
    12,076
    
    
    $
    12,146
 Note 10. Recent Accounting Pronouncements
    11




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Item 2   Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
   Recent Developments
  ® ® ® ®
 ®
  12




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##### Table of Contents



Summary of Financial Information
  NET SALES BY CATEGORY
 Three Months EndedOctober 31, 2010
    
    
    Mix
    
    
    October 31, 2009
    
    
    MixOphthalmology
    
    $
    7,976
    
    
    
    66.1
    %
    
    $
    7,522
    
    
    
    61.9
    %Direct Neurosurgery
    
    
    487
    
    
    
    4.0
    %
    
    
    2,900
    
    
    
    23.9
    %Marketing Partners (1)
    
    
    1,762
    
    
    
    14.6
    %
    
    
    
    
    
    
    Total Neurosurgery
    
    $
    2,249
    
    
    
    18.6
    %
    
    $
    2,900
    
    
    
    23.9
    %Original Equipment
Manufacturers (OEM) (2)
    
    
    1,837
    
    
    
    15.2
    %
    
    
    1,690
    
    
    
    13.9
    %Other
    
    
    14
    
    
    
    0.1
    %
    
    
    34
    
    
    
    0.3
    %Total
    
    $
    12,076
    
    
    
    
    
    
    $
    12,146
 
 (1)
    
    Marketing partners sales include disposable bipolar forceps and disposable
instrument tips and accessories which were previously sold by our direct neurosurgery
sales force and our distribution partners, which have been transitioned to our marketing
partners.(2)
    
    Revenues from OEM represent sales of generators, related accessories and certain
laser probes to Stryker, Codman and Iridex. ® ®
 13




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RESULTS OF OPERATIONS
(Dollars in Thousands)
 Three Months EndedIncreaseOctober 31, 2010
    
    
    October 31, 2009
    
    
    (Decrease)Net Sales
    
    $
    12,076
    
    
    $
    12,146
    
    
    
    (0.6
    %)Gross Profit
    
    
    7,023
    
    
    
    6,927
    
    
    
    1.4
    %Gross Profit Margin %
    
    
    58.2
    %
    
    
    57.0
    %
    
    
    2.1
    %Commercial ExpensesSales and Marketing
    
    
    3,023
    
    
    
    3,259
    
    
    
    (7.2
    %)General and Administrative
    
    
    2,252
    
    
    
    2,030
    
    
    
    10.9
    %Research and Development
    
    
    719
    
    
    
    659
    
    
    
    9.1
    %Operating Income
    
    
    1,029
    
    
    
    979
    
    
    
    5.1
    %Operating Margin
    
    
    8.5
    %
    
    
    8.1
    %
    
    
    4.9
    %EBITDA (1)
    
    
    1,535
    
    
    
    1,449
    
    
    
    5.9
    %Net Income
    
    $
    633
    
    
    $
    542
    
    
    
    16.8
    %Earnings per share
    
    $
    0.03
    
    
    $
    0.02
    
    
    
    50.0
    %Return on equity (1)
    
    
    1.4
    %
    
    
    1.4
    %
    
    
    0.0
    %Return on assets (1)
    
    
    1.0
    %
    
    
    1.2
    %
    
    
    (16.7
    %)
 
 (1)
    
    EBITDA, return on equity and return on assets are not financial measures recognized by U.S.
generally accepted accounting principles (GAAP). EBITDA is defined as income before net
interest expense, income taxes, depreciation and amortization. Return on equity is defined
as net income divided by average equity. Return on assets is defined as net income plus
interest expense divided by average assets. See disclosure following regarding the use of
non-GAAP financial measures. Three Months Ended(Dollars in Thousands)October 31, 2010
    
    
    October 31, 2009Net income
    
    $
    633
    
    
    $
    542Interest
    
    
    80
    
    
    
    168Income taxes
    
    
    341
    
    
    
    259Depreciation andAmortization
    
    
    481
    
    
    
    480EBITDA
    
    $
    1,535
    
    
    $
    1,449Net income
    
    $
    633
    
    
    $
    542Average Equity:October 31, 2010
    
    
    45,167July 31, 2010
    
    
    44,226October 31, 2009
    
    
    
    
    
    
    38,746July 31, 2009
    
    
    
    
    
    
    38,130Average Equity
    
    
    44,697
    
    
    
    38,438Return on Equity
    
    
    1.4
    %
    
    
    1.4
    %
 14




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Three Months Ended(Dollars in Thousands)October 31, 2010
    
    
    October 31, 2009Net income
    
    $
    633
    
    
    $
    542Interest
    
    
    80
    
    
    
    168Net income + interest expense
    
    
    713
    
    
    
    710Average Assets:October 31, 2010
    
    
    74,143July 31, 2010
    
    
    73,095October 31, 2009
    
    
    
    
    
    
    56,737July 31, 2009
    
    
    
    
    
    
    58,080Average Assets
    
    
    73,619
    
    
    
    57,409Return on Assets
    
    
    1.0
    %
    
    
    1.2
    %
       Three Months EndedOctober 31, 2010
    
    
    October 31, 2009Ophthalmology
    
    
    66.1
    %
    
    
    61.9
    %Neurosurgery
    
    
    4.0
    %
    
    
    23.9
    %Marketing Partners
    
    
    14.6
    %
    
    
    OEM
    
    
    15.2
    %
    
    
    13.9
    %Other
    
    
    0.1
    %
    
    
    0.3
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  15




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Our Business Strategy
  fiscal 2010 strategies
 Improve Profitability and Cash Efficiency through:
  Lean Manufacturing
 Component Cost Savings
 Supply Chain Management
  16




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Human Resource Rationalization
 Cash Management
 Accelerate growth through:
 Research & Development (R&D) 
 New Business Development 
 Assess Distribution Alternatives:
  Improve Sales Force Productivity:
  fiscal 2011 driving strategic priorities are
 
    
    To move the Company onto a higher growth trajectory. This means, simply, new
products, some in new categories. The focus on our top four R&D opportunities will
allow us access
 17




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to different segments within the vitreoretinal and intracranial
markets to drive organic growth, along with new business development opportunities
that the Company is aggressively pursuing. We believe that this focus will revitalize
the Companys compound annual growth rate.
    
    To continue to enhance the profitability of our operational platform by focusing
on our manufacturing efficiencies, including lean manufacturing and select
outsourcing of high quality components, and cost savings. In the first quarter of
fiscal 2011, we enhanced our operating margins from 8.1 percent to 8.5 percent.
 New Product Sales
  Demand Trends
 ®
   Pricing Trends
  Economic Trends
  18




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##### Table of Contents



Results Overview
  Results of Operations
 Three-Month Period Ended October 31, 2010 Compared to Three-Month Period Ended October 31, 2009
 Net Sales
  Quarter Ended% IncreaseOctober 31, 2010
    
    
    October 31, 2009
    
    
    (Decrease)Ophthalmic
    
    $
    7,976
    
    
    $
    7,522
    
    
    
    6.0
    %Direct Neurosurgery
    
    
    487
    
    
    
    2,900
    
    
    
    (83.2
    %)Marketing partners (Codman,
Stryker)
    
    
    1,762
    
    
    
    
    
    
    
    N/M
    *Total Neurosurgery
    
    $
    2,249
    
    
    $
    2,900
    
    
    
    (22.4
    %)OEM (Codman, Stryker, Iridex)
    
    
    1,837
    
    
    
    1,690
    
    
    
    8.7
    %Other
    
    
    14
    
    
    
    34
    
    
    
    (58.8
    %)Total
    
    $
    12,076
    
    
    $
    12,146
    
    
    
    (0.6
    %)
 
 *
    
    N/M  Not meaningful.  ® ®
 19




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##### Table of Contents



Three Months Ended% IncreaseOctober 31, 2010
    
    
    October 31, 2009
    
    
    (Decrease)United States (including
Marketing Partner and OEM sales)
    
    $
    8,470
    
    
    $
    8,489
    
    
    
    (0.2
    %)International (including Canada)
    
    
    3,606
    
    
    
    3,657
    
    
    
    (1.4
    %)Total
    
    $
    12,076
    
    
    $
    12,146
    
    
    
    (0.6
    %)
  Gross Profit
  Operating Expenses
    20




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##### Table of Contents



Other Income/(Expenses)
  Operating Income, Income Taxes and Net Income
    Liquidity and Capital Resources
      21




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##### Table of Contents



Revolving Credit Facility:
  Non-U.S. Receivables Revolving Credit Facility
 Equipment Line of Credit:
   The Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act), provide a safe harbor for forward-looking
statements made by or on behalf of the Company. The Company and its representatives may from time
to time make written or oral statements that are forward-looking, including statements contained
in this report and other filings with the Securities and Exchange Commission (SEC) and in our
reports to stockholders. In some cases forward-looking statements can be identified by words such
as believe, expect, anticipate, plan, potential, continue or similar expressions. Such
forward-looking statements include risks and uncertainties and there are important factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. These factors, risks and
uncertainties can be found in Part I, Item 1A, Risk Factors section of the Companys Form 10-K
for the fiscal year ended July 31, 2010.
 22




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##### Table of Contents



Although we believe the expectations reflected in our forward-looking statements are based
upon reasonable assumptions, it is not possible to foresee or identify all factors that could have
a material effect on the future financial performance of the Company. The forward-looking
statements in this report are made on the basis of managements assumptions and analyses, as of the
time the statements are made, in light of their experience and perception of historical conditions,
expected future developments and other factors believed to be appropriate under the circumstances.
 In addition, certain market data and other statistical information used throughout this report
are based on independent industry publications. Although we believe these sources to be reliable,
we have not independently verified the information and cannot guarantee the accuracy and
completeness of such sources.
 Except as otherwise required by the federal securities laws, we disclaim any obligation or
undertaking to publicly release any updates or revisions to any forward-looking statement contained
in this quarterly report on Form 10-Q and the information incorporated by reference in this report
to reflect any change in our expectations with regard thereto or any change in events, conditions
or circumstances on which any statement is based.
 Critical Accounting P olicies
  
 Item 3  Quantitative and Qualitative Disclosures about Market Risk
     
 Item 4  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  23




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 Part II  Other Information
 
 Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
  
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3  Defaults Upon Senior Securities
  
 Item 4  [Removed and Reserved]
 
 Item 5  Other Information
 (a)
    
    None.(b)
    
    There have been no material changes to the procedures by which security holders may
recommend nominees to the Companys Board of Directors since the filing of the Companys
Annual Report on Form 10-K for the fiscal year ended July 31, 2010.
 24




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##### Table of Contents



Item 6  Exhibits
 Exhibit No.
    
    Description10.1
    
    Change in Control Agreement between Synergetics USA,
Inc. and Pamela G. Boone, effective as of August 1, 2010
(filed as Exhibit 10.10 to the Registrants Annual
Report on Form 10-K filed on October 12, 2010 and
incorporated by reference).31.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 Trademark Acknowledgements
  25




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##### Table of Contents



SYNERGETICS USA, INC.
(Registrant)December 14, 2010
    /s/ David M. HableDavid M. Hable,President and Chief Executive Officer
(Principal Executive Officer)December 14, 2010
    /s/ Pamela G. BoonePamela G. Boone,Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and Principal Accounting Officer) 26