Manufacturing Consolidation Project and Tax Strategy

3 Months Ended

Mar. 29, 2013

Manufacturing Consolidation Project and Tax Strategy Disclosure [Abstract]

Manufacturing Consolidation Project and Tax Strategy Disclosure [Text Block]

Note 11 — Manufacturing Consolidation Project and Tax Strategy

Since 2011 the Company devoted significant resources to two initiatives: a project to consolidate global manufacturing and product development as part of a strategy to optimize its global organization for tax purposes. The goal of both of these strategies is to continue the Company’s improvement in gross profit margin by reducing costs and to position the Company for future growth. STAAR currently manufactures its products in four facilities worldwide. It has developed a plan to substantially complete its consolidation of manufacturing in a single site at its Monrovia, California location by the end of 2013, which is expected subsequently to yield significant savings in cost of goods and to lower its global administrative and regulatory costs and reduce income taxes. Based on our efforts, we expect our effective tax rate to decline from approximately 50% in 2012 to 40% in 2013.

The Company expects these initiatives to cost approximately $6 million over a three-year period, of which it has incurred approximately $4.6 million to date. These expenses are included in “other general and administrative expenses” in consolidated statement of income for the period ended March 29, 2013. Expenses consisted of professional fees to advisors and consultants, travel, salaries and severance accrual. The Company expects to spend approximately $2.5 million in manufacturing consolidation expenses in 2013.

A summary of the activity for these initiatives is presented below as of March 29, 2013 (in thousands):

	Termination Benefits		Other Associated Costs			Total
Liability at December 28, 2012	$	504	$	293		$	797
Costs incurred and charged to expense	$	113	$	788		$	901
Cash payments	$	—	$	(258	)	$	(258	)
Liability at March 29, 2013	$	617	$	823		$	1,440
Total costs incurred to date	$	1,013	$	3,584		$	4,597
Total costs expected to be incurred	$	1,410	$	4,590		$	6,000