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 streamlining operations and reducing costs in order to position the Company for future growth. STAAR currently manufactures its products in three 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 middle of 2014, 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.

The Company expects these initiatives to cost approximately $6.2 million over a three and half year period, of which it has spent approximately $5.2 million to date. The Company announced that these costs for 2013 should be approximately $2.5 million. Through the first half of 2013 these costs have been $1.5 million. These expenses are included in “other general and administrative expenses” in consolidated statement of income for the period ended June 28, 2013. The expenses generally consist of professional fees to advisors and consultants, travel, salaries and severance accrual.

A summary of the activity for these initiatives is presented below as of June 28, 2013 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability at December 28, 2012	$	504	$	293	$	797
Costs incurred and charged to expense	$	207	$	1,307	$	1,514
Cash payments	$	(94)	$	(1,547)	$	(1,641)
Liability at June 28, 2013	$	617	$	53	$	670

Total costs incurred to date	$	1,107	$	4,103	$	5,210
Total costs expected to be incurred	$	1,400	$	4,800	$	6,200