Note 12 — Manufacturing Consolidation Project and Tax Strategy

From fiscal 2011 through 2013, the Company has devoted significant resources to two initiatives: a project to consolidate global manufacturing, and development of a strategy to optimize its global organization for tax purposes. The goal of these initiatives is to further improve upon gross profit margin by streamlining operations, thereby reducing costs and to increase profits in the U.S., to enable the Company to utilize its approximately $122 million in net operating loss carryforwards and at the same time, reduce income taxes in foreign jurisdictions where it pays tax. STAAR currently manufactures its products in three facilities worldwide (Monrovia, Ca., Aliso Viejo, Ca., and Nidau, Switzerland). It has developed a plan to consolidate its manufacturing in a single site at its Monrovia, California location which is expected to be substantially completed by the middle of 2014.

The Company has invested approximately $6.1 million since inception of these initiatives, including $168,000 incurred during the three months ended April 4, 2014 and, approximately $100,000 remaining to be incurred during the remainder of fiscal year 2014. These expenses are included in the other general and administrative expenses in the consolidated statements of operations. Expenditures to date have largely consisted of severance, employee costs, professional fees to advisors and consultants.

A summary of the activity for these initiatives is presented below for the period ended April 4, 2014 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability at January 3, 2014	$	731	$	28	$	759
Costs incurred and charged to expense		106		62		168
Cash payments		(16)		(62)		(78)
Liability at April 4, 2014	$	821	$	28	$	849