Note 13 — Manufacturing Consolidation Project and Tax Strategy

From fiscal 2011 through June 2014, 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 increasing 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 had manufactured its products in four facilities worldwide (Monrovia, Ca., Aliso Viejo, Ca., Nidau, Switzerland, and Ichikawa City, Japan). As of June 2014, all international production has been consolidated into the Monrovia site. Aliso Viejo is expected to integrate into Monrovia by the end of 2015.

The Company has invested approximately $6.3 million since inception of these initiatives, including $334,000 incurred during the nine months ended October 3, 2014, and future expenses, if any, are not expected to be material. These expenses are included in the other general and administrative expenses in the condensed consolidated statements of operations. Expenditures 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 nine-month period ended October 3, 2014 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability as of January 3, 2014	$	731	$	28	$	759
Costs incurred and charged to expense		212		122		334
Cash payments		(698)		(150)		(848)
Liability as of October 3, 2014	$	245	$	—	$	245