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Liabilities | 12 Months Ended
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Dec. 28, 2012
Liabilities [Abstract] |
Liabilities [Text Block] | Note 9 —Liabilities Lines of Credit The Company’s wholly owned Japanese subsidiary, STAAR Japan, has an agreement, as amended on December 28, 2012, with Mizuho Bank which provides for borrowings of up to 500,000,000 Yen (approximately $5.8 million based on the rate of exchange on December 28, 2012), at an interest rate equal to the Tokyo short-term prime interest rate (approximately 1.475% as of December 28, 2012) and may be renewed annually (the current line expires on March 28, 2013). The credit facility is not collateralized. The Company had 500,000,000 Yen and 200,000,000 Yen outstanding on the line of credit as of December 28, 2012 and December 30, 2011, (approximately $5.8 million and $2.6 million based on the foreign exchange rates on December 28, 2012 and December 30, 2011, respectively) which approximates fair value due to the short-term maturity and market interest rates of the line of credit. In case of default, the interest rate will be increased to 14% per annum. As of December 28, 2012, there were no available borrowings under the line. In August 2010, the Company’s wholly-owned Swiss subsidiary, STAAR Surgical AG, entered into a credit agreement with Credit Suisse (the “Bank”). The credit agreement provides for borrowing of up to 1,000,000 CHF (Swiss Francs) $1,096,000 at the rate of exchange on December 28, 2012), to be used for working capital purposes. Accrued interest and 0.25% commissions on average outstanding borrowings is payable quarterly and the interest rate will be determined by the Bank based on the then prevailing market conditions at the time of borrowing. The credit agreement is automatically renewed on an annual basis based on the same terms assuming there is no default. The credit agreement may be terminated by either party at any time in accordance with its general terms and conditions. The credit facility is not collateralized and contains certain conditions such as providing the Bank with audited financial statements annually and notice of significant events or conditions as defined in the credit agreement. The Bank may also declare all amounts outstanding to be immediately due and payable upon a change of control or a “material qualification” in STAAR Surgical AG’s independent auditors’ report. There were no borrowings outstanding as of December 28, 2012 and the full amount of the line was available for borrowing. Covenant Compliance The Company is in compliance with covenants of its credit facilities and lines of credit as of December 28, 2012. Broadwood Promissory Note The Company had a $5 million principal amount of indebtedness under an Amended and Restated Senior Secured Promissory Note (the “Note”) held by Broadwood Partners, L.P. (“Broadwood”), which was issued on April 13, 2009 and was scheduled to mature on December 14, 2010. On June 22, 2010, the Company repaid the $5 million principal plus $322,000 in accrued interest. As a result of repaying the Note, the Company recorded a $267,000 loss on early extinguishment due to the write-off of the remaining unamortized debt discount and issuance costs on the date of the repayment; this loss is included in Other income (expense), net, in the accompanying consolidated statements of operations. As additional consideration for the loan, on December 14, 2007, the Company also entered into a Warrant Agreement with Broadwood (the “December 2007 Warrant Agreement”) granting the right to purchase up to 700,000 shares of Common Stock at an exercise price of $4.00 per share, exercisable for a period of six years. The December 2007 warrant has been accounted for as an equity instrument. The December 2007 Note also provided that if any indebtedness remained outstanding under the Note on June 1, 2009, the Company would issue additional warrants on the same terms as set forth in the December 2007 Warrant Agreement in a number equal to 700,000 times the percentage of the original $5 million principal that remains outstanding. On June 1, 2009, as the Note remained outstanding, the Company issued an additional 700,000 warrants to Broadwood, which were valued at approximately $290,000 and included as debt discount and additional paid–in capital in the consolidated balance sheet upon issuance. The warrants have a 6 year life and expire on December 14, 2013 and June 1, 2015 respectively. The December 2007 Warrant Agreement provides that the Company will register the shares issuable upon exercise of the warrants with the Securities Exchange Commission. The Company filed and secured effectiveness of a registration statement covering resale of the shares. If the Company fails to keep the registration statement effective and the lapse exceeds permitted suspensions, as the holder’s sole remedy, the Company will be obligated to issue an additional 30,000 warrants for each month that the Company does not meet this effectiveness requirement through the term of the warrants (“Penalty Warrants”) (a maximum of approximately 870,000 warrants issuable as of December 28, 2012 under an assumed noncompliance as of that date). The Company does not consider the issuance of Penalty Warrants likely. The fair value of the warrants was treated as an additional discount on the loan and was amortized using the effective interest method over the life of the loan (which approximates an effective interest rate of 32% per annum, assuming the 20% cash interest rate is maintained throughout the life of the Note). During the year ended December 31, 2010 approximately $236,000 of the discount was amortized and included in interest expense. The fair value of the warrants was estimated on December 14, 2007 and on June 1, 2009 issuance dates using a Black-Scholes option valuation model applying the assumptions noted in the following table:
|  | As of December 12, 2007 |  |  | As of June 1, 2009 |
Common stock price per share |  | $ | 2.63 |  |  | $ | 1.01 |
Number of warrants |  |  | 700,000 |  |  |  | 700,000 |
Expected dividends |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 67.3 | % |  |  | 74.4 | %
Risk-free rate |  |  | 3.88 | % |  |  | 3.28 | %
Life (in years) |  |  | 6.0 |  |  |  | 6.0 |
Broadwood also holds warrants to purchase 70,000 shares of Common Stock at an exercise price of $6.00 per share, which was issued in connection with a loan of $4 million by Broadwood under a Promissory Note dated March 21, 2007. The March 21, 2007 Promissory Note was repaid in full in June 2007. The warrants expire on March 21, 2013. As explained in Note 1, these warrants were classified as a liability. As of December 28, 2012 and December 30, 2011, the fair value was $27,000 and $362,000, and the $335,000 change in fair value since December 30, 2011 has been recorded in other income (expense). The fair value of the warrant that was classified as a liability on December 28, 2012 and December 30, 2011 were based on Black-Scholes option valuation model applying the assumption noted on the following table below:
|  | December 28, 2012 |  |  | December 30, 2011 |
Common stock price per share |  | $ | 5.82 |  |  | $ | 10.49 |
Number of warrants |  |  | 70,000 |  |  |  | 70,000 |
Expected dividends |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 42.15 | % |  |  | 63.61 | %
Risk-free rate |  |  | .01 | % |  |  | .25 | %
Life (in years) |  |  | .23 |  |  |  | 1.25 |
Asset Retirement Obligation Included in Long-Term Liabilities are Asset Retirement Obligations (“ARO”) that have been recorded in connection with the Company’s leased facilities in Japan and specifically relate to leasehold improvements made to the facility. This liability arises from the Company’s obligation to return the facility to its “original condition.” In accordance with FASB ASC 410-20, Asset Retirement Obligations, the Company has recognized the fair value of a liability for an asset retirement obligation of $707,000. During fourth quarter of 2012, in connection with the Company’s decision to consolidate its manufacturing operations to the U.S. and close its Japanese manufacturing facility, the Company obtained more current estimates of the costs to return the facility to its original condition. This additional change did not result in a charge to income for the year ended December 28, 2012. The following table describes all changes to the Company’s asset retirement obligation liability (in thousands):
|  | December 28, |  |  | December 30, |
|  | 2012 |  |  | 2011 |
Asset retirement obligation at beginning of the year |  | $ | 523 |  |  |  | — |
Liabilities incurred |  |  | 169 |  |  | $ | 577 |
Accretion expense |  |  | 15 |  |  |  | — |
Asset retirement obligation at end of the year |  | $ | 707 |  |  | $ | 577 |

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