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Employee Benefit Plans
 12 Months Ended
Dec. 28, 2012
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 12 – Employee Benefit Plans

 

The Company maintains a passive pension plan (the “Swiss Plan”) covering employees of its Swiss subsidiary, which is accounted for as a defined benefit plan

 

Defined Benefit Plan-Switzerland

 

In Switzerland employers are required to provide a minimum pension plan for their staff.  The Swiss Plan is financed by contributions of both the employees and employer. The amount of the contributions is defined by the plan regulations and cannot be decreased without amending the plan regulations. It is required that the employer contribute an amount equal to or greater than the employee contribution.

 

The funded status of the Swiss benefit plan at December 28, 2012 and December 30, 2011 is as follows:

  

    2012     2011  
Change in Projected Benefit Obligation:                
Projected benefit obligation, beginning of period   $ 4,710     $ 4,868  
Service cost     301       414  
Interest cost     116       127  
Participant contributions     234       275  
Benefits paid     (639 )     (641 )
Actuarial (gain) loss on obligation     131       (333 )
    Projected benefit obligation, end of period   $ 4,853     $ 4,710  
Changes in Plan Assets:                
Plan assets at fair value, beginning of period   $ 3,058     $ 3,074  
Actual return on plan assets (including foreign currency impact)     166       75  
Employer contributions     234       275  
Participant contributions     234       275  
Benefits paid     (639 )     (641 )
  Plan assets at fair value, end of period   $ 3,053     $ 3,058  
Net Amount Recognized in Consolidated Balance Sheets:                
Underfunded, end of year   $ (1,800 )   $ (1,652 )
Other long term liabilities   $ (1,800 )   $ (1,652 )
Amount  Recognized in Accumulated Other Comprehensive Loss, Net of Tax:                
 Actuarial loss on plan assets   $ (558 )   $ (610 )
 Actuarial loss on benefit obligation     (466 )     (364 )
 Actuarial gain recognized in current year     205       163  
  Accumulated other comprehensive loss   $ (819 )   $ (811 )
    Accumulated benefit obligation at end of year   $ (4,410 )   $ (4,087 )

 

The underfunded balance of $1,800,000 and $1,652,000 was included in other long-term liabilities on the consolidated balance sheets as of December 28, 2012 and December 30, 2011, respectively.

 

Net periodic pension cost associated with the Swiss Plan in the years ended December 28, 2012, December 30, 2011, and December 31, 2010, include the following components (in thousands):

 

    2012     2011     2010  
Service Cost   $ 301     $ 414     $ 328  
Interest Cost     116       127       120  
Expected return on plan assets     (100 )     (101 )     (91 )
Actuarial loss recognized in current year     54       97       55  
Net periodic pension cost   $ 371     $ 537     $ 412  

 

Changes in other comprehensive loss (net of tax) associated with the Swiss Plan in the year ended December 28, 2012 and December 30, 2011 include the following components (in thousands):

 

    2012     2011  
Actuarial gain (loss) of current year   $ (51 )   $ 238  
Actuarial (loss) income recorded in current year     42       75  
Change in other comprehensive loss   $ (9 )   $ 313  

 

The amount in accumulated other comprehensive loss as of December 28, 2012 that is expected to be recognized as a component of the net periodic pension costs in the subsequent year is $55,000.

 

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated on December 28, 2012 and December 30, 2011 using the following assumptions:

 

    2012     2011  
Discount rate     2.00 %     2.50 %
Salary increases     2.00 %     3.00 %
Expected return on plan assets     3.00 %     3.35 %
Expected average remaining working lives in years     10.30       10.60  

 

The discount rates of 2.00% and 2.50% for the period ending December 28, 2012 and December 30, 2011, respectively are based on an assumed pension benefit maturity of 10 to 15 years. The rate was estimated using the rate of return for high quality Swiss corporate bonds that mature in eight years. This maturity was used as there are significant numbers of high quality Swiss bonds, but very few bonds issued with maturities with longer lives. As of December 28, 2012 and December 30, 2011, the average rate for high quality Swiss corporate bonds was 2.00% and 2.50% respectively. In order to determine an appropriate discount rate, the eight year rate of return was then extrapolated along the yield curve of Swiss government bonds.

 

The salary increase rate of 2.00% was based on the Company’s best estimate of future increases over time.

 

The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates, and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for relevant asset categories.

 

Plan assets categories in the Swiss Plan are comprised of the following (in thousands):

 

    2012     2011  
Bonds and loans   $ 2,259     $ 2,186  
Real estate (including real estate funds)     684       765  
Equity securities     76       73  
Liquid assets     34       34  
    $ 3,053     $ 3,058  

 

The assets above are measured at fair value and are categorized into three different class levels.  Level 1 assets are those whose value is based on quoted prices in active markets.  Level 2 assets are those whose values are based on direct or indirect observable markets for similar assets.  Level 3 assets are those whose values are unobservable. As of December 28, 2012, Level 1 assets in the Swiss Plan include bonds (67%), equity (3%) and liquid assets (1%).  Level 2 assets are comprised of mortgages (12%), real estate assets (10%) and loans (7%). As of December 30, 2011, Level 1 assets in the Swiss Plan include bonds (65%), equity (2%) and liquid assets (1%).  Level 2 assets are comprised of mortgages (14%), real estate assets (11%) and loans (7%).

 

The Company has contracted with the Allianz Suisse Life Insurance Company’s BVG Collective Foundation to manage the Swiss Plan.  The investment strategy is determined by the Swiss insurance company and applies to all members of the collective foundation.

 

In fiscal 2013, the Company expects to make cash contributions totaling approximately $244,000 to the Swiss Plan.

 

The estimated future benefit payments for the Swiss Plan are as follows (in thousands):

 

Fiscal Year      
2013   $ 51  
2014     50  
2015     52  
2016     55  
2017     58  
2018 – 2022     336  
Total   $ 602  

 

Defined Benefit Plan-Japan

 

In connection with the Company’s acquisition of the remaining interest in STAAR Japan, Inc., STAAR assumed the net pension liability under STAAR Japan’s noncontributory defined benefit pension plan (“Japan Plan”) substantially covering all of the employees of STAAR Japan.  Benefits under the Japan plan are earned, vested and accumulated based on a point-system, primarily based on the combination of years of service, actual and expected future grades (management or non-management) and actual and future zone (performance) levels of the employees.  Each point earned is worth a fixed monetary value, 1,000 Yen per point, regardless of the level grade or zone of the employee.  Gross benefits are calculated based on the cumulative number of points earned over the service period multiplied by 1,000 Yen.  The mandatory retirement age limit is 60 years old.

 

STAAR Japan maintains and administers the plan (the “Plan”) and funds the obligations of the Plan from STAAR Japan’s operations.   STAAR Japan is not required, and does not intend to provide any future contributions to the Plan to meet benefit obligations and will therefore not have any plan assets.  Benefit payments are made to beneficiaries from operating cash flows as they become due.

 

The funded status of the benefit plan at December 28, 2012 and December 30, 2011 is as follows: 

 

    2012     2011  
Change in Projected Benefit Obligation:                
Projected benefit obligation, beginning of period   $ 1,108     $ 782  
Service cost     185       174  
Interest cost     13       6  
Actuarial loss     63       137  
Benefits paid     (65 )     (38 )
Foreign exchange adjustment     (116 )     47  
    Projected benefit obligation, end of period   $ 1,188     $ 1,108  
Changes in Plan Assets:                
Plan assets at fair value, beginning of period   $ —     $ —  
Actual return on plan assets     —       —  
Employer contributions     —       —  
Benefits paid     —       —  
Distribution of plan assets     —       —  
Foreign exchange adjustment     —       —  
  Plan assets at fair value, end of period   $ —     $ —  
Net Amount Recognized in Consolidated Balance Sheets:                
Underfunded, end of period   $ (1,188 )   $ (1,108 )
Other long term liabilities   $ (1,188 )   $ (1,108 )
Amount  Recognized in Accumulated Other Comprehensive Income:                
Transition obligation   $ 117     $ 101  
Actuarial gain     99       207  
Prior service cost     28       29  
  Accumulated  other comprehensive income   $ 244     $ 337  
    Accumulated benefit obligation at end of year   $ (972 )   $ (912 )

 

The underfunded balance of $1,188,000 and $1,108,000 was included in other long-term liabilities on the consolidated balance sheets as of December 28, 2012 and December 30, 2011.

 

Net periodic pension cost associated with the Japan Plan for the years ended December 28, 2012, December 30, 2011 and December 31, 2010 include the following components (in thousands):

 

    2012     2011     2010  
Service cost   $ 185     $ 174     $ 234  
Interest cost     13       6       13  
Net amortization of transition obligation     16       16       15  
Actuarial Loss     (58 )     (117 )     (24 )
Prior Service Cost     (1 )     (1 )     (1 )
Net periodic pension cost   $ 155     $ 78     $ 237  

 

Changes in other comprehensive income (loss) associated with the Japan Plan for the years ended December 30, 2011 and December 31, 2010 include the following components (in thousands):

 

    2012     2011  
Amortization of  transitional obligation   $ 16     $ (16 )
Net actuarial (loss) gain of current year     (62 )     137  
Actuarial loss recorded in current year     (47 )     117  
Prior Service Cost     (1 )     1  
Change in other comprehensive income (loss)   $ (94 )   $ 239  

 

The amount in accumulated other comprehensive income as of December 28, 2012 that is expected to be recognized as a component of the net periodic pension cost in fiscal 2013 is approximately $25,000.

 

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated on December 28, 2012 and December 30, 2011using the following assumptions:

 

    2012     2011  
Discount rate     .80 %     .70 %
Salary increases     3.00 %     2.00 %
Expected return on plan assets     N/A       N/A  
Expected average remaining working lives in years     8.88       8.61  

 

The discount rate of 0.8% for the period ending December 28, 2012 and the discount rate of 0.7% for the period ending December 30, 2011 are based on the approximate Japanese government bond rate with a term of 10 to 20 years.

 

The salary increase average rate of 3.00% was based on the Company’s best estimate of future increases over time.

 

The estimated future benefit payments for the Japan Plan are as follows (in thousands):

 

Fiscal Year      
2013   $ 59  
2014     60  
2015     72  
2016     90  
2017     236  
2018 – 2023     388  
Total   $ 905  

  

Defined Contribution Plan

 

The Company maintains a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of qualified employees in North America. During the fiscal year ended December 28, 2012, employees who participate may elect to make salary deferral contributions to the 401(k) Plan up to the $17,000 of the employees’ eligible payroll subject to annual Internal Revenue Code maximum limitations (with a $5,500 annual catch-up contribution permitted for those over 50 years old). The Company makes a contribution of 50% of the employee’s contribution up to the first 6% of the employee’s compensation. In addition, STAAR may make a discretionary contribution to qualified employees, in accordance with the 401(k) Plan.  During the years ended December 28, 2012, December 30, 2011, and December 31, 2010, the Company made contributions, net of forfeitures, of $284,000, $150,000, and $123,000, respectively, to the 401(k) Plan.