Note 12 — Manufacturing Consolidation Project and Tax Strategy

Since 2011 the Company has been engaged in a restructuring initiative to consolidate global manufacturing into the U.S. to reduce costs, improve gross profit, enable the use of $122.5 million in net operating loss carryforwards in the U.S., and reduce income taxes in foreign jurisdictions. At the time, the Company manufactured its products in four facilities located in the U.S., Switzerland and Japan. Since that time, the Company has developed and began implementing a plan to consolidate its manufacturing into a single site at its Monrovia, California location, to be largely completed by the middle of 2014. During 2013, STAAR completed the transfer of manufacturing operations from Japan to the U.S.

The Company expects the initiative to cost approximately $6.2 million over a three and a half year period, of which approximately $5.7 million has been spent to date. The Company estimates that the cost for 2013 is approximately $2.3 million. Total costs during the nine months ended September 27, 2013 are approximately $2.0 million. These expenses are included in “other general and administrative expenses” in the consolidated statement of income for the period ended September 27, 2013. The expenses generally consist of professional fees to advisors and consultants, travel, salaries and severance accruals.

A summary of the costs associated with this initiative is presented below as of September 27, 2013 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability at December 28, 2012	$	504	$	293	$	797
Costs incurred and charged to expense	$	376	$	1,629	$	2,005
Cash payments	$	(105)	$	(1,867)	$	(1,972)
Liability at September 27, 2013	$	775	$	55	$	830

Total costs incurred to date	$	1,276	$	4,425	$	5,701
Total costs expected to be incurred	$	1,592	$	4,608	$	6,200