Employee Benefit Plans

12 Months Ended

Jan. 03, 2014

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 10 – 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 following table shows the changes in the benefit obligation and plan assets and the Swiss Plan’s funded status as of January 3, 2014 and December 28, 2012:

	2013		2012
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	4,853	$	4,710
Service cost		320		301
Interest cost		101		116
Participant contributions		239		234
Benefits paid		(157)		(639)
Actuarial (gain) loss on obligation		(173)		131
Projected benefit obligation, end of period	$	5,183	$	4,853
Change in Plan Assets:
Plan assets at fair value, beginning of period	$	3,053	$	3,058
Actual return on plan assets (including foreign currency impact)		144		166
Employer contributions		239		234
Participant contributions		239		234
Benefits paid		(158)		(639)
Plan assets at fair value, end of period	$	3,517	$	3,053

Funded status (pension liability), end of year	$	(1,666)	$	(1,800)
Amount Recognized in Accumulated Other Comprehensive Loss, net of tax:
Actuarial loss on plan assets	$	(521)	$	(558)
Actuarial loss on benefit obligation		(331)		(466)
Actuarial gain recognized in current year		247		205
Accumulated other comprehensive loss	$	(605)	$	(819)

Accumulated benefit obligation at end of year	$	(4,824)	$	(4,410)

The underfunded balance of $1,666,000 and $1,800,000 was included in other long-term liabilities on the consolidated balance sheets as of January 3, 2014 and December 28, 2012, respectively.

Net periodic pension cost associated with the Swiss Plan during the years ended January 3, 2014, December 28, 2012, and December 30, 2011 include the following components (in thousands):

	2013		2012		2011
Service cost	$	320	$	301	$	414
Interest cost		101		116		127
Expected return on plan assets		(96)		(100)		(101)
Actuarial loss recognized in current year		55		54		97
Prior service loss recognized in current year		—		—		—
Transition obligation recognized in current year		—		—		—
Amendments		—		—		—
Net periodic pension cost	$	380	$	371	$	537

Changes in other comprehensive loss, net of tax, associated with the Swiss Plan in the year ended January 3, 2014 and December 28, 2012 include the following components (in thousands):

	2013		2012
Current year actuarial gain on plan assets, net of tax	$	37	$	50
Current year actuarial (loss) gain on benefit obligation, net of tax		135		(101)
Actuarial gain recorded in current year, net of tax		46		42
Prior service cost		—		—
Change in other comprehensive loss	$	218	$	(9)

The amount in accumulated other comprehensive income (loss) as of January 3, 2014 that is expected to be recognized as a component of the net periodic pension costs during fiscal year 2014 is $24,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated on January 3, 2014 and December 28, 2012 using the following assumptions:

	2013			2012
Discount rate		2.50	%		2.00	%
Salary increases		2.00	%		2.00	%
Expected return on plan assets		3.00	%		3.00	%
Expected average remaining working lives in years		10.50			10.30

The discount rates of 2.50% and 2.00% as of January 3, 2014 and December 28, 2012, 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 January 3, 2014 and December 28, 2012 the average rate for high quality Swiss corporate bonds was 2.00%. 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 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.

The Company has contracted with the Allianz Suisse Life Insurance Company’s BVG Collective Foundation (“Foundation”) to manage the Swiss Plan. The Swiss pension funds are legally independent from the employer and are regulated by Swiss federal law. The investment strategy is determined by the Foundation and this applies to all its members. However, the funds contributed by an employer are specifically earmarked only for its employees. The unfunded obligations of a plan are not borne by the remaining participating employers. Vested benefits have to be paid to terminated employees and they are generally rolled over into the pension fund of their new employer. Since the Swiss Plan assets are comingled with other plans’ assets within the Foundation, the individual allocation of the assets cannot be determined. The Foundation typically invests in bonds, equities, mortgage and real estate.

In fiscal 2014, the Company expects to make cash contributions totaling approximately $286,000 to the Swiss Plan.

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

Fiscal Year
2014	$	54
2015		54
2016		57
2017		60
2018		64
2019 – 2023		386
Total	$	675

Defined Benefit Plan-Japan

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

The funded status of the benefit plan at January 3, 2014 and December 28, 2012 is as follows:

	2013		2012
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	1,188	$	1,108
Service cost		158		185
Interest cost		8		13
Actuarial loss		47		63
Benefits paid		(123)		(65)
Foreign exchange adjustment		(229)		(116)
Projected benefit obligation, end of period	$	1,049	$	1,188
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	$	—	$	—

Funded status (pension liability), end of period	$	(1,049)	$	(1,188)

Amount Recognized in Accumulated Other Comprehensive Income, net of tax:
Transition obligation	$	81	$	117
Actuarial gain		191		353
Prior service cost		17		28
Net loss		(184)		(204)
Accumulated other comprehensive income	$	105	$	294

Accumulated benefit obligation at end of year	$	(857)	$	(972)

The underfunded balance of $1,049,000 and $1,188,000, respectively, was included in other long-term liabilities on the consolidated balance sheets as of January 3, 2014 and December 28, 2012, respectively.

Net periodic pension cost associated with the Japan Plan for the years ended January 3, 2014, December 28, 2012 and, December 30, 2011 includes the following components (in thousands):

	2013		2012		2011
Service cost	$	158	$	185	$	174
Interest cost		8		13		6
Net amortization of transition obligation		12		16		16
Actuarial gain		(31)		(58)		(117)
Prior service cost (credit)		(1)		(1)		(1)
Net periodic pension cost	$	146	$	155	$	78

Changes in other comprehensive income, net of tax, associated with the Japan Plan for the years ended January 3, 2014 and December 28, 2012 include the following components (in thousands):

	2013		2012
Amortization of net transition obligation	$	12	$	16
Amortization of actuarial loss		(47)		(62)
Actuarial loss recorded in current year		(153)		(80)
Amortization prior service cost		(1)		(1)
Change in other comprehensive income	$	(189)	$	(127)

The amount in accumulated other comprehensive income as of January 3, 2014 that is expected to be recognized as a component of the net periodic pension cost in fiscal 2014 is approximately $9,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated on January 3, 2014 and December 28, 2012 using the following assumptions:

	2013			2012
Discount rate		0.90	%		0.80	%
Salary increases		4.70	%		3.00	%
Expected return on plan assets		N/A			N/A
Expected average remaining working lives in years		7.48			8.88

The discount rate of 0.90% as of January 3, 2014 and the discount rate of 0.80% as of December 28, 2012 are based on the approximate Japanese government bond rate with a term of 10 to 20 years.

The salary increase average rate 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
2014	$	45
2015		58
2016		75
2017		120
2018		72
2019 – 2023		390
Total	$	760

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 January 3, 2014, employees who participate may elect to make salary deferral contributions to the 401(k) Plan up to the $17,500 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 January 3, 2014, December 28, 2012, and December 30, 2011, the Company made contributions, net of forfeitures, of $270,000, $284,000, and $150,000, respectively, to the 401(k) Plan.