Note 18 — Manufacturing Consolidation Project and Tax Strategy

From fiscal 2011 through 2013, 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 strategies is to further improve upon gross profit margin by streamlining operations, thereby reducing costs and to increase profits in the U.S., to enable the Company to utilize its $121.7 million in net operating loss carryforwards and at the same time, reduce income taxes in foreign jurisdictions where it pays tax. STAAR currently manufactures its products in four facilities worldwide. It has developed a plan to methodically consolidate its manufacturing in a single site at its Monrovia, California location which is expected to be substantially completed during 2014.

The Company has invested approximately $5.9 million over a three-year period, of which it incurred approximately $2.2 million during 2013. These expenses are included in the other general and administrative expenses in the consolidated statement of operations for the year ended January 3, 2014. Expenditures to date have largely consisted of severance, employee costs, professional fees to advisors and consultants.

A summary of the activity for these initiatives is presented below as of January 3, 2014 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability at December 28, 2012	$	504	$	293	$	797
Costs incurred and charged to expense		481		1,761		2,242
Cash payments		(254)		(2,026)		(2,280)
Liability at January 3, 2014	$	731	$	28	$	759

Total costs incurred to date	$	1,381	$	4,558	$	5,939
Total costs expected	$	1,592	$	4,608	$	6,200
Total costs remaining	$	211	$	50	$	261