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Stockholders' Equity
 12 Months Ended
Jan. 03, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Note 11 — Stockholders’ Equity
 
Common Stock
 
During fiscal year 2013, the Company issued 153,600 shares of restricted stock to certain employees and the Board of Directors. Restricted shares are issued at fair market value on the date of grant, vest over a period of one to three years, and are subject to forfeiture until vested or the service period is achieved and the restriction is lapsed or terminated.     As of January 3, 2014, none of the 2013 grants had vested. Restricted stock is issued and outstanding for legal and voting purposes but are not considered to be participating securities as defined by ASC 260, Earnings per Share, as restricted stock dividends, if any declared, are forfeitable if the service condition is not met (see Note 15).
 
Stock-Based Compensation
 
Stock-based compensation expense is set forth below (in thousands): 
    
 
 
Fiscal Year Ended
 
 
 
January 3,
2014
 
December 28,
2012
 
December 30,
2011
 
Employee stock options
 
$
2,683
 
$
2,595
 
$
1,361
 
Restricted stock
 
 
999
 
 
590
 
 
466
 
Restricted stock units
 
 
589
 
 
—
 
 
—
 
Consultant compensation
 
 
218
 
 
23
 
 
87
 
Total
 
$
4,489
 
$
3,208
 
$
1,914
 
 
There was no net income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense for non-qualified stock options, as the Company fully offsets net deferred tax assets with a valuation allowance (see Note 9).  In addition, the Company capitalized $232,000, $150,000, and $121,000, of stock-based compensation to inventory as of January 3, 2014, December 28, 2012, and December 30, 2011, respectively, and recognizes these amounts as cost of sales as the inventory is sold. The Company does not recognize deferred income taxes for incentive stock option compensation expense, and records a tax deduction only when a disqualified disposition has occurred (see Note 9).
 
Stock Option Plans
 
In fiscal year 2003, the Board of Directors approved the 2003 Omnibus Equity Incentive Plan (the “2003 Plan”) authorizing awards of equity compensation, including options to purchase common stock and restricted shares of common stock. On May 13, 2013, the stockholders of STAAR approved the Restated 2003 Omnibus Plan, which increased the number of shares available for grants under the Plan by 1,250,000 shares. As of January 3, 2014, all outstanding options have been issued under a plan approved by our stockholders.
 
As of January 3, 2014, approximately 1,363,000 shares were authorized and available for grants under the 2003 Omnibus Plan. The 2003 Plan provides for various forms of stock-based incentives. To date, of the available forms of awards under the 2003 Plan, the Company has granted only stock options, restricted stock and restricted stock units. Options under the plan are granted at fair market value on the date of grant, become exercisable generally over a three- or four-year service period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the 2003 Plan). The Company settles stock option exercises with newly issued shares of common stock. Restricted stock grants under the 2003 Plan generally vest over a period of one, three or four years. Restricted stock units generally vest over a period of one year if both performance and service conditions have been met, as further described below.
   
Assumptions
 
The Company uses the Black-Scholes option pricing model to estimate the fair value of new stock option grants and establish that fair value on the date of grant using the assumptions noted in the following table. Additionally, all option valuation models require the input of highly subjective assumptions including the expected life of the option and expected stock price volatility. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and optionee termination experience. The expected term of options granted is derived from the historical exercise and activity from the time of grant to the time of exercise or post-vesting cancellation date, and represents the period of time that options granted are expected to be outstanding.  The Company has determined an estimated  9.92% forfeiture rate used in the model for fiscal year 2013 option grants based on historical forfeiture experience.   The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Following are the weighted-average assumptions used with the Black-Scholes option-pricing model to determine the fair value estimates of options granted: 
   
 
 
Fiscal Year Ended
 
 
 
January 3,
2014
 
 
December 28,
2012
 
 
December 30,
2011
 
Expected dividend yield
 
 
0
%
 
 
0
%
 
 
0
%
Expected volatility
 
 
71
%
 
 
79
%
 
 
77
%
Risk-free interest rate
 
 
0.73
%
 
 
0.82
%
 
 
1.82
%
Expected term (in years)
 
 
4.12
 
 
 
5.21
 
 
 
5.49
 
 
A summary of option activity under the Plan as of January 3, 2014 is presented below:
 
Options
 
 
Shares
(000’s)
 
 
Weighted-
Average
Exercise
Price
 
 
Weighted-
Average
Remaining
Contractual
Term
 
 
Aggregate
Intrinsic
Value
(000’s)
 
Outstanding at December 28, 2012
 
 
3,376
 
$
5.89
 
 
 
 
 
 
 
Granted
 
 
603
 
 
6.77
 
 
 
 
 
 
 
Exercised
 
 
(645)
 
 
5.10
 
 
 
 
 
 
 
Forfeited or expired
 
 
(35)
 
 
8.53
 
 
 
 
 
 
 
Outstanding at January 3, 2014
 
 
3,299
 
$
6.17
 
 
6.27
 
$
32,745
 
Exercisable at January 3, 2014
 
 
2,168
 
$
5.30
 
 
5.04
 
 
23,405
 
 
The weighted-average grant-date fair value of options granted during the fiscal years ended January 3, 2014, December 28, 2012, and December 30, 2011, was $3.51, $6.65, and $3.85, per option, respectively.  The total fair value of options vested during fiscal years ended January 3, 2014, December 28, 2012, and December 30, 2011, was $3,084,000, $1,830,000, and $1,049,000, respectively. The total intrinsic value of options exercised during the fiscal years ended January 3, 2014, December 28, 2012, and December 30, 2011, was $3,894,000, $1,240,000, and $2,533,000, respectively.
 
 As of January 3, 2014, there was $3.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.64 years.
    
The following table summarizes information about stock options outstanding and exercisable at January 3, 2014 (in thousands, except per share data):
 
Range of Exercise Prices
Number
Outstanding at
January 3,
2014
 
Options
Outstanding
Weighted-Average
Remaining
Contractual Life
 
Weighted-
Average
Exercise
Price
Number
Exercisable at
January 3,
2014
 
Weighted-
Average
Exercise
Price
 
$
0.95
 
 
29
 
5.24 Years
 
$
0.95
 
 
29
 
$
0.95
 
$
1.56 to $2.30
 
 
320
 
4.30 Years
 
$
2.19
 
 
320
 
$
2.19
 
$
2.45 to $3.60
 
 
177
 
5.48 Years
 
$
3.29
 
 
177
 
$
3.29
 
$
3.75 to $5.29
 
 
506
 
3.16 Years
 
$
4.22
 
 
497
 
$
4.20
 
$
5.34 to $7.32
 
 
1,457
 
6.96 Years
 
$
5.71
 
 
817
 
$
5.89
 
$
7.50 to $13.34
 
 
810
 
7.94 Years
 
$
10.61
 
 
328
 
$
10.00
 
 
 
 
 
3,299
 
6.27 Years
 
$
6.17
 
 
2,168
 
$
5.30
 
 
Warrants
 
On December 14, 2007, the Company entered into a Warrant Agreement with Broadwood Partners, L.P. (“Broadwood”) 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.  On December 12, 2013, Broadwood exercised these warrants with a “cashless” exercise (net share settlement) as allowed for under the original Warrant Agreement (“cashless exercise”).  Under the terms of the cashless exercise, the Company issued 485,456 shares of common stock to Broadwood and simultaneously withheld 214,544 shares of common stock as consideration for the $2.8 million aggregate ($4.00 per share) exercise price owed by Broadwood to the Company, the number of shares withheld determined using the Company’s average 21-day per share closing stock price preceding the exercise date. 
 
On June 1, 2009, the Company issued warrants to Broadwood, pursuant to a Warrant Agreement, granting the right to purchase up to an additional 700,000 shares of Common Stock at an exercise price of $4.00 per share, exercisable for a period of six years, which remain outstanding.  The warrants are accounted for as an equity instrument.
 
The 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 (“Penalty Warrants”) for each month that the Company does not meet this effectiveness requirement through the term of the remaining warrants, June 1, 2015.  The Company does not consider the issuance of Penalty Warrants likely.
 
The fair value of the warrants was estimated on the issuance date, June 1, 2009, using a Black-Scholes option valuation model applying the assumptions noted in the following table:
 
 
 
As of 
June 1, 2009
 
Common stock price per share
 
$
1.01
 
Number of warrants
 
 
700,000
 
Expected dividends
 
 
0
%
Expected volatility
 
 
74.4
%
Risk-free rate
 
 
3.28
%
Life (in years)
 
 
6.0
 
 
A summary of the warrants activity is provided below:
 
 
 
Shares
(000’s)
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
(000’s)
 
Outstanding at December 28, 2012
 
 
1,470
 
$
4.10
 
 
 
 
 
 
 
Granted
 
 
—
 
 
—
 
 
 
 
 
 
 
Exercised
 
 
(700)
 
 
4.00
 
 
 
 
 
 
 
Forfeited or expired
 
 
(70)
 
 
6.00
 
 
 
 
 
 
 
Outstanding at January 3, 2014
 
 
700
 
$
4.00
 
 
1.41
 
$
8,470
 
Exercisable at January 3, 2014
 
 
700
 
$
4.00
 
 
1.41
 
$
8,470
 
 
Restricted stock
 
A summary of restricted stock as of January 3, 2014 is presented below:
 
 
 
Shares
(000’s)
 
 
Weighted
Average
Grant-Date
Fair Value
per Share
 
Outstanding at December 28, 2012
 
 
205
 
 
$
8.48
 
Granted
 
 
154
 
 
 
6.58
 
Forfeited
 
 
—
 
 
 
—
 
Vested
 
 
(18)
 
 
 
9.90
 
Outstanding at January 3, 2014
 
 
341
 
 
$
7.55
 
Restricted Stock Units
 
In March 2013, pursuant to the Company’s Amended and Restated 2003 Omnibus Equity Incentive Plan, the Compensation Committee approved a 2013 Restricted Stock Unit Plan (“2013 RSU Plan”), which is a performance contingent restricted stock award. On March 4, 2013, the Company granted 135,000 RSUs as presented in the table below with vesting subject to a performance and service condition. As of January 3, 2014, although the Company had achieved the performance target, none of the RSUs were vested due to not having met the service condition date, which is March 12, 2014. 
 
A summary of restricted stock units as of January 3, 2014 is presented below:
 
 
 
Units
(000’s)
 
 
Weighted
Average
Grant-Date
Fair Value
per Share
 
Outstanding at December 28, 2012
 
 
—
 
 
$
—
 
Granted
 
 
135
 
 
 
5.34
 
Forfeited
 
 
—
 
 
 
—
 
Vested
 
 
—
 
 
 
—
 
Outstanding at January 3, 2014
 
 
135
 
 
$
5.34