Employee Benefit Plans

12 Months Ended

Jan. 02, 2015

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.

For the year ended, January 2, 2015, pursuant to the Manufacturing Consolidation Project, the Company terminated certain employees in its Swiss subsidiary resulting in Swiss pension plan curtailments as defined by ASC 715-30-35, Defined Benefit Plans – Pensions, Settlements, Curtailments, and Certain Termination Benefits. The curtailments resulted in a decrease of $1.6 million in the Swiss pension plan’s projected benefit obligation, of which $0.9 million was used to distribute cash payments to employees resulting in a decrease in plan assets. The remaining $0.8 million was recorded as a curtailment gain measured in accordance with ASC 715-30-35-93.

However, since the Swiss pension plan’s accumulated other comprehensive loss, immediately preceding the curtailments exceeded the curtailment gains, the curtailment gains were fully offset against the loss and no gain was recognized in earnings.

At January 2, 2015, the discount rate, one of the key assumptions used to calculate the Swiss pension plan’s projected benefit obligation, was reduced from 2.5% to 1.4%, resulting in an increase to the projected benefit obligation of $0.7 million recorded through an increase in the accumulated other comprehensive loss account of the Swiss pension plan.

The following table shows the changes in the benefit obligation and plan assets and the Swiss Plan’s funded status as of January 2, 2015 and January 3, 2014 (in thousands):

	2014		2013
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	5,183	$	4,853
Service cost		297		320
Interest cost		114		101
Participant contributions		241		239
Benefits paid		(116)		(157)
Actuarial (gain) loss on obligation		737		(173)
Curtailments		(1,629)		—
Projected benefit obligation, end of period	$	4,827	$	5,183
Change in Plan Assets:
Plan assets at fair value, beginning of period	$	3,517	$	3,053
Actual return on plan assets (including foreign currency impact)		(230)		144
Employer contributions		241		239
Participant contributions		241		239
Benefits paid		(116)		(158)
Curtailment distributions		(948)		—
Plan assets at fair value, end of period	$	2,705	$	3,517

Funded status (pension liability), end of year	$	(2,122)	$	(1,666)

Amount Recognized in Accumulated Other Comprehensive Loss, net of tax:
Actuarial loss on plan assets	$	(773)	$	(521)
Actuarial loss on benefit obligation		(902)		(331)
Actuarial gain recognized in current year		266		247
Effect of curtailments		528		—
Accumulated other comprehensive loss	$	(881)	$	(605)

Accumulated benefit obligation at end of year	$	(4,488)	$	(4,824)

The underfunded balance of $2,122,000 and $1,666,000 was included in other long-term liabilities (pension liability) on the consolidated balance sheets as of January 2, 2015 and January 3, 2014, respectively.

Net periodic pension cost associated with the Swiss Plan during the years ended January 2, 2015, January 3, 2014 and December 28, 2012 include the following components (in thousands):

	2014		2013		2012
Service cost	$	297	$	320	$	301
Interest cost		114		101		116
Expected return on plan assets		(97)		(96)		(100)
Actuarial loss recognized in current year		24		55		54
Prior service loss recognized in current year		—		—		—
Transition obligation recognized in current year		—		—		—
Amendments		—		—		—
Net periodic pension cost	$	338	$	380	$	371

Changes in other comprehensive income (loss), net of tax, associated with the Swiss Plan in the year ended January 2, 2015, January 3, 2014 and December 28, 2012 include the following components (in thousands):

	2014		2013		2012
Current year actuarial gain (loss) on plan assets, net of tax	$	(375)	$	37	$	50
Current year actuarial gain (loss) on benefit obligation, net of tax		(846)		135		(101)
Actuarial gain recorded in current year, net of tax		28		46		42
Prior service cost		—		—		—
Effect of curtailments		782		—		—
Change in other comprehensive income (loss)	$	(411)	$	218	$	(9)

The amount in accumulated other comprehensive income (loss) as of January 2, 2015 that is expected to be recognized as a component of the net periodic pension costs during fiscal year 2015 is $64,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated on January 2, 2015 and January 3, 2014 using the following assumptions:

	2014			2013
Discount rate		1.4	%		2.5	%
Salary increases		2.0	%		2.0	%
Expected return on plan assets		3.0	%		3.0	%
Expected average remaining working lives in years		10.1			10.5

The discount rates 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. 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

Under Swiss law, pension funds are legally independent from the employer and all the contributions are invested with regulated entities. The Company has a contract with Allianz Suisse Life Insurance Company’s BVG Collective Foundation (the “Foundation”) to manage its Swiss pension fund. Multiple employers contract with the Foundation to manage the employers’ respective pension plans. The Foundation manages the pension plans of its contracted employers as a collective entity. The investment strategy is determined by the Foundation and applies to all members of the collective Foundation. There are no separate financial statements for each employer contract. The pension plan assets of all the employers that contract with the Foundation are comingled. They are considered multiple-employer plans under ASC 715-30-35-70 and therefore accounted for as single-employer plans.

As there are no separate financial statements for each employer contract, there are no individual investments that can be directly attributed to the Company’s pension plan assets. However, the funds contributed by an employer are specifically earmarked for its employees and the total assets of the plan allocable to Company’s employees are separately tracked by the Foundation. The lack of visibility into the specific investments of the plan assets and how they are valued is considered to be a significant unobservable input, therefore, the Company considers the plan assets collectively to be Level 3 assets under the fair value hierarchy (see Note 1).

Plan assets totaled $2.7 million and $3.5 million as of January 2, 2015 and January 3, 2014, respectively.

The table below sets forth the fair value of Plan assets for the fiscal year 2014 in accordance with ASC 715-20-50-1(d) (in thousands):

	Fair Value Measurement Using Significant Unobservable Inputs ( Level 3)
	Liquid Asset Fund		Bond Fund		Equity Fund		Real Estate Fund		Total
Beginning balance at:: January 3, 2014	$	22	$	3,017	$	115	$	363	$	3,517
Actual return on plan assets		1		(200)		(2)		(29)		(230)
Purchases, sales and settlement		2		(505)		(6)		(73)		(582)
Ending Balance at: January 2, 2015	$	25	$	2,312	$	107	$	261	$	2,705

The table below sets forth the fair value of Plan assets for the fiscal year 2013 (in thousands):

	Fair Value Measurement Using Significant Unobservable Inputs ( Level 3)
	Liquid Asset Fund		Bond Fund		Equity Fund		Real Estate Fund		Total
Beginning balance at:: December 28, 2012	$	35	$	2,623	$	73	$	322	$	3,053
Actual return on plan assets		(4)		122		13		13		144
Purchases, sales and settlement		(9)		272		29		28		320
Ending Balance at: January 3, 2014	$	22	$	3,017	$	115	$	363	$	3,517

During fiscal 2015, the Company expects to make cash contributions totaling approximately $196,000 to the Swiss Plan.

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

Fiscal Year		Amount
2015	$	50
2016		55
2017		60
2018		65
2019		64
2020 – 2024		397
Total	$	691

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 2, 2015 and January 3, 2014 is as follows (in thousands):

	2014		2013
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	1,049	$	1,188
Service cost		157		158
Interest cost		9		8
Actuarial (gain) loss		(55)		47
Benefits paid		(66)		(123)
Foreign exchange adjustment		(137)		(229)
Projected benefit obligation, end of period	$	957	$	1,049
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	$	(957)	$	(1,049)

Amount Recognized in Accumulated Other Comprehensive Income, net of tax:
Transition obligation	$	(26)	$	81
Actuarial gain		146		191
Prior service cost		9		17
Net loss		(8)		(184)
Accumulated other comprehensive income	$	121	$	105

Accumulated benefit obligation at end of year	$	828	$	(857)

The underfunded balance of $957,000 and $1,049,000, respectively, was included in other long-term liabilities (pension liability) on the consolidated balance sheets as of January 2, 2015 and January 3, 2014.

Net periodic pension cost associated with the Japan Plan for the years ended January 2, 2015, January 3, 2014 and, December 28, 2012 includes the following components (in thousands):

	2014		2013		2012
Service cost	$	157	$	158	$	185
Interest cost		9		8		13
Net amortization of transition obligation		12		12		16
Actuarial gain		(10)		(31)		(58)
Prior service cost (credit)		(1)		(1)		(1)
Net periodic pension cost	$	167	$	146	$	155

Changes in other comprehensive income (loss), net of tax, associated with the Japan Plan for the years ended January 2, 2015, January 3, 2014 and December 28, 2012 include the following components (in thousands):

	2014		2013			2012
Amortization of net transition obligation		12		12		16
Amortization of actuarial loss		(9)		(47)		(62)
Actuarial income (loss) recorded in current year		13		(153)		(117)
Amortization prior service cost		(2)		(1)		(1)
Change in other comprehensive income (loss)	$	14	$	(189)	$	(127)

The amount in accumulated other comprehensive income (loss) as of January 2, 2015 that is expected to be recognized as a component of the net periodic pension cost in fiscal 2015 is approximately $5,500.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated on January 2, 2015 and January 3, 2014 using the following assumptions:

	2014			2013
Discount rate		0.6	%		0.9	%
Salary increases		4.5	%		4.7	%
Expected return on plan assets		N/A			N/A
Expected average remaining working lives in years		8.12			7.48

The discount rate of 0.60% as of January 2, 2015 and the discount rate of 0.90% as of January 3, 2014 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	Amount
2015	$	85
2016		54
2017		141
2018		51
2019		48
2020-2024		537
Total	$	916

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 2, 2015, 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). In 2014, the Company increased the contribution percentage to 80% from 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 2, 2015, January 3, 2014, and December 28, 2012, the Company made contributions, net of forfeitures, of $518,000, $270,000, and $284,000, respectively, to the 401(k) Plan.

- Definition

The entire disclosure for pension and other postretirement benefits.

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