Note 18 — Manufacturing Consolidation and Tax Strategy

From fiscal 2011 through June 2014, the Company 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 initiatives was to improve upon gross profit margin by streamlining operations, thereby reducing costs and increasing profits in the U.S., to enable the Company to utilize its approximately $131 million in net operating loss carryforwards and at the same time, reduce income taxes in foreign jurisdictions where it pays tax. STAAR had manufactured its products in four facilities worldwide (Monrovia, California, Aliso Viejo, California, Nidau, Switzerland, and Ichikawa City, Japan). As of June 2014, all international production is consolidated into the Monrovia site.

The Company has invested approximately $6.3 million since inception of these initiatives, including $319,000 incurred during 2014, and future expenses, if any, are not expected to be material. These expenses are included in the other general and administrative expenses in the condensed consolidated statements of operations. Expenditures have largely consisted of severance, employee costs, professional fees to advisors and consultants.

A summary of the activity for these initiatives is presented below for the year ended January 2, 2015 (in thousands):

	Termination Benefits		Other Associated Costs		Total
Liability as of January 3, 2014	$	731	$	28	$	759
Costs incurred and charged to expense		212		109		321
Cash payments		(763)		(137)		(900)
Liability as of January 2, 2015	$	180	$	—	$	180