Employee Benefit Plans

12 Months Ended

Dec. 29, 2017

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. Contributions of both the employees and employer finance the Swiss Plan. 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 December 29, 2017 and December 30, 2016 (in thousands):

	2017		2016
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	6,363	$	6,349
Service cost		381		469
Interest cost		53		65
Participant contributions		260		230
Benefits deposited (paid)		(185)		(340)
Actuarial loss (gain)		721		(410)
Prior service credit		(148)		—
Projected benefit obligation, end of period	$	7,445	$	6,363
Change in Plan Assets:
Plan assets at fair value, beginning of period	$	3,606	$	3,498
Actual return on plan assets (including foreign currency impact)		203		(12)
Employer contributions		260		230
Participant contributions		260		230
Benefits deposited (paid)		(185)		(340)
Plan assets at fair value, end of period	$	4,144	$	3,606
Funded status pension liability, end of year	$	(3,301)	$	(2,757)
Amount Recognized in Accumulated Other Comprehensive Loss, net of tax:
Actuarial loss on plan assets	$	(932)	$	(816)
Actuarial loss on benefit obligation		(1,902)		(1,393)
Actuarial gain recognized in current year		527		454
Prior service credit		184		(6)
Effect of curtailments		609		606
Accumulated other comprehensive loss	$	(1,514)	$	(1,155)
Accumulated benefit obligation at end of year	$	(6,932)	$	(5,980)

The underfunded balance of $3,301,000 and $2,757,000 was included in other long-term liabilities (pension liability) on the consolidated balance sheets as of December 29, 2017 and December 30, 2016, respectively.

Net periodic pension cost associated with the Swiss Plan during the years ended December 29, 2017, December 30, 2016 and January 1, 2016 include the following components (in thousands):

	2017		2016		2015
Service cost	$	381	$	469	$	316
Interest cost		53		65		74
Expected return on plan assets		(94)		(89)		(93)
Actuarial loss recognized in current year		72		111		64
Prior service credit		(7)		(7)		—
Net periodic pension cost	$	405	$	549	$	361

Changes in other comprehensive income (loss), net of tax, associated with the Swiss Plan in the year ended December 29, 2017, December 30, 2016 and January 1, 2016 include the following components (in thousands):

	2017		2016		2015
Current year actuarial gain (loss) on plan assets	$	97	$	(8)	$	61
Current year actuarial loss on benefit obligation		(645)		(269)		(699)
Actuarial gain (loss) recorded in current year		65		(98)		57
Prior service credit		126		(6)		64
Effect of curtailments		3		—		—
Change in other comprehensive loss	$	(354)	$	(381)	$	(517)

The amount in accumulated other comprehensive loss as of December 29, 2017 that is expected to be recognized as a component of the net periodic pension costs during fiscal year 2018 is $114,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated on December 29, 2017 and December 30, 2016 using the following assumptions:

	2017			2016
Discount rate		0.7	%		0.8	%
Salary increases		2.0	%		2.0	%
Expected return on plan assets		2.5	%		2.5	%
Expected average remaining working lives in years		10.2			10.0

The discount rates are based on an assumed duration of the pension obligations and estimated using the rates of returns for AAA and AA-rated Swiss and foreign CHF-denominated corporate bonds listed on the SIX Swiss Exchange.

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 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).

The table below sets forth the fair value of Plan assets at December 30, 2016 and December 29, 2017, and the related activity in fiscal years 2016 and 2017, in accordance with ASC 715-20-50-1(d) (in thousands):

	Insurance Contracts
	(Level 3)
Beginning balance at January 1, 2016	$	3,498
Actual return on plan assets		(12)
Purchases, sales, and settlement		120
Ending balance at December 30, 2016		3,606
Actual return on plan assets		203
Purchases, sales, and settlement		335
Ending balance at December 29, 2017	$	4,144

During fiscal 2018, the Company expects to make cash contributions totaling approximately $282,000 to the Swiss Plan.

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

Fiscal Year	Amount
2018	$	48
2019		53
2020		58
2021		64
2022		71
Thereafter		458
Total	$	752

Defined Benefit Plan-Japan

STAAR Japan maintains a noncontributory defined benefit pension plan (“Japan Plan”) substantially covering all 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 December 29, 2017 and December 30, 2016 is as follows (in thousands):

	2017		2016
Change in Projected Benefit Obligation:
Projected benefit obligation, beginning of period	$	1,240	$	1,035
Service cost		147		148
Interest cost		4		6
Actuarial gain		32		49
Benefits paid		(116)		(17)
Foreign exchange adjustment		45		19
Projected benefit obligation, end of period	$	1,352	$	1,240
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	$	(1,352)	$	(1,240)
Amount Recognized in Accumulated Other Comprehensive Income, Net of Tax:
Transition obligation	$	(7)	$	(14)
Actuarial gain (loss)		(35)		(31)
Prior service cost		8		8
Net gain (loss)		122		125
Accumulated other comprehensive income	$	88	$	88

Accumulated benefit obligation at end of year	$	(1,158)	$	(1,078)

The underfunded balance of $1,352,000 and $1,240,000, respectively, was included in other long-term liabilities (pension liability) on the consolidated balance sheets as of December 29, 2017 and December 30, 2016.

Net periodic pension cost associated with the Japan Plan for the years ended December 29, 2017, December 30, 2016 and January 1, 2016 includes the following components (in thousands):

	2017		2016		2015
Service cost	$	147	$	148	$	121
Interest cost		4		6		6
Net amortization of transition obligation		11		12		11
Actuarial loss		(1)		(13)		(15)
Prior service credit		(3)		(1)		(2)
Net periodic pension cost	$	158	$	152	$	121

Changes in other comprehensive income (loss), net of tax, associated with the Japan Plan for the years ended December 29, 2017, December 30, 2016 and January 1, 2016 include the following components (in thousands):

	2017		2016		2015
Amortization of net transition obligation	$	7	$	8	$	7
Amortization of actuarial gain (loss)		(1)		25		(21)
Actuarial income (loss) recorded in current year		(19)		(40)		(10)
Change in other comprehensive income (loss)	$	(13)	$	(7)	$	(24)

The amount in accumulated other comprehensive loss as of December 29, 2017 that is expected to be recognized as a component of the net periodic pension cost in fiscal 2018 is approximately $9,000.

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated on December 29, 2017 and December 30, 2016 using the following assumptions:

	2017			2016
Discount rate		0.3	%		0.3	%
Salary increases		6.2	%		6.0	%
Expected return on plan assets		N/A			N/A
Expected average remaining working lives in years		9.08			8.84

The discount rates are based on the yield curve of corporate bonds rated AA or higher. 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
2018	$	46
2019		51
2020		56
2021		101
2022		62
Thereafter		729
Total	$	1,045

Defined Contribution Plan

The Company has a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of qualified employees in the U.S. During the fiscal year ended December 29, 2017, employees who participate may elect to make salary deferral contributions to the 401(k) Plan up to the $18,000 of the employees’ eligible payroll subject to annual Internal Revenue Code maximum limitations (with a $6,000 annual catch-up contribution permitted for those over 50 years old). The Company’s contribution percentage is 80% 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 December 29, 2017, December 30, 2016 and January 1, 2016, the Company made contributions, net of forfeitures, of $764,000, $703,000 and $625,000, respectively, to the 401(k) Plan.