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Employee Benefit Plans
 12 Months Ended
Dec. 29, 2023
Retirement Benefits [Abstract]  
Employee Benefit Plans

Note 11 – Employee Benefit Plans

Defined Benefit Plan – Switzerland

The Company maintains a passive pension plan (the “Swiss Plan”) covering employees of STAAR AG, which is accounted for as a defined benefit plan.

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 (in thousands):

 

 

 

2023

 

 

2022

 

Change in Projected Benefit Obligation:

 

 

 

 

 

 

Projected benefit obligation, beginning of period

 

$

21,463

 

 

$

26,247

 

Service cost

 

 

916

 

 

 

1,133

 

Interest cost

 

 

413

 

 

 

82

 

Participant contributions

 

 

863

 

 

 

772

 

Benefits deposited (paid)

 

 

(7,101

)

 

 

208

 

Actuarial (gain) loss

 

 

5,411

 

 

 

(6,979

)

Projected benefit obligation, end of period

 

$

21,965

 

 

$

21,463

 

Change in Plan Assets:

 

 

 

 

 

 

Plan assets at fair value, beginning of period

 

$

20,709

 

 

$

18,809

 

Actual return on plan assets (including foreign currency impact)

 

 

1,922

 

 

 

12

 

Employer contributions

 

 

988

 

 

 

908

 

Participant contributions

 

 

863

 

 

 

772

 

Benefits deposited (paid)

 

 

(7,101

)

 

 

208

 

Plan assets at fair value, end of period

 

$

17,381

 

 

$

20,709

 

Funded status (pension liability), end of year(1)

 

$

(4,584

)

 

$

(754

)

Amount Recognized in Accumulated Other Comprehensive Income
   (Loss), net of tax:

 

 

 

 

 

 

Actuarial loss on plan assets

 

$

(38

)

 

$

(1,354

)

Actuarial loss on benefit obligation

 

 

(5,378

)

 

 

(531

)

Actuarial gain recognized in current year

 

 

1,849

 

 

 

1,847

 

Prior service credit

 

 

1,122

 

 

 

1,283

 

Effect of curtailments

 

 

610

 

 

 

610

 

Accumulated other comprehensive income (loss)

 

$

(1,835

)

 

$

1,855

 

Accumulated benefit obligation at year end

 

$

(20,729

)

 

$

(20,784

)

 

(1) The underfunded balance was included in pension liability on the Consolidated Balance Sheets.

Note 11 – Employee Benefit Plans (Continued)

Defined Benefit Plan – Switzerland (Continued)

Net periodic pension cost associated with the Swiss Plan included the following components (in thousands):

 

 

 

Years Ended

 

 

 

2023

 

 

2022

 

 

2021

 

Service cost(1)

 

$

916

 

 

$

1,133

 

 

$

1,089

 

Interest cost(2)

 

 

413

 

 

 

82

 

 

 

55

 

Expected return on plan assets(2)

 

 

(452

)

 

 

(494

)

 

 

(434

)

Prior service credit(2),(3)

 

 

(179

)

 

 

(179

)

 

 

(42

)

Actuarial loss recognized in current period(2),(3)

 

 

—

 

 

 

390

 

 

 

524

 

Net periodic pension cost

 

$

698

 

 

$

932

 

 

$

1,192

 

 

(1) Recognized in selling general and administrative expenses on the Consolidated Statements of Income.

(2) Recognized in other income (expense), net, on the Consolidated Statements of Income.

(3) Amounts reclassified from accumulated other comprehensive income (loss).

Changes in other comprehensive income (loss), net of tax, associated with the Swiss Plan included the following components (in thousands):

 

 

 

Years Ended

 

 

 

2023

 

 

2022

 

 

2021

 

Current year actuarial gain (loss) on plan assets

 

$

1,316

 

 

$

(432

)

 

$

(724

)

Current year actuarial gain (loss) on benefit obligation

 

 

(4,847

)

 

 

6,251

 

 

 

1,671

 

Actuarial gain recorded in current year

 

 

2

 

 

 

348

 

 

 

470

 

Prior service credit

 

 

(161

)

 

 

(160

)

 

 

1,142

 

Change in other comprehensive gain (loss)

 

$

(3,690

)

 

$

6,007

 

 

$

2,559

 

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Swiss Plan were calculated using the following assumptions:

 

 

 

2023

 

 

2022

 

Discount rate

 

 

1.5

%

 

 

2.2

%

Salary increases

 

 

2.5

%

 

 

2.0

%

Expected return on plan assets

 

 

3.0

%

 

 

2.5

%

Expected average remaining working lives in years

 

 

9.5

 

 

 

9.3

 

 

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 and therefore accounted for as single-employer plans.

Note 11 – Employee Benefit Plans (Continued)

Defined Benefit Plan – Switzerland (Continued)

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.

The table below sets forth the fair value of Plan assets at December 29, 2023 and December 30, 2022, and the related activity in years ended 2023 and 2022 (in thousands):

 

 

 

Insurance
Contracts
(Level 3)

 

Ending balance at December 31, 2021

 

$

18,809

 

Actual return on plan assets

 

 

12

 

Purchases, sales, and settlement

 

 

1,888

 

Ending balance at December 30, 2022

 

$

20,709

 

Actual return on plan assets

 

 

1,922

 

Purchases, sales, and settlement

 

 

(5,250

)

Ending balance at December 29, 2023

 

$

17,381

 

 

During fiscal year 2024, the Company expects to make cash contributions totaling approximately $1,099,000 to the Swiss Plan.

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

 

Year Ended

 

Amount

 

2024

 

$

196

 

2025

 

 

131

 

2026

 

 

158

 

2027

 

 

202

 

2028

 

 

3,897

 

Thereafter

 

 

—

 

Total

 

$

4,584

 

 

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.

Note 11 – Employee Benefit Plans (Continued)

Defined Benefit Plan-Japan (Continued)

The funded status of the benefit plan was as follows (in thousands):

 

 

 

2023

 

 

2022

 

Change in Projected Benefit Obligation:

 

 

 

 

 

 

Projected benefit obligation, beginning of period

 

$

1,181

 

 

$

1,320

 

Service cost

 

 

60

 

 

 

116

 

Interest cost

 

 

3

 

 

 

2

 

Actuarial (gain) loss

 

 

8

 

 

 

(42

)

Benefits paid

 

 

(705

)

 

 

(46

)

Foreign exchange adjustment

 

 

(76

)

 

 

(169

)

Projected benefit obligation, end of period

 

$

471

 

 

$

1,181

 

Change 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 year(1)

 

$

(471

)

 

$

(1,181

)

Amount Recognized in Accumulated Other Comprehensive Income
   (Loss), net of tax:

 

 

 

 

 

 

Actuarial loss

 

$

(28

)

 

$

(30

)

Prior service cost

 

 

3

 

 

 

4

 

Settlement

 

 

(106

)

 

 

—

 

Curtailment

 

 

(2

)

 

 

—

 

Net gain (loss)

 

 

189

 

 

 

210

 

Accumulated other comprehensive income

 

$

56

 

 

$

184

 

Accumulated benefit obligation at year end

 

$

(446

)

 

$

(1,134

)

 

(1) The underfunded balance was included in pension liability on the Consolidated Balance Sheets.

Net periodic pension cost associated with the Japan Plan included the following components (in thousands):

 

 

 

Years Ended

 

 

 

2023

 

 

2022

 

 

2021

 

Service cost(1)

 

$

60

 

 

$

116

 

 

$

177

 

Interest cost(2)

 

 

3

 

 

 

2

 

 

 

6

 

Prior service credit(2),(3)

 

 

(14

)

 

 

(24

)

 

 

5

 

Settlement gain(2),(3)

 

 

(160

)

 

 

—

 

 

 

—

 

Curtailment gain(2),(3)

 

 

(4

)

 

 

—

 

 

 

—

 

Net periodic pension cost

 

$

(115

)

 

$

94

 

 

$

188

 

 

(1) Recognized in selling general and administrative expenses on the Consolidated Statements of Income.

(2) Recognized in other income (expense), net, on the Consolidated Statements of Income.

(3) Amounts reclassified from accumulated other comprehensive loss.

Note 11 – Employee Benefit Plans (Continued)

Defined Benefit Plan-Japan (Continued)

Changes in other comprehensive income (loss), net of tax, associated with the Japan Plan include the following components (in thousands):

 

 

 

Years Ended

 

 

 

2023

 

 

2022

 

 

2021

 

Amortization of actuarial loss

 

$

2

 

 

$

5

 

 

$

3

 

Prior service cost

 

 

(1

)

 

 

(2

)

 

 

(1

)

Actuarial income (loss) recorded in current year

 

 

(21

)

 

 

(11

)

 

 

175

 

Settlement

 

 

(106

)

 

 

—

 

 

 

—

 

Curtailment loss

 

 

(2

)

 

 

—

 

 

 

—

 

Change in other comprehensive income (loss)

 

$

(128

)

 

$

(8

)

 

$

177

 

 

Net periodic pension cost and projected and accumulated pension obligation for the Company’s Japan Plan were calculated using the following assumptions:

 

 

 

2023

 

 

2022

 

Discount rate

 

 

0.8

%

 

 

0.4

%

Salary increases

 

 

4.8

%

 

 

3.8

%

Expected return on plan assets

 

N/A

 

 

N/A

 

Expected average remaining working lives in years

 

 

6.0

 

 

 

10.2

 

 

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):

 

Year Ended

 

Amount

 

2024

 

$

40

 

2025

 

 

45

 

2026

 

 

49

 

2027

 

 

51

 

2028

 

 

64

 

Thereafter

 

 

222

 

Total

 

$

471

 

 

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 year ended December 29, 2023, employees who participate may elect to make salary deferral contributions to the 401(k) Plan up to $22,500 of the employees’ eligible payroll subject to annual Internal Revenue Code maximum limitations (with a $7,500 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. The Company’s contributions, net of forfeitures, to the 401(k) Plan were as follows (in thousands):

 

 

 

Years Ended

 

 

 

2023

 

 

2022

 

 

2021

 

Employer contributions, net of forfeitures

 

$

2,720

 

 

$

2,004

 

 

$

1,563