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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
or
( ) TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13606
SOLA INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3189941
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
1290 OAKMEAD PARKWAY, SUITE 230, SUNNYVALE, CA 94085
(Address of principal executive offices)
(zip code)
(408) 735-1982
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No___________
-----------
As of February 2, 2001, 23,693,416 shares of the registrant's common stock,
par value $0.01 per share, which is the only class of common stock of the
registrant, were outstanding.
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SOLA INTERNATIONAL INC.
Table of Contents
Form 10-Q for the Quarterly Period
Ended December 31, 2000
PART I FINANCIAL INFORMATION PAGE
------ --------------------- ----
Item 1. Financial Statements
Unaudited Consolidated Condensed Balance Sheet as of December 31, 2000 3
Consolidated Condensed Balance Sheet as of March 31, 2000 (derived from
audited financial statements) 3
Unaudited Consolidated Condensed Statements of Income for
the three and nine month periods ended December 31, 2000 and
December 31, 1999 4
Unaudited Consolidated Condensed Statements of Cash Flows for the nine
month periods ended December 31, 2000 and December 31, 1999 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
OTHER INFORMATION
-----------------
PART II
-------
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
SOLA INTERNATIONAL INC.
Consolidated Condensed Balance Sheets
(in thousands, except per share data)
March 31, 2000
December 31, (derived from
2000 audited financial
ASSETS (unaudited) statements)
----------- -----------
Current assets:
Cash and cash equivalents..................................... $ 17,397 $ 18,852
Trade accounts receivable, less allowance for doubtful
accounts of $7,169 and $8,873 at December 31, 2000 and March
31, 2000, respectively....................................... 121,295 120,882
Inventories................................................... 138,676 172,888
Other current assets.......................................... 24,035 35,725
-------- --------
Total current assets...................................... 301,403 348,347
Property, plant and equipment, at cost, less accumulated
depreciation and amortization............................. 130,866 152,979
Goodwill and other intangibles, net.............................. 178,162 195,465
Other long-term assets........................................... 53,379 18,242
-------- --------
Total assets.............................................. $663,810 $715,033
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks........................................ $ 5,953 $ 18,741
Current portion of long-term debt............................. 8,323 4,676
Accounts payable.............................................. 57,834 60,151
Accrued liabilities........................................... 44,919 43,326
Accrued payroll and related compensation...................... 30,128 28,303
Bank debt..................................................... 141,600 --
Other current liabilities..................................... 1,390 2,304
-------- --------
Total current liabilities................................. 290,147 157,501
Long-term debt, less current portion............................. 1,253 4,362
Bank debt, less current portion.................................. -- 105,200
Senior notes..................................................... 94,721 99,672
Other long-term liabilities...................................... 23,644 20,496
-------- --------
Total liabilities......................................... 409,765 387,231
-------- --------
Commitments and Contingencies
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; no
shares issued............................................. -- --
Common stock, $0.01 par value; 50,000 shares authorized; 24,937
shares issued............................................. 249 249
Additional paid-in capital....................................... 281,491 281,467
Equity participation loans....................................... -- (10)
Retained earnings................................................ 7,221 71,319
Cumulative other comprehensive loss.............................. (26,750) (25,223)
Common stock in treasury, at cost - 1,245 shares at
December 31, 2000........................................ (8,166) --
-------- --------
Total shareholders' equity................................ 254,045 327,802
-------- --------
Total liabilities and shareholders' equity................ $663,810 $715,033
======== ========
The accompanying notes are an integral part of these consolidated condensed
financial statements
3
SOLA INTERNATIONAL INC.
Unaudited Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended Nine Months Ended
December 31, December 31,
2000 1999 2000 1999
---- ---- ---- ----
Net sales.............................................. $ 126,144 $127,238 $ 400,683 $401,886
Cost of sales.......................................... 76,753 71,983 236,626 223,677
--------- -------- --------- --------
Gross profit........................................ 49,391 55,255 164,057 178,209
--------- -------- --------- --------
Research and development expenses...................... 3,373 4,861 11,273 15,216
Selling and marketing expenses......................... 25,732 25,752 75,216 76,812
General and administrative expenses.................... 14,286 16,529 42,960 46,063
Special charges........................................ 100,637 (657) 114,628 3,706
--------- -------- --------- --------
Operating expenses.................................. 144,028 46,485 244,077 141,797
--------- -------- --------- --------
Operating income/(loss)......................... (94,637) 8,770 (80,020) 36,412
Interest expense, net.................................. 5,600 4,963 17,008 13,912
--------- -------- --------- --------
Income/(loss) before provision for income
taxes, minority interest and extraordinary
item............................................. (100,237) 3,807 (97,028) 22,500
Benefit/(provision) for income taxes................... 32,490 (1,218) 31,410 (7,200)
Minority interest...................................... 62 86 49 534
--------- -------- --------- --------
Income/(loss) before extraordinary item (67,685) 2,675 (65,569) 15,834
Extraordinary item, net of tax......................... -- -- 1,471 --
--------- -------- --------- --------
Net income/(loss)................................... ($67,685) $ 2,675 ($64,098) $ 15,834
========= ======== ========= ========
Earnings/(loss) per share - basic
Earnings/(loss) per share before extraordinary
item....................................... ($2.86) $ 0.11 ($2.71) $ 0.64
Extraordinary item................................ -- -- 0.06 --
--------- -------- --------- --------
Earnings/(loss) per share - basic................ ($2.86) $ 0.11 ($2.65) $ 0.64
========= ======== ========= ========
Weighted average common shares outstanding............. 23,693 24,875 24,166 24,871
========= ======== ========= ========
Earnings/(loss) per share - diluted:
Earnings/(loss) per share before extraordinary
item....................................... ($2.86) $ 0.11 ($2.71) $ 0.63
Extraordinary item................................ -- -- 0.06 --
--------- -------- --------- --------
Earnings/(loss) per share - diluted............... ($2.86) $ 0.11 ($2.65) $ 0.63
========= ======== ========= ========
Weighted average common and dilutive securities
outstanding.......................................... 23,693 25,075 24,166 25,113
========= ======== ========= ========
The accompanying notes are an integral part of these consolidated condensed
financial statements
4
SOLA INTERNATIONAL INC.
Unaudited Consolidated Condensed Statements of Cash Flows
(in thousands)
Nine Months Ended Nine Months Ended
December 31, 2000 December 31, 1999
--------------------- ---------------------
Net cash provided by operating activities.............. $ 4,772 $ 9,793
-------- -----------
Cash flows from investing activities:
Purchase of business.................................. (2,480) (3,673)
Investments in trade investments and joint
ventures............................................ (1,337) (5,219)
Capital expenditures.................................. (15,654) (13,869)
Other investing activities............................ 14 1,045
-------- -----------
Net cash used in investing activities.................. (19,457) (21,716)
-------- -----------
Cash flows from financing activities:
Payments on equity participation loans/exercise
of stock options..................................... 34 607
Net receipts/(payments) under notes payable to
banks............................................... (8,813) 2,373
Borrowings on long-term debt.......................... 2,524 1,996
Payments on long-term debt............................ (3,217) (4,443)
Proceeds under bank debt.............................. 36,400 14,500
Purchase of treasury stock............................ (8,166) --
Repurchase of senior notes............................ (4,984) --
-------- -----------
Net cash provided by financing activities.............. 13,778 15,033
-------- -----------
Effect of exchange rate changes on cash and cash
equivalents........................................... (548) (311)
-------- -----------
Net increase/(decrease) in cash and cash
equivalents........................................... (1,455) 2,799
Cash and cash equivalents at beginning of period....... 18,852 21,578
-------- -----------
Cash and cash equivalents at end of period............. $ 17,397 $ 24,377
======== ===========
The accompanying notes are an integral part of these consolidated condensed
financial statements
5
SOLA INTERNATIONAL INC.
Notes to Consolidated Condensed Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying consolidated condensed financial statements of the Company
have been prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The consolidated condensed balance
sheet as of March 31, 2000 was derived from audited financial statements. The
accompanying consolidated condensed financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the fiscal year ended
March 31, 2000.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
period. The results of operations for the nine months ended December 31, 2000
are not necessarily indicative of the results to be expected for the full year.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". This statement establishes
accounting and reporting standards for derivative instruments and requires
recognition of all derivatives as assets or liabilities in the statement of
financial position and measurement of those instruments at fair value.
Subsequently, the FASB issued SFAS No. 137, which defers the effective date of
SFAS No. 133 to fiscal years beginning after June 15, 2000. The Company is in
the process of determining the impact that adoption and implementation will have
on its consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance for revenue recognition under certain
circumstances. The accounting and disclosures prescribed by SAB 101 will be
adopted effective for the Company's fourth quarter of 2001 retroactive to the
first quarter of fiscal year 2001. The Company believes there will be no
material impact resulting from the application of SAB 101.
2. Inventories
December 31, 2000 March 31, 2000
(in thousands) (in thousands)
-------------- --------------
Raw Materials $ 20,769 $ 15,427
Work In Progress 3,359 7,273
Finished Goods 89,379 105,274
Molds 25,169 44,914
-------- --------
$138,676 $172,888
======== ========
Molds comprise mainly finished goods for use by manufacturing affiliates in
the manufacture of spectacle lenses.
6
3. Bank Credit Agreement
The Company's Multicurrency Credit Agreement ("Agreement") contains a number
of covenants including compliance with certain financial tests and maintenance
of certain financial ratios. At December 31, 2000, the Company did not meet the
Leverage Ratio covenant of the Agreement. Subsequent to December 31, 2000, a
one-time waiver was obtained for this covenant. Management has prepared
projections that indicate that the Company may not be in compliance with this
covenant as of March 31, 2001. As a result, the Company has classified the
$141.6 million outstanding under the Agreement as a current liability for the
period ended December 31, 2000. The terms of the waiver require the Company to
(i) include an amendment to the credit agreement which grants a security
interest in certain personal property located in the United States of the
Company and American Optical Lens Company ("AOLC"), a wholly owned subsidiary of
the Company, (ii) require AOLC to provide a guaranty to support the obligations
of the facility (iii) limit the facility to $200 million from January 31, 2001
until March 31, 2001 and $185 million from April 1, 2001 until May 7, 2001 (iv)
pay certain fees. Management is currently in discussions with several financial
institutions in order to explore financing alternatives, including bank credit
facilities, long-term fixed-rate note offerings and subordinated debt offerings.
The Company continues to have significant liquidity requirements. In addition
to working capital needs and capital expenditures, the Company has cash
requirements for debt service. In the event that the Company is unable to
arrange a further waiver or an extension of the termination date of the
Agreement and the Company does not obtain refinancing by May 7, 2001 an event of
default will have occurred. The company's Senior Notes contain a "cross
default" provision which would be triggered if a default occurs under the
Agreement and will result in an acceleration of both the Senior Notes and the
debt. Management anticipates that if it is successful in obtaining a new credit
it will have access to sufficient financial resources to ensure that the
Company's current cash resources, together with other available sources of cash
and cash generated from operations, will be able to fund the Company's
operations, debt service and required capital expenditures through the end of
fiscal 2002 and beyond. In the event such refinancing is not successfully
obtained prior to May 7, 2001, to meet its additional remaining capital
requirements and to service its debt obligations, the Company will be required
to sell additional equity securities, sell existing assets and/or enter into new
financing arrangements. There can be no assurance the Company will be able to
obtain the additional financing necessary to satisfy its cash requirements, in
which event the Company will be unable to fund its ongoing operations, which
would have a materiel adverse effect on its business, results of operations and
financial condition.
4. Contingencies
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges to surface and subsurface waters and the
generation, handling, storage, transportation, treatment and disposal of waste
materials.
The Company is currently participating in a remediation program of one of its
manufacturing facilities under the Comprehensive Environmental Response,
Compensation and Liability Act and the Superfund Amendments and Reauthorization
Act of 1986. Since March 1997 the Company has curtailed clean-up activities,
and continues to monitor contamination levels. During the quarter ended
December 31, 1997 a report on contamination levels, and the impact of curtailed
activities, was submitted to the EPA, which indicates no significant impact on
the site from the curtailed activities, and the EPA has consented to continued
curtailment of activities. The Company expects continued reduction of clean-up
activities due to relatively low levels of contamination existing at the site.
Reserves for these clean-up and monitoring activities are considered to be
adequate by the Company and are immaterial to the Company's financial position.
Under the terms of the sale agreement with Pilkington plc ("Pilkington"), for
the purchase of the Sola business in December 1993 ("Acquisition"), Pilkington
has indemnified the Company with regard to expenditures subsequent to the
Acquisition for certain environmental matters relating to circumstances existing
at the time of the Acquisition. Under the terms of the indemnification, the
Company is responsible for the first $1 million spent on such environmental
matters, Pilkington and the Company share equally the cost of any further
expenditures between $1 million and $5 million, and Pilkington retains full
liability for any expenditures in excess of $5 million.
7
In the ordinary course of business, various legal actions and claims pending
have been filed against the Company. While it is reasonably possible that such
contingencies may result in a cost greater than that provided for in the
financial statements, it is the opinion of management that the ultimate
liability, if any, with respect to these matters, will not materially affect the
consolidated operations or financial position of the Company.
5. Comprehensive Income
The components of comprehensive income, net of related tax, are as follows (in
thousands):
Three Months Nine Months
Ended December 31, Ended December 31,
2000 1999 2000 1999
---- ---- ---- ----
Net income/(loss) $(67,685) $ 2,675 $(64,098) $15,834
Foreign currency translation adjustments 9,597 (3,531) (1,527) 1,080
-------- ------- -------- -------
Comprehensive income (loss) $(58,088) $ (856) $(65,625) $16,914
======== ======= ======== =======
8
6. Earnings/(Loss) Per Share
The following table sets forth the computation of basic and diluted
earnings/(loss) per share for the three and nine months ended December 31, 2000
and 1999 (in thousands except per share data):
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2000 1999 2000 1999
---- ---- ---- ----
Numerator:
Income/(loss) before extraordinary item........... $(67,685) $ 2,675 $(65,569) $15,834
Extraordinary item, net of tax.................... -- -- 1,471 --
-------- ------- -------- -------
Net income/(loss)................................ $(67,685) $ 2,675 $(64,098) $15,834
======== ======= ======== =======
Denominator:
Denominator for basic earnings per share -
Weighted average common shares
outstanding................................... 23,693 24,875 24,166 24,871
Effect of dilutive securities:
Employee stock options......................... -- 200 -- 242
-------- ------- -------- -------
Denominator for diluted earnings per share -
Weighted average common shares and
dilutive securities outstanding............ 23,693 25,075 24,166 25,113
======== ======= ======== =======
Basic earnings/(loss) per share:
Income/(loss) before extraordinary item........... $ (2.86) $ 0.11 $ (2.71) $ 0.64
Extraordinary item, net of tax.................... -- -- 0.06 --
-------- ------- -------- -------
Net income/(loss)................................ $ (2.86) $ 0.11 $ (2.65) $ 0.64
======== ======= ======== =======
Diluted earnings/(loss) per share:
Income/(loss) before extraordinary item........... $ (2.86) $ 0.11 $ (2.71) $ 0.63
Extraordinary item, net of tax.................... -- -- 0.06 --
-------- ------- -------- -------
Net income/(loss)................................ $ (2.86) $ 0.11 $ (2.65) $ 0.63
======== ======= ======== =======
For the three and nine months ended December 31, 2000, approximately 3.4
million common stock options were not included in the calculation of diluted net
loss per share because to do so would be anti-dilutive for those periods. For
the three and nine months ended December 31, 1999, 2.2 million common stock
options were excluded from the calculation of diluted earnings per share because
the options exercise price was greater than the average market price of the
common shares.
7. Special Charges and Transition Costs
During the three and nine months ended December 31, 2000 the Company
recorded pretax special charges of $100.6 million and $114.6 million,
respectively. The pre-tax special charges are comprised of the following:
Three Months Ended Nine Months Ended
(in thousands) December 31,2000 December 31,2000
---------------- ----------------
Charges associated with work-force reductions $ 4,163 $ 11,412
Inventory write-off associated with product standardization 39,895 42,076
Charges associated with facility closures and product transfers 19,110 23,671
Goodwill write-off 17,025 17,025
Asset write-offs associated with discontinued product line 17,328 17,328
Charges associated with the devaluation of the Brazilian Real 3,116 3,116
-------- --------
Total $100,637 $114,628
======== ========
9
Primarily as a result of the Company's restructuring plan, which
commenced in the fourth quarter of fiscal 2000, the Company incurred $100.6
million of pretax special charges during the three months ended December
31, 2000. The Company incurred $4.2 million associated with workforce
reductions mainly in North America (233 employees). During the three months
ended December 31, 2000 the Company paid $1.3 million related to workforce
reductions implemented in the fourth quarter of fiscal 2000 and first nine
months of fiscal 2001. The special charge includes $39.9 million related to
the write-off of inventories and molds which were discontinued as a result
of the Company's efforts to globally standardize product specifications.
The Company also continued the transfer of high-volume production to low-
cost manufacturing locations and the consolidation of manufacturing
expertise into fewer production facilities. As a result, charges of $1.0
million were incurred related to production cost inefficiencies, $18.1
million related to redundant equipment write-off and facility closure costs
and $17.0 million related to the write-off of goodwill associated with a
prior acquisition of a lens manufacturing business. Additionally, in the
third quarter of fiscal 2001 the Company discontinued the development and
manufacture of polycarbonate Matrix products. As a result, the Company
incurred $17.3 million in asset write-offs including equipment ($5.9
million), inventory ($10.8 million) and related commitments ($0.6 million).
Lastly, the devaluation of the Brazilian Real (11% in the third fiscal
quarter) and the related impact on asset valuation resulted in a special
charge of $3.1 million.
During the nine months ended December 31, 2000 the Company recorded
pretax special charges of $114.6 million. The Company incurred $11.4
million associated with workforce reductions in North America, Europe and
Australia (543 employees). The special charge includes $42.1 million
related to the write-off of inventories and molds which were discontinued
as a result of the Company's efforts to globally standardize product
specifications. The Company commenced this identification of inventories in
the fourth quarter of fiscal 2000. Also, the Company continued the transfer
of high-volume production to low-cost manufacturing locations and the
consolidation of manufacturing expertise into fewer production facilities
that commenced in the fourth quarter of fiscal 2000. As a result, charges
of $2.7 million were incurred related to production cost inefficiencies,
$20.9 million related to redundant equipment write-off and facility closure
costs and $17.0 million related to the write-off of goodwill associated
with a prior acquisition of a lens manufacturing business. Additionally, as
a result of the discontinuation of the development of the polycarbonate
Matrix product line, the Company incurred $17.3 million in asset write-offs
including equipment ($5.9 million), inventory ($10.8 million) and related
commitments ($0.6 million). Lastly, the devaluation of the Brazilian Real
(11% in the third fiscal quarter) and the related impact on asset valuation
resulted in a special charge of $3.1 million.
Details of the special charges are as follows:
Asset Write-
offs
Facility Associated
Closures and with
Workforce Inventory Product Goodwill Discontinued Devaluation of
Reductions Write-offs Transfers Write-offs Product Line Brazilian Real Total
---------- ---------- --------- ---------- ------------ -------------- -----
Restructuring
Liability as of
March 31, 2000 $ 6,268 $ - $ - $ - $ - $ - $ 6,268
-------- --------- --------- --------- --------- -------- ----------
Fiscal 2001:
Charges to
Operations:
First Quarter 6,088 - 744 - - - 6,832
Second Quarter 1,161 2,181 3,817 - - - 7,159
Third Quarter 4,163 39,895 19,110 17,025 17,328 3,116 100,637
-------- --------- --------- --------- --------- -------- ----------
Nine Months Ended
December 31, 2000 11,412 42,076 23,671 17,025 17,328 3,116 114,628
Utilized:
Non cash - (42,076) (21,062) (17,025) (17,328) (3,116) (100,607)
Cash (7,688) - (188) - - - (7,876)
-------- --------- --------- --------- --------- -------- ----------
Restructuring
Liability as of
December 31, 2000 $ 9,992 $ - $ 2,421 $ - $ - $ - $ 12,413
======== ========= ========= ========= ========= ======== ==========
10
The restructuring liability as of December 31, 2000 is included in accrued
liabilities. The Company anticipates that substantially all of the accrued
restructuring costs will be paid in fiscal 2002 and will be funded through
future asset sales and cash provided by operations.
In connection with the restructuring plan, the Company anticipates
recording additional pretax special charges of approximately $11 million, before
any related gain on asset sales, primarily in the fourth fiscal quarter. As a
result of the restructuring, the Company is in the process of selling land and
buildings made redundant by the restructuring plan which are expected to
generate proceeds in excess of $20 million and result in a net gain on sale.
The special charges during the nine months ended December 31, 1999 comprise
costs associated with the consolidation of the Sola and American Optical
manufacturing facilities in Mexico, work force reductions and the erosion of the
Brazilian Real.
Additionally, during the third quarter of fiscal 2001, the Company incurred
transition costs associated with executing its restructuring plan. Such costs
amounted to $8.8 million and were primarily related to interim workforce and
out-of-pocket expenditures which are expected to be eliminated as the
restructuring plan is fully executed. Of these costs, $4.7 million are
reflected in cost of sales, $0.5 million in research and development expenses,
$2.0 million in selling and marketing expenses and $1.6 million in general and
administrative expenses. The Company anticipates the restructuring plan will be
substantially implemented over the ensuing five quarters.
8. Extraordinary Item
During the nine months ended December 31, 2000 the Company purchased $5.0
million of its 6 7/8% Senior Notes due 2008. As a result, the Company recorded
an extraordinary gain of $1.5 million, net of tax of $0.9 million, resulting
from the difference between the carrying value of the notes and the purchase
price. The purchase was funded by the Company's credit facility and resulted in
a decline in net borrowings.
9. Subsequent Event
In January 2001 the Company acquired the net assets of Oracle Lens
Manufacturing Corporation ("Oracle"), a manufacturer and distributor of
polycarbonate lenses located in Rhode Island. The Company acquired Oracle for
cash consideration of approximately $15.4 million and $2.0 million payable in
two years. The Oracle acquisition was funded through borrowings under the
Company's Multicurrency Credit Agreement.
11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the Company's consolidated
condensed financial statements and notes thereto included elsewhere herein.
Results of Operations
Three months ended December 31, 2000 compared to three months ended December 31,
1999
Net Sales
Net sales totaled $126.1 million in the three months ended December 31, 2000,
reflecting a decrease of 0.9% over net sales of $127.2 million for the same
period in the prior year. The decrease in net sales is primarily attributable to
the impact of the strong dollar on non-U.S. dollar sales. Using constant
exchange rates, net sales increased by 6.3%. Higher priced products accounted
for approximately 70% of net sales for the three months ended December 31, 2000
compared to 71% for the same period in the prior year. Progressive lens net
sales for the three months ended December 31, 2000 decreased 6.0% from the same
period in the prior year, due primarily to impact of the strong U.S. dollar.
Using constant exchange rates the regional performances were as follows: North
America decreased by 2.4%, Europe increased by 10.6% and Rest of World increased
by 17.0%.
Gross Profit and Gross Margin
Gross profit totaled $49.4 million for the three months ended December 31,
2000, reflecting a decrease of 10.6% from gross profit of $55.3 million for the
same period in the prior year. Gross profit as a percentage of net sales
("gross margin") decreased from 43.4% for the three months ended December 31,
1999 to 39.2% for the three months ended December 31, 2000. Included in gross
profit for the current quarter was approximately $4.7 million of costs relating
to transition activities associated with the Company's restructuring plan (see
note 7 of notes to financial statements). These transition costs include
underabsoption of manufacturing overhead due to reduced production levels and
the impact of product migration activities. If these costs were excluded,
gross margin would have been 42.9% for the quarter ended December 31, 2000.
Additionally, the Company experiences price competition, which can be severe in
certain markets, especially for standard products.
Operating Expenses
Operating expenses in the three months ended December 31, 2000 totaled $144.0
million, an increase of $97.5 million from the same period in the prior year.
Included in operating expenses for the three months ended December 31, 2000 and
1999 were $100.6 million of expense, and $0.7 million of income, respectively,
representing special charges. Also included in operating expenses for the
current quarter were $4.1 million of costs relating to transition activities
associated with the Company's restructuring plan. If these special charges and
transition costs were excluded from both periods, operating expenses would have
been $39.3 million and $47.1 million, respectively, representing a decrease over
the three months ended December 31, 1999 of 16.7%. Operating expenses,
excluding the
12
special charges and transition costs, for the three months ended December 31,
2000 and 1999 as a percentage of net sales were 31.1% and 37.1%, respectively.
Research and development expenses for the three months ended December 31, 2000
decreased $1.5 million to $3.4 million, compared to $4.9 million for the three
months ended December 31, 1999, which represents 2.7% and 3.8% of net sales for
the three months ended December 31, 2000 and 1999, respectively. The decrease in
research and development expenses is due in part to the impact of the strong
U.S. dollar against non-U.S. dollar expenses as well as headcount reductions
associated with the restructuring plan. Selling and marketing expenses for the
three months ended December 31, 2000 and 1999 were $25.7 million, which
represents 20.4% and 20.2% of net sales, respectively. General and
administrative expenses for the three months ended December 31, 2000 were $14.3
million compared to $16.5 million for the same period in the prior year, a
decrease of $2.2 million. As a percentage of net sales general and
administrative expenses decreased to 11.3% from 13.0% in the prior year.
Primarily as a result of the Company's restructuring plan, which commenced in
the fourth quarter of fiscal 2000, the Company incurred $100.6 million of pretax
special charges during the three months ended December 31, 2000. The Company
incurred $4.2 million associated with workforce reductions mainly in North
America (233 employees). During the three months ended December 31, 2000 the
Company paid $1.3 million related to workforce reductions implemented in the
fourth quarter of fiscal 2000 and first nine months of fiscal 2001. The special
charge includes $39.9 million related to the write-off of inventories and molds
which were discontinued as a result of the Company's efforts to globally
standardize product specifications. The Company also continued the transfer of
high-volume production to low-cost manufacturing locations and the consolidation
of manufacturing expertise into fewer production facilities. As a result,
charges of $1.0 million were incurred related to production cost inefficiencies,
$18.1 million related to redundant equipment write-off and facility closure
costs and $17.0 million related to the write-off of goodwill associated with a
prior acquisition of a lens manufacturing business. Additionally, in the third
quarter of fiscal 2001 the Company discontinued the development and manufacture
of polycarbonate Matrix products. As a result, the Company incurred $17.3
million in asset write-offs including equipment ($5.9 million), inventory ($10.8
million) and related commitments ($0.6 million). Lastly, the devaluation of the
Brazilian Real (11% in the third fiscal quarter) and the related impact on asset
valuation resulted in a special charge of $3.1 million.
Additionally, during the third fiscal quarter, the Company incurred transition
costs associated with executing its restructuring plan. Such costs amounted to
$8.8 million and were primarily related to interim workforce and out-of-pocket
expenditures which are expected to be eliminated as the restructuring plan is
fully executed. Of these costs, $4.7 million are reflected in cost of sales,
$0.5 million in research and development expenses, $2.0 million in selling and
marketing expenses and $1.6 million in general and administrative expenses. The
Company anticipates the restructuring plan will be substantially implemented
over the ensuing five quarters.
Operating Income/Loss
For the three months ended December 31, 2000 the Company's operating loss
totaled $94.6 compared to operating income of $8.8 million for the same period
in the prior year, a decrease of $103.4 million. Operating income excluding
special charges and transition costs in the three months ended December 31, 2000
and 1999 would have been $14.8 million and $8.1 million, respectively, an
increase of $6.7 million, or 90.0%.
Net Interest Expense
Net interest expense totaled $5.6 million for the three months ended December
31, 2000 compared to $5.0 million for the three months ended December 31, 1999,
an increase of $0.6 million. The increase in interest expense is due to
increased borrowing rates and increased borrowing levels.
13
Provision/Benefit for Income Taxes
The Company's combined state, federal and foreign tax rate represents an
effective tax rate projected for the full fiscal 2001 year of 32%. For the
three months ended December 31, 1999 the Company recorded an effective income
tax rate of 32%, and for the full fiscal 2000 year the Company reported an
effective tax rate of 83.9%. If the special charges reported in fiscal 2000
are excluded from income before provision for income taxes, and the tax benefit
associated with the special charges is excluded from the provision for income
taxes, the resulting effective combined state, federal and foreign tax rate for
fiscal 2000 would have been 31.2%. As of December 31, 2000 the Company has on
its balance sheet deferred tax assets amounting to approximately $52.0 million
and deferred tax liabilities of approximately $11.5 million. The ultimate
utilization of the deferred tax assets is dependent on the Company's ability to
generate taxable income in the future.
Net Income/Loss
Net loss for the three months ended December 31, 2000 totaled $67.7 million
compared to net income of $2.7 million for the same period in the prior year.
If the special charges, transition costs and the associated taxes were excluded
from the three months ended December 31, 2000 and 1999, net income would have
been $6.9 million and $2.2 million, respectively, an increase of $4.7 million.
Results of Operations
Nine months ended December 31, 2000 compared to nine months ended December 31,
1999
Net Sales
Net sales totaled $400.7 million in the nine months ended December 31, 2000,
compared to net sales of $401.9 million for the same period in the prior year, a
decrease of 0.3%. The decrease in net sales is primarily attributable to the
impact of the strong dollar on non-U.S. dollar sales. Using constant exchange
rates, net sales increased by 5.0%. Progressive lens net sales for the nine
months ended December 31, 2000 decreased 7.6% from the same period in the prior
year, due primarily to product mix change in the North American region and the
impact of the strong U.S. dollar. Higher priced products accounted for
approximately 71% of net sales for the nine months ended December 31, 2000
similar to the same period in the prior year. Net sales performances by region
were as follows: Europe increased by 0.5%, Rest of World increased by 15.8%, and
the North American region decreased by 7.2%. Using constant exchange rates, the
regional performances were as follows: Europe increased by 13.4%, Rest of World
increased by 19.5%, and North America decreased by 7.0%.
Gross Profit and Gross Margin
Gross profit totaled $164.1 million for the nine months ended December 31,
2000, reflecting a decrease of 7.9% from gross profit of $178.2 million for the
same period in the prior year. Gross profit as a percentage of net sales
("gross margin") decreased from 44.3% for the nine months ended December 31,
1999 to 40.9% for the nine months ended December 31, 2000. Included in gross
profit in fiscal 2001 was approximately $4.7 million of costs relating to
transition activities associated with the Company's restructuring plan (see note
7 of notes to financial statements). These transition costs include
underabsorption of manufacturing overhead due to reduced production levels and
the impact of product migration activities. If these costs were excluded,
gross margin would have been 42.1% for the nine months ended December 31, 2000.
The Company experiences price competition, which can be severe in certain
markets, particularly for standard products.
14
Operating Expenses
Operating expenses in the nine months ended December 31, 2000 totaled $244.1
million compared to operating expenses of $141.8 million for the same period in
the prior year. Included in operating expenses for the nine months ended
December 31, 2000 and 1999 were special charges of $114.6 million and $3.7
million respectively. Also included in operating expenses in fiscal 2001 were
$4.1 million of costs relating to transition activities associated with the
Company's restructuring plan. If these special charges and transition costs
were excluded from both periods, operating expenses would have been $125.4
million for the nine months ended December 31, 2000 and $138.1 million for the
same period in the prior year, a decrease of $12.8 million. Operating expenses,
excluding the charges and transition costs, for the nine months ended December
31, 2000 and 1999 as a percentage of net sales were 31.3% and 34.4%,
respectively. Research and development expenses for the nine months ended
December 31, 2000 decreased $3.9 million to $11.3 million, from $15.2 million
for the nine months ended December 31, 1999, which represent 2.8% and 3.8% of
net sales for the nine months ended December 31, 2000 and 1999, respectively.
The decrease in research and development expenses is due in part to the impact
of the strong U.S. dollar against non-U.S. dollar expenses as well as headcount
reductions associated with the restructuring plan. Selling and marketing
expenses for the nine months ended December 31, 2000 decreased $1.6 million to
$75.2 million compared to $76.8 million for the same period in the prior year.
Selling and marketing expenses represent 18.8% and 19.1% of net sales for the
nine months ended December 31, 2000 and 1999, respectively. General and
administrative expenses were $43.0 million for the nine months ended December
31, 2000 and $46.1 million for the same period in the prior year, a decrease of
$3.1 million. As a percentage of net sales, general and administrative expenses
decreased from 11.5% for the months ended December 31, 1999 to 10.7% for the
nine months ended December 31, 2000.
During the nine months ended December 31, 2000 the Company recorded pretax
special charges of $114.6 million. The Company incurred $11.4 million associated
with workforce reductions in North America, Europe and Australia (543
employees). The special charge includes $42.1 million related to the write-off
of inventories and molds which were discontinued as a result of the Company's
efforts to globally standardize product specifications. The Company commenced
this identification of inventories in the fourth quarter of fiscal 2000. Also,
the Company continued the transfer of high-volume production to low-cost
manufacturing locations and the consolidation of manufacturing expertise into
fewer production facilities that commenced in the fourth quarter of fiscal 2000.
As a result, charges of $2.7 million were incurred related to production cost
inefficiencies, $20.9 million related to redundant equipment write-off and
facility closure costs and 17.0 million related to the write-off of goodwill
associated with a prior acquisition of a lens manufacturing business.
Additionally, as a result of the discontinuation of the development of the
polycarbonate Matrix product line, the Company incurred $17.3 million in asset
write-offs including equipment ($5.9 million), inventory ($10.8 million) and
related commitments ($0.6 million). Lastly, the devaluation of the Brazilian
Real (11% in the third fiscal quarter) and the related impact on asset valuation
resulted in a special charge of $3.1 million.
In connection with the restructuring plan, the Company anticipates recording
additional pretax special charges of approximately $11 million, before any
related gain on asset sales, primarily in the fourth fiscal quarter. As a
result of the restructuring, the Company is in the process of selling land and
buildings made redundant by the restructuring plan which are expected to
generate proceeds in excess of $20 million and result in a net gain on sale. As
a result of these restructuring efforts, the Company expects annualized savings
of approximately $24 million before tax primarily due to reduced costs and
operational efficiencies.
The special charges during the nine months ended December 31, 1999 comprise
costs associated with the consolidation of the Sola and American Optical
manufacturing facilities in Mexico, work force reductions and the erosion of the
Brazilian Real.
Additionally, during the third fiscal quarter of 2001, the Company incurred
transition costs associated with executing its restructuring plan. Such costs
amounted to $8.8 million and were primarily related to interim workforce and
out-of-pocket expenditures which are expected to be eliminated as the
restructuring
15
plan is fully executed. Of these costs, $4.7 million are reflected in cost of
sales, $0.5 million in research and development expenses, $2.0 million in
selling and marketing expenses and $1.6 million in general and administrative
expenses. The Company anticipates the restructuring plan will be substantially
implemented over the ensuing five quarters.
Operating Income/Loss
Operating loss for the nine months ended December 31, 2000 totaled $80.0
million, a decrease of $116.4 million from operating income of $36.4 million for
the nine months ended December 31, 1999. Operating income excluding the special
charges and transition costs in the nine months ended December 31, 2000 and 1999
would have been $43.4 million and $40.1 million, respectively, an increase of
$3.3 million, or 8.2%.
Net Interest Expense
Net interest expense totaled $17.0 million for the nine months ended December
31, 2000 compared to $13.9 million for the nine months ended December 31, 1999,
an increase of $3.1 million. The increase in interest expense is due primarily
to increased borrowing rates and increased borrowing levels.
Extraordinary Item
During the nine months ended December 31, 2000 the Company purchased $5.0
million of its 6 7/8% Senior Notes due 2008. As a result, the Company recorded
an extraordinary gain of $1.5 million, net of tax of $0.9 million resulting from
the difference between the carrying value of the notes and the purchase price.
The purchase was funded by the Company's credit facility and resulted in a
decline in net borrowings.
Net Income/Loss
Net loss for the nine months ended December 31, 2000 totaled $64.1 million
compared to net income of $15.8 million for the same period in the prior year.
If the special charges, transition costs, extraordinary item and associated
taxes were excluded from the nine months ended December 31, 2000 and 1999, net
income would have been $18.6 million and $18.4 million, respectively, an
increase of $0.2 million.
Liquidity and Capital Resources
Net cash provided by operating activities for the nine months ended December
31, 2000 amounted to $4.8 million, a decrease of $5.0 million from the funds
provided by operating activities of $9.8 million for the nine months ended
December 31, 1999. The change from prior year is due primarily to the reduction
in net income offset in part by a decrease in working capital.
Cash flows from investing activities in the nine months ended December 31,
2000 amounted to an outflow of $19.5 million. Of this amount, $15.7 million
represented capital expenditures, $2.5 million was for investment in
acquisitions and $1.3 million related to trade investments. The $2.5 million
spent on acquisitions represents the purchase of the remaining 65% ownership
interest in a laboratory group located in Australia and New Zealand. Cash flows
from investing activities in the nine months ended December 31, 1999 amounted to
an outflow of $21.7 million, reflecting capital expenditures of $13.9 million,
trade investments of $5.2 million and acquisition of a laboratory in Portugal
for $3.7 million.
16
Management anticipates capital expenditures of approximately $20 million
annually over the next several years, of which approximately $5 million annually
is viewed as discretionary.
Net cash provided by financing activities in the nine months ended December
31, 2000 amounted to $13.8 million, primarily related to borrowings under the
Company's bank credit agreement. Cash outflows included $8.2 million related to
stock buy back under the Company's stock repurchase program. Additionally,
during the nine months ended December 31, 2000 the Company purchased $5.0
million of its 6 7/8% Senior Notes due 2008. The purchase was funded by the
Company's credit facility and resulted in a decline in net borrowings. Net cash
provided by financing activities in the nine months ended December 31, 1999
amounted to $15.0 million, mostly due to the increase in bank borrowings and
long term debt used to fund investment activities in excess of funds derived
from operations.
The Company's Multicurrency Credit Agreement ("Agreement") contains a number
of covenants including compliance with certain financial tests and maintenance
of certain financial ratios. At December 31, 2000, the Company did not meet the
Leverage Ratio covenant of the Agreement. Subsequent to December 31, 2000, a
one-time waiver was obtained for this covenant. Management has prepared
projections that indicate that the Company may not be in compliance with this
covenant as of March 31, 2001. As a result, the Company has classified the
$141.6 million outstanding under the Agreement as a current liability for the
period ended December 31, 2000. The terms of the waiver require the Company to
(i) include an amendment to the credit agreement which grants a security
interest in certain personal property located in the United States of the
Company and American Optical Lens Company ("AOLC"), a wholly owned subsidiary of
the Company, (ii) require AOLC to provide a guaranty to support the obligations
of the facility (iii) limit the facility to $200 million from January 31, 2001
until March 31, 2001 and $185 million from April 1, 2001 until May 7, 2001 (iv)
pay certain fees. Management is currently in discussions with several financial
institutions in order to explore financing alternatives, including bank credit
facilities, long-term fixed-rate note offerings and subordinated debt offerings.
In addition to the Company's borrowings under its multicurrency Bank Credit
Agreement ($141.6 million borrowed as of December 31, 2000 under a $200 million
facility) and the Company's outstanding 6 7/8% Senior Notes, its foreign
subsidiaries maintain local credit facilities to provide credit for overdraft,
working capital and some fixed asset investment purposes. As of December 31,
2000 the total borrowing capacity available to the Company's foreign
subsidiaries under such local facilities was approximately $20.0 million, of
which $6.0 million had been utilized.
The Company continues to have significant liquidity requirements. In addition
to working capital needs and capital expenditures, the Company has cash
requirements for debt service. In the event that the Company is unable to
arrange a further waiver or an extension of the termination date of the
Agreement and the Company does not obtain refinancing by May 7, 2001 an event of
default will have occurred. The company's Senior Notes contain a "cross
default" provision which would be triggered if a default occurs under the
Agreement and will result in an acceleration of both the Senior Notes and the
debt. Management anticipates that if it is successful in obtaining a new credit
it will have access to sufficient financial resources to ensure that the
Company's current cash resources, together with other available sources of cash
and cash generated from operations, will be able to fund the Company's
operations, debt service and required capital expenditures through the end of
fiscal 2002 and beyond. In the event such refinancing is not successfully
obtained prior to May 7, 2001, to meet its additional remaining capital
requirements and to service its debt obligations, the Company will be required
to sell additional equity securities, sell existing assets and/or enter into new
financing arrangements. There can be no assurance the Company will be able to
obtain the additional financing necessary to satisfy its cash requirements, in
which event the Company will be unable to fund its ongoing operations, which
would have a materiel adverse effect on its business, results of operations and
financial condition.
17
Subsequent Event
In January 2001 the Company acquired the net assets of Oracle Lens
Manufacturing Corporation ("Oracle"), a manufacturer and distributor of
polycarbonate lenses located in Rhode Island. The Company acquired Oracle for
cash consideration of approximately $15.4 million and $2.0 million payable in
two years. The Oracle acquisition was funded through borrowings under the
Company's Multicurrency Credit Agreement and is expected to be accretive to
earnings.
Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". This statement establishes
accounting and reporting standards for derivative instruments and requires
recognition of all derivatives as assets or liabilities in the statement of
financial position and measurement of those instruments at fair value.
Subsequently, the FASB issued SFAS No. 137, which defers the effective date of
SFAS No. 133 to fiscal years beginning after June 15, 2000. The Company is in
the process of determining the impact that adoption and implementation will have
on its consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance for revenue recognition under certain
circumstances. The accounting and disclosures prescribed by SAB 101 will be
adopted effective for the Company's fourth quarter 2001 retroactive to the first
quarter of fiscal year 2001. The Company believes there will be no material
impact resulting from the application of SAB 101.
Currency Exchange Rates
As a result of the Company's worldwide operations, currency exchange rate
fluctuations tend to affect the Company's results of operations and financial
position. The two principal effects of currency exchange rates on the Company's
results of operations and financial position are (i) translation adjustments for
subsidiaries where the local currency is the functional currency and (ii)
translation adjustments for subsidiaries in hyper-inflationary countries.
Translation adjustments for functional local currencies have been made to
shareholders' equity. For the nine months ended December 31, 2000 and 1999 such
translation adjustments were approximately ($1.6) million and $1.1 million,
respectively.
For translation adjustments of the Company's subsidiaries operating in hyper-
inflationary countries the functional currency is determined to be the U.S.
dollar, and therefore all translation adjustments are reflected in the Company's
Statements of Operations. In hyper-inflationary environments, the Company
generally protects margins by methods which include increasing prices monthly at
a rate appropriate to cover anticipated inflation, compounding interest charges
on sales invoices daily and holding cash balances in U.S. dollar denominated
accounts where possible.
Because a majority of the Company's debt is U.S. dollar denominated, the
Company may hedge against certain currency fluctuations by entering into
currency swaps (however certain currencies, such as the Brazilian Real, cannot
be hedged economically), although no such swaps had been entered into as of
December 31, 2000. As of December 31, 2000 certain of the Company's foreign
subsidiaries had entered into forward contracts for intercompany purchase
commitments in amounts other than their home currency. The carrying amount of
the forward contracts approximates fair value, which has been estimated based on
current exchange rates.
18
Seasonality
The Company's business is somewhat seasonal, with fiscal third quarter results
generally weaker than the other three quarters as a result of lower sales during
the holiday season, and fiscal fourth quarter results generally the strongest.
Inflation
Inflation continues to affect the cost of the goods and services used by the
Company. The competitive environment in many markets limits the Company's
ability to recover higher costs through increased selling prices, and the
Company is subject to price erosion in many of its standard product lines. The
Company seeks to mitigate the adverse effects of inflation through cost
containment and productivity and manufacturing process improvements. For a
description of the effects of inflation on the Company's reported revenues and
profits and the measures taken by the Company in response to inflationary
conditions, see--"Currency Exchange Rates" above.
European Union Conversion to the "Euro"
The Company has instituted a "Euro" conversion team and begun preliminary
preparation for the conversion by eleven member states of the European Union to
a common currency, the "Euro". Conversion to the Euro by these member states of
the union is taking place on a "no compulsion, no prohibition" basis between
January 1, 1999 and January 1, 2002. By January 1, 2002 all companies operating
in the eleven member states will be required to be fully operational using the
new currency. The Sola conversion team has primarily addressed the accounting
and information systems changes that are necessary to facilitate trading in the
Euro, the possible market place implications of a common currency and the
currency exchange rate risks, with the initial emphasis placed on the system
modifications. The Company has not completed the evaluation of the possible
effect of the changes to the Euro on intercompany foreign currency loans, or the
impact if any, on the market place implications of a common currency.
Preliminary assessments indicate that the financial impact of conversion to a
Euro-based currency will not be material to the Company's consolidated financial
position, results of operations or cash flows.
Information Relating to Forward-Looking Statements
This quarterly report includes forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, including statements
regarding among other items, (i) the impact of inflation, (ii) future income tax
rates and capital expenditures, (iii) future special charges, (iv) refinancing
efforts, and (v) the costs and other consequences related to conversion to the
Euro. These forward-looking statements reflect the Company's current views with
respect to future events and financial performance. The words "believe",
"expect", "anticipate" and similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of their dates. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Actual
results could differ materially from the forward-looking statements as a result
of "Factors Affecting Future Operating Results" included in Exhibit 99.1 of the
Company's Form 10-K for the fiscal year ended March 31, 2000, and the factors
described in "Business-Environmental Matters", also included in the Company's
Form 10-K for the fiscal year ended March 31, 2000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in the Company's assessment of its
sensitivity to market risk since its presentation set forth in Item 7A,
"Quantitative and Qualitative Disclosures About Market Risk", in its Annual
Report on Form 10-K for the fiscal year ended March 31, 2000.
19
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
10.26 Amendment No. 4 to the Multicurrency Credit
Agreement, dated as of June 14, 1996, among Sola
International Inc., and the other Borrowers as the
Borrowers, the Subsidiary Guarantors, The Bank of
America National Trust and Savings Association, as
Agent and Letter of Credit Issuing Bank, The First
National Bank of Boston and The Bank of Nova
Scotia, as Co-Agents, and the Other Financial
Institutions Party Thereto
27 Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the fiscal quarter ended
December 31, 2000.
20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sola International Inc.
(Registrant)
Dated: February 14, 2001 By: /s/ Steven M. Neil
------------------ --------------------------
Steven M. Neil
Executive Vice President, Chief Financial
Officer, Secretary and Treasurer (Duly
Authorized Officer and Principal officer)
21
Exhibit Index
-------------
Exhibit No. Description
----------- -----------
10.26 Amendment No. 4 to the Multicurrency
Credit Agreement, dated as of June 14,
1996, among Sola International Inc., and
the other Borrowers as the Borrowers, the
Subsidiary Guarantors, The Bank of
America National Trust and Savings
Association, as Agent and Letter of
Credit Issuing Bank, The First National
Bank of Boston and The Bank of Nova
Scotia, as Co-Agents, and the Other
Financial Institutions Party Thereto
27 Financial Data Schedule