UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the plan year ended December 31, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number:
Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Sola Optical
401(k) Savings Plan
1500 Cader Lane
Petaluma, CA 94954
Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Sola International Inc.
2420 Sand Hill Road, Ste. 200
Menlo Park, CA 94025
<PAGE>
Sola Optical
401(k) Savings Plan
Financial Statements
Years ended December 31, 1995 and 1994
Contents
Report of Independent Auditors ..................................3
Audited Financial Statements
Statements of Net Assets
Available for Benefits ..........................................4
Statements of Changes in Net Assets
Available for Benefits ..........................................5
Notes to Financial Statements .....................................6
Supplemental Schedules
Item 27(a) - Schedule of Assets Held
for Investment Purposes ........................................14
Item 27(d) - Schedule of
Reportable Transactions ........................................15
Exhibit 23 - Consent of Independent Auditors ....................17
<PAGE>
Report of Independent Auditors
The Administrative Committee
Sola Optical
401(k) Savings Plan
We have audited the accompanying statements of net assets available
for benefits of Sola Optical 401(k) Savings Plan (formerly Sola
Optical USA 401(k) Savings Plan) (the "Plan") as of December 31, 1995
and 1994, and the related statements of changes in net assets
available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
benefits of the Plan at December 31, 1995 and 1994, and the changes in
its net assets available for benefits for the years then ended, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment purposes as of
December 31, 1995, and reportable transactions for the year then
ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974, and are not a
required part of the basic financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in
our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects, in relation to the basic
financial statements taken as a whole.
/s/ERNST & YOUNG LLP
June 14, 1996
<PAGE>
Sola Optical
401(k) Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1995 1994
Assets
Investments, at fair value:
<S> <C> <C>
Mutual funds $12,098,666 $ 7,205,707
Participant loans 889,790 698,550
Money market fund 252,834 150,100
---------- ----------
Investments, at contract value:
Guaranteed investment contracts 5,516,282 5,881,915
---------- ----------
18,757,572 13,936,272
Interest receivable 31,555 33,801
Employer contributions receivable 328,935 363,324
Participant contributions receivable 2,859 22,920
---------- ----------
Net assets available for benefits $19,120,921 $14,356,317
---------- ----------
</TABLE>
See accompanying notes.
<PAGE>
Sola Optical
401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
Year ended December 31
1995 1994
Additions
Contributions:
<S> <C> <C>
Employer $ 768,784 $ 734,993
Participant 2,186,646 2,080,048
Rollover - 4,258
--------- ---------
2,955,430 2,819,299
Investment income:
Interest 438,128 419,857
Dividends 664,907 363,069
Net realized and
unrealized
appreciation
(depreciation) in
fair value of
investments 1,961,328 (569,355)
--------- ---------
3,064,363 213,571
--------- ---------
Total additions 6,019,793 3,032,870
Deductions
Benefits paid to participants 1,252,789 1,987,806
Investment management fee 2,400 2,880
--------- ---------
Total deductions 1,255,189 1,990,686
--------- ---------
Net increase in net
assets 4,764,604 1,042,184
Net assets available for plan
benefits at beginning of year 14,356,317 13,314,133
---------- ---------
Net assets available
for plan benefits at
end of year $19,120,921 $14,356,317
---------- ----------
</TABLE>
See accompanying notes.
<PAGE>
1. Summary of Significant Accounting Policies
Description of Accounting
The financial statements of the Sola Optical 401(k) Savings Plan
(formerly Sola Optical USA 401(k) Savings Plan) (the "Plan") are
prepared on the accrual basis in conformity with generally accepted
accounting principles.
Valuation of Investments
The assets of the Plan are stated at fair value based on quoted market
pricing on the last business day of the year. The Plan presents in
the statements of changes in net assets available for benefits the net
appreciation (depreciation) in the fair value of its investments,
which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
The Plan adopted the American Institute of Certified Public
Accountants Statement of Position ("SOP") No. 94-4 in 1995. SOP No.
94-4 requires the Plan to report its guaranteed investment contracts
entered into subsequent to December 15, 1993 at fair value. The
adoption of SOP No. 94-4 did not have a material effect on the Plan's
financial statements. The Plan has one guaranteed investment contract
which was entered into subsequent to December 15, 1993. This
guaranteed investment contract is valued at contract value which
management believes approximates fair value. The average yield and
crediting interest rate on this contract was 6.81% for 1995.
Crediting interest rates are applied to investment balances daily.
The net effective interest rate on the daily balance is guaranteed to
equal the stated annual rate of 6.81%.
Administrative Expenses
Administrative expenses of the Plan (including trustee's fees), other
than the investment management fee, are paid directly by the Plan's
administrator, Sola Optical, USA. Inc. (the "Company"), and are not
reflected in the accounts of the Plan.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
<PAGE>
2. Description of the Plan and Funding Policy
The Plan is a defined contribution plan which provides eligible
employees long-term savings programs to supplement Company or
government retirement benefits. The Plan covers all full-time and
regular part-time employees who are not members of a collective
bargaining agreement. Employees are eligible to participate in the
Plan beginning on the first day of the calendar quarter following the
completion of one year of employment in which 1,000 hours of service
have been completed with the Company. Participants are fully vested in
their Plan accounts at all times.
Participating employees may select a contribution amount between 1%
and 16% of their compensation up to $9,240 for 1995 and 1994.
Contributions are subject to certain discrimination tests imposed by
the Internal Revenue Service for highly compensated employees.
The Company's Board of Directors determines the Company's matching
contribution to the Plan. The Company's matching contribution will be
allocated to the account of each participant who is still employed on
the allocation date, has retired at age 65 or later, has died or
becomes disabled during the period ended on the allocation date. Only
those eligible participants who have made before-tax contributions
during the preceding six months and who meet these requirements will
receive matching contributions. The Company's matching contribution
was 50% of employee before-tax contributions, up to a maximum of 50%
of the first 6% of before-tax compensation contributed by
participants. Participants are fully vested in the matching
contributions on the allocation date.
Participating employees may apply to the Plan for loans,
collateralized by the participant's account, in an amount not
exceeding the lesser of 50% of the present value of the participant's
account balance or an amount which may be amortized by scheduled
payments of principal and interest, each of which are not greater than
10% of the participant's gross monthly salary, up to $50,000. The loan
term may be for a period of one to five years with the exception of
residential loans, which may be up to 10 years. Principal payments
are due at each pay period, with interest at rates which approximate
market as periodically determined by the Plan's administrative
committee.
Employees terminating, or qualifying under certain "hardship" rules as
prescribed by the Internal Revenue Service, may elect to receive
distributions from the Plan. Employees attaining age 70 1/2 are
required to commence receiving distributions by April 1 of the
following calendar year.
The Company anticipates that the Plan will continue indefinitely but
assumes no contractual liability as to its continuance. In the event
that the Plan is terminated, each participant is fully vested in his
account.
<PAGE>
2. Description of the Plan and Funding Policy (continued)
The Plan is administered by the Company. The Plan's records are
maintained by Watson Wyatt, actuaries and consultants. The Company,
however, determines questions of eligibility for participation,
interprets the plan provisions, communicates with participants and
their beneficiaries, and is otherwise generally responsible for plan
operations. The trustee for the Plan is State Street Bank and Trust
Company.
Participants may choose to invest in the following investment
instruments via the funds described below:
<TABLE>
<CAPTION>
<S> <S>
Fund Description Type of Investment Instrument
Fidelity Magellan Fund Corporate common stocks
Financial Industrial Income Fund Dividend-paying common stocks, convertible
bonds, preferred stocks, and straight debt
securities
Vanguard Asset Allocation Fund Common stocks, long-term U.S. Treasury bonds,
and cash
First Stable Value Fund Investment contracts with insurance companies,
banks, and other financial institutions
Guaranteed Investment Contracts Fixed income contracts guaranteed by various
insurance companies
</TABLE>
In addition, contributions are temporarily invested in a short-term
investment fund in order to earn interest until such time as they are
invested in the funds noted above.
3. Tax Status of the Plan
The Plan obtained its latest determination letter on April 20, 1994,
in which the Internal Revenue Service stated that the Plan was in
compliance with the applicable requirements of the Internal Revenue
code. The Company believes that the Plan is currently designed and
being operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statement.
<PAGE>
Sola Optical
401(k) Savings Plan
Notes to Financial Statements (continued)
4. Statement of Changes in Net Assets Available for Benefits by
Investment Fund
The following schedules detail the changes in net assets available for
benefits for the years ended December 31, 1995 and 1994 by investment
program. The Short-Term Investment Fund is maintained for cash
balances held pending investment or disbursement to participants.
Contributions receivable and interest receivable are not allocated by
investment fund until such amounts are received.
<TABLE>
<CAPTION>
Fidelity Financial Vanguard Asset First Stable
Magellan Fund Industrial Allocation Fund Value Fund
Income Fund
Net assets available at
<S> <C> <C> <C> <C>
December 31, 1994 $ 3,452,184 $ 1,756,315 $ 1,997,208 $ -
Additions
Contributions:
Employer 230,399 109,313 138,428 62,374
Participant 656,605 286,416 407,148 160,428
--------- --------- --------- --------
Total contributions 887,004 395,729 545,576 222,802
Investment income:
Interest - - - -
Dividends 320,157 107,732 236,624 22
Net realized and unrealized
appreciation
in fair value of investments 1,021,195 350,875 560,510 28,270
--------- -------- --------- --------
1,341,352 458,607 797,134 28,292
--------- -------- --------- --------
Total additions 2,228,356 854,336 1,342,710 251,094
Deductions
Benefits paid to participants 292,096 94,066 185,996 -
Other expenses - - - -
--------- --------- --------- --------
Total deductions 292,096 94,066 185,996 -
Transfers 162,297 (267,188) 301,719 591,793
--------- --------- --------- --------
Net increase (decrease) 2,098,557 493,082 1,458,433 842,887
--------- --------- --------- --------
Net assets available at
December 31,1995 $ 5,550,741 $ 2,249,397 $ 3,455,641 $ 842,887
--------- --------- --------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Guaranteed Short-Term
Investment Investment Fund
Contracts Participant and Receivables Total
Loans
Net assets available at
<S> <C> <C> <C> <C>
December 31, 1994 $ 5,881,915 $ 698,550 $ 570,145 $ 14,356,317
Additions
Contributions:
Employer 262,659 - (34,389) 768,784
Participant 675,572 - 477 2,186,646
--------- -------- -------- ----------
Total contributions 938,231 - (33,912) 2,955,430
Investment income:
Interest 371,877 38,196 28,055 438,128
Dividends 372 - - 664,907
Net realized and unrealized
appreciation
in fair value of investments - - 478 1,961,328
--------- -------- -------- ----------
372,249 38,196 28,533 3,064,363
--------- -------- -------- ----------
Total additions 1,310,480 38,196 (5,379) 6,019,793
Deductions
Benefits paid to participants 617,887 58,745 3,999 1,252,789
Other expenses 2,400 - - 2,400
--------- -------- -------- ----------
Total deductions 620,287 58,745 3,999 1,255,189
Transfers (1,055,826) 211,789 55,416 -
--------- -------- -------- ----------
Net increase (decrease) (365,633) 191,240 46,038 4,764,604
--------- -------- -------- ----------
Net assets available at
December 31, 1995 $ 5,516,282 $ 889,790 $ 616,183 $19,120,921
--------- -------- -------- ----------
</TABLE>
<PAGE>
Sola Optical
401(k) Savings Plan
Notes to Financial Statements (continued)
4. Statement of Changes in Net Assets Available for Benefits by
Investment Fund (continued)
<TABLE>
<CAPTION>
Fidelity Financial Vanguard Asset
Magellan Fund Industrial Allocation Fund
Income Fund
Net assets available at
<S> <C> <C> <C>
December 31, 1993 $ 2,835,989 $ 1,859,516 $ 2,125,966
Additions
Contributions:
Employer 209,610 121,559 137,612
Participant 616,461 316,962 364,413
Rollover 1,810 816 816
--------- --------- ---------
Total contributions 827,881 439,337 502,841
Investment income:
Interest - - -
Dividends 130,914 148,775 83,380
Net realized and unrealized
(depreciation)
in fair value of investments (207,928) (221,248) (140,179)
--------- --------- ---------
(77,014) (72,473) (56,799)
--------- --------- ---------
Total additions 750,867 366,864 446,042
Deductions
Benefits paid to participants 303,021 207,261 211,313
Other expenses - - -
--------- --------- ---------
Total deductions 303,021 207,261 211,313
Transfers 168,349 (262,804) (363,487)
--------- --------- ---------
Net increase (decrease) 616,195 (103,201) (128,758)
--------- --------- ---------
Net assets available at
December 31, 1994 $ 3,452,184 $ 1,756,315 $ 1,997,208
--------- --------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Guaranteed Short-Term
Investment Investment Fund
Contracts Participant and Receivables Total
Loans
Net assets available at
<S> <C> <C> <C> <C>
December 31, 1993 $ 5,368,767 $ 576,124 $ 547,771 $ 13,314,133
Additions
Contributions:
Employer 297,639 - (31,427) 734,993
Participant 763,343 - 18,869 2,080,048
Rollover 816 - - 4,258
--------- ------- ------- ----------
Total contributions 1,061,798 - (12,558) 2,819,299
Investment income:
Interest 380,221 38,084 1,552 419,857
Dividends - - - 363,069
Net realized and unrealized
(depreciation)
in fair value of investments - - - (569,355)
--------- ------- ------- ----------
380,221 38,084 1,552 213,571
--------- ------- ------- ----------
Total additions 1,442,019 38,084 (11,006) 3,032,870
Deductions
Benefits paid to participants 1,221,127 45,084 - 1,987,806
Other expenses 2,880 - - 2,880
--------- ------- ------- ----------
Total deductions 1,224,007 45,084 - 1,990,686
Transfers 295,136 129,426 33,380 -
--------- ------- ------- ----------
Net increase (decrease) 513,148 122,426 22,374 1,042,184
--------- ------- ------- ----------
Net assets available at
December 31, 1994 $ 5,881,915 $ 698,550 $ 570,145 $ 14,356,317
--------- ------- ------- ----------
</TABLE>
<PAGE>
5. Investments at Fair Value That Represent Over 5% of Net Assets
The trustee of the Plan has custody of the Plan's investment assets
and executes investment transactions. The following investment
balances at fair value represent individual investments in excess of
5% of net assets available for plan benefits.
<TABLE>
<CAPTION>
December 31
1995 1994
----------------------
Mutual Funds
<S> <C> <C>
Fidelity Magellan Fund $5,550,741 $3,452,184
Financial Industrial Income Fund 2,249,397 1,756,315
Vanguard Asset Allocation Fund 3,455,641 1,997,208
Guaranteed Investment Contracts
John Hancock Mutual Life Insurance Company 1,695,349 1,788,086
Hartford Life Insurance Company 1,854,739 1,048,893
Massachusetts Mutual Life Insurance Company 922,054 1,029,181
Metropolitan Life Insurance Company - 1,358,302
</TABLE>
6. Subsequent Events
In January 1996, the Plan changed trustees and recordkeepers. The new
trustee is Chase Manhattan Bank and the new recordkeeper is 20th
Century Services Incorporated.
<PAGE>
Sola Optical
401(k) Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1995
<TABLE>
<CAPTION>
Identity of Issue Description of Asset Shares Cost Fair Value
* State Street Bank and Collective Trust
Trust -
<S> <C> <C> <C>
Short-Term Investment Fund Fund 252,834 $ 252,834 $ 252,834
Fidelity Magellan Fund Mutual Fund 64,559 4,709,838 5,550,741
Financial Industrial Mutual Fund 176,839 2,058,563 2,249,397
Income Fund
Vanguard Asset Mutual Fund 202,677 2,973,634 3,455,641
Allocation Fund
First Stable Value Fund Pooled Fund 49,303 843,175 842,887
Hartford Life Insurance Guaranteed
Company - Investment
GIC - maturity date 7/1/99 Contract 1,854,739 1,854,739 1,854,739
Metropolitan Life Guaranteed
Insurance Investment
Company - GIC - maturity Contract
date
6/30/96 658,849 658,849 658,849
New York Life Insurance Guaranteed
Company - GIC - maturity Investment
date Contract
6/30/96 315,291 315,291 315,291
Massachusetts Mutual Guaranteed
Life Insurance Company - Investment
GIC - Contract
maturity date 6/30/98 992,054 992,054 992,054
John Hancock Mutual Life Guaranteed
Insurance Company - GIC - Investment
maturity date 6/30/98 Contract 1,695,349 1,695,349 1,695,349
* Participant loans (6% to 10%) - 889,790 889,790
---------- ---------- ----------
Total investments $ 17,244,116 $ 18,757,572
---------- ----------
* Indicates party-in-interest.
</TABLE>
<PAGE>
Sola Optical
401(k) Savings Plan
Item 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1995
<TABLE>
<CAPTION>
Current Net
Value of Realized
Asset on Gain
Description of Number of Transaction Cost of Transacti (Loss)
Asset Transactions Type Asset on Date
Category (iii) - a series of transactions in excess of 5% of plan assets
<S> <C> <S> <C> <C> <C>
State Street Bank 104 Purchase $ 2,390,661 $ 2,390,661
and Trust Short-
Term Investment
Fund*
State Street Bank 46 Sale 2,287,928 2,287,928
and Trust Short-
Term Investment
Fund*
Fidelity Magellan 49 Purchase 1,708,011 1,708,011
Fund
Fidelity Magellan 38 Sale 541,399 630,649 $ 89,250
Fund
Financial 48 Purchase 571,014 571,014
Industrial Income
Fund
Financial 34 Sale 440,048 428,808 (11,240)
Industrial Income
Fund
Vanguard Asset 50 Purchase 1,276,462 1,276,462
Allocation Fund
Vanguard Asset 32 Sale 347,012 378,539 31,527
Allocation Fund
First Stable Value 23 Purchase 1,529,537 1,529,537
Fund
First Stable Value 17 Sale 686,362 715,398 29,036
Fund
Hartford Life 36 Purchase 1,009,657 1,009,657
Insurance Company-
GIC
Hartford Life 9 Sale 203,811 203,811
Insurance Company-
GIC
Metropolitan Life 12 Purchase 82,311 82,311
Metropolitan Life 8 Sale 781,764 781,764
Participant Loans 39 Purchase 689,912 689,912
Participant Loans 96 Sale 498,671 498,671
Note 1: There were no category (i), (ii) or (iv) reportable transactions during
1995.
* Invested in pooled funds of State Street Bank and Trust Company (Trustee), a Party-
In-Interest as defined by ERISA.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the persons who administer the employee benefit plan have duly caused
this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Sola Optical 401(k) Savings Plan
By: Sola Optical 401(k) Savings Plan Administrative Committee
/s/ Stephen J. Lee
Stephen J. Lee
Dated: June 28, 1996
Vice President, Human Resources
<PAGE>
Exhibit 23
CONSENT OF ERNST & YOUNG LLP, INDENPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No.333-4489)
pertaining to the Sola Optical 401(k) Savings Plan
of our report dated June 14, 1996, with respect to
the financial statements and supplemental schedules
of the Sola Optical 401(k) Savings Plan included in
this Annual Report (Form 11-K) for the year ended
December 31, 1995.
/s/ERNST & YOUNG LLP
Palo Alto, California
June 28, 1996
