================================================================================
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, 1997
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, 1997 and 1996
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits................................2
Statements of Changes in Net Assets Available for Benefits.....................3
Notes to Financial Statements..................................................4
Supplemental Schedules
Line 27(a) - Schedule of Assets Held for Investment Purposes..................15
Line 27(d) - Schedule of Reportable Transactions..............................16
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Administrative Committee
Sola Optical 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Sola Optical 401(k) Savings Plan (the "Plan") as of December 31, 1997 and
1996, 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, 1997 and 1996, 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, 1997, 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
Palo Alto, California
June 11, 1998
1
<PAGE>
Sola Optical 401(k) Savings Plan
Statements of Net Assets Available for Benefits
December 31
1997 1996
---------------------------
Assets
Investments, at fair value:
Mutual funds $19,866,049 $15,268,146
Common/collective trusts 9,795,098 5,517,286
Sola International Inc. common stock 566,557 285,820
Participant loans 2,114,305 1,675,120
Money market fund -- 33,482
Investments, at contract value:
Guaranteed investment contracts 2,502,678 3,953,859
---------------------------
34,844,687 26,733,713
Employer contributions receivable 519,235 456,602
Participant contributions receivable 82,448 57,746
---------------------------
Net assets available for benefits $35,446,370 $27,248,061
===========================
See accompanying notes.
2
<PAGE>
<TABLE>
Sola Optical 401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
<CAPTION>
Year ended December 31
1997 1996
----------------------------------
<S> <C> <C>
Additions
Contributions:
Employer $ 1,031,971 $ 948,533
Participant 3,078,992 2,648,468
Participant rollovers 420,620 2,449,657
----------------------------------
4,531,583 6,046,658
Investment income:
Interest 581,504 372,207
Dividends 3,439,726 1,304,373
Net realized and unrealized appreciation in fair value of investments 2,222,461 2,169,541
----------------------------------
6,243,691 3,846,121
----------------------------------
Total additions 10,775,274 9,892,779
Deductions
Benefit distributions 2,562,312 1,747,819
Investment management fee 14,653 17,820
----------------------------------
Total deductions 2,576,965 1,765,639
----------------------------------
Net increase in net assets 8,198,309 8,127,140
Net assets available for plan benefits at beginning of year 27,248,061 19,120,921
----------------------------------
Net assets available for plan benefits at end of year $35,446,370 $27,248,061
==================================
<FN>
See accompanying notes.
</FN>
3
</TABLE>
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements
December 31, 1997
1. Description of Plan
The following description of Sola Optical 410(k) Savings Plan provides only
general information. Participants should refer to the Plan agreement (the
"Plan") for a more complete description of the Plan's provisions. The Plan is
subject to the Employee Retirement Income Security Act of 1974 ("ERISA").
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. Effective July 1, 1996, all
eligible participants of the former American Optical Corporation's 401 (k) Plan
became participants of the Plan. Effective January 1, 1997, the assets of the
Neolens 401(k) Plan merged in to the Sola Optical 401(k) Savings Plan. 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 $9,500 for 1997 and 1996. 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 became 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.
4
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
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.
All employees terminating, or qualifying under certain "hardship" rules as
prescribed by the Internal Revenue Service, may elect to receive lump sum
distributions from the Plan. Employees attaining age 70 1/2 are required to
commence receiving distributions by April 1 of the following calendar year.
Each participant's account is credited with the participant's contributions,
Company matching contributions and earnings thereon less any withdrawals. The
benefit to which a participant is entitled is the benefit that can be provided
from the participant's account.
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.
The Plan is administered by the Company. In mid-January 1996, the Plan's record
keeper changed from Watson Wyatt to American Century Investments. At the same
time, the Plan's trustee changed from State Street Bank and Trust Company to the
Chase Manhattan Bank. The Company determines questions of eligibility for
participation, interprets the plan provisions, communicates with participants
and their beneficiaries, and is otherwise generally responsible for plan
operations.
5
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
<TABLE>
In January 1996, the Plan eliminated its investment options in the Fidelity
Magellan Fund, Financial Industrial Income Fund and Vanguard Asset Allocation
Fund and transferred these balances into new investment funds. Effective January
1996, participants may choose to invest up to 25% of their account balance in
Sola International Inc. common stock and their remaining account balance in the
following investment instruments via the funds described below:
<CAPTION>
Fund Description Type of Investment Instrument
---------------- -----------------------------
<S> <C>
Twentieth Century Ultra Investors Fund Mutual Fund investing in securities of
mid-sized and larger companies
American Century Equity Growth Fund Mutual Fund investing in common stocks
Barclays Global Investors Equity Index Fund Common/Collective Trust Fund investing in
common stocks
Benham Stable Value Fund Common/Collective Trust Fund and investment
contracts with insurance companies
Benham Premium Managed Bond Fund Mutual Fund investing in longer term bonds and
other debt instruments
</TABLE>
Effective April 1996, participants are permitted to self-direct their
investments into any mutual fund offered through Charles Schwab.
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
International Inc. (the "Company"), and are not reflected in the accounts of the
Plan.
6
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies
Description of Accounting
The financial statements of the Sola Optical 401(k) Savings 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. Investments in Sola
International Inc. common stock are valued based on quoted market pricing on the
last business day of the year. Shares of mutual funds are valued at quoted
market prices which represent the net asset value of shares held by the Plan at
year end. Investments in the common/collective trust funds are stated at the
fair value of the total units of participation held by the Plan. The fair value
of the units of participation held by the Plan reflects the market values of the
fund's underlying assets. The stable value fund invests primarily in the Benham
Stable Asset Fund and guaranteed investment contracts issued by major financial
institutions, rated AA or higher. Participant loans are valued at their
outstanding balances which approximates fair value.
SOP No. 94-4 requires the Plan to report its benefit responsive guaranteed
investment contract at contract value. At December 31, 1997 and 1996, contract
value approximates fair value. There are no reserves against contract value for
credit risk of the contract issuer or otherwise. The average yield on these
contracts was 5.6% and 5.7% for 1997 and 1996, respectively. Crediting interest
rates applied to investment balances daily are guaranteed to equal the stated
annual rates of 5.7% through 6.8%.
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.
7
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Valuation of Investments (continued)
Interest income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Investment purchases and sales are recorded upon settlement of the transaction.
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.
3. Tax Status of the Plan
The Plan obtained its latest determination letter on March 18, 1997, 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.
8
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
4. Statement of Net Assets and Changes in Net Assets Available for Benefits by
Investment Fund
<TABLE>
The following schedules detail the net assets available for benefits and changes
in net assets available for benefits for the years ended December 31, 1997 and
1996 by investment options available to participants:
<CAPTION>
Participant-Directed
-----------------------------------------------------------------------------------
Sola Benham
International Barclays Benham Premium
Self-Directed Inc. Equity Stable Ultra Equity Managed
Participant Common Index Asset Investors Growth Bond
Accounts Stock Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value:
Mutual Funds $ 31,602 $ -- $ -- $ -- $11,891,636 $ 7,939,761 $ 3,050
Common/Collective Trusts -- -- 5,796,841 3,998,257 -- -- --
Sola International Inc.
Common Stock -- 566,557 -- -- -- -- --
Participant loans -- -- -- -- -- -- --
Investments, at contract value:
Guaranteed Investment
Contracts -- -- -- 2,502,678 -- -- --
-----------------------------------------------------------------------------------------------
31,602 566,557 5,796,841 6,500,935 11,891,636 7,939,761 3,050
Employer contributions -- -- -- -- -- -- --
receivable
Participant contributions
receivable -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
Net assets available for
benefits at December 31, 1997 $ 31,602 $ 566,557 $ 5,796,841 $ 6,500,935 $11,891,636 $ 7,939,761 $ 3,050
===============================================================================================
</TABLE>
Participant-Directed
----------------------------
Participant
Loans Other Total
---------------------------------------
Assets
Investments, at fair value:
Mutual Funds $ -- $ -- $19,866,049
Common/Collective Trusts -- -- 9,795,098
Sola International Inc.
Common Stock -- -- 566,557
Participant loans 2,114,305 -- 2,114,305
Investments, at contract value:
Guaranteed Investment
Contracts -- -- 2,502,678
---------------------------------------
2,114,305 -- 34,844,687
Employer contributions -- 519,235 519,235
receivable
Participant contributions
receivable -- 82,448 82,448
---------------------------------------
Net assets available for
benefits at December 31, 1997 $ 2,114,305 $ 601,683 $35,446,370
=======================================
9
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
<TABLE>
4. Statement of Net Assets and Changes in Net Assets Available for Benefits by
Investment Fund (continued)
<CAPTION>
Participant-Directed
--------------------------------------------------------------------------------------
Sola
International First Barclays
Inc. Guaranteed Stable Equity Ultra Equity
Common Investment Value Index Investors Growth
Stock Contracts Fund Fund Fund Fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value:
Mutual Funds $ -- $ -- $ -- $ -- $10,225,714 $ 5,042,432
Common/Collective Trusts -- -- 1,633,409 3,883,877 -- --
Sola International Inc. Common
Stock 285,820 -- -- -- -- --
Participant loans -- -- -- -- -- --
Money Market Fund -- -- -- -- -- --
Investments, at contract value:
Guaranteed Investment Contracts -- 3,953,859 -- -- -- --
--------------------------------------------------------------------------------------
285,820 3,953,859 1,633,409 3,883,877 10,225,714 5,042,432
Employer contributions receivable -- -- -- -- -- --
Participant contributions
receivable -- -- -- -- -- --
--------------------------------------------------------------------------------------
Net assets available for benefits
at December 31, 1996 $ 285,820 $ 3,953,859 $ 1,633,409 $ 3,883,877 $10,225,714 $ 5,042,432
======================================================================================
</TABLE>
Participant-Directed
-------------------------
Participant
Loans Other Total
---------------------------------------
Assets
Investments, at fair value:
Mutual Funds $ -- $ -- $15,268,146
Common/Collective Trusts -- -- 5,517,286
Sola International Inc. Common
Stock -- -- 285,820
Participant loans 1,675,120 -- 1,675,120
Money Market Fund -- 33,482 33,482
Investments, at contract value:
Guaranteed Investment Contracts -- -- 3,953,859
---------------------------------------
1,675,120 33,482 26,733,713
Employer contributions receivable -- 456,602 456,602
Participant contributions
receivable -- 57,746 57,746
---------------------------------------
Net assets available for benefits
at December 31, 1996 $ 1,675,120 $ 547,830 $27,248,061
=======================================
10
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
<TABLE>
4. Statement of Net Assets and Changes in Net Assets Available for Benefits by
Investment Fund (continued)
<CAPTION>
Participant-Directed
--------------------------------------------------------------------------
Sola
International Barclays Benham
Self-Directed Inc. Equity Stable Ultra Equity
Participant Common Index Asset Investors Growth
Accounts Stock Fund Fund Fund Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available at
December 31, 1996 $ -- $ 285,820 $ 3,883,877 $ 5,587,268 $ 10,225,714 $ 5,042,432
Additions
Contributions:
Employer -- -- 172,188 200,481 417,846 216,754
Participant -- -- 541,620 597,388 1,202,543 674,790
Participant rollovers -- -- 95,554 46,671 120,584 157,811
----------------------------------------------------------------------------------------
Total contributions -- -- 809,362 844,540 1,740,973 1,049,355
Investment income:
Interest -- -- -- 426,624 -- --
Dividends 220 271 8,305 -- 2,464,305 966,625
Net realized and unrealized
appreciation
(depreciation) in fair
value of investments -- 31,688 1,363,813 66,134 (290,482) 1,084,800
----------------------------------------------------------------------------------------
220 31,959 1,372,118 492,758 2,173,823 2,051,425
----------------------------------------------------------------------------------------
Total additions 31,959 2,181,480 1,337,298 3,914,796 3,100,780 40
Deductions
Benefit distributions -- 15,169 344,725 558,438 908,690 545,229
Investment management fees -- -- 1,747 3,461 6,780 2,665
----------------------------------------------------------------------------------------
Total deductions -- 15,169 346,472 561,899 915,470 547,894
Interfund transfers 31,382 263,947 77,956 138,268 (1,333,404) 344,443
----------------------------------------------------------------------------------------
Net (decrease) increase 31,602 280,737 1,912,964 913,667 1,665,922 2,897,329
----------------------------------------------------------------------------------------
Net assets available at
December 31, 1997 $ 31,602 $ 566,557 $ 5,796,841 $ 6,500,935 $ 11,891,636 $ 7,939,761
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Participant-Directed
-----------------------------------------------------
Benham
Premium
Managed
Bond Participant
Fund Loans Other Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets available at
December 31, 1996 $ -- $ 1,675,120 $ 547,830 $ 27,248,061
Additions
Contributions:
Employer -- -- 24,702 1,031,971
Participant 18 -- 62,633 3,078,992
Participant rollovers -- -- -- 420,620
---------------------------------------------------------------------------
Total contributions 18 -- 87,335 4,531,583
Investment income:
Interest 32 154,848 -- 581,504
Dividends -- -- -- 3,439,726
Net realized and unrealized
appreciation
(depreciation) in fair
value of investments (10) -- (33,482) 2,222,461
---------------------------------------------------------------------------
22 154,848 (33,482) 6,243,691
---------------------------------------------------------------------------
Total additions 154,848 53,853 10,775,274
Deductions
Benefit distributions -- 190,061 -- 2,562,312
Investment management fees -- -- -- 14,653
---------------------------------------------------------------------------
Total deductions -- 190,061 -- 2,576,965
Interfund transfers 3,010 474,398 -- --
---------------------------------------------------------------------------
Net (decrease) increase 3,050 439,185 53,853 8,198,309
---------------------------------------------------------------------------
Net assets available at
December 31, 1997 $ 3,050 $ 2,114,305 $ 601,683 $ 35,446,370
===========================================================================
11
</TABLE>
<PAGE>
<TABLE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
4. Statement of Net Assets and Changes in Net Assets Available for Benefits by
Investment Fund (continued)
<CAPTION>
Sola
Prior International Barclays First
Investment Inc. Equity Ultra Equity Stable
Manager Common Index Investors Growth Value
Funds(1) Stock Fund Fund Fund Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available at
December 31, 1995 $ 11,255,779 $ -- $ -- $ -- $ -- $ 842,887
Additions
Contributions:
Employer -- -- 74,057 231,961 89,811 96,102
Participant -- -- 408,023 1,164,650 474,917 543,132
Participant rollovers -- -- 302,156 641,365 408,988 1,097,148
----------------------------------------------------------------------------------------
Total contributions 784,236 2,037,976 973,716 1,736,382 -- --
Investment income:
Interest -- -- -- -- -- --
Dividends -- -- 57 575,387 576,705 152,224
Net realized and unrealized
appreciation in fair value
of investments 61,087 47,655 649,918 1,028,577 382,016 288
----------------------------------------------------------------------------------------
61,087 47,655 649,975 1,603,964 958,721 152,512
----------------------------------------------------------------------------------------
Total additions 61,087 47,655 1,434,211 3,641,940 1,932,437 1,888,894
Deductions
Benefit distributions -- -- 126,894 432,325 127,813 125,341
Investment management fees -- -- 2,303 7,694 2,659 5,164
----------------------------------------------------------------------------------------
Total deductions -- -- 129,197 440,019 130,472 130,505
Transfers (11,316,866) 238,165 2,578,863 7,023,793 3,240,467 (967,867)
----------------------------------------------------------------------------------------
Net (decrease) increase (11,255,779) 285,820 3,883,877 10,225,714 5,042,432 790,522
Net assets available at
December 31, 1996 $ -- $ 285,820 $ 3,883,877 $ 10,225,714 $ 5,042,432 $ 1,633,409
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Receivables
Investment Participant and Other
Contracts Loans Funds Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net assets available at
December 31, 1995 $ 5,516,282 $ 889,790 $ 616,183 $19,120,921
Additions
Contributions:
Employer -- -- 456,602 948,533
Participant -- -- 57,746 2,648,468
Participant rollovers -- -- -- 2,449,657
-------------------------------------------------------------------------
Total contributions -- -- 514,348 6,046,658
Investment income:
Interest 250,469 95,709 26,029 372,207
Dividends -- -- -- 1,304,373
Net realized and unrealized
appreciation in fair value
of investments -- -- -- 2,169,541
-------------------------------------------------------------------------
250,469 95,709 26,029 3,846,121
-------------------------------------------------------------------------
Total additions 250,469 95,709 540,377 9,892,779
Deductions
Benefit distributions 863,025 72,421 -- 1,747,819
Investment management fees -- -- -- 17,820
-------------------------------------------------------------------------
Total deductions 863,025 72,421 -- 1,765,639
Transfers (949,867) 762,042 (608,730) --
-------------------------------------------------------------------------
Net (decrease) increase (1,562,423) 785,330 (68,353) 8,127,140
Net assets available at
December 31, 1996 $ 3,953,859 $ 1,675,120 $ 547,830 $27,248,061
=========================================================================
<FN>
1 - Includes the Fidelity Magellan Fund, Financial Industrial Income Fund and Vanguard Asset Allocation Fund which were
transferred to new investment funds in January 1996 (Note 2).
</FN>
12
</TABLE>
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
5. Investments
The Plan's investments are held by Chase Manhattan Bank and various
sub-custodians. During 1997 and 1996, the Plan's investments (including
investments bought, sold, as well as held during the year) appreciated
(depreciated) in fair value by $2,222,461 and $2,169,541, respectively, as
follows:
1997 1996
-----------------------------
Mutual Funds $ 794,308 $ 1,471,680
Common/Collective Trusts 1,429,947 650,206
Sola International Inc. Common Stock 31,688 47,655
Other (33,482) --
-----------------------------
$ 2,222,461 $ 2,169,541
=============================
The fair values of individual investments that represent 5% or more of the
Plan's net assets at December 31 are as follows:
1997 1996
----------- -----------
Barclays Global/Investors Equity Index
Common/Collective Trust $ 5,796,841 $ 3,883,877
Twentieth Century Ultra Investors Mutual Fund 11,891,636 10,225,714
American Century Equity Growth Mutual Fund 7,939,761 5,042,432
Benham Stable Asset Common/Collective Trust 3,998,257 --
First Stable Value Common/Collective Trust -- 1,633,409
Hartford Life Insurance Guaranteed Insurance
Contract -- 1,619,671
John Hancock Mutual Life Guaranteed Insurance
Contract -- 1,462,631
6. Related-Party Transactions
Sola International, Inc. stock is an investment choice of plan participants.
Sola International, Inc. is the sponsor company and, therefore, qualifies as a
party-in-interest to the Plan. Certain Plan investments are mutual funds managed
by American Century Investors. American Century Investors is the recordkeeper as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest.
13
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
7. Year 2000 Issue (Unaudited)
The Plan sponsor has developed a plan to modify its internal information
technology to be ready for the Year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have a reasonable plan in place to become Year 2000 compliant.
The Plan sponsor currently expects the project to be substantially complete by
early 1999. The Plan sponsor does not expect this project to have a significant
effect on Plan operations.
14
<PAGE>
Supplemental Schedules
<PAGE>
<TABLE>
Sola Optical 401(k) Savings Plan
EIN: 94 - 3189941
PLAN NO. 012
Line 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
(c) (e)
(b) Description (d) Current
(a) Identity of Issue of Investment Cost Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sound Shore Fund Inc. Mutual Fund $ 30,063 $ 30,063
Schwab Money Market Fund Mutual Fund 1,539 1,539
* Benham Premium Managed Bond Fund Mutual Fund 3,060 3,050
Barclays Global Investors Equity Index Fund Common/Collective Trust 4,015,275 5,796,841
* Twentieth Century Ultra Investors Fund Mutual Fund 11,761,899 11,891,636
* American Century Equity Growth Fund Mutual Fund 6,732,367 7,939,761
Sola International Inc. Common Stock 503,089 566,557
* Benham Stable Asset Fund Common/Collective Trust 3,998,257 3,998,257
John Hancock Mutual Life Insurance Company Guaranteed Investment
Contract - maturity
date June 30, 1998 772,708 772,708
Hartford Life Insurance Company Guaranteed Investment
Contract - maturity
date July 1, 1999 1,729,970 1,729,970
* Participant loans (6% to 10%) maturing from
January 1997 through
August 2007 - 2,114,305
--------------
$ 34,844,687
==============
<FN>
* Indicates party-in-interest.
</FN>
15
</TABLE>
<PAGE>
<TABLE>
Sola Optical 401(k) Savings Plan
EIN: 94 - 3189941
PLAN NO. 012
Line 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1997
<CAPTION>
(a) (c) (d)* (g)
Identity (b) Purchase Selling Cost of
of Party Involved Description of Security Price Price Asset
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category (i) - an individual transaction in excess of 5% of plan assets
SEI Trust Benham Stable Asset Fund
(Common/Collective Trust) $ 1,654,231 $ - $ 1,654,231
Twentieth Century Investments Ultra Investors Fund
(Mutual Fund) 1,480,096 - 1,480,096
Category (iii) - a series of transactions in excess of 5% of plan assets
First Trust National Association First Stable Value Fund
(Common/Collective 1,912,734 - 1,912,734
Trust) - 2,856,444 2,856,444
SEI Trust Benham Stable Asset Fund 3,730,553 - 3,730,553
(Common/Collective Trust) - 694,941 694,941
Twentieth Century Investments Ultra Investors Fund 5,217,552 - 5,217,552
(Mutual Fund) - 3,261,147 2,762,298
American Century Equity Growth Fund 3,376,597 - 3,376,597
(Mutual Fund) - 1,564,069 1,354,125
Barclays PLC Investors Equity Index Fund 1,578,441 - 1,578,441
(Common/Collective Trust) - 1,029,290 837,175
</TABLE>
<TABLE>
<CAPTION>
(h) (i)
Current Value Net
of Asset on Realized
Transaction Date Gain (Loss)
-----------------------------------
<S> <C> <C>
Category (i) - an individual transaction in excess of 5% of plan assets
SEI Trust
$ 1,654,231 $ -
Twentieth Century Investments
1,480,096 -
Category (iii) - a series of transactions in excess of 5% of plan assets
First Trust National Association
1,912,734 N/A
SEI Trust 2,856,444 -
3,730,553 N/A
Twentieth Century Investments 694,941 -
5,217,552 N/A
American Century 3,261,147 498,849
3,376,597 N/A
Barclays PLC Investors 1,564,069 209,944
1,578,441 N/A
1,029,290 192,115
<FN>
Note 1: There were no category (ii) or (iv) reportable transactions during 1997.
o Columns (e) lease rental and (f) expense incurred with transaction are N/A.
</FN>
</TABLE>
1
<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 30, 1998
Vice President, Human Resources
Exhibit 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT 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 11, 1998, 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, 1997.
/s/ ERNST & YOUNG LLP
Palo Alto, California
June 19, 1998
