UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 17, 1998
SOLA INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
1-13606
(Commission File Number)
DELAWARE 94-3189941
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
2420 SAND HILL ROAD, SUITE 200, MENLO PARK, CA 94025
(Address of principal executive offices)
(zip code)
(650) 324-6868
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Items
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. The Company adopted
Statement 128 for its fiscal quarter ended December 31, 1997, and all earnings
per share amounts for all included periods were presented, and where necessary,
restated to conform to the Statement 128 requirements in its Form 10-Q for such
fiscal quarter.
In connection with the Company's adoption of FAS 128, the Company is
restating certain earnings per share information previously presented in the
Company's Securities Exchange Act filings. This Form 8-K restates all previously
reported earnings per share amounts in the Company's fiscal 1997 Form 10-K and
its Form 10-Q filings for the quarters ended June 30, 1997 and September 30,
1997.
<TABLE>
The following table of contents cross references the attached sub-items to
the respective 10-K and 10-Q filings:
<CAPTION>
Sub-item Description Reference to 10-K or 10-Q
<S> <C> <C>
a. Selected Financial Data Form 10-K, Item 6
b. Summary of Significant Accounting Form 10-K, Note 2 to Consolidated
Policies - Earnings per Share Financial Statements and Exhibit 11
c. Common Stock Pro Forma Disclosures Form 10-K, Note 9 to Consolidated
Financial Statements
d. Pro Forma Data Form 10-K, Note 16 to Consolidated
Financial Statements
e. Quarterly Financial Data Form 10-K, additional disclosure
f. Earnings Per Share - Quarterly Replaces Exhibit 11 to Forms 10-Q for the
quarters ended June 30, and September 30,
1997
</TABLE>
2
<PAGE>
<TABLE>
1. SELECTED FINANCIAL DATA
<CAPTION>
Sola International Inc. Predecessor Business
------------------------------------------------------ ------------------------
Fiscal Year Fiscal Year Fiscal Year Four Months Eight Months Fiscal Year
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, November 30, March 31,
1997 (3) 1996 1995 1994 (1) 1993 1993
--------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Statements of Operations Data
(in thousands, except per share data)
Net sales ........................ $ 488,689 $ 387,709 $ 345,631 $ 106,030 $ 200,025 $ 281,494
========= =========== =========== ========= ========= =========
Income (loss) before
extraordinary item ............. $ 30,897 $ 34,588 $ 13,640 $ (61,394) $ 10,749 $ 16,515
Extraordinary item, write-off of
debt issuance costs, net ....... -- (912) (3,915) -- -- --
--------- ----------- ----------- --------- --------- ---------
Net income (loss) ................ $ 30,897 $ 33,676 $ 9,725(2) $ (61,394) $ 10,749 $ 16,515
========= =========== =========== ========= ========= =========
Earnings (Loss) Per Share Data
basic (4)
Income (loss) before
extraordinary item ............ $ 1.31 $ 1.59 $ 0.82 $ (3.75)
Extraordinary item ............... -- (0.04) (0.23) --
--------- ----------- ----------- ---------
Net income (loss) ................ $ 1.31 $ 1.55 $ 0.59 $ (3.75)
========= =========== =========== =========
Weighted average number of
shares outstanding ........... 23,561 21,785 16,710 16,353
========= =========== =========== =========
Earnings (Loss) Per Share Data
diluted (5)
Income (loss) before extraordinary
item .......................... $ 1.24 $ 1.51 $ 0.78 $ (3.75)
Extraordinary item ............... -- (0.04) (0.22) --
--------- ----------- ----------- ---------
Net income (loss) ................ $ 1.24 $ 1.47 $ 0.56 $ (3.75)
========= =========== =========== =========
Weighted average number of
shares outstanding ........... 24,859 22,944 17,516 16,353
========= =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
Sola International Inc. Predecessor Business
-------------------------------------------------------- --------------------
As of March 31,
1997 1996 1995 1994 1993
---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total assets.............. $605,508 $416,849 $383,457 $360,631 $246,944
Long-term debt............ 162,797 97,890 107,407 186,740 9,744
Parent company investment. -- -- -- -- 117,129
Total shareholders' equity 284,298 192,241 159,443 63,495 --
<FN>
- ---------------------------
(1) For the four months ended March 31, 1994, the Company recorded two
non-recurring, non-cash charges associated with the Acquisition: (i) a
$32.9 million charge for the amortization associated with an inventory
write-up to fair value that was reflected in cost of sales; and (ii) a
$40.0 million charge for the write-off of in-process research and
development that was reflected in in-process research and development
expense.
(2) For fiscal 1995, the Company recorded two non-recurring charges in
connection with the IPO: (i) a $3.0 million charge for the termination of
the AEA Investors Inc. management agreement with the Company that was
reflected in general and administrative expenses; and (ii) a $3.9 million
write-off of debt issuance costs, that was reflected in the historical
financial statements as an extraordinary item.
(3) For fiscal 1997, the Company recorded two non-recurring charges in
connection with the AO Acquisition: (i) a $7.2 million charge for the
amortization associated with an inventory write-up to fair value that was
reflected in cost of sales; and (ii) a $9.5 million charge for the
write-off of in-process research and development that was reflected in
in-process research and development expense.
(4) Earnings per share, as restated for the adoption of FAS 128, are computed
using the weighted average number of common shares outstanding during the
period, for fiscal 1997, 1996, 1995, and 1994, after giving effect to the
IPO.
(5) Earnings per share, as restated for the adoption of FAS 128, are computed
using the weighted average number of common shares and dilutive securities
outstanding during the period, for fiscal 1997, 1996, 1995, and 1994, after
giving effect to the IPO.
</FN>
</TABLE>
3
<PAGE>
2. Summary of Significant Accounting Policies
Earnings (Loss) Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all included periods have been presented, and where necessary,
restated to conform to the Statement 128 requirements.
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share for the fiscal years ended March 31, 1997, 1996 and 1995:
<CAPTION>
Fiscal Year Ended
March 31, 1997 March 31, 1996 March 31, 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Numerator:
Income before extraordinary item ............ $ 30,897 $ 34,588 $ 13,640
Extraordinary item, repurchase of senior
subordinated notes (1995-write-off of debt
issuance costs), net of tax ................. -- (912) (3,915)
-------- ---------- --------
Net income ............................... $ 30,897 $ 33,676 $ 9,725
======== ========== ========
Denominator:
Denominator for basic earnings per share -
Weighted average common shares
outstanding ............................ 23,561 21,785 16,710
Effect of dilutive securities:
Employee stock options ................. 1,298 1,159 772
Other dilutive securities .............. -- -- 34
Denominator for diluted earnings per share - ________ __________ ________
Weighted average common shares and
dilutive securities outstanding ........ 24,859 22,944 17,516
======== ========== ========
Basic earnings per share:
Income before extraordinary item ............ $ 1.31 $ 1.59 $ 0.82
Extraordinary item .......................... -- (0.04) (0.23)
-------- ---------- --------
Net income ............................... $ 1.31 $ 1.55 $ 0.59
======== ========== ========
Diluted earnings per share:
Income before extraordinary item ............ $ 1.24 $ 1.51 $ 0.78
Extraordinary item .......................... -- (0.04) (0.22)
-------- ---------- --------
Net income ............................... $ 1.24 $ 1.47 $ 0.56
======== ========== ========
</TABLE>
4
<PAGE>
<TABLE>
Supplemental pro forma earnings per share (unaudited), calculated as if the
Acquisition, Mergers and IPO had taken place at the beginning of fiscal 1995,
and excluding Acquisition and IPO related non-recurring charges from net income,
was $1.05 (diluted), $1.09 (basic) for fiscal 1995, calculated as follows:
<CAPTION>
Year Ended
March 31, 1995
--------------
(in thousands,
except per share data)
(unaudited)
<S> <C>
Net income, as reported .................................................. $ 9,725
Pro forma adjustments, primarily interest and AEA fees, assuming that the
IPO occurred at the beginning of the period ......................... 13,920
-------
Net Income used for supplemental pro forma earnings per share calculation $23,645
=======
Weighted average number of shares outstanding, as reported ............... 16,710
Adjustment necessary assuming shares issued in the IPO were outstanding
for the full period ................................................. 5,012
-------
Weighted average number of shares outstanding used in supplemental basic
pro forma earnings per share calculation ............................ 21,722
Effect of dilutive securities:
Employee stock options .............................................. 772
Other dilutive securities ........................................... 34
Shares used in supplemental diluted pro forma earnings per share
calculation ......................................................... 22,528
=======
Supplemental pro forma earnings per share - basic ........................ $ 1.09
=======
Supplemental pro forma earnings per share - diluted ...................... $ 1.05
=======
</TABLE>
5
<PAGE>
3. Common Stock
Pro Forma Disclosures
Pro Forma information regarding net income and earnings per share, as
restated for the adoption of FAS 128, is required by Statement 123, and has been
determined as if the Company had accounted for its employee stock options under
the fair value method of that Statement. The fair value for these options was
estimated at the date of grant using a Black-Scholes option pricing model with
the following assumptions: risk-free interest rate of 6.67%, no dividend yield,
volatility factor of the expected market price of the Company's common stock of
.389, and a weighted-average expected life of the option of 4 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands except for earnings per share
information):
1997 1996
---- ----
Pro forma net income.............. $30,251 $33,603
Pro forma earnings per share:
Basic.......................... $1.28 $1.54
Diluted........................ $1.22 $1.46
The pro forma effect on net income during the phase-in period of Statement
123 may not be representative of the effects on pro forma net income in future
periods.
6
<PAGE>
4. Pro Forma Data
The following pro forma data, as restated for the adoption of FAS 128, was
prepared to illustrate the estimated effect of the AO Acquisition and the
financing related thereto, as if the Acquisition had occurred as of the
beginning of each period presented:
Year Ended Year Ended
March 31, March 31,
1997 1996
---------- -----------
Net Sales ................................... $ 507,713 $ 475,274
---------- -----------
Income before extraordinary item ............ $ 41,968 $ 42,093
---------- -----------
Net income .................................. $ 41,968 $ 41,181
---------- -----------
Earnings per share - basic:
Income before extraordinary item ......... $ 1.72 $ 1.75
---------- -----------
Net income ............................... $ 1.72 $ 1.71
---------- -----------
Earnings per share - diluted:
Income before extraordinary item ......... $ 1.64 $ 1.67
---------- -----------
Net income ............................... $ 1.64 $ 1.63
---------- -----------
These pro forma results of operations have been prepared for comparison
purposes only, and do not purport to be indicative of what the results would
have been had the AO Acquisition occurred at the beginning of the period or the
results which may occur in the future. As a result of the AO Acquisition the
Company has incurred two non-recurring charges during fiscal 1997: (i) a $7.2
million charge to cost of sales for the amortization associated with an
inventory write-up to fair value during the six months ended September 30, 1996;
and (ii) a $9.5 million charge for the write-off of in-process research and
development all of which was recorded in the quarter ended June 30, 1996. These
charges, and the related provision for tax thereon, have been excluded from the
pro forma results as they are non-recurring. The pro forma data above does not
include pro forma adjustments for the Neolens Acquisition as the results of
Neolens prior to acquisition were not material to the Company's consolidated
results of operations.
7
<PAGE>
<TABLE>
5. QUARTERLY FINANCIAL DATA (1)
<CAPTION>
(in thousands, except per share data) Quarter Ended Quarter Ended Quarter Ended Quarter Ended
(unaudited) June 30, 1995 Sept. 30, 1995 Dec. 31, 1995 March 31, 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales.............................. $ 95,922 $ 95,866 $ 91,329 $ 104,592
Gross profit........................... 45,740 45,404 43,557 51,017
Operating income....................... 13,668 15,565 11,461 20,059
Income before extraordinary
item............................... 7,355 9,000 5,958 12,275
Net income............................. 6,443 9,000 5,958 12,275
Earnings per share - basic:
Income before extraordinary
item........................... 0.34 0.41 0.27 0.56
Extraordinary item................. (0.04) -- -- --
Net income......................... 0.30 0.41 0.27 0.56
Earnings per share - diluted:
Income before extraordinary
item........................... 0.32 0.39 0.26 0.53
Extraordinary item................. (0.04) -- -- --
Net income......................... 0.28 0.39 0.26 0.53
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
June 30, 1996 Sept. 30, 1996 Dec. 31, 1996 March 31, 1997
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales............................. $ 109,536 $ 128,194 $ 119,721 $ 131,238
Gross profit.......................... 51,487 53,109 57,124 62,434
Operating income...................... 6,082 13,975 15,261 22,029
Net income............................ 2,162 6,969 7,840 13,926
Earnings per share - basic:
Net income........................ 0.10 0.29 0.32 0.57
Earnings per share - diluted:
Net income........................ 0.09 0.27 0.31 0.55
<FN>
(1) As restated for the adoption of FAS 128.
</FN>
</TABLE>
8
<PAGE>
6. Earnings Per Share - Quarterly
<TABLE>
The following tables set forth the computation of basic and diluted
earnings per share under FAS 128 for each of the quarters ended June 30, 1997
and 1996 and September 30, 1997 and 1996, together with respective year to date
computations at September 30, 1997 and 1996:
<CAPTION>
Three Months Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Numerator:
Net income .......................................... $11,089 $ 2,162
======= =======
Denominator:
Denominator for basic earnings per share -
Weighted average common shares
outstanding ....................................... 24,269 21,802
Effect of dilutive securities:
Employee stock options ............................ 1,150 1,357
Denominator for diluted earnings per share - _______ _______
Weighted average common shares and
dilutive securities outstanding ................... 25,419 23,159
======= =======
Basic earnings per share:
Net income .......................................... $ 0.46 $ 0.10
======= =======
Diluted earnings per share:
Net income .......................................... $ 0.44 $ 0.09
======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Net income ................................. $11,778 $ 6,969 $22,867 $ 9,131
======= ======= ======= =======
Denominator:
Denominator for basic earnings per share -
Weighted average common shares outstanding . 24,319 24,033 24,294 22,957
Effect of dilutive securities:
Employee stock options ................... 1,220 1,427 1,186 1,394
Denominator for diluted earnings per share - _______ _______ _______ _______
Weighted average common shares and
dilutive securities outstanding .......... 25,539 25,460 25,480 24,351
======= ======= ======= =======
Basic earnings per share:
Net income ................................. $ 0.48 $ 0.29 $ 0.94 $ 0.40
======= ======= ======= =======
Diluted earnings per share:
Net income ................................. $ 0.46 $ 0.27 $ 0.90 $ 0.37
======= ======= ======= =======
</TABLE>
9
<PAGE>
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 23, 1998 By: /s/Steven M. Neil
------------------- ------------------------------
Steven M. Neil
Executive Vice President and Chief
Financial Officer
10
