================================================================================
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, 1998
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
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<PAGE>
Sola Optical 401(k) Savings Plan
Financial Statements
Years ended December 31, 1998 and 1997
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 December 31, 1998 and 1997, 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, 1998 and 1997, 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, 1998, 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
San Francisco, California
May 17, 1999
1
<PAGE>
Sola Optical 401(k) Savings Plan
Statements of Net Assets Available for Benefits
December 31
1998 1997
------------- --------------
Assets
Investments, at fair value:
Mutual funds $ 26,732,264 $ 19,866,049
Common/collective trusts 14,571,468 9,795,098
Sola International Inc. common stock 966,259 566,557
Participant loans 2,153,468 2,114,305
Investments, at contract value:
Guaranteed investment contracts 923,891 2,502,678
------------- --------------
45,347,350 34,844,687
Employer contributions receivable 518,576 519,235
Participant contributions receivable 14,412 82,448
------------- --------------
Net assets available for benefits $45,880,338 $ 35,446,370
============= ==============
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
1998 1997
------------------- -------------------
Additions
Contributions:
<S> <C> <C>
Employer $ 1,122,295 $ 1,031,971
Participant 3,302,617 3,078,992
Participant rollovers 190,205 420,620
------------------- -------------------
4,615,117 4,531,583
Investment income:
Interest 678,021 581,504
Dividends 1,850,234 3,439,726
Net realized and unrealized appreciation in fair value of
investments 5,744,650 2,222,461
------------------- -------------------
8,272,905 6,243,691
------------------- -------------------
Total additions 12,888,022 10,775,274
Deductions
Benefit distributions 2,438,826 2,562,312
Investment management fee 15,228 14,653
------------------- -------------------
Total deductions 2,454,054 2,576,965
------------------- -------------------
Net increase in net assets 10,433,968 8,198,309
Net assets available for plan benefits at beginning
of year 35,446,370 27,248,061
------------------- -------------------
Net assets available for plan benefits at end of year $ 45,880,338 $ 35,446,370
=================== ===================
<FN>
See accompanying notes.
</FN>
</TABLE>
3
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements
December 31, 1998
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. Effective
July 1, 1998, the eligibility period began for employees of U.S. Coatings.
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 20% of
their compensation up to $10,000 for 1998 and $9,500 for 1997. Effective July 1,
1998, the maximum contribution percentage was increased from 16% to 20%.
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 remains fully vested in his account.
The Plan is administered by the Company. 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>
Participants may choose to direct contributions into any of the five fund
options 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 Asset Fund Common/Collective Trust Fund investing in
guaranteed investment contracts and
an individual guaranteed investment
contract previously purchased by the
Plan
Benham Premium Managed Bond Fund Mutual Fund investing in longer term bonds and
other debt instruments
</TABLE>
Once a participant accumulates an account balance in excess of $1,000, he or she
can elect to transfer up to 25% of the account balance into Sola International
Inc. common stock or, effective April 1996, into a Schwab Personal Choice
Retirement Account. Via the Schwab Personal Choice Retirement Account a
participant can self-direct balance transfers 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, 1998 and 1997, 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 7.9% and 5.6% for 1998 and 1997, respectively. Crediting interest
rates applied to investment balances as of December 31, 1998 and 1997 were
guaranteed to equal the stated annual rates of 6.8% and 5.7% - 6.8%,
respectively.
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)
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.
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 has received a determination letter from the Internal Revenue Service
dated March 18, 1997, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
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, 1998 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 $ 96,228 $ - $ - $ - $15,512,230 $10,575,264 $ 548,542
Common/Collective Trusts - 2,250 7,686,200 6,883,018 - - -
Sola International Inc.
Common Stock - 966,259 - - - - -
Participant loans - - - - - - -
Investments, at contract value:
Guaranteed Investment - - - 923,891 - - -
Contracts
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total investments 96,228 968,509 7,686,200 7,806,909 15,512,230 10,575,264 548,542
Employer contributions - - - - - - -
receivable
Participant contributions - - - - - - -
receivable
------------- ------------- ------------- -------------- ------------- ------------- -------------
Net assets available for
benefits at December 31, 1998$ 96,228 $ 968,509 $ 7,686,200 $ 7,806,909 $15,512,230 $10,575,264 $ 548,542
============= ============= ============= ============== ============= ============= =============
--------------
Participant
Loans Other Total
------------- ------------- -------------
<S> <C> <C> <C>
Assets
Investments, at fair value:
Mutual Funds $ - $ - $26,732,264
Common/Collective Trusts - - 14,571,468
Sola International Inc.
Common Stock - - 966,259
Participant loans 2,153,468 - 2,153,468
Investments, at contract value:
Guaranteed Investment - - 923,891
Contracts
------------- ------------- -------------
Total investments 2,153,468 - 45,347,350
Employer contributions - 518,576 518,576
receivable
Participant contributions - 14,412 14,412
receivable
------------- ------------- -------------
Net assets available for
benefits at December 31, 1998 $ 2,153,468 $ 532,988 $45,880,338
============= ============= =============
</TABLE>
9
<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 (continued)
<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 by
investment options available to participants:
<CAPTION>
Self-Directed Participant-Directed
------------------------------------------------------------------------------------
Schwab Sola Benham
Personal International Barclays Benham Premium
Choice Inc. Equity Stable Ultra Equity Managed
Retirement Common Index Asset Investors Growth Bond
Account 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 - - - 2,502,678 - - -
Contracts
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total investments 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
============= ============= ============= ============== ============= ============= =============
--------------
Participant
Loans Other Total
------------- ------------- -------------
<S> <C> <C> <C>
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 - - 2,502,678
Contracts
------------- ------------- -------------
Total investments 2,114,305 - 34,844,687
Employer contributions - 519,235 519,235
receivable
Participant contributions - 82,448 82,448
receivable
------------- ------------- -------------
Net assets available for
benefits at December 31, 1997 $ 2,114,305 $ 601,683 $35,446,370
============= ============= =============
</TABLE>
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>
Self-Directed Participant-Directed
------------------------------------------------------------------------------------
Schwab Sola Benham
Personal International Barclays Benham Premium
Choice Inc. Equity Stable Ultra Equity Managed
Retirement Common Index Asset Investors Growth Bond
Account Stock Fund Fund Fund Fund Fund
------------- ------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets available at
December 31, 1997 $ 31,602 $ 566,557 $ 5,796,841 $ 6,500,935 $11,891,636 $ 7,939,761 $ 3,050
Additions
Contributions:
Employer - - 207,891 213,365 439,953 256,947 4,209
Participant - - 635,004 628,112 1,264,554 807,445 36,127
Participant rollovers - - 44,731 6,053 88,638 25,041 25,742
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total contributions - - 887,626 847,530 1,793,145 1,089,433 66,078
Investment income:
Interest 2,626 514 - 492,872 - - 18
Dividends - 2,464 - - 1,338,241 494,391 15,138
Net realized and unrealized
appreciation
(depreciation) in fair - (162,979) 1,671,929 - 2,640,258 1,598,758 (3,316)
value of investments
------------- ------------- ------------- -------------- ------------- ------------- -------------
2,626 (160,001) 1,671,929 492,872 3,978,499 2,093,149 11,840
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total additions 2,626 (160,001) 2,559,555 1,340,402 5,771,644 3,182,582 77,918
Deductions
Benefit distributions - (36,742) (336,144) (611,432) (743,900) (517,147) (4,861)
Investment management fees - - (2,876) (3,359) (5,656) (3,220) (117)
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total deductions - (36,742) (339,020) (614,791) (749,556) (520,367) (4,978)
Interfund transfers 62,000 598,695 (331,176) 580,363 (1,401,494) (26,712) 472,552
------------- ------------- ------------- -------------- ------------- ------------- -------------
Net (decrease) increase 64,626 401,952 1,889,359 1,305,974 3,620,594 2,635,503 545,492
------------- ------------- ------------- -------------- ------------- ------------- -------------
Net assets available at
December 31, 1998 $ 96,228 $ 968,509 $ 7,686,200 $ 7,806,909 $15,512,230 $10,575,264 $ 548,542
============= ============= ============= ============== ============= ============= =============
-------------
Participant
Loans Other Total
------------- ------------- -------------
<S> <C> <C> <C>
Net assets available at
December 31, 1997 $ 2,114,305 $ 601,683 $35,446,370
Additions
Contributions:
Employer - (70) 1,122,295
Participant - (68,625) 3,302,617
Participant rollovers - - 190,205
------------- ------------- -------------
Total contributions - (68,695) 4,615,117
Investment income:
Interest 181,991 - 678,021
Dividends - - 1,850,234
Net realized and unrealized
appreciation
(depreciation) in fair - - 5,744,650
value of investments
------------- ------------- -------------
181,991 - 8,272,905
------------- ------------- -------------
Total additions 181,991 (68,695) 12,888,022
Deductions
Benefit distributions (188,600) - (2,438,826)
Investment management fees - - (15,228)
------------- ------------- -------------
Total deductions (188,600) - (2,454,054)
Interfund transfers 45,772 - -
------------- ------------- -------------
Net (decrease) increase 39,163 (68,695) 10,433,968
------------- ------------- -------------
Net assets available at
December 31, 1998 $ 2,153,468 $ 532,988 $45,880,338
============= ============= =============
</TABLE>
11
<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>
Self-Directed Participant-Directed
------------- ------------------------------------------------------------------------------------
Schwab Sola Benham
Personal International Barclays Benham Premium
Choice Inc. Equity Stable Ultra Equity Managed
Retirement Common Index Asset Investors Growth Bond
Account Stock Fund Fund Fund Fund Fund
------------- ------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <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 18
Participant rollovers - - 95,554 46,671 120,584 157,811 -
------------- ------------- ------------- -------------- ------------- ------------- -------------
Total contributions - - 809,362 844,540 1,740,973 1,049,355 18
Investment income:
Interest - - - 426,624 - - 32
Dividends 220 271 8,305 - 2,464,305 966,625 -
Net realized and unrealized
appreciation
(depreciation) in fair - 31,688 1,363,813 66,134 (290,482) 1,084,800 (10)
value of investments
------------- ------------- ------------- -------------- ------------- ------------- -------------
220 31,959 1,372,118 492,758 2,173,823 2,051,425 22
------------- ------------- ------------- -------------- ------------- ------------- -------------
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 3,010
------------- ------------- ------------- -------------- ------------- ------------- -------------
Net (decrease) increase 31,602 280,737 1,912,964 913,667 1,665,922 2,897,329 3,050
------------- ------------- ------------- -------------- ------------- ------------- -------------
Net assets available at
December 31, 1997 $ 31,602 $ 566,557 $ 5,796,841 $ 6,500,935 $11,891,636 $ 7,939,761 $ 3,050
============= ============= ============= ============== ============= ============= =============
--------------
Participant
Loans Other Total
------------- ------------- -------------
<S> <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 - 62,633 3,078,992
Participant rollovers - - 420,620
------------- ------------- -------------
Total contributions - 87,335 4,531,583
Investment income:
Interest 154,848 - 581,504
Dividends - - 3,439,726
Net realized and unrealized
appreciation
(depreciation) in fair - (33,482) 2,222,461
value of investments
------------- ------------- -------------
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 474,398 - -
------------- ------------- -------------
Net (decrease) increase 439,185 53,853 8,198,309
------------- ------------- -------------
Net assets available at
December 31, 1997 $ 2,114,305 $ 601,683 $35,446,370
============= ============= =============
</TABLE>
12
<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 1998 and 1997, the Plan's investments (including
investments bought, sold, as well as held during the year) appreciated
(depreciated) in fair value as follows:
1998 1997
------------------ -------------------
Mutual Funds $ 4,235,700 $ 794,308
Common/Collective Trusts 1,671,929 1,429,947
Sola International Inc. Common Stock (162,979) 31,688
Other - (33,482)
================== ===================
$ 5,744,650 $ 2,222,461
================== ===================
The fair values of individual investments that represent 5% or more of the
Plan's net assets at December 31 are as follows:
1998 1997
------------ ------------
Barclays Global/Investors Equity Index
Common/Collective Trust $ 7,686,200 $ 5,796,841
Twentieth Century Ultra Investors Mutual Fund 15,512,230 11,891,636
American Century Equity Growth Mutual Fund 10,575,264 7,939,761
Benham Stable Asset Common/Collective Trust 6,883,013 3,998,257
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 shares of mutual
funds managed by American Century Investors and common/collective funds managed
by Chase Manhattan Bank. As defined by the Plan, American Century Investors the
recordkeeper and Chase Manhattan Bank is the trustee, therefore, these
transactions qualify as party-in-interest.
13
<PAGE>
Sola Optical 401(k) Savings Plan
Notes to Financial Statements (continued)
7. Year 2000 (Unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by mid 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be year 2000 compliant by early 1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan, because they are confident that all systems will be year 2000
ready.
8. Subsequent Event
Effective April 1, 1999, a participant shall become eligible to participate on
the first day of the month following the date on which the Employee completes 30
days of employment with the Employer.
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, 1998
<CAPTION>
(c) (e)
(b) Description (d) Current
(a) Identity of Issue of Investment Cost Value
- ------- ---------------------------------------------- ----------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Schwab Money Market Fund Mutual Fund $ 96,228 $ 96,228
* Benham Premium Managed Bond Fund Mutual Fund 550,428 548,542
Barclays Global Investors Equity Index Fund Common/Collective Trust 4,649,083 7,686,200
* Twentieth Century Ultra Investors Fund Mutual Fund 13,039,827 15,512,230
* American Century Equity Growth Fund Mutual Fund 8,012,023 10,575,264
* Sola International Inc. Common Stock 1,100,979 966,259
* Chase Manhattan Bank Pooled Investment Trust
for Employee Benefit Plans II Cash
Investment Fund Common/Collective Trust 2,250 2,250
* Benham Stable Asset Fund Common/Collective Trust 6,883,018 6,883,018
Hartford Life Insurance Company Guaranteed Investment
Contract - maturity
date July 1, 1999 923,891 923,891
* Participant loans (6% to 10%) maturing from
January 1997 through
August 2007 2,153,468
---------------
$ 45,347,350
===============
<FN>
* Indicates party-in-interest.
</FN>
</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, 1998
<CAPTION>
(a) (c) (d)* (g)
Identity (b) Purchase Selling Cost of
of Party Involved Description of Asset Price Price Asset
- ----------------------------- ------------------------------- -------------- ---------------- ---------------
Category (i) transactions-an individual transaction in excess of 5% of plan
assets:
<S> <C> <C> <C> <C>
SEI Trust Benham Stable Asset $ 1,687,847 $ - $ 1,687,847
Category (iii) transactions-series of transaction in excess of 5% of plan
assets:
American Century Ultra 4,561,516 - 4,561,516
American Century Ultra - 3,581,083 3,283,593
Wells Fargo Barclays Equity Index 1,883,396 - 1,883,396
Wells Fargo Barclays Equity Index - 1,666,096 1,249,588
Chase Manhattan Bank Pooled Investment Trust 1,098,438 - 1,098,438
Chase Manhattan Bank Pooled Investment Trust - 1,096,104 1,096,104
American Century Equity Growth 4,782,877 - 4,782,877
American Century Equity Growth - 3,746,132 3,503,221
SEI Trust Benham Stable Asset 6,860,422 - 6,860,422
SEI Trust Benham Stable Asset - 4,037,711 4,037,711
(h) (i)
(a) Current Value Net
Identity of Asset on Realized
of Party Involved Transaction Date Gain (Loss)
- ----------------------------- ----------------- --------------
Category (i) transactions-an individual transaction in excess of 5% of plan
assets:
<S> <C> <C>
SEI Trust $ 1,687,847 $ -
Category (iii) transactions-series of transaction in excess of 5% of plan
assets:
American Century 4,561,516 -
American Century 3,581,083 297,490
Wells Fargo 1,883,396 -
Wells Fargo 1,666,096 416,507
Chase Manhattan Bank 1,098,438 -
Chase Manhattan Bank 1,096,104 -
American Century 4,782,877 -
American Century 3,746,132 242,911
SEI Trust 6,860,422 -
SEI Trust 4,037,711 -
<FN>
There were no category (ii) or (iv) reportable transactions during 1998.
* Columns (e) lease rental and (f) expense incurred with transaction are N/A.
</FN>
</TABLE>
16
<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
Vice President, Human Resources
Dated: June 23, 1999
17
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 May 17, 1999, 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, 1998.
/s/ERNST & YOUNG LLP
San Francisco, California
June 21, 1999
