SOLA International Announces Fiscal 2001 Third Quarter Results And Global Strategic Initiatives.Business Editors SUNNYVALE Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , Calif.--(BUSINESS WIRE)--Feb. 8, 2001 SOLA International Inc. (NYSE NYSE See: New York Stock Exchange : SOL), a global manufacturer of spectacle Spectacle Speed (See SWIFTNESS.) Aïda opera renowned for its scenic grandeur; sometimes played with on-stage elephants. [Ital. lenses, today announced global strategic initiatives and its fiscal 2001 third quarter results. Strategic Initiatives The Company announced that after an extensive review of its worldwide operations, it has initiated a series of actions to improve profitability, restore earnings growth and increase cash flow. These activities, to be substantially completed over the next 15 months, will be implemented across all primary business functions and operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon . "We expect that these actions will significantly improve the Company's operating efficiency and customer service, while streamlining the supply and distribution chains, reducing worldwide operating costs operating costs npl → gastos mpl operacionales and strengthening our competitive position in the global spectacle lens market," said president and chief executive officer Jeremy Jeremy (jĕr`ĭmē), English form of Jeremiah. The Epistle of Jeremy is a title given to the sixth chapter of Baruch. C. Bishop. "The savings achieved through these actions, together with increased sales of polycarbonate A category of plastic materials used to make a myriad of products, including CDs and CD-ROMs. products and new product launches, including SOLA Contour Optics optics, scientific study of light. Physical optics is concerned with the genesis, nature, and properties of light; physiological optics with the part light plays in vision; and geometrical optics with the reflection and refraction of light as encountered in the study , are expected to accelerate the Company's earnings growth as transitional costs associated with these actions are eliminated." The actions being announced today will require the Company to recognize non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of certain assets. These charges relate to the suspension of activities to commercialize polycarbonate Matrix products, the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of inventory and moulds no longer necessary due to global product standardization standardization In industry, the development and application of standards that make it possible to manufacture a large volume of interchangeable parts. Standardization may focus on engineering standards, such as properties of materials, fits and tolerances, and drafting activities, the migration of production to the Company's most cost efficient facilities which include China, Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , the consolidation of redundant manufacturing and distribution facilities and the write-off of certain intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . These non-cash charges total approximately $95 million on a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta basis or $65 million on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. . In addition to these non-cash charges, the Company will recognize cash charges related to actions to effect the consolidation of facilities and the resulting reduction of approximately 500 employees from its higher cost manufacturing sites. These cash charges are expected to be approximately $16 million on a pre-tax basis and are anticipated to be recovered from cash flow savings in approximately 12 to 18 months. On an after-tax basis, these cash charges total approximately $11 million. Offsetting these expenditures will be pre-tax proceeds of approximately $25 million from the sale of redundant assets. The Company has recorded approximately $101 million of the pre-tax charges in the fiscal 2001 third quarter and anticipates charges of approximately $10 million in the fiscal 2001 fourth quarter. Gains on sales of assets will be recorded as they are realized. Third Quarter Results The Company also announced today that net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the period ended December December: see month. 31, 2000 were $126.1 million compared with $127.2 million in the third quarter of fiscal 2000. On a constant currency basis, consolidated sales increased 6.3 percent with sales in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Rest
of World increasing 10.6 percent and 17.0 percent respectively in the
quarter reflecting the continued success of the Company's sales and
marketing strategies in those geographies. Sales in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. decreased 2.4 percent compared to the third quarter a year ago, an
improvement from prior period comparisons but indicative of continuing
difficult market conditions.
Net income in the quarter, excluding special charges and transition costs, was $6.9 million, or $0.29 per share, compared with net income, excluding special charges, of $2.2 million, or $0.09 per share, in the year ago quarter. The net loss in the quarter, including special charges and transition costs, of $67.7 million, or $2.86 per share, compared with net income, including special charges, of $2.7 million, or $0.11 per share, in the year ago quarter. "We are pleased that we have achieved quarterly financial results consistent with the expectations of management and the investment community despite the impact of a strong U.S. Dollar and a difficult North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market place," commented Mr. Bishop. "Our third quarter results reflect the Company's commitment to its core strategies and continuation of the strategic actions initiated in the fourth quarter of fiscal 2000. The significant reduction in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. compared to the prior year, approximately $5.3 million excluding the impact of acquisitions, reflects our vigorous pursuit of cost control across the organization." Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Net sales for the first nine months of fiscal 2001 were $400.7 million compared with $401.9 million in the same period a year ago. On a constant currency basis, net sales for the first nine months of fiscal 2001 increased 5.1 percent. Net income, excluding special charges, extraordinary gains and transition costs, for the first nine months of fiscal 2001, were $18.6 million, or $0.77 per share, compared with net income, excluding special charges, of $18.4 million, or $0.73 per share, in the first nine months of fiscal 2000. Total debt, net of cash and cash equivalents, at December 31, 2000 was $234.5 million compared with $229.0 million at September September: see month. 30, 2000, an increase of $5.5 million. The increase in net debt was primarily attributable to cash severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments made during the quarter and lower operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . Contour Optics Contour Optics is a new, proprietary, patented technology developed by SOLA to produce highly curved lenses with superior optics and increased, more accurate peripheral vision peripheral vision n. Vision produced by light rays falling on areas of the retina beyond the macula. Also called indirect vision. Peripheral vision . SOLA will introduce the technology in a single vision lens. In addition to the optical benefits, the convex shape Noun 1. convex shape - a shape that curves or bulges outward convexity umbo - a slight rounded elevation where the malleus attaches to the eardrum solid - a three-dimensional shape camber - a slight convexity (as of the surface of a road) of the lens creates a unique, highly fashionable look that has been well received in market research. The product will be sold to upscale optical retailers together with custom frames manufactured by an exclusive frame partner of SOLA. A special manufacturing site has been established for processing Contour Optics lens products because of their unique processing requirements. Oracle Acquisition Separately, the Company announced today that the acquisition of the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of Oracle Lens Manufacturing Corporation had been completed with an effective date of January January: see month. 15, 2001. As previously communicated, Oracle is a leading manufacturer and distributor of polycarbonate lenses and is headquartered in Warwick, Rhode Island Warwick is a city in Kent County, Rhode Island, United States. It is the second largest city in the state, with 85,808 people. Its mayor, since 2000, has been Scott Avedisian. Founded by Samuel Gorton in 1642, Warwick has witnessed major events in American history. . The purchase price totalled $17.4 million of which $2.0 million is payable in two years. The acquisition is anticipated to be accretive to earnings. Commenting on the acquisition, Mr. Bishop stated, "We welcome the employees of Oracle to SOLA. Oracle is an integral part of our worldwide polycarbonate strategy and together with our manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. in Mexico, will provide the cornerstones for expanding our polycarbonate lens business which has experienced year-to-date sales growth of 29 percent." Debt Refinancing Refinancing An extension and/or increase in amount of existing debt. In addition to the review of its worldwide operations that has led to the strategic initiatives announced today, the Company has been exploring alternatives for replacing its current credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . Steven M. Neil, executive vice president and chief financial officer of Sola, said, "At the same time we are changing our global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. , we will be arranging new financing. To provide additional interim flexibility, we are pleased to announce that we have successfully completed an amendment to our existing Multicurrency Credit facility." The maturity date of the amendment is May 7, 2001. Fourth Quarter Outlook Excluding special charges and transition costs, the Company anticipates earnings per share of $0.27 to $0.31 for the fourth quarter ending March 31, 2001. Mr. Neil stated, "Earnings in the fourth quarter and fiscal 2002 will continue to be significantly impacted by transition costs associated with the actions announced today. We anticipate that certain non-recurring costs will be incurred as we transition to our global manufacturing and logistics model and it is our intention to fully disclose the impact of such costs in all required financial disclosures." Conference Call Information The Company will host a conference call on February 8, 2001 at 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. to discuss today's announcement and fiscal 2001 third quarter earnings results. Investors and interested parties may listen to the call via www.sola.com or www.streetfusion.com. Company Description SOLA International Inc. designs, manufactures and distributes a broad range of eyeglass eye·glass n. 1. eyeglasses Glasses for the eyes. 2. A single lens in a pair of glasses; a monocle. 3. See eyepiece. 4. See eyecup. lenses, primarily focusing on the faster-growing plastic lens segment of the global lens market, and particularly on higher-margin value-added products. SOLA's strong global presence includes manufacturing and distribution sites in three major regions: North America, Europe and Rest of World (primarily Australia, Asia and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. ) and approximately 7,000 employees in 30 countries servicing customers in over 50 markets world-wide. For additional information, visit the Company's web site at www.sola.com. Safe-Harbor This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 21E of the Securities Exchange Act of 1934, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's potential growth prospects. Such forward-looking statements are subject to various risks and uncertainties, many of which are beyond the control of the Company. Actual results could differ materially from the forward-looking statements as a result of, among other things the highly competitive nature of the eyeglass lens and coating industry; the Company's need to develop new products; potential adverse developments in the domestic and foreign economic and political environment, including exchange rates, tariffs This is a list of tariffs and trade legislation:
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended March 31, 2000. The words "believe", "expect", "anticipate", "estimate" and similar expressions identify forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Sola International Inc.
Unaudited Statements of Income
(Amounts in thousands, except per share data)
Third Quarter Third Quarter
2001 2000
---- ----
Net sales $ 126,144 $ 127,238
Cost of sales 76,753 71,983
--------- ---------
Gross profit 49,391 55,255
--------- ---------
Research and development
expenses 3,373 4,861
Selling and marketing
expenses 25,732 25,752
General and administrative
expenses 12,701 15,040
Goodwill amortization 1,585 1,489
Special charges 100,637 (657)
--------- ---------
Operating expenses 144,028 46,485
--------- ---------
Operating income/(loss) (94,637) 8,770
Interest expense, net (5,600) (4,963)
--------- ---------
Income/(loss) before
provision for income
taxes, minority interest
and extraordinary item (100,237) 3,807
Benefit/(provision) for
income taxes 32,490 (1,218)
Minority interest income 62 86
--------- ---------
Income/(loss) before
extraordinary item (67,685) 2,675
Extraordinary item,
net of tax -- --
--------- ---------
Net Income/(loss) $ (67,685) $ 2,675
========= =========
Earnings/(loss) per share
- basic:
Before extraordinary item $ (2.86) $ 0.11
Extraordinary item -- --
--------- ---------
Earnings/(loss) per share
- basic $ (2.86) $ 0.11
========= =========
Weighted average common
shares outstanding 23,693 24,875
========= =========
Earnings/(loss) per share
- diluted:
Before extraordinary item $ (2.86) $ 0.11
Extraordinary item -- --
--------- ---------
Earnings/(loss) per share
- diluted $ (2.86) $ 0.11
========= =========
Weighted average common
shares and dilutive
securities outstanding 23,693 25,075
========= =========
Note:
Net income excluding
special charges,
extraordinary gain
and transition costs $ 6,921 $ 2,228
Earnings per share
excluding special charges,
extraordinary gain and
transition costs $ 0.29 $ 0.09
Sola International Inc.
Unaudited Statements of Income
(Amounts in thousands, except per share data)
Year To Date Year to Date
2001 2000
---- ----
Net sales $ 400,683 $ 401,886
Cost of sales 236,626 223,677
--------- ---------
Gross profit 164,057 178,209
Research and development
expenses 11,273 15,216
Selling and marketing
expenses 75,216 76,812
General and administrative
expenses 38,207 43,085
Goodwill amortization 4,753 2,978
Special charges 114,628 3,706
--------- ---------
Operating expenses 244,077 141,797
--------- ---------
Operating income/(loss) (80,020) 36,412
Interest expense, net (17,008) (13,912)
--------- ---------
Income/(loss) before
provision for income
taxes and minority interest (97,028) 22,500
Benefit/(provision) for
income taxes 31,410 (7,200)
Minority interest income 49 534
--------- ---------
Income/(loss) before
extraordinary item (65,569) 15,834
Extraordinary item,
net of tax 1,471 --
--------- ---------
Net Income/(loss) $ (64,098) $ 15,834
========= =========
Earnings/(loss) per share
- basic:
Before extraordinary item $ (2.71) $ 0.64
Extraordinary item 0.06 --
--------- ---------
Earnings/(loss) per share
- basic $ (2.65) $ 0.64
========= =========
Weighted average common
shares outstanding 24,166 24,871
========= =========
Earnings/(loss) per share
- diluted:
Before extraordinary item $ (2.71) $ 0.63
Extraordinary item 0.06 --
--------- ---------
Earnings/(loss) per share - diluted $ (2.65) $ 0.63
========= =========
Weighted average common
shares and dilutive
securities outstanding 24,166 25,113
========= =========
Note:
Net income excluding
special charges,
extraordinary gain
and transition costs $ 18,551 $ 18,354
Earnings per share
excluding special charges,
extraordinary gain and
transition costs $ 0.77 $ 0.73
Sola International Inc.
Balance Sheet Data
(Amounts in thousands)
(Unaudited)
December 31, March 31, December 31,
2000 2000 1999
---- ---- ----
Cash and cash equivalents $ 17,397 $ 18,852 $ 24,377
Trade accounts receivable, net 121,295 120,882 123,344
Inventories 138,676 172,888 195,791
Other assets 386,442 402,411 396,402
-------- -------- --------
Total assets $663,810 $715,033 $739,914
======== ======== ========
Trade payables, accruals and
other current liabilities $134,271 $134,084 $121,577
Short and long-term debt 251,850 232,651 243,005
Other liabilities 23,644 20,496 25,448
-------- -------- --------
Total liabilities 409,765 387,231 390,030
Shareholders' equity 254,045 327,802 349,884
-------- -------- --------
Total liabilities and
shareholders' equity $663,810 $715,033 $739,914
======== ======== ========
Sola International Inc.
Cash Flow Data
(Amounts in thousands)
(Unaudited)
Nine Months to Nine Months to
December 31, December 31,
2000 1999
---- ----
Net Income/(loss) $(64,098) $ 15,834
Depreciation and amortization 20,250 19,531
Changes in trading assets and
liabilities 48,620 (25,572)
-------- --------
Net cash provided by
operating activities $ 4,772 $ 9,793
-------- --------
Purchases of businesses (2,480) (3,673)
Trade investments and joint
ventures (1,337) (5,219)
Capital expenditures (15,654) (13,869)
Other 14 1,045
-------- --------
Net cash provided by/(used
in) investing activities (19,457) (21,716)
Net cash provided by
financing activities 13,778 15,033
Effect of exchange rates (548) (311)
-------- --------
Net increase/(decrease)
in cash and equivalents $ (1,455) $ 2,799
======== ========
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