SOLA International Announces Fiscal 2003 First Quarter Results.Business Editors SAN DIEGO--(BUSINESS WIRE)--Aug. 7, 2002 SOLA International Inc. (NYSE NYSE See: New York Stock Exchange :SOL), a global designer, manufacturer and distributor of spectacle Spectacle Speed (See SWIFTNESS.) Aïda opera renowned for its scenic grandeur; sometimes played with on-stage elephants. [Ital. lenses, today announced that fiscal year 2003 first quarter operating results were in line with expectations. The company reported a net loss of $5.4 million, or $0.22 per share. Net income in the current fiscal year includes a net after-tax loss of $10.7 million, or $0.44 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, associated with the impact of foreign currency on the company's net long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , foreign exchange contracts and Euro-denominated cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. . For comparative purposes, the company reported net income of $6.7 million, or $0.28 per diluted share, in the year ago quarter. Net income in the prior year includes a net after-tax gain Net after-tax gain Capital gain after income taxes have been paid. of $3.8 million, or $0.16 per diluted share, associated with the impact of foreign currency on the company's net long-term debt, foreign exchange contracts and Euro-denominated cash reserves. Jeremy C. Bishop, president and chief executive officer of SOLA, commented, "At this time, we continue to anticipate that reported net income in fiscal 2003, excluding the currency impact on long-term debt, foreign exchange contracts and Euro-denominated cash reserves, will be in the range of $26.0 - $28.5 million, while free cash flow is expected to be in the range of $25 - $30 million, including the negative cash impact of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities that will be completed in 2003, and after planned capital expenditures." Sales to the company's top 20 global customers increased approximately 11% in the quarter while sales from the company's global prescription laboratory network increased approximately 18% compared to the prior year. Value-added products represented 76.1% of fiscal 2003 first quarter sales compared with 73.3% in the comparable year ago period. Fiscal 2003 first quarter polycarbonate A category of plastic materials used to make a myriad of products, including CDs and CD-ROMs. sales and volume increased 29.0% and 24.4%, respectively, continuing the company's gains in this product category. 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 in the first quarter were $135.2 million compared with $136.0 million in the year ago period, a decrease of 0.6%. Consolidated net sales in the first quarter, on a constant currency basis, decreased 1.9% with Europe, 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. and Rest of World decreasing 0.2%, 3.9% and 0.3%, respectively. Total debt, net of cash and cash equivalents, at June 30, 2002 was $239.6 million, compared to $214.1 million at March 31, 2002. Excluding the impact of currency, total debt, net of cash and cash equivalents, at June 30, 2002 was $216.5 million, an increase of $2.4 million. The increase is primarily related to the company's previously announced acquisition of certain 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 Optical Electroforming Electroforming is a highly specialized process of metal part fabrication using electrodeposition in a plating bath over a base form or mandrel which is subsequently removed. Inc. ("OEF OEF Operation Enduring Freedom (US government response to September 11, 2001 terrorism attacks) OEF Oxford Economic Forecasting OEF Oregon Entrepreneurs Forum OEF Optimal Extension Fields "). Bishop stated, "The first quarter was a good quarter for SOLA as we realized our strategic and financial objectives. A number of accomplishments occurred during the quarter that are key elements of our strategic plan." "Firstly, I am particularly proud of the 18% year over year sales growth achieved through our global prescription laboratory network. Growing this network is a key priority for the next 12 months and, as announced today, we have acquired certain net assets of wholesale optical laboratories B&W Optical and Southeastern Optical ("B&W"), which are located in Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). and Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). . These acquisitions represent a significant step in the company's strategic plan to improve its competitive position in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . These labs are among the premier prescription laboratories in the United States, and we hope to acquire other labs of similar quality in the future." "Secondly, we successfully launched Teflon Teflon, trade name for a solid, chemically inert polymer of tetrafluoroethylene (C2F4), F2C=CF2. Stable up to temperatures around 572°F; (300°C;), Teflon is used in electrical insulation, gaskets, and in making (R) EasyCare lenses in Italy. In July, we commenced marketing efforts in the United Kingdom and have planned additional second fiscal quarter launches in France, Portugal, and Australia along with test marketing in the United States." "Finally, we increased polycarbonate capacity with the installation of two additional production lines based at our Oracle manufacturing facility in Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. . We anticipate that this expansion, combined with three additional lines to be installed by the end of the fiscal third quarter, will increase Oracle's capacity by 100% this fiscal year, enabling us to further participate in this fast growing category. Additionally, the acquisition of OEF strengthens our capabilities in the manufacture of polycarbonate lens product and insures that mold mold, name for certain multicellular organisms of the various classes of the kingdom Fungi, characteristically having bodies composed of a cottony mycelium. The colors of molds are caused by the spores, which are borne on the mycelium. / insert manufacturing are an internal core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
"North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales were consistent with plan and I am particularly encouraged that our North American sales in July increased approximately 3% year-over-year, the first positive sales growth experienced in this region since December 2001. I still anticipate that our initiatives will restore sales growth in the second half of the fiscal year with the possibility that modest growth may occur earlier." "European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales at our prescription laboratories continued to record year-over-year sales growth, however, sales in our wholesale business suffered due to short-term supply issues and reduced shipments of recently launched photochromic Pho`to`chro´mic a. 1. Of or pertaining to photochromy; produced by photochromy. product. Both of these issues have now been dealt with and as a consequence, inventory levels increased in June. Improving service levels in this region remains a priority for the balance of fiscal 2003." Steven M. Neil, executive vice president and chief financial officer of SOLA, commented, "The weak U.S. Dollar is having a significant, and mostly non-cash, impact on our financial statements as noted previously. In particular, in the first quarter the Euro, Yen and Australian Dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents appreciated approximately 14%, 10% and 6%, respectively, most of which occurred in June, which had a positive impact on sales of approximately $1.8 million." "We reconfirm re·con·firm tr.v. re·con·firmed, re·con·firm·ing, re·con·firms To confirm again, especially to establish or support more firmly: reconfirmed the reservations. that revenues on a constant currency basis are expected to be flat for the first half of the fiscal year and we anticipate growth in the second half, when increased polycarbonate capacity becomes available, improvements to the supply chain are gained and Teflon EasyCare coating sales gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. . Sales from our wholly-owned prescription laboratories are also expected to grow, including the benefit from the B&W acquisition." The company will host a conference call today at 5:00 p.m. Eastern Standard Time (2:00 p.m. Pacific Standard Time). In addition, investors and interested parties may listen to the call via webcast at www.SOLA.com or www.Companyboardroom.com. A replay of the call will be available starting at 6:00 p.m. Eastern Standard Time, Aug. 7, 2002 through 6:00 p.m. Eastern Standard Time, Aug. 14, 2002. The replay number is 800/633-8284 and the access code is 20763439. 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 SOLA's potential growth prospects. Such forward-looking statements are subject to various risks and uncertainties, many of which are beyond the control of SOLA. Actual results could differ materially from the forward-looking statements as a result of, among other things, the highly competitive nature of the 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. lens and coating industry; SOLA'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, 2002. The words "believe," "expect," "anticipate," "estimate," "plan" and similar expressions identify forward-looking statements. SOLA 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. designs, manufactures and distributes a broad range of eyeglass 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 28 countries servicing customers in over 50 markets worldwide. For additional information, visit the company's Web site at www.Sola.com.
Sola International Inc.
Unaudited Statements of Operations
(Amounts in thousands, except per share data)
First Quarter First Quarter
2003 2002
---- ----
Net sales $ 135,177 $ 135,956
Cost of sales 79,761 81,147
--------- ---------
Gross profit 55,416 54,809
--------- ---------
Research and development expenses 3,245 3,044
Selling and marketing expenses 26,021 26,787
General and administrative expenses 11,122 13,021
--------- ---------
Operating expenses 40,388 42,852
--------- ---------
Operating income 15,028 11,957
Interest income 486 441
Interest expense (7,825) (7,636)
Foreign currency gain/(loss) (14,889) 5,088
--------- ---------
Income/(loss) before
(provision)/benefit for income
taxes and minority interest (7,200) 9,850
(Provision)/benefit for income taxes 2,160 (3,152)
Minority interest (312) (20)
--------- ---------
Net Income/(Loss) $ (5,352) $ 6,678
========= =========
Net income/(loss) per share -- basic $ (0.22) $ 0.28
========= =========
Weighted average common shares outstanding 24,542 23,746
========= =========
Net income/(loss) per share -- diluted $ (0.22) $ 0.28
========= =========
Weighted average common shares and
dilutive securities outstanding 24,542 24,176
========= =========
Sola International Inc.
Balance Sheet Data
(Amounts in thousands)
(Unaudited)
June 30, March 31, June 30,
2002 2002 2001
---- ---- ----
Cash and cash equivalents $ 68,240 $ 68,419 $ 49,747
Trade accounts receivable, net 120,024 114,993 116,734
Inventories 94,742 82,586 100,477
Other assets 455,924 447,067 438,364
-------- -------- --------
Total assets $738,930 $713,065 $705,322
======== ======== ========
Trade payables, accruals and
other current liabilities $143,688 $138,694 $156,667
Notes payable and other debt 307,802 282,555 281,704
Other liabilities 31,238 30,454 22,859
-------- -------- --------
Total liabilities 482,728 451,703 461,230
Stockholders' equity 256,202 261,362 244,092
-------- -------- --------
Total liabilities and
stockholders' equity $738,930 $713,065 $705,322
======== ======== ========
Sola International Inc.
Cash Flow Data
(Amounts in thousands)
(Unaudited)
First Quarter First Quarter
2003 2002
---- ----
Net Income/(loss) $ (5,352) $ 6,678
Depreciation and amortization 6,663 7,724
Changes in assets and liabilities 7,918 (14,584)
-------- --------
Net cash provided by/(used in)
operating activities 9,229 (182)
-------- --------
Purchases of businesses (3,591) --
Capital expenditures (2,630) (4,486)
Mold expenditures (648) (2,252)
Other 202 27
-------- --------
Net cash used in investing
activities (6,667) (6,711)
-------- --------
Net cash provided by/(used in)
financing activities (3,746) 30,620
Effect of exchange rates 1,005 (129)
-------- --------
Net increase/(decrease) in cash
and equivalents $ (179) $ 23,598
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