SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 1, 1998 BOLLE INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-23899 13-3934135 -------- --------- ---------- (State of (Commission (IRS Employer Incorporation) File Number) Identification No.) Suite B-302, 555 Theodore Fremd Avenue, Rye, New York 10580 - ----------------------------------------------------- ----- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code: (914) 967-9475 --------------- Not Applicable -------------- (Former name or former address, if changed from last report) Page 1 of 30. Index to Financial Statements at page 4. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS - --------------------------------------------------------------------------- The following Financial Statements, pro forma financial information and exhibits are filed as part of this Report. (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: The financial statements of Bill Bass Optical Pty Limited as of and for the two (2) years ended June 30, 1997, required to be provided by Rule 3-05(b) of Regulation S-X, together with the report of Ernst & Young, independent accountants, dated September 3, 1998. The unaudited interim financial statements of Bill Bass Optical Pty Limited have not been included herein as they have not yet been prepared by the acquired company. When completed, such statements will be filed by amendment. (b) PRO FORMA FINANCIAL INFORMATION: Pro forma financial information required to be provided pursuant to Article 11. Incorporated by reference to financial exhibits to the Company's Registration Statement on Form S-1 (Registration No. 333-56687). 2 SIGNATURES 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 hereunto duly authorized. Dated: September 8, 1998 BOLLE INC. /s/ Ian Ashken ------------------------ By: Ian G.H. Ashken Title: Chief Financial Officer 3 INDEX TO FINANCIAL STATEMENTS ----------------------------- Document Page - -------- ---- The financial statements of Bill Bass Filed electronically Optical Pty Limited for the two (2) herewith. years ended June 30, 1997, required to be provided by Rule 3-05(b) of Regulation S-X, together with the report of Ernst & Young, independent accountants, dated September 3, 1998. Pro Forma financial information required Incorporated by to be provided pursuant to Article 11. reference to financial exhibits to the Company's Registra- tion Statement on Form S-1 (Registra- tion No. 333-56687). 4 BILL BASS OPTICAL PTY LIMITED A.C.N. 005 741 300 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1997 BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1997 A.C.N: 005 741 300 CONTENTS Page Independent audit report 1 Profit and loss account 2 Balance sheet 3 Statement of cash flows 4-5 Notes to and forming part of the financial statements 6-23 INDEPENDENT AUDIT REPORT To the Board of Directors of Bill Bass Optical Pty Limited We have audited the accompanying consolidated balance sheets of Bill Bass Optical Pty Ltd as of 30 June 1997 and 30 June 1996, and the related consolidated statements of profit and loss and cashflows for the years then ended. These financial statements are the responsibility of the company's management. Our own 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 in the United States of America. 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 reasonable basis for our opinion. AUDIT OPINION In our opinion, the consolidated financial statements referred to above, present fairly, in all material respects, the consolidated financial position of Bill Bass Pty Ltd at 30 June 1997 and 30 June 1996 and the consolidated results of its operations and its cashflows for the years then ended in conformity with Note 1. Accounting principles generally accepted in Australia vary in certain significant respects from accounting principles generally accepted in the United States of America (see Note 27). ERNST & YOUNG Melbourne, Australia 3 September 1998 BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES PROFIT AND LOSS STATEMENT YEAR ENDED 30 JUNE 1997 NOTE CONSOLIDATED 1997 1996 A$ A$ Operating revenue 2 18,707,918 19,561,453 ========== ========== Operating profit before abnormal items and income tax 3 2,654,778 2,671,156 Operating profit before income tax 2,654,778 2,671,156 Income tax expense 4 891,979 940,985 attributable to operating result ---------------------------- Operating profit after income tax 1,762,799 1,730,171 Retained profits at the beginning of the financial year 4,194,763 2,502,592 ------------ ------------ Total available for appropriation 5,957,562 4,232,763 ------------ ------------ Dividends provided for or paid 19 314,358 38,000 Retained profits at the end of the financial year 5,643,204 4,194,763 ------------ ------------ The Profit and Loss Statement should be read in conjunction with the following notes. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES BALANCE SHEET AS AT 30 JUNE 1997 NOTE CONSOLIDATED 1997 1996 A$ A$ CURRENT ASSETS Cash 505,322 46,142 Receivables 5 2,685,471 3,510,594 Inventories 6 4,964,655 4,157,688 Other 7 139,494 140,607 ------------ ------------- TOTAL CURRENT ASSETS 8,294,942 7,855,031 ------------ ------------- NON-CURRENT ASSETS Investments 8 23,876 175,844 Property, plant and equipment 9 3,118,793 3,116,188 Intangibles 10 1,045,000 1,140,000 Other 11 21,643 2,237 -------------- ------------- TOTAL NON-CURRENT ASSETS 4,209,312 4,434,269 ------------ ------------- TOTAL ASSETS 12,504,254 12,289,300 ------------ ------------- CURRENT LIABILITIES Accounts Payable 12 3,714,382 2,365,451 Borrowings 13 2,000,000 2,531,301 Provisions 14 861,038 1,012,238 ------------ ------------- TOTAL CURRENT LIABILITIES 6,575,420 5,908,990 ------------ ------------- NON CURRENT LIABILITIES Accounts Payable 15 200,732 220,183 Provisions 16 55,289 64,786 ------------- ------------- TOTAL NON CURRENT LIABILITIES 256,021 284,969 ------------- ------------- TOTAL LIABILITIES 6,831,441 6,193,959 ------------ ------------ NET ASSETS 5,672,813 6,095,341 ============ ============ SHAREHOLDERS' EQUITY Share capital 17 20,000 1,920,917 Reserves 18 9,609 (20,339) Retained Profits 5,643,204 4,194,763 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 5,672,813 6,095,341 ============ ============ The Balance Sheet should be read in conjunction with the following notes. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWS YEAR ENDED 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 16,496,010 16,420,075 Payments to suppliers and employees (14,235,713) (15,629,933) Income tax paid (1,106,515) (165,788) Other income 552,070 525,986 Interest received 132,064 69,535 Interest paid (254,525) (305,825) -------------- ------------- NET CASH FLOWS FROM OPERATING ACTIVITIES 26 (b) 1,583,391 914,050 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of plant & equipment (215,373) (106,619) Proceeds from sale of plant & equipment 110,470 35,864 Proceeds from sale of investments 177,810 - Investment in joint venture - 16,052 Proceeds from partnership 14,443 - Advance to partnership - (3,980) Proceeds from short term deposits 78,864 (130,544) ------------- --------- NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES 166,214 (189,227) ------------- --------- This Statement of Cash Flows should be read in conjunction with the following notes. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWS YEAR ENDED 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Foreign exchange contracts settled 1,364 31,753 Share buyback (1,900,917) - Repayment of bills payable (100,000) - Repayments of advances - associates - (102,100) Advances - associates 125,000 8,880 Repayments of advances - related parties (1,008,457) (713,622) Advances - related parties 2,289,528 334,037 Advances - other 34,198 - Repayments - other - (11,925) Repayments - secured loan - (291,321) Dividends paid (314,358) (38,000) Finance lease principal repaid (25,167) (109,336) ----------------- ----------- NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (898,309) (891,634) ----------------- ------------ NET INCREASE/(DECREASE) IN CASH HELD 851,296 (166,811) Add opening cash brought forward (385,159) (201,632) Effect of exchange rate changes on opening cash 39,185 (16,716) ------------- ------------ CLOSING CASH CARRIED FORWARD 27 (a) 505,322 (385,159) ============ ============ This Statement of Cash Flows should be read in conjunction with the following notes. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The special purpose financial report has been prepared for Bolle Inc. for filing with the United States of America's Securities and Exchange Commission. The accounting policies used in preparation of this report, as described below, are consistent with previous years and are in the opinion of the directors appropriate to meet the needs of Bolle Inc. By virtue of Statement of Accounting Concepts 1 (SAC 1) the requirements of Accounting Standards issued by the Australian Accounting Standards Board and other professional reporting requirements do not have mandatory applicability to Bill Bass Optical Pty Limited in relation to the years ended 30 June 1997 and 1996 because the directors have determined that the company and the economic entity are not reporting entities. However, the directors have determined that in order for the financial statements to present fairly the consolidated results of operations and state of affairs, the requirements of Accounting Standards and other professional reporting requirements have been complied with, with the exception of the presentation of parent entity financial information These accounting principles differ in certain significant respect from accounting principles generally accepted in the United States of America (refer Note 27: Differences between Australian and United States Generally Accepted Accounting Principles). CASH For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts. FOREIGN CURRENCIES Translation of foreign currency transactions Transactions in foreign currencies of entities within the economic entity are converted to local currency at the rate of exchange ruling at the date of the transaction. Amounts payable to and by the entities within the economic entity that are outstanding at the balance date and are denominated in foreign currencies have been concerted to local currency using rates of exchange ruling at the end of the financial year. All resulting exchange differences arising on settlement or re-statement are brought to account in determining the profit or loss for the financial year, and transaction costs, premiums and discounts on forward exchange contracts are deferred and amortised over the life of the contract. Translation of accounts of overseas operations All overseas operations are deemed self-sustaining as each is financially and operationally independent of Bill Bass Optical Pty Ltd. The accounts of overseas operations are translated using the current rate method and any exchange differences are taken directly to the foreign currency translation reserve component of shareholders' equity. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 INVENTORIES Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: o Raw materials - purchase cost on a first-in-first-out basis; and o Finished goods and work-in-progress - cost of direct material and labour and a proportion of manufacturing overheads based on normal operating capacity. PROPERTY, PLANT AND EQUIPMENT Cost and Valuation Property, plant and equipment are carried at cost. Depreciation Depreciation is calculated on a reducing balance basis on all plant and equipment other than land and buildings at rates calculated to allocate the cost less estimated residual value at the end of the useful lives of the assets, against revenue over those estimated useful lives. RECOVERABLE AMOUNT Non-current assets are not revalued to an amount above their recoverable amount, and where carrying values exceed this recoverable amount assets are written down. In determining recoverable amount the expected net cash flows have been discounted to their present value using a market determined risk adjusted discount rate. INTANGIBLES Goodwill Goodwill is amortised by the straight line method over the period during which benefits are expected to be received. This is taken as being 20 years. INVESTMENTS Non-current investments are carried at the lower of cost and recoverable amount. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 2. OPERATING REVENUE Included in the operating profit are the following items of operating revenue: Sales revenue 17,735,657 18,926,003 Other revenue - - Management Fee - associate 79,380 152,100 - - Exchange gains (net) 9,236 10,106 - associate 117,468 - - other 64,316 77,535 - - Rent received 261,905 246,203 - - Share of joint venture profit/(loss) (1,968) 12,013 - - Share of partnership profit/(loss) 14,443 (3,980) - - Proceeds on sale of non current assets 266,416 35,864 - - Proceeds on sale of leased assets - (14,074) - - Interest received - other related parties 108,339 62,043 - other 23,725 7,492 - - Other 29,001 50,148 ----------- ------------- Operating Revenue 18,707,918 19,561,453 ========== ========== 3. OPERATING PROFIT The operating profit before income tax is arrived at after charging the following items: Amortisation of non current assets: Borrowing costs 498 251 Plant and equipment under lease 70,013 70,004 Goodwill 95,000 95,000 Depreciation of plant and equipment 54,951 34,161 Bad debts written off 12,127 13,150 Bank charges 40,163 40,355 Finance charges - leases 37,044 34,325 Interest expenses - director related parties 47,362 35,527 - other 207,163 270,298 Superannuation contributions 194,292 176,088 Rental - operating leases 155,000 137,349 Unrealised foreign exchange loss/(gain) 17,099 (57,950) BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ Net loss/(profit) on disposal of non current assets (50,581) 11,220 Charges to the following provisions: Annual leave 4,996 32,351 Doubtful debts (10,000) - Long service leave (9,497) 64,786 4. INCOME TAX The prima facie tax, on operating profit differs from the income tax provided in the accounts as follows: Prima facie tax benefit on operating profit at 36% 955,720 961,616 Tax effect of permanent differences Rebateable dividends (54,000) - Non deductible entertainment 3,822 3,834 FITB not previously recognised (36,419) - Amortisation of intangible assets 34,200 34,200 Other items 40,056 (58,665) Under/(over) provision of previous year (51,400) - ------------ --------------- Income tax expense attributable to operating profit 891,979 940,985 ========== ========== BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 5. RECEIVABLES (CURRENT) Trade Debtors - wholly owned group - - Trade Debtors 2,490,338 2,477,228 Provision for Doubtful Debts (20,000) (30,000) ----------- ----------- 2,470,338 2,447,228 ---------- ---------- Sundry debtors 55,978 16,723 Short term deposits 51,680 130,544 Forward exchange contract 7,667 26,129 Amounts other than trade debts receivable from related parties: Wholly owned group - ultimate parent entity - 649,692 - controlled entities - - Directors and director-related entities - director related entities 2,160 - Other related parties - associated companies 97,648 240,278 ------------- ------------ Total receivables 2,685,471 3,510,594 =========== =========== a) Movement in provision for doubtful debts - balance at the beginning of the year (30,000) (30,000) - write back of previous bad and doubtful debts provided for 10,000 - ---------- ----------- - balance at the end of the year (20,000) (30,000) ========= =========== 6. INVENTORIES (CURRENT) Raw materials 34,880 - Finished goods 4,929,775 4,157,688 ----------- ----------- 4,964,655 4,157,688 =========== =========== BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 7. OTHER CURRENT ASSETS Prepayments 47,052 86,600 Future income tax benefit 92,422 54,007 ----------- ------------ 139,474 140,607 ========== ========== 8. INVESTMENTS (NON-CURRENT) Equity in joint venture 22,789 24,757 Shares - unlisted 1,087 151,087 ------------- ----------- 23,876 175,844 ============= =========== a) Investment in controlled entities comprises: Country of Percentage of equity interest Name Incorporation held by the economic entity 1997 1996 % % Parkhurst Oaks Pty Ltd Aust - - ordinary shares 100 100 Bolle Asia Ltd HK - - ordinary shares 100 100 9. PROPERTY, PLANT AND EQUIPMENT Land and buildings - - At cost 2,651,745 2,651,745 ---------- --------- Leasehold improvements - - At cost 6,445 6,445 ------------ ------------ Office furniture - - At cost 245,686 278,223 - - Provision for depreciation (150,981) (186,715) --------- --------- 94,705 91,508 ----------- ------------ BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 9. PROPERTY, PLANT AND EQUIPMENT - CONTINUED Furniture and fittings - - At cost 60,462 52,093 - - Provision for depreciation (33,595) (28,226) ----------- ----------- 26,867 23,867 ------------ ------------ Motor vehicles - - At cost 80,857 70,470 - - Provision for depreciation (21,416) (9,716) ----------- ------------ 59,441 60,754 ------------ ------------ Motor Vehicle under lease - - At cost 374,619 347,719 - - Provision for amortisation (95,029) (71,043) ----------- ----------- 279,590 276,676 ---------- ---------- Plant and equipment under lease - - At cost - 13,000 - - Provision for amortisation - (7,807) --------------- ------------ - 5,193 --------------- ------------ Total Property, Plant & Equipment - - At cost 3,419,814 3,419,695 - - Provision for depreciation (301,021) (303,507) ---------- ---------- Total written down amount 3,118,793 3,116,188 ========== ========== 10. INTANGIBLES Goodwill - - At cost 1,900,000 1,900,000 - - Provision for amortisation (855,000) (760,000) ---------- ---------- 1,045,000 1,140,000 ========== ========== BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 11. OTHER NON CURRENT ASSETS CONSOLIDATED 1997 1996 A$ A$ Borrowing costs - - At cost 2,488 2,488 - - Provision for amortisation (749) (251) ------------- ---------------- 1,739 2,237 ------------ ------------- Future income tax benefit 19,904 - ------------ ------------- 21,643 2,237 ============= ============= 12. ACCOUNTS PAYABLE (CURRENT) Trade creditors - others 2,141,731 1,193,606 Amounts other than trade debts payable to: Wholly owned group - ultimate parent entity 724,102 - - controlled entities - - Directors and director-related entities - loan from director 2,375 13,904 - director related entities 484,263 571,090 Other related parties - associated companies - 9,337 Other unsecured loans 42,295 8,097 Other creditors 260,667 504,752 Lease Liability 58,949 64,665 ------------ ------------ 3,714,382 2,365,451 ========== ========== 13. BORROWINGS (CURRENT) Bank overdraft - 431,301 Bills payable 1,500,000 1,600,000 Bank loan 500,000 500,000 ----------- ------------ 2,000,000 2,531,301 =========== =========== BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 14. PROVISIONS (CURRENT) Provision for income tax 749,521 905,718 Provision for discount 9,500 9,500 Provision for employee entitlements 102,017 97,020 ---------- ----------- 861,038 1,012,238 ========== ========== 15. ACCOUNTS PAYABLE (NON CURRENT) Lease liability 200,732 220,183 ========== =========== 16. PROVISIONS (NON CURRENT) Provision for employee entitlements 55,289 64,786 ========== =========== 17. SHARE CAPITAL Authorised Capital 10,000,000 ordinary $1.00 shares 10,000,000 10,000,000 ========== =========== Issued and Fully Paid 20,000 ordinary $1.00 shares (1996 - 1,920,917 ordinary $1.00 shares) 20,0000 1,920,917 ========== ============ A share buy back of 1,900,917 ordinary shares at the par value of $1 per share was undertaken during the year to restructure the capital of the company. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 18. RESERVES Foreign currency translation 9,609 (20,339) ============= ============== Movement in foreign currency translation reserve: - - Balance at beginning of year (20,339) 6,869 Gain/(loss) on translation of overseas controlled entities 29,948 (37,208) ------------- -------------- Balance at year end 9,609 (20,339) ============== ============== 19. DIVIDENDS PAID OR PROVIDED FOR Dividends paid during the year: - - Current year interim Franked dividends - ordinary 314,358 38,000 ============= ============= The tax rate at which dividends have or will be franked is 36% (1996:36%). The amount of franking credits available for the subsequent financial year are: - - franking account balance as at the end of the financial year is $5,054,365 - - franking credits that will arise from payment of income tax payable as at the end of the financial year will be $1,200,797. 20. AUDITORS REMUNERATION Amounts received or due and receivable by the auditors for: - - Auditing services 23,750 5,092 - - Other services 60,143 37,575 ------------- ------------ 83,893 42,667 ============= ============ BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 21. REMUNERATION OF DIRECTORS Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of each entity in the economic entity, directly or indirectly, by the entities of which they are directors or any related party: 428,000 406,944 ========== ======= The number of directors of Bill Bass Optical Pty Limited whose remuneration falls within the following bands: 1997 1996 $190,000 - 199,999 0 1 $210,000 - 219,999 2 1 22. RELATED PARTY DISCLOSURES a) The directors of Bill Bass Optical Pty Limited during the year were: Eric Henry Collicoat Roger Howard Gibbons b) Bill Bass Trust is the ultimate parent entity. c) The following related party transaction occurred during the financial year: (i) Transactions with related parties in wholly-owned group. 1. $724,102 (1996: $649,692) was borrowed from Bill Bass Trust at an interest rate of 10% ($64,969) repayable at call. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 22. RELATED PARTY DISCLOSURES - CONTINUED (ii) Transactions with other related parties. 1. Management fees totalling $79,380 (1996: $152,100) were received by Bill Bass Optical Pty Ltd from Bolle Sunglasses Ltd in respect of management services provided during the period. 2. An amount of $9,337 (1996: $134,347) was repaid to settle an existing loan with William Bass & Co. 3. An amount of $125,500 (1996: $Nil) was repaid on an existing loan to Bolle Sunglasses Ltd, an associate of Bill Bass Optical Pty Ltd. (iii) Transactions with the directors of Bill Bass Optical Pty Ltd and the economic entity. 1. Interest of $181 (1996: $168) was charged to a loan account payable to Roger Gibbons. This interest charge was calculated at an annual interest rate of 8%. 2. An amount of $11,710 (1996: $Nil) was repaid to Eric Collicoat as settlement for an existing loan. (iv) Transactions with director-related entities. 1. An amount of $9,476 (1996: $Nil) was repaid Tickworth Pty Ltd, a company in which Eric Collicoat has a controlling ownership interest as part settlement of an debt owing. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 22. RELATED PARTY DISCLOSURES - CONTINUED (iv) Transactions with director-related entities. 2. Interest of $30,164 (1996: $28,043) was charged to a loan account payable to Tickworth Pty Ltd, a company in which Eric Collicoat has a controlling ownership interest. This interest charge was calculated at an annual interest rate of 8%. 3. An amount of $Nil (1996: $15,604) was repaid to Second Pasdenom Pty Ltd, a company in which a relative of Eric Collicoat has a controlling ownership interest as part settlement of an debt owing. 4. Interest of $7,261 (1996: $7,317) was charged to a loan account payable to Second Pasdenom Pty Ltd, a company in which a relative of Eric Collicoat has a controlling ownership interest. This interest charge was calculated at an annual interest rate of 8%. 5. An amount of $114,776 was repaid to settle an existing loan with Sunnyco Trust, an entity in which Roger Gibbons has a controlling interest, repayable at call. 6. A loan of $2,160 (1996: $Nil) was made to Sunnyco Trust, an entity in which Roger Gibbons has a controlling interest. Interest is charged at an annual rate of 8%. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 22. RELATED PARTY DISCLOSURES - CONTINUED d) Equity instruments of directors (i) Interests in the equity instruments of entities in the economic entity held by directors of the reporting entity and their director-related entities at balance date: Bill Bass Optical Pty Ltd A$1 Ordinary shares Dividends paid 1997 1996 1997 1996 E.H. Collicoat* 6,667 640,306 104,786 12,667 R.H. Gibbons* 6,667 640,306 104,786 12,667 ----------------- ------------------ ---------- --------- 13,334 1,280,612 209,572 25,334 ================= ================== ========== ========= The decrease in ownership of shares is attributable to the share buyback disclosed in Note 17. * These shares are held indirectly through Bill Bass Trust. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 23. EXPENDITURE COMMITMENTS Finance leases: - - Not later than one year 85,329 94,173 - - Later than one year and not later than two years 168,345 86,177 - - Later than two years and not later than five years 52,626 165,824 ---------- ---------- Total minimum lease payments 306,300 346,174 Future finance charges (46,619) (61,326) ----------- ----------- Lease liability 259,681 284,848 ========== ========== Current lease liability 58,949 64,665 Non current lease liability 200,732 220,183 ---------- ---------- 259,681 284,848 ========== ========== 24. SEGMENT INFORMATION The economic entity operates predominantly in the one industry segment, namely wholesaler of sunglasses, clothing and accessories, within one geographical segment, Australia. 25. SUBSEQUENT EVENTS On 3rd June 1998 the directors of Bill Bass Optical announced the intention to sell a 75% interest in its Australian operations to Bolle Inc. Included in the transaction will be the company's 100% interest in Bolle Asia Ltd and its 49% interest in Bolle Sunglasses Ltd in the UK. In January 1998 the Sydney building was sold for $2.835 million resulting in a profit of approximately $103,000. BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 CONSOLIDATED 1997 1996 A$ A$ 26. STATEMENT OF CASH FLOWS (a) Reconciliation of cash Cash balance comprises - Cash at bank 505,322 (385,159) =========== ============ (b) Reconciliation of the operating profit after tax to net cash flows from operations Operating profit/(loss) after tax 1,762,799 1,730,171 Depreciation and amortisation 220,462 199,416 Provision for employee entitlements (4,501) 97,137 Profit/(loss) on sale of assets (21,392) 11,220 Profit/(loss) on sale of investment (27,810) - Profit/(loss) on lease payout (1,274) - Share of partnership profit (14,443) 3,980 Share of joint venture profit 1,968 (12,013) Exchange gains/losses 7,863 (68,056) Changes in assets and liabilities Trade receivables (23,111) (973,409) Sundry receivables (39,255) (16,723) Inventory (806,967) 25,619 Prepayments 39,548 (6,616) Trade creditors 948,125 (1,058,351) Accrued expenses (244,085) 206,478 Tax provision (156,197) 766,059 Future income tax benefit (58,339) 9,138 -------------- ------------- Net cash flow from operating activities 1,583,391 914,050 =========== =========== (c) Unused credit facilities The chief entity has unused credit facilities available to the extent of $Nil (1996: $Nil) BILL BASS OPTICAL PTY LIMITED AND CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 30 JUNE 1997 26. STATEMENT OF CASH FLOWS - CONTINUED (d) Disposal of related parties On 30 June 1997, Bill Bass Optical Pty Ltd disposed of their ownership interest in William Bass & Co Pty Ltd, a unlisted company. Net assets of William Bass & Co Pty Ltd at 30 June 1997: Receivables 329,856 Inventories 409,867 Plant and equipment 19,032 --------- 758,755 Bank overdraft (84,190) Trade creditors (213,378) Other payables (253,025) Provisions (11,960) --------- Net tangible assets 196,202 --------- Consideration - cash 150,000 - other 14,358 --------- 164,358 --------- 27. DIFFERENCES BETWEEN AUSTRALIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES United States generally accepted accounting principles ("US GAAP") require certain additional financial statement disclosures beyond those required by accounting principles generally accepted in Australia ("Australian GAAP"). These additional disclosures have not been included in the notes to financial statements as they are not required in financial statements of foreign businesses prepared in accordance with Item 17 of Form 20-F. With respect to the Company's financial statements there are no material measurement differences between Australian accounting standards issued by the Australian Accounting Standards Board and other professional reporting requirements and US GAAP, except for the inclusion, in 1996, of $431,301 of bank overdrafts in the resulting cash balances in the statement of cash flows. In a US GAAP statement of cash flows, such bank overdrafts would have been included in Financing Activities.