Standards and Compliance in Today’s US Optical Market

1. Standards and Compliance in Today’s US Optical Market What Does This Mean for Optical Manufacturing

2. Your Presenters • Ken Frederick • Sunglass & Reader Division Liaison • Ken Wood • Lens Processing & Technology Liason, ASC Z80 Secretariat • Jeff Endres • Technical Director • Amber Robinson • Manager, Member & Technical Programs

3. Overview of Topics • U.S. Customs and Regulations • Consumer Product Safety Improvement Act (CPSIA) • California State Proposition 65 • U.S. National Standards • The Vision Council Programs and Resources

4. Customs Issues and Regulatory Update

5. Best Practices for US Importing: US FDA Agent • a) Definition of a US Agent • All foreign establishments required to register with the FDA must designate a U.S. Agent. The U.S. Agent is responsible only for 1) assisting the FDA in communicating with the foreign establishment; 2) responding to FDA questions concerning the foreign establishment’s products that are imported and offered for sale in the U.S., and 3) assisting the FDA in scheduling an inspection of the foreign establishment.

6. Best Practices for US Importing: US FDA Agent, Cont. • b) What’s the difference between US agent and Official Correspondent? • If the foreign establishment needs to inquire of the FDA, then this communication must originate from the company’s “official correspondent,” not its U.S. agent. As discussed above, the official correspondent is the individual designated by the company in its FDA registration as the spokesperson for the company. The FDA will not address any inquiry put to it by anyone who is not the official correspondent of the registrant.

7. Country of Origin For Lenses and Frames Lenses • U.S. Customs Regulation for Importation • Human Readable “Made in China” • Machine Readable Barcode • The Vision Council Resource Guides

8. Country of Origin Continued • Unless subject to an exception, United States Customs laws require that all goods that are produced outside of the U.S. must be physically, conspicuously and legibly marked with information concerning the country where the item was produced. This marking must be permanent enough to convey this information to the ultimate purchaser of the good.

9. Country of Origin Continued • Therefore, imported ophthalmic frames, sunglasses, or ready to wear near vision spectacles must be clearly and permanently marked with the country of origin. The requirements for the procedures to be used in marking imported ready to wear near vision spectacles are set out in 19 U.S.C. § 1304 and 19 C.F.R. § 134.

10. Country of Origin Continued • Marking becomes more complicated when the manufacturing process occurs in more than one country. In those circumstances, the country of origin will be the country in which the constituent components or raw materials undergo a “substantial transformation” when manufactured into the finished item. By definition, a “substantial transformation” occurs when an article emerges from a manufacturing process with a name, character, or use that differs from those of the original material subjected to the process.

11. Country of Origin Continued • This is a subjective test, with Customs considering the amount and type of work performed in each country, as well as the value added, to determine whether a change in name, character or use has resulted in a substantial transformation of those components into a finished frame. Multi-step processing in manufacturing of a frame, such as soldering, drilling, bending, mitering, polishing of raw frame components, may help establish that various raw material, parts or components have undergone a substantial transformation into the finished product.

12. Country of Origin Continued • Merely stamping a ready to wear near vision spectacle with the name of a country DOES NOT constitute substantial transformation. • Merchandise can be marked “made in the USA” or the equivalent thereof only if the product is “all or virtually all” US origin. Such a marking cannot be used in the event that the product to be marked has more than a trifling amount of foreign content. In this situation, however, a conditional marking may be appropriate.

13. Lacey Act • Covers the importation into the United States of any product containing wood or cellulosic products. • 1. What is covered by the Lacey Amendment? • A recent amendment to a long standing Department of Agriculture law, known as the Lacey Act, could create compliance issues for sunglass and reading glass companies that incorporate any wood or other plant material in their products.

14. Lacey Act • 2. Compliance issues • The amendment made it unlawful to import plant or “plant products” without an import declaration containing the scientific name of the plant, its value, quantity and country of origin. As amended, the revised law could be broadly applied to capture any number of products Continued…

15. Lacey Act • 2. Compliance issues • Due to this, Customs Animal Plant Health Inspection Service (“APHIS”), the section withinAgriculture responsible for overseeing this law, have moved to limit the products actually covered by the law. Companies knowing that their products incorporate any type of plant matter should review the Lacey Act to determine whether or not the amendment applies to them.

16. Lacey Act • Amendment of law covering import, export, transport, sell, receive, acquire or purchase of plants or plant products without: • Import declaration w/scientific name of plant; value of plant; quantity of plant; country of origin of plant • Covers any product with any plant atoms – lemonade (lemon essence), pharmaceuticals (cellulose), and shirts (cotton). • Hangtags and warranty cards now excluded • Packaging excluded, except if as a commercial item

17. FDA Lens Impact Testing Required • Testing and certification required for all lenses • 5/8 inch steel ball is dropped 50 inches onto lens • Statistically based sampling allowed • Certification letter must accompany every shipment

18. Consumer Product Safety Improvement act

19. Consumer Product Safety Improvement Act- CPSIA • Covers Frames, cases, lenses, accessories • Federal Requirement • No Marking requirement • Products in violation subject to public recall • The Vision Council Resource Guide

20. State Issues

21. California Proposition 65- CA Prop 65 • Duty to warn the consumer • Point of sale labeling requirements • Over 900 Chemicals • The Vision Council Resource Guide

22. ANSI Z80, Z87 and ASTM Updates Impact of Standards updates on Manufacturing

23. U.S. National Standards • The Vision Council is active in all standards groups • ANSI coordinates standards development for sunglasses, readers, lenses and frames • Z80 develops standards for dress eyeglasses • Vision Council is Z80 Secretariat • U.S. TAG to ISO TC172/SC7 meets with Z80 • Z87 develops safety eyeglasses standards • ASTM develops eye protector standards for sports

24. ANSI Z80.1-2010 • Sets minimum performance of prescription lenses • Power measurement now sphere and cylinder • Compensated power for near and distance • Abrasion resistant lenses must meet ISO 8980-5 • A-R coating durability added from ISO 8980-4

25. ANSI Z80.5 • Revised in 2010 with no major changes • Currently under comprehensive review • Considering limited harmonization with the ISO frame standard

26. Z80.3-2010 : the US Sunglass Standard • Revised in June 2010 to bring it up to date with addition of Country of origin, Resistance to radiation clause, and several corrections to tables.

27. ANSI Reader Standard • Reader standard being developed in the Z80 Committeeand expected to be published late 2011 • Adapting the ISO (International) standard for new ANSI standard not feasible for the following reasons: • Limits to diopter range for OTC readers in ISO-not necessary in the US • Clarifying definition of bifocals, specifically for sun readers • Modifying label requirements-making them simpler • Including FDA Impact standards • Including country of origin marking

28. Z87.1 2010 Standards • Most recent revision April of 2010 • Major reorganization • New Requirements for dust, splash and mist • New Requirements for testing complete device • New Frame marking regimen

29. ANSI Z87.1-2010 Impact Requirements • Related to Z80.1 Impact requirements • U.S. Customs regulations for importation • Recently Updated • Covers a wide range of devices • The Vision Council Resource Guide

30. ASTM International:Society for Testing and Materials • Association for testing standards covers sport eyewear • Motorsport Goggle Standard near completion • Ski Goggle standard revision published in 2010 • New committee forming this year to review antifog claims for lenses. • Current US leadership for the ISO sunglass committee

31. US Optical Market Overview and Outlook The Vision Council

32. Trends in Vision Correction: Is America Seeing Clearly?

33. Percentage of American Adults Using Any Form of Vision Correction within Gender and Age Groups VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

34. Overall Market Performance

35. Vision Care Products & Services – Total U.S. Market Breakout—In Millions -2.1% In Millions -3.1% All Retail* Inflation not taken into consideration +7.7% -11.1% +1.5% -24.0% +7.9% *All retail includes dollars spent at all retailtypes at any retail location on the sale of either spectacle lenses (including Rx sun), frames, contact lenses, sunglasses (plano), OTC readers, or revenue earned from refractive surgery (LASIK only) or eye examinations. This number does not include sunglass clips and reflects the dollars spent only by those U.S. residents 18 and older.Does not include retail dollars spent by/for contact lenses and exams for those 17 years of age and younger. VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

36. Plano Sunglasses&OTC Readers

37. Plano Sunglass Retail Sales – Dollars & Units -5.9% 2010 against 2009 -6.0% 2010 against 2009 -11.1% 2010 against 2008 -12.1% 2010 against 2008 Nominal $s – Not revised for Inflation VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

38. US Plano Sunglass Retail Sales 12ME Dec. 2010 By Channel (Millions) VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

39. OTC Readers Wearers & Purchases In millions Ages 18+ Repurchase Cycle 0.58 years 0.62 years 0.60 years 0.61 years VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

40. Prescription Eyeglasses—Ophthalmic Frames

41. Retail Structure of Frame Market (Dollars) 09/10 % change -1.7% $8,400.7M $8,278.7M $8,139.4M +1.0% -4.2% -16.7% +1.5% +28.5% VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults *

42. Eyeglass Frames – Retail Price Point Profile –In Units Trended Base: Respondents purchasing frames VisionWatch:The Vision Council Annual Sample Size: 100,000+ Adults

43. 2011 / 2012 Outlook

44. Key Points: Future Outlook A Weak Recovery Beginning to Take Effect Economic Conditions Improving by Still Weak Lowering Unemployment, Strengthening Employment Outlook; Changing Employment Landscape Productivity Rising; Leading Economic Indicators are Up Consumer Spending and Consumer Confidence Rising Recovery is VERY Fragile Rising Energy and Food Prices Political and Global Turmoil Housing Market Still Flat Optical Specific Purchase Intent Up for Eyeglasses, Exams, Contact Lenses and Plano SG ECPs Are Optimistic (But Still Cautious) About the Future The Optical Industry is a “Lagging” Industry

45. . The Vision Council related programs/resources

46. Lens Description Standard - LDS • Standard for format for electronic data • Allows interface with • Laboratory Management Systems • Warehouse systems • Practice management systems • Flexible for new or existing lens products • Standard available on-line

47. Data Communication Standard - DCS • Standard for format for machine communication • Allows interface with • Laboratory Management Systems, • Warehouse systems • Practice management systems • Business Enterprise software • DCS Simulator • Standard available on-line

48. Job Tray Standard • Standard for format for job trays physical dimensions • Useful for development of automation • Standard available on-line

49. Optical Product Code for Lenses • OPC codes needed for all lenses sold in the U.S. • OPC codes are used by lens suppliers to provide unique identification of every prescription lens blank. • The code is a 10-digit number and barcode that identifies the manufacturer and the specific product. • The Vision Council manages manufacturer code assignments and is the only source for OPC codes.

50. Sunglass & OTC Regulatory Guide • Available for anyone interested are copies of a Regulatory guidance manual that covers sunglasses and reading glasses sold in the US. The manual is comprehensive and covers standards for these products, FDA and US Customs regulatory requirements (as well as some state specific regulations). The manual is a great reference guide and should answer most questions. If you do have an issue in the future that isn’t clearly addressed, please do not hesitate to contact Amber Robinson and we will attempt to answer.