SMITHFIELD and SAN LUIS OBISPO – Nonprescription eyewear designer FGX International Holdings Ltd. (Nasdaq: FGXI) has acquired California-based sunglasses maker Dioptics Medical Products Inc. in a cash-and-shares deal valued at about $42.7 million.

“Dioptics is a natural fit for FGX International,” CEO Alec Taylor said in a statement. “The addition of this product line complements our existing product portfolio, accelerates our strategic growth initiatives and strengthens our competitive position.”

FGX is a designer and marketer of nonprescription reading glasses and sunglasses – under the Foster Grant, Magnivision, Angel, Gargoyles, Anarchy and other brands – as well as costume jewelry.

Dioptics – the holder of more than 400 U.S. and international patents – is a wholesale and retail vendor of sunglasses, eye-care products and optical accessories to the medical, sporting-goods and mass markets. Its brands include SolarShield, the fits-over sunglasses most often provided to patients after eye surgery; SolarComfort and PolarEyes sunglasses and clip-ons; and Encore safety glasses.

Going forward, Taylor said, “our customers will realize significant benefits from a single-source supplier for all their eyewear needs. In addition, our marketing efforts will be enhanced with the addition of the SolarShield and PolarEyes brands to our successful Foster Grant and Magnivision brands.

“Dioptics also opens up a new trade channel for us, as we will be entering the medical market, which we believe will generate cross-selling opportunities. Moreover, we expect to realize significant synergies in sourcing and supply-chain management … as we leverage the buying power of FGX for the Dioptics’ product lines.”

FGX said it acquired the privately held firm for $35 million in cash – “or $32.7 million, net of Dioptics existing cash balance” – and 952,380 FGX shares, which at Wednesday’s closing price of $10.52 per share were worth about $10 million.

Steve Crellin – an eyewear-industry veteran of more than two decades, who has served as executive vice president of FGX for the past four years – will take over as president of Dioptics, the Smithfield company added.

Dioptics, established in 1979, reported net revenue of about $33 million for the fiscal year ended Sept. 30, FGX added. The California company said its expects the acquisition “to be accretive to earnings in fiscal 2009.”

FGX recently posted a third-quarter profit of $3.9 million – compared with the year-ago period’s break-even results – on revenue that surged 10 percent year-over-year to $59.1 million. Earnings per diluted share for the July through September period rose to 18 cents from break-even in the 2007 third quarter.

Among segments, third-quarter sales of sunglasses and prescription frames rose 20 percent year-over-year to $10.42 million; sales of non-Rx reading-glasses rose 18 percent to $36.50 million, “driven by organic growth from new and existing customers”; sales in the international segment fell 7 percent year-over-year to $7.03 million; and costume jewelry sales fell 24 percent to $5.15 million, FGX said.

“The momentum we experienced in the first six months of the year continued into the third quarter despite challenging economic times,” Taylor said in the company’s quarterly filing with the U.S. Securities and Exchange Commission. The company predicted full-year 2008 earnings of 29 to 31 cents per share, on net sales of $66 to $68 million, which Taylor noted was “within our guidance announced at the end of last year.”

FGX International Holdings Ltd. (Nasdaq: FGXI) is a designer and marketer of costume jewelry and nonprescription eyeglasses. Besides its headquarters in Smithfield, it does business via offices in Bentonville, Ark.; New York City; Toronto; Mexico City; Stoke-on-Trent in the United Kingdom; and Shenzhen, China. Additional information is available at www.fgxi.com and www.dioptics.com.