Shamir Optical Industry Ltd. Reports First Quarter 2010 Results

--Revenue Increased 18.2% Year-Over-Year

KIBBUTZ SHAMIR, Israel, May 10 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd. (Nasdaq: SHMR) ("Shamir"), a leading provider of innovative products and technology to the ophthalmic lens market, today announced unaudited financial results for the first quarter ended March 31, 2010.

For the quarter ended March 31, 2010, revenues increased 18.2% to $40.1 million, compared with revenues of $33.9 million for the same period in 2009. Gross profit for the quarter was $21.8 million, or 54.5% of revenues, compared with gross profit of $17.9 million, or 52.6% of revenues for the same period last year.

For the quarter ended March 31, 2010, operating income increased 41.3% to $5.5 million, or 13.6% of revenues, compared with operating income of $3.9 million, or 11.4% of revenues for the same period last year.  

Net income for the quarter increased 78.3% to $3.9 million, compared with net income of $2.2 million for the same period in 2009. Net income attributable to Shamir's shareholders was $3.7 million or $0.22 per diluted share, compared with $2.1 million or $0.13 per diluted share for the same period in 2009.

For the quarter ended March 31, 2010, excluding the effect of non-cash stock-based compensation expenses and amortization of intangible assets, operating income was $6.0 million, or 14.9% of revenues, compared with operating income of $4.3 million, or 12.6% of revenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses, accretion of redeemable non-controlling interest, net of tax, and amortization of intangible assets, net of tax, net income attributable to Shamir's shareholders for the quarter was $4.2 million, or $0.25 per diluted share, compared with net income of $2.5 million, or $0.15 per diluted share for the same period last year.

The reconciliation of GAAP operating income and net income to non-GAAP operating income and non-GAAP net income is set forth below.

As of March 31, 2010, the Company had cash and cash equivalents, including short-term investments of $30.1 million.

Commenting on first quarter results, Amos Netzer, chief executive officer of Shamir, said, "Shamir had a strong first quarter 2010 across all of its major operating regions. Our favorable results reflect the progress we continue to achieve throughout our operations, which includes the strengthening of our brand as well as the improvements we have made in our sales and manufacturing capabilities. The investments we have made in both people and geographic expansion have allowed us to increase our market share."

For the fiscal year ending December 31, 2010, Shamir confirmed its previous estimate for 2010 revenue growth in the range of 8%-12%, under the assumption of December 2009 exchange rates.

Conference Call:

Shamir has scheduled a conference call for 10:00 a.m. ET today to discuss first quarter results.  To participate in the call, please dial (888) 562-3356 (U.S. and Canada) or (973) 582-2700 (International).  The conference ID for this event is 72108068.  For those unable to participate there will be replay available from 1:00 p.m. ET on May 10, 2010 through 11:59 p.m. EDT, May 17, 2010.  Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International).  The ID code for the replay is 72108068.

The call will be available as a live, listen-only webcast at www.kcsa.com. Please go to the KCSA website at least 15 minutes prior to the scheduled start time to register, download and install any necessary audio software. A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call.

About non – GAAP financial measures

This press release includes non-GAAP financial measures - non-GAAP operating income and non-GAAP net income – that exclude certain charges. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management of Shamir believes that non-GAAP operating income and non-GAAP net income provides meaningful supplemental information because these numbers reflect our core operational results and are used by management internally to review Shamir's financial results.

About Shamir

Shamir is a leading provider of innovative products and technology to the spectacle lens market. Utilizing its proprietary technology, the company develops, designs, manufactures, and markets progressive lenses to sell to the ophthalmic market. In addition, Shamir utilizes its technology to provide design services to optical lens manufacturers under service and royalty agreements. Progressive lenses are used to treat presbyopia, a vision condition where the eye loses its ability to focus on close objects. Progressive lenses combine several optical strengths into a single lens to provide a gradual and seamless transition from near to intermediate, to distant vision. Shamir differentiates its products from its competitors' primarily through lens design. Shamir's leading lenses are marketed under a variety of trade names, including Shamir Genesis(TM), Shamir Piccolo(TM), Shamir Office(TM), Shamir Autograph(TM) and Shamir Smart(TM). Shamir believes that it has one of the world's preeminent research and development teams for progressive lenses, molds, and complementary technologies and tools. Shamir developed software dedicated to the design of progressive lenses. This software is based on Shamir's proprietary mathematical algorithms that optimize designs of progressive lenses for a variety of activities and environments. Shamir also has created software tools specifically designed for research and development and production requirements, including Eye Point Technology software, which simulates human vision.

Safe Harbor Statement

Statements concerning Shamir's business outlook or future economic performance; product introductions and plans and objectives related thereto; and assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements" as that term is defined under U.S. federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: The conflicts in the region; the effects of competition in our industry, and changes in our relationships with optical laboratories, distributors, research and development partners and other third parties; the effects of the international expansion of our operations and our ability to manage our growth, including our ability to manage potential future acquisitions; the effect of global economic conditions in general and conditions in Shamir's industry and target markets in particular; shifts in supply and demand; market acceptance of new products and continuing products' demand; the impact of competitive products and pricing on Shamir's and its customers' products and markets; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; interest rate fluctuations; and other factors detailed in Shamir's filings with the Securities and Exchange Commission. Shamir assumes no obligation to update the information in this release.

(Tables to follow)

SHAMIR OPTICAL INDUSTRY LTD.





Consolidated Balance Sheets





(US dollars in thousands, except share and per share data)



As of December 31,


As of March 31,



2009


2010



(Unaudited)


(Unaudited)

CURRENT ASSETS:





Cash and cash equivalents


$        19,929


$        16,605

Short-term investment


11,679


13,539

Trade receivables (1)


33,648


37,574

Other receivables and prepaid expenses


7,918


8,423

Inventory


26,946


25,587

TOTAL CURRENT ASSETS


100,120


101,728






LONG-TERM INVESTMENTS:





Severance pay fund


2,909


2,979

Long-term receivables


427


415

Investments in affiliates


1,306


1,298

TOTAL LONG-TERM INVESTMENTS


4,642


4,692






PROPERTY, PLANT AND EQUIPMENT, NET


38,568


36,736

OTHER ASSETS


7,439


7,022

GOODWILL


12,945


13,366

TOTAL ASSETS


$      163,714


$      163,544






CURRENT LIABILITIES:





Short-term bank credit and loans


$        11,033


$          8,874

Current maturities of long-term loans


6,879


5,873

Trade payables


11,680


11,719

Accrued expenses and other liabilities


15,447


15,061

TOTAL CURRENT LIABILITIES


45,039


41,527






LONG-TERM LIABILITIES:





Long-term loans


12,599


11,631

Capital leases


2,367


2,051

Accrued severance pay


3,270


3,421

Other long-term liabilities


2,763


2,942

Deferred income taxes


2,224


2,174

TOTAL LONG-TERM LIABILITIES


23,223


22,219






Redeemable non-controlling interest


690


702

EQUITY:





Share capital





Common shares of NIS 0.01 par value





Authorized: 100,000,000 shares at December 31, 2009 and March 31, 2010; Issued and outstanding:  16,592,345 and 16,773,596 shares at December 31, 2009 and March 31, 2010, respectively


37


38

Additional paid-in capital


68,230


69,844

Accumulated other comprehensive income


(1,122)


(2,577)

Retained earnings


24,795


28,488

Total Shamir Optical Industry Ltd. Shareholders' equity


91,940


95,793

Non-controlling interests


2,822


3,303

TOTAL  EQUITY


94,762


99,096

TOTAL LIABILITIES AND EQUITY


$      163,714


$      163,544


(1) Net of allowance for doubtful accounts of $3,076 and $3,088 as of December 31, 2009 and March 31, 2010, respectively





Three Months Ended March 31,



2009


2010



(Unaudited)


(Unaudited)

Revenues, net

$    33,920


$    40,095

Cost of revenues

16,065


18,257

Gross profit

    17,855


    21,838






Operating Expenses:





Research and development costs

741


1,089


Selling and marketing expenses

9,865


11,170


General and administrative expenses

3,380


4,114

Total operating expenses

13,986


16,373

Operating income

3,869


5,465






Financial expenses and other, net

833


166

Income before taxes on income

3,036


5,299

Taxes on income

867


1,277

Income after taxes on income

2,169


4,022






Equity in earnings of affiliates, net

(27)


(1)

Accretion of redeemable non controlling interest

         -


107

Net income

$      2,196


$      3,916





Net income attributable to non-controlling interests

74


223

Net income attributable to Shamir Optical Industry Ltd. Shareholders

$      2,122


$      3,693











Net earnings per share:





Basic

$        0.13


$        0.22


Diluted

$        0.13


$        0.22











Number of shares:





Basic

16,424


16,679


Dilutive

16,453


16,767











SHAMIR OPTICAL INDUSTRY LTD.

Reconciliation of Non-GAAP Operating Income and  Net Income

(US dollars in thousands, except  per share data)



Three Months Ended March 31,



2009


2010



(Unaudited)


(Unaudited)





Operating income

$      3,869


$      5,465






Non-GAAP adjustment:





Stock based compensation

147


137


Amortization of intangible assets

244


357

Non-GAAP operating income

$      4,260


$      5,959














Net income attributable to Shamir Optical Industry Ltd. Shareholders

$      2,122


$      3,693






Non-GAAP adjustment:





Stock based compensation

147


137


Amortization of intangible assets, net

185


264


Accretion of redeemable non controlling interest

-


107

Non-GAAP net income attributable to Shamir Optical Industry Ltd. Shareholders

$      2,454


$      4,201






Net earnings per share:





Basic

$        0.15


$        0.25


Diluted

$        0.15


$        0.25






Number of shares:





Basic

16,424


16,679


Dilutive

16,453


16,767



SOURCE Shamir Optical Industry Ltd.

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