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Shamir Optical Industry Ltd. Reports First Quarter 2008 Results
Date:5/28/2008

KIBBUTZ SHAMIR, Israel, May 28 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd. (Nasdaq: SHMR) ("Shamir"), a leading provider of innovative products and technology to the progressive ophthalmic lens market, today announced unaudited financial results for the first quarter ended March 31, 2008.

For the quarter ended March 31, 2008, revenues increased 29.5% to $38.0 million, compared to revenues of $29.3 million for the same period of 2007. Gross profit for the quarter increased 34.8% to $20.8 million, or 54.7% of revenues, compared to gross profits of $15.4 million, or 52.5% of revenues for the same period last year.

For the quarter ended March 31, 2008, operating income increased 27.2% to $4.3 million, or 11.2% of revenues, from operating income of $3.3 million, or 11.4% of revenues for the same period last year. Net income for the quarter increased 25.2% to $2.9 million, or $0.17 per diluted share, compared to net income of $2.3 million or $0.14 per diluted share for the comparable period in 2007.

For the quarter ended March 31, 2008, excluding the effects of non-cash stock-based compensation expenses, operating income was $4.5 million, or 11.9% of revenues, compared to operating income of $3.7 million, or 12.5% of revenues, for the same period last year.

Excluding the effects of non-cash stock-based compensation expenses, net income for the quarter was $3.2 million, or $0.19 per diluted share, an increase of 19.7%, from net income of $2.6 million 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, 2008, the Company had cash and cash equivalents, including short-term investments of $27.6 million.

Commenting on first quarter results, Eyal Hayardeny, chief executive officer of Shamir, said, "Overall Shamir had a good start in 2008. During the first quarter, we experienced favorable results, many of which reflect the changes we have instituted throughout our organization to effectuate improved sales and manufacturing capabilities. Our growth this quarter was spread out over most of our operations. In addition, our R&D team diligently improved our technological capabilities which are reflected in our innovative products."

Mr. Hayardeny concluded, "Our sales efforts continue to be bolstered by the investments we have made to expand our selling and marketing capabilities. These capabilities support our long range goals. To that end, in February 2008 we increased our ownership in our lab in Mexico to 51% from 26%. We were encouraged with the performance of our investment in Mexico and are pleased to have been able to increase our ownership in the subsidiary."

Based on the results through the first quarter of 2008, Shamir is increasing their estimated revenue growth for the fiscal year ending on December 31, 2008, to the range of 10% to 16% under the December 2007 exchange rates and excluding the results of our Mexican operation.

Conference Call:

Shamir has scheduled a conference call for 9:00 a.m. today to discuss first quarter results. To participate in the call, please dial (800) 254-5933 (U.S. and Canada) or (973) 409-9255 (International). The conference ID for this event is 46827103. For those unable to participate there will be replay available from 12:00 p.m. EDT on May 28, 2008 through 11:59 p.m. EDT, June 2, 2008. Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International). The ID code for the replay is 46827103.

The call will be available as a live, listen-only webcast at http://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, which exclude the effect of non-cash stock-based compensation expenses, 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 progressive 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 Nano(TM) and Shamir Autograph(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.

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,

------------------ ------------------

2007 2008

------------------ ------------------

(Unaudited) (Unaudited)

CURRENT ASSETS:

Cash and cash equivalents $18,953 $20,053

Short-term investment 14,375 7,514

Trade receivables (1) 30,719 39,103

Other receivables and prepaid

expenses 7,579 8,934

Inventory 27,972 31,410

------------------ ------------------

TOTAL CURRENT ASSETS 99,598 107,014

LONG-TERM INVESTMENTS:

Severance pay fund 3,089 3,482

Long-term receivables 1,299 1,122

Investments in affiliates 4,437 1,487

------------------ ------------------

TOTAL LONG-TERM INVESTMENTS 8,825 6,091

PROPERTY, PLANT AND EQUIPMENT, NET 39,170 42,832

OTHER ASSETS 5,356 8,128

GOODWILL 7,542 9,931

------------------ ------------------

TOTAL ASSETS $160,491 $173,996

================== ==================

CURRENT LIABILITIES:

Short-term bank credit and loans $15,950 $17,808

Current maturities of long-term

loans 7,689 10,147

Trade payables 10,852 16,737

Accrued expenses and other

liabilities 12,735 13,884

------------------ ------------------

TOTAL CURRENT LIABILITIES 47,226 58,576

LONG-TERM LIABILITIES:

Long-term loans 17,491 18,989

Capital leases 4,303 4,120

Accrued severance pay 3,337 4,038

Other long-term liabilities 753 663

Deferred income taxes 1,358 2,161

------------------ ------------------

TOTAL LONG-TERM LIABILITIES 27,242 29,971

MINORITY INTERESTS 800 924

------------------ ------------------

SHAREHOLDERS' EQUITY:

Share capital

Common shares of NIS 0.01 par value

Authorized: 100,000,000 shares at

December 31, 2007 and March 31,

2008; Issued and outstanding:

16,423,740 shares at December 31,

2007 and March 31, 2008 37 37

Additional paid-in capital 66,629 66,903

Accumulated other comprehensive

income 1,628 1,764

Retained earnings 16,929 15,821

------------------ ------------------

TOTAL SHAREHOLDERS' EQUITY 85,223 84,525

------------------ ------------------

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY $160,491 $173,996

================== ==================

(1) Net of allowance for doubtful accounts of $ 2,140 and $ 2,216 as of

December 31, 2007 and March 31, 2008, respectively.

SHAMIR OPTICAL INDUSTRY LTD.

Consolidated Statements of Income

(US dollars in thousands, except per share data)

Three Months Ended March 31,

--------------------------------------

2007 2008

------------------ ------------------

(Unaudited) (Unaudited)

Revenues, net $29,338 $37,998

Cost of revenues 13,927 17,225

------------------ ------------------

Gross profit 15,411 20,773

Operating Expenses:

Research and development costs 630 874

Selling and marketing expenses 8,308 11,667

General and administrative

expenses 3,132 3,982

------------------ ------------------

Total operating expenses 12,070 16,523

------------------ ------------------

Operating income 3,341 4,250

Financial expenses and other, net 58 74

------------------ ------------------

Income before taxes on income 3,283 4,176

Taxes on income 1,032 1,557

------------------ ------------------

Income after taxes on income 2,251 2,619

Equity in losses (gains) of

affiliates, net 29 (10)

Minority interest in losses of

subsidiaries (88) (263)

------------------ ------------------

Net income $2,310 $2,892

================== ==================

Net earnings per share:

Basic $0.14 $0.18

================== ==================

Diluted $0.14 $0.17

================== ==================

Number of shares:

Basic 16,257 16,424

Dilutive 16,542 16,539

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,

--------------------------------------

2007 2008

------------------ ------------------

(Unaudited) (Unaudited)

Operating income $3,341 $4,250

Non-GAAP adjustment:

Stock based compensation (336) (274)

------------------ ------------------

Non-GAAP operating income $3,677 $4,524

================== ==================

Net income

$2,310 $2,892

Non-GAAP adjustment:

Stock based compensation (336) (274)

------------------ ------------------

Non-GAAP net income $2,646 $3,166

================== ==================

Non-GAAP net earnings per share:

Basic $0.16 $0.19

================== ==================

Diluted $0.16 $0.19

================== ==================

Number of shares:

Basic 16,257 16,424

Dilutive 16,542 16,539


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SOURCE Shamir Optical Industry Ltd.
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