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Shamir Optical Industry Ltd. Reports Fourth Quarter and Year-End 2008 Results
Date:3/18/2009

KIBBUTZ SHAMIR, Israel, March 18 /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 fourth quarter and year ended December 31, 2008.

For the quarter ended December 31, 2008, revenues were $29.2 million, compared to $30.6 million for the fourth quarter of 2007. Gross profit for the quarter was $16.0 million, or 54.9% of revenues, compared to gross profit of $17.4 million, or 56.7% of revenues for the same period last year. As noted last year, gross profit for the fourth quarter of 2007 was positively impacted by a special grant of approximately $0.6 million, or 2% of revenues, that one of the Company's subsidiaries received from its local government regarding machinery costs in its facility. Excluding the effect of the grant, gross profit for the fourth quarter of 2007 was approximately 54.8% of revenues.

For the quarter ended December 31, 2008, operating income was $2.9 million, or 10.0% of revenues, compared to operating income of $2.7 million, or 8.8% of revenues for the same period last year. Net income for the quarter was $1.4 million, or $0.08 per diluted share, compared to net income of $1.6 million or $0.09 per diluted share for the comparable period in 2007.

Excluding the effects of non-cash stock-based compensation expenses and amortization of intangible assets, non-GAAP operating income was $3.3 million, or 11.4% of revenues, compared to non-GAAP operating income of $3.3 million, or 10.7% of revenues, for the same period in 2007.

Excluding the effects of non-cash stock-based compensation expenses and amortization of intangible assets, net of tax, non-GAAP net income for the quarter was $1.7 million, compared to $2.7 million for the comparable period in 2007. Please note that the non-GAAP adjustments for the fourth quarter in 2007 included an increase of valuation allowance provided on deferred tax assets, net of minority interest.

For the year ended December 31, 2008, revenues were $140.3 million, compared to $120.4 million for the same period in 2007. Gross profit for the year was $75.9 million, or 54.1% of revenues, compared to gross profit of $64.6 million, or 53.6% of revenues for the same period last year.

For the year ended December 31, 2008, operating income was $13.4 million, or 9.5% of revenues, compared to operating income of $11.9 million, or 9.9% of revenues for the same period last year. Net income for the year was $9.1 million, or $0.55 per diluted share, compared to net income of $8.2 million or $0.50 per diluted share for the comparable period in 2007.

Excluding the effects of non-cash stock-based compensation expenses, amortization of intangible assets and a one-time compensation to the Company's former CEO, non-GAAP operating income for the year was $15.8 million, or 11.3% of revenues, compared to non-GAAP operating income of $14.0 million, or 11.6% of revenues, for the same period in 2007.

Excluding the effects of non-cash stock-based compensation expenses, amortization of intangible assets, net of tax and one-time compensation to the Company's former CEO, net of tax, non-GAAP net income for the year was $11.2 million, compared to $10.7 million for the comparable period in 2007. Please note that the non-GAAP adjustments for the year 2007 included a valuation allowance provided on deferred tax assets, net of minority interest.

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 December 31, 2008, the Company had cash and cash equivalents, including short-term investments of $25.5 million.

Commenting on the results, Mr. Eyal Hayardeny, Chief Executive Officer of Shamir, said, "In 2008, Shamir performed well, successfully executing our business strategy while penetrating new markets such as Mexico, and further penetrating our core geographic markets. We executed solidly and continued to make important inroads in many of our operating markets, with the goal of advancing the recognition of Shamir-branded products."

Mr. Hayardeny added, "Starting in the second half of 2008, and increasing in severity by the end of the year, we began to encounter a steadily deteriorating economic environment, negative currency fluctuation and an anticipated slowdown in the fourth quarter on revenues. Despite these challenges, we were able to adjust our expense structure and overall we are pleased with our fourth quarter results."

Mr. Hayardeny concluded, "Moving into 2009, we are determined to expand our footprint throughout the world while facing a high level of uncertainly due to the world economic crisis. Until such time as we are able to forecast our sales with a higher level of certainty, we will not be providing guidance for 2009."

Conference Call:

Shamir has scheduled a conference call for 10:00 a.m. EDT today to discuss fourth quarter results. To participate in the call, please dial (877) 375-4189 (U.S. and Canada) or (973) 935-2046 (International). The conference ID for this event is 90272402. For those unable to participate there will be replay available from 12:00 p.m. EDT on March 18, 2009, through 11:59 p.m. EDT, March 25, 2009. Please call: (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International). The ID code for the replay is 90272402.

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, which exclude the effect of non-cash stock-based compensation expenses, amortization of intangible assets, one-time compensation to the former CEO and valuation allowance provided on deferred tax assets, net of minority interest, 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 Nano(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          As of
                                              December 31,   December 31,
                                                  2007           2008
                                                             (Unaudited)
    CURRENT ASSETS:
    Cash and cash equivalents                  $18,953        $18,276
    Short-term investment                       14,375          7,187
    Trade receivables (1)                       30,719         30,331
    Other receivables and prepaid expenses       7,523          8,469
    Inventory                                   27,972         26,063
      TOTAL CURRENT ASSETS                      99,542         90,326

    LONG-TERM INVESTMENTS:
    Severance pay fund                           3,089          2,584
    Long-term receivables                        1,299            813
    Investments in affiliates                    4,437          2,085
      TOTAL LONG-TERM INVESTMENTS                8,825          5,482

    PROPERTY, PLANT AND EQUIPMENT, NET          39,170         38,617
    OTHER ASSETS                                 5,412          5,902
    GOODWILL                                     7,542          9,169
      TOTAL ASSETS                            $160,491       $149,496

    CURRENT LIABILITIES:
    Short-term bank credit and loans           $15,950        $11,597
    Current maturities of long-term loans        7,689         10,403
    Trade payables                              10,852          8,876
    Accrued expenses and other liabilities      12,735         11,680
      TOTAL CURRENT LIABILITIES                 47,226         42,556

    LONG-TERM LIABILITIES:
    Long-term loans                             17,491          9,800
    Capital leases                               4,303          3,393
    Accrued severance pay                        3,337          3,172
    Other long-term liabilities                    753            634
    Deferred income taxes                        1,358          1,922
      TOTAL LONG-TERM LIABILITIES               27,242         18,921

    MINORITY INTERESTS                             800          1,250

    SHAREHOLDERS' EQUITY:
    Share capital
    Common shares of NIS 0.01 par value
     Authorized: 100,000,000 shares at
     December 31, 2007 and December 31,
     2008; Issued and outstanding:
     16,423,740 shares at December 31,
     2007 and December 31, 2008                     37             37
    Additional paid-in capital                  66,629         67,362
    Accumulated other comprehensive income       1,628         (2,637)
    Retained earnings                           16,929         22,007
      TOTAL SHAREHOLDERS' EQUITY                85,223         86,769
      TOTAL LIABILITIES AND SHAREHOLDERS'
       EQUITY                                 $160,491       $149,496

    (1) Net of allowance for doubtful accounts of $2,140 and $2,159 as of
        December 31, 2007 and December 31, 2008, respectively.



    SHAMIR OPTICAL INDUSTRY LTD.
    Consolidated Statements of Income
    (US dollars in thousands, except per share data)

                            Three Months Ended            Year Ended
                               December 31,              December 31,
                            2007         2008         2007         2008
                         (Unaudited)  (Unaudited)               (Unaudited)

    Revenues, net           $30,596      $29,155     $120,419     $140,326
    Cost of revenues         13,234       13,143       55,856       64,415
    Gross profit             17,362       16,012       64,563       75,911

    Operating Expenses:
      Research and
       development costs        663          761        2,564        3,368
      Selling and
       marketing expenses    10,083        8,847       36,552       42,374
      General and
       administrative
       expenses               3,921        3,485       13,549       16,793
    Total operating
     expenses                14,667       13,093       52,665       62,535
    Operating income          2,695        2,919       11,898       13,376

    Financial expenses
     And other, net             106        1,273          239        2,142
    Income before taxes
     on income                2,589        1,646       11,659       11,234
    Taxes on income           1,661          153        5,013        2,216
    Income after taxes on
     income                     928        1,493        6,646        9,018

    Equity in earnings of
     affiliates, net            (65)         (30)         (46)         (44)
    Minority interest in
     earnings (losses) of
     subsidiaries              (575)         164       (1,509)         (16)
    Net income               $1,568       $1,359       $8,201       $9,078

    Net earnings per share:
      Basic                   $0.10        $0.08        $0.50        $0.55
      Diluted                 $0.09        $0.08        $0.50        $0.55

    Number of shares:
      Basic                  16,424       16,424       16,339       16,424
      Dilutive               16,548       16,492       16,552       16,522



    SHAMIR OPTICAL INDUSTRY LTD.
    Reconciliation of Non-GAAP Operating Income and Net Income
    (US dollars in thousands, except per share data)

                            Three Months Ended            Year Ended
                               December 31,              December 31,
                            2007         2008         2007         2008
                         (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

    Operating income         $2,695       $2,919      $11,898      $13,376

    Non-GAAP adjustment:
      Stock based
       compensation            (289)        (140)      (1,030)        (733)
      Amortization of
       intangible assets       (305)        (257)      (1,062)      (1,292)
      Compensation to
       former CEO                 -            -            -         (434)
    Non-GAAP operating
     income                  $3,289       $3,316      $13,990      $15,835

    Net income               $1,568       $1,359       $8,201       $9,078

    Non-GAAP adjustment:
      Stock based
       compensation            (289)        (140)      (1,030)        (733)
      Amortization of
       intangible assets, net  (248)        (202)        (864)      (1,022)
      Increase in
       valuation
       allowance on deferred
       tax assets,
       net of minority
       interest                (575)           -         (575)           -
      Compensation to former
       CEO, net                   -            -            -         (378)
    Non-GAAP net income      $2,680       $1,701      $10,670      $11,211

    Net earnings per share:
      Basic                   $0.16        $0.10        $0.65        $0.68
      Diluted                 $0.16        $0.10        $0.64        $0.68

    Number of shares:
      Basic                  16,424       16,424       16,339       16,424
      Dilutive               16,548       16,492       16,552       16,522


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SOURCE Shamir Optical Industry Ltd.
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