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Shamir Optical Industry Ltd. Reports Second Quarter 2009 Results
Date:8/13/2009

KIBBUTZ SHAMIR, Israel, Aug. 13 /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 second quarter ended June 30, 2009.

For the quarter ended June 30, 2009, revenues were $35.2 million, compared with revenues of $37.1 million for the same period in 2008. The decrease in revenues was mainly due to the decrease in the value of the Euro versus the US dollar between the comparable quarters. Gross profit for the quarter was $19.0 million, or 53.8% of revenues, compared with gross profit of $20.1 million, or 54.3% of revenues for the same period last year.

For the quarter ended June 30, 2009, operating income increased by 25.0% to $4.1 million, or 11.6% of revenues, compared with operating income of $3.3 million, or 8.8% of revenues for the same period last year. Net income for the quarter increased by 39.1% to $3.9 million compared with net income of $2.8 million for the comparable period in 2008. Net income attributable to Shamir's shareholders was $0.22 per diluted share, compared with $0.16 per diluted share for the same period in 2008

For the quarter ended June 30, 2009, excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets and compensation to the Company's former chief executive officers, operating income increased by 22.5% to $4.8 million, or 13.6% of revenues, compared with operating income of $3.9 million, or 10.5% of revenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets and compensation to the Company's former chief executive officers, net of tax, net income attributable to Shamir's shareholders for the quarter was $4.3 million, or $0.26 per diluted share, compared with net income of $3.2 million, or $0.19 per diluted share for the same period last year.

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

As of June 30, 2009, the Company had cash and cash equivalents, including short-term investments of $27.4 million.

Commenting on the results, Amos Netzer, Chief Executive Officer of Shamir, said, "During the past few years, Shamir has worked diligently, not only to expand our geographic footprint, but also to improve our manufacturing capabilities and solidify and expand our sales and marketing capabilities. The positive effect of these efforts is reflected in our favorable results for the second quarter. In Europe, we generated improved sales and operating results and our operations in the United States continued to perform well."

Mr. Netzer added, "To support our long range goals of expanding our selling and manufacturing capabilities, in July 2009 we increased our ownership in our lab in Thailand from 40.4% to 51%. We are very encouraged with the performance of our investment in Thailand and are pleased to have been able to increase our ownership in the subsidiary."

Mr. Netzer concluded, "In terms of our overall strategy, we continue to maintain a strong balance between investing in long-term growth and monitoring operational expenses, which helped us achieve positive performance thus far this year. However, due to the uncertainty in the global economic landscape and the remaining challenges, our visibility for the second half of 2009 is unclear."

Conference Call:

Shamir has scheduled a conference call for 11:00 a.m. today to discuss second 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 23500382. For those unable to participate there will be replay available from 12:00 p.m. EDT on August 13, 2009 through 11:59 p.m. EDT, August 20, 2009. Please call: 800-642-1687 (U.S. and Canada) 706-645-9291 (International). The ID code for the replay is 23500382.

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, compensation to the former Chief Executive Officers and amortization of intangible assets, 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.

    Investor Relations Contacts:
    Roni Gavrielov                   Jeffrey Goldberger/Marybeth Csaby
    KM / KCSA Investor Relations     KCSA Strategic Communications
    +972-3-516-7620                  212-896-1249/212-896-1236
    roni@km-ir.co.il                 jgoldberger@kcsa.com / mcsaby@kcsa.com

(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 June 30,
                                             2008                 2009
                                       ------------------    --------------
                                                               (Unaudited)


    CURRENT ASSETS:
    Cash and cash equivalents                    $18,276           $12,862
    Short-term investment                          7,187            14,499
    Trade receivables (1)                         30,331            34,469
    Other receivables and prepaid expenses         8,469             8,150
    Inventory                                     26,063            25,395
                                                  ------            ------
     TOTAL CURRENT ASSETS                         90,326            95,375

    LONG-TERM INVESTMENTS:
    Severance pay fund                             2,584             2,703
    Long-term receivables                            813               417
    Investments in affiliates                      2,085             2,661
                                                   -----             -----
     TOTAL LONG-TERM INVESTMENTS                   5,482             5,781

    PROPERTY, PLANT AND EQUIPMENT, NET            38,617            36,518
    OTHER ASSETS                                   5,902             5,334
    GOODWILL                                       9,169             9,583
                                                   -----             -----
     TOTAL ASSETS                               $149,496          $152,591
                                                ========          ========

    CURRENT LIABILITIES:
    Short-term bank credit and loans             $11,597           $10,185
    Current maturities of long-term loans         10,403             6,398
    Trade payables                                 8,876            11,984
    Accrued expenses and other liabilities        11,680            13,158
                                                  ------            ------
     TOTAL CURRENT LIABILITIES                    42,556            41,725

    LONG-TERM LIABILITIES:
    Long-term loans                                9,800             7,270
    Capital leases                                 3,393             2,846
    Accrued severance pay                          3,172             3,179
    Other long-term liabilities                      634               547
    Deferred income taxes                          1,922             1,754
                                                   -----             -----
     TOTAL LONG-TERM LIABILITIES                  18,921            15,596

    EQUITY:
    Share capital
    Common shares of NIS 0.01 par value
     Authorized: 100,000,000 shares at
      December 31, 2008 and June 30, 2009;
      Issued and outstanding: 16,423,740
      shares at December 31, 2008 and June
      30, 2009                                        37                37
    Additional paid-in capital                    67,362            67,674
    Accumulated other comprehensive income        (2,637)           (1,890)
    Retained earnings                             22,007            27,825
                                                 ------             ------
     Total Shamir Optical Industry Ltd.
      Shareholders' equity                        86,769            93,646
    Non-controlling interests                      1,250             1,624
                                                   -----             -----
     TOTAL  EQUITY                                88,019            95,270
                                                  ------            ------
     TOTAL LIABILITIES AND EQUITY               $149,496          $152,591
                                                ========          ========

(1) Net of allowance for doubtful accounts of $ 2,159 and $ 2,451 as of December 31, 2008 and June 30, 2009, respectively.

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

                               Three Months Ended       Six Months Ended
                                   June 30,                  June 30,
                             ---------------------   ---------------------
                             2008 (1)      2009       2008 (1)      2009
                             ---------   ---------   ---------   ---------
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     Revenues, net             $37,055     $35,234     $75,053     $69,154
     Cost of revenues           16,949      16,273      34,174      32,338
                                ------      ------      ------      ------
     Gross profit               20,106      18,961      40,879      36,816

     Operating Expenses:
        Research and development
         costs                     865         789       1,739       1,530
        Selling and marketing
         expenses               11,388      10,283      23,055      20,148
        General and
         administrative expenses 4,593       3,815       8,575       7,195
                                 -----       -----       -----       -----
     Total operating expenses   16,846      14,887      33,369      28,873
                                ------      ------      ------      ------
     Operating income            3,260       4,074       7,510       7,943

     Financial expenses (income)
       and other, net              426        (931)        500         (98)
                                   ---        ----         ---         ---
     Income before taxes on
      income                     2,834       5,005       7,010       8,041
     Taxes on income               127       1,184       1,684       2,051
                                   ---       -----       -----       -----
     Income after taxes on
      income                     2,707       3,821       5,326       5,990

     Equity in earnings of
      affiliates, net               15          34          25          61
                                    --          --          --          --
        Net income               2,722       3,855       5,351       6,051
     Net income (loss)
      attributable to
      non-controlling interests    101         159        (162)        233
                                   ---         ---        ----         ---
     Net income attributable to
      Shamir Optical Industry
      Ltd. Shareholders         $2,621      $3,696      $5,513      $5,818
                                ======      ======      ======      ======


     Net earnings per share:
            Basic                $0.16       $0.23       $0.34       $0.35
                                 =====       =====       =====       =====
            Diluted              $0.16       $0.22       $0.33       $0.35
                                 =====       =====       =====       =====


     Number of shares:
            Basic               16,424      16,424      16,424      16,424
            Dilutive            16,532      16,475      16,535      16,475

(1) Amounts have been reclassified to reflect the implementation of SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 151.

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

                               Three Months Ended       Six Months Ended
                                    June 30,                 June 30,
                             ---------------------   ---------------------
                                2008       2009        2008         2009
                             ---------   ---------   ---------   ---------
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     Operating income           $3,260      $4,074      $7,510      $7,942

     Non-GAAP adjustment:
      Stock based compensation    (274)       (165)       (548)       (312)
      Amortization of intangible
       assets                     (373)       (249)       (691)       (490)
      Compensation to former
       Chief Executive Officers      -        (303)          -        (303)
                                   ---        ----         ---        ----
     Non-GAAP operating income  $3,907      $4,791      $8,749      $9,047
                                ======      ======      ======      ======



     Net income attributable
      to Shamir Optical
      Industry Ltd.
      Shareholders              $2,621      $3,696      $5,513      $5,818

     Non-GAAP adjustment:
      Stock based compensation    (274)       (165)       (548)       (312)
      Amortization of intangible
       assets, net                (302)       (187)       (556)       (372)
      Compensation to former
       Chief Executive Officers,
       net                           -        (227)          -        (227)
                                   ---        ----         ---        ----
     Non-GAAP net income
      attributable to Shamir
      Optical Industry Ltd.
      Shareholders              $3,197      $4,275      $6,617      $6,729
                                ======      ======      ======      ======

     Net earnings per share:
      Basic                      $0.19       $0.26       $0.40       $0.41
                                 =====       =====       =====       =====
      Diluted                    $0.19       $0.26       $0.40       $0.41
                                 =====       =====       =====       =====

     Number of shares:
      Basic                     16,424      16,424      16,424      16,424
      Dilutive                  16,532      16,475      16,535      16,475


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SOURCE Shamir Optical Industry Ltd.
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