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Shamir Optical Industry Reports Fourth Quarter and Year-End 2009 Results
Date:3/11/2010

KIBBUTZ SHAMIR, Israel, March 11 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd. (Nasdaq: SHMR) ("Shamir"), a leading provider of innovative products and technology to the ophthalmic lens market, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2009.

For the quarter ended December 31, 2009, revenues increased 27.2% to $37.1 million, compared to $29.2 million for the fourth quarter of 2008.  Gross profit for the quarter increased 27.2% to $20.4 million, or 55.0% of revenues, compared to a gross profit of $16.0 million, or 54.9% of revenues for the same period last year.

For the quarter ended December 31, 2009, operating income increased 55.6% to $4.5 million, or 12.3% of revenues, compared to operating income of $2.9 million, or 10.0% of revenues for the same period last year. Net income for the quarter increased 132.8% to $3.5 million compared to a net income of $1.5 million for the comparable period in 2008. Net income attributable to Shamir's shareholders was $0.20 per diluted share, compared to $0.08 per diluted share for the same period in 2008.

For the quarter ended December 31, 2009, excluding the effects of non-cash stock-based compensation expenses and amortization of intangible assets, non-GAAP operating income was $5.0 million, or 13.5% of revenues, compared to non-GAAP operating income of $3.3 million, or 11.4% of revenues for the same period in 2008.

Excluding the effect of non-cash stock-based compensation expenses, accretion of redeemable non controlling interest and amortization of intangible assets, net of tax, net income attributable to Shamir's shareholders for the quarter was $3.6 million, or $0.22 per diluted share, compared to net income of $1.7 million, or $0.10 per diluted share for the same period last year.

For the year ended December 31, 2009, revenues were $142.4 million, compared to $140.3 million for the same period in 2008.  Gross profit for the year was $76.9 million, or 54.0% of revenues, compared to gross profit of $75.9 million, or 54.1% of revenues for the same period last year.

For the year ended December 31, 2009, operating income was $17.3 million, or 12.2% of revenues, compared to operating income of $13.4 million, or 9.5% of revenues for the same period last year.  Net income for the year was $13.3 million, or $0.77 per diluted share, compared to net income of $9.1 million or $0.55 per diluted share for the comparable period in 2008.

Excluding the effects of non-cash stock-based compensation expenses, amortization of intangible assets and compensation to the Company's former chief executive officers, non-GAAP operating income for the year was $19.2 million, or 13.5% of revenues, compared to non-GAAP operating income of $15.8 million, or 11.3% of revenues, in 2008.

Excluding the effects of non-cash stock-based compensation expenses, amortization of intangible assets, net of tax, accretion of redeemable non controlling interest and compensation to the Company's former chief executive officers, net of tax, non-GAAP net income attributable to Shamir's shareholders for the year was $14.3 million or $0.86 per diluted share, compared to $11.2 million or $0.68 per diluted share for the comparable period in 2008.

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, 2009, the Company had cash and cash equivalents, including short-term investments of $31.6 million.

Commenting on the results, Amos Netzer, Chief Executive Officer of Shamir, said, "Despite continued economic challenges throughout the world during the fourth quarter, and for that matter, the full year, Shamir's performance surpassed internal projections.  During the year we increased penetration and acceptance of the Shamir brand as well as experienced the maturing of our investments in both manufacturing and distribution."

Mr. Netzer concluded, "The overall strength of our results in 2009 gives us reason to feel confident that we will achieve similar success in 2010. Our strategy remains intact, which includes continued operational excellence and penetration into new markets."

For the fiscal year ending on December 31, 2010, Shamir currently estimates its 2010 revenues growth in the range of 8%-12%, under the assumption of December 2009 exchange rates.

Conference Call:

Shamir has scheduled a conference call for 10:30 a.m. ET today to discuss fourth quarter and year-end 2009 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 57774730.  For those unable to participate there will be replay available from 1:30 p.m. ET on March 11, 2010, through 11:59 p.m. EDT, March 18, 2010.  Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International).  The ID code for the replay is 57774730.

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 December 31,
                                           2008                 2009
                                           ----                 ----
                                                            (Unaudited)
    CURRENT ASSETS:
    Cash and cash equivalents                 $18,276              $19,929
    Short-term investment                       7,187               11,679
    Trade receivables (1)                      30,331               33,648
    Other receivables and 
     prepaid expenses                           8,469                7,918
    Inventory                                  26,063               26,946
                                               ------               ------
     TOTAL CURRENT ASSETS                      90,326              100,120
    
    LONG-TERM INVESTMENTS:
    Severance pay fund                          2,584                2,909
    Long-term receivables                         813                  427
    Investments in affiliates                   2,085                1,306
                                                -----                -----
     TOTAL LONG-TERM INVESTMENTS                5,482                4,642
    
    PROPERTY, PLANT AND
     EQUIPMENT, NET                            38,617               38,568
    OTHER ASSETS                                5,902                7,439
    GOODWILL                                    9,169               12,945
                                                -----               ------
     TOTAL ASSETS                            $149,496             $163,714
                                             ========             ========
    
    CURRENT LIABILITIES:
    Short-term bank credit
     and loans                                $11,597              $11,033
    Current maturities of
     long-term loans                           10,403                6,879
    Trade payables                              8,876               11,680
    Accrued expenses and other
     liabilities                               11,680               15,447
                                               ------               ------
     TOTAL CURRENT LIABILITIES                 42,556               45,039
    
    LONG-TERM LIABILITIES:
    Long-term loans                             9,800               12,599
    Capital leases                              3,393                2,367
    Accrued severance pay                       3,172                3,270
    Other long-term
     liabilities                                  634                2,763
    Deferred income taxes                       1,922                2,224
                                                -----                -----
     TOTAL LONG-TERM LIABILITIES               18,921               23,223
    
    Redeemable non-
     controlling interest                                              690
                                                                       ---
    
    EQUITY:
    Share capital
    Common shares of NIS 0.01
     par value
     Authorized: 100,000,000
      shares at December 31,
      2008 and 2009; Issued and
      outstanding: 16,423,740
      and 16,592,345 shares at
      December 31, 2008 and
      2009, respectively                           37                   37
    Additional paid-in capital                 67,362               68,230
    Accumulated other
     comprehensive income                      (2,637)              (1,122)
    Retained earnings                          22,007               24,795
                                               ------               ------
     Total Shamir Optical
      Industry Ltd.
      Shareholders' equity                     86,769               91,940
    Non-controlling interests                   1,250                2,822
                                                -----                -----
     TOTAL  EQUITY                             88,019               94,762
                                               ------               ------
     TOTAL LIABILITIES AND
      EQUITY                                 $149,496             $163,714
                                             ========             ========
    
    (1)Net of allowance for doubtful accounts of $2,066 and $3,076 as of 
    December 31, 2008 and 2009, 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,
                                 ------------            ------------
                              2008(1)       2009      2008(1)       2009
                              -------       ----      -------       ----
                            (Unaudited)  (Unaudited)            (Unaudited)
    Revenues, net            $29,155     $37,073    $140,326    $142,384
    Cost of revenues          13,143      16,700      64,415      65,448
                              ------      ------      ------      ------
    Gross profit              16,012      20,373      75,911      76,936
    
    Operating Expenses:
       Research and
        development costs        761         907       3,368       3,239
       Selling and
        marketing expenses     8,847      10,537      42,374      40,959
       General and
        administrative
        expenses               3,485       4,387      16,793      15,410
                               -----       -----      ------      ------
    Total operating
     expenses                 13,093      15,831      62,535      59,608
                              ------      ------      ------      ------
    Operating income           2,919       4,542      13,376      17,328
    
    Financial expenses
     and other, net            1,273         158       2,142         395
                               -----         ---       -----         ---
    Income before
     taxes on income           1,646       4,384      11,234      16,933
    Taxes on income              153         822       2,216       3,699
                                 ---         ---       -----       -----
    Income after
     taxes on income           1,493       3,562       9,018      13,234
    
    Equity in losses
     (earnings) of
     affiliates, net             (30)         17         (44)        (31)
                                 ---         ---         ---         ---
    Net income                 1,523       3,545       9,062      13,265
    
    Net income (loss)
     attributable to
     non-controlling
     interests                   164         201         (16)        477
                                 ---         ---         ---         ---
    Net income
     attributable to
     Shamir Optical
     Industry Ltd.
     Shareholders             $1,359      $3,344      $9,078     $12,788
                              ======      ======      ======     =======
    
    
    Net earnings per share:
       Basic                   $0.08       $0.20       $0.55       $0.78
                               =====       =====       =====       =====
       Diluted                 $0.08       $0.20       $0.55       $0.77
                               =====       =====       =====       =====
    
    
    Number of shares:
       Basic                  16,424      16,480      16,424      16,438
       Dilutive               16,492      16,623      16,522      16,530

(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. 51.

    
    
    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,
                                 ------------            ------------
                              2008        2009          2008        2009
                              ----        ----          ----        ----
                          (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
    
     Operating income       $2,919      $4,542       $13,376     $17,328
    
    Non-GAAP adjustment:
     Stock based
      compensation             140          79           733         451
     Amortization of
       intangible assets       257         385         1,292       1,148
     Compensation to
      former Chief
      Executive Officers         -           -           434         303
                               ---         ---           ---         ---
    Non-GAAP operating
     income                 $3,316      $5,006       $15,835     $19,230
                            ======      ======       =======     =======
    
    
    Net income
     attributable to
     Shamir Optical
     Industry Ltd.
     Shareholders           $1,359      $3,344        $9,078     $12,788
    
    Non-GAAP adjustment:
     Stock based
      compensation             140          79           733         451
     Amortization of
      intangible assets,
      net                      202         284         1,022         863
     Accretion of
      redeemable non
       controlling
       interest                  -         (64)            -         (64)
     Compensation to
      former Chief
      Executive Officers,
       net                       -           -           378         227
                               ---         ---           ---         ---
    Non-GAAP net income
     attributable to
     Shamir Optical
     Industry Ltd.
     Shareholders           $1,701      $3,643       $11,211     $14,265
                            ======      ======       =======     =======
    
    Net earnings per share:
       Basic                 $0.10       $0.22         $0.68       $0.87
                             =====       =====         =====       =====
       Diluted               $0.10       $0.22         $0.68       $0.86
                             =====       =====         =====       =====
    
    Number of shares:
       Basic                16,424      16,480        16,424      16,438
       Dilutive             16,492      16,623        16,522      16,530

SOURCE Shamir Optical Industries Ltd.

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