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Shamir Optical Industry Ltd. Reports Third Quarter 2009 Results
Date:11/18/2009

KIBBUTZ SHAMIR, Israel, Nov. 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 third quarter ended September 30, 2009.

For the quarter ended September 30, 2009, revenues were $36.2 million, compared to $36.1 million for the third quarter of 2008. Gross profit for the quarter increased 3.8% to $19.7 million, or 54.6% of revenues, compared to gross profit of $19.0 million, or 52.7% of revenues for the same period last year.

For the quarter ended September 30, 2009, operating income increased 64.3% to $4.8 million, or 13.4% of revenues, compared to operating income of $2.9 million, or 8.2% of revenues for the same period last year. Net income for the quarter increased 67.7% to $3.7 million compared to net income of $2.2 million for the comparable period in 2008. Net income attributable to Shamir's shareholders was $0.22 per diluted share, compared with $0.13 per diluted share for the same period in 2008.

For the quarter ended September 30, 2009, excluding the effects of non-cash stock-based compensation expenses amortization of intangible assets, and in 2008 compensation to our former Chief Executive Officer, non-GAAP operating income was $5.2 million, or 14.3% of revenues, compared to non-GAAP operating income of $3.8 million, or 10.4% of revenues for the same period of 2008.

Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, and in 2008 compensation to our former Chief Executive Officer, net of tax, net income attributable to Shamir's shareholders for the quarter was $3.9 million, or $0.24 per diluted share, compared to net income of $2.9 million, or $0.18 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 September 30, 2008, the Company had cash and cash equivalents, including short-term investments of $28.1 million.

Commenting on the results, Amos Netzer, Chief Executive Officer of Shamir, said, "Shamir preformed well in the third quarter, particularly in light of the difficult economic environment throughout the world. 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. Concurrent with these efforts, we continue to stress the importance of strict cost controls, which has always been a centerpiece of our operating philosophy, but has become increasingly important during these difficult economic times."

Mr. Netzer continued, "To support our long range goals of expanding our worldwide sales and manufacturing capabilities, we recently purchased a 66.6% stake in a local lab in Australia that currently has annual revenue of approximately USD $7 million. We are enthusiastic about this opportunity and are confident in our ability to penetrate and expand our holdings in this new market and to promote the Shamir brand in this region. This new acquisition follows the recently reported gain of control of our lab in Thailand which as of this quarter was consolidated into our reported financial results."

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 has helped us achieve positive performance thus far this year."

Conference Call:

Shamir has scheduled a conference call for 10:00 a.m. ET today to discuss third 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 40966354. For those unable to participate there will be replay available from 12:00 p.m. ET on November 18, 2009, through 11:59 p.m. ET, November 25, 2009. Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International). The ID code for the replay is 40966354.

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 and compensation to former Chief Executive Officers, 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           As of             As of
     share and per share data)               December 31,    September 30,
                                                2008              2009
                                                ----              ----
                                                              (Unaudited)
    CURRENT ASSETS:
    Cash and cash equivalents                  $18,276          $13,395
    Short-term investment                        7,187           14,723
    Trade receivables (1)                       30,331           35,176
    Other receivables and prepaid expenses       8,469            9,299
    Inventory                                   26,063           27,206
                                                ------           ------
        TOTAL CURRENT ASSETS                    90,326           99,799

    LONG-TERM INVESTMENTS:
    Severance pay fund                           2,584            2,854
    Long-term receivables                          813              242
    Investments in affiliates                    2,085            1,319
                                                 -----            -----
        TOTAL LONG-TERM INVESTMENTS              5,482            4,415

    PROPERTY, PLANT AND EQUIPMENT, NET          38,617           38,369
    OTHER ASSETS                                 5,902            5,949
    GOODWILL                                     9,169            9,764
                                                 -----            -----
        TOTAL ASSETS                          $149,496         $158,296
                                              ========         ========

    CURRENT LIABILITIES:
    Short-term bank credit and loans           $11,597           $9,224
    Current maturities of long-term loans       10,403            6,562
    Trade payables                               8,876           11,583
    Accrued expenses and other liabilities      11,680           14,324
                                                ------           ------
        TOTAL CURRENT LIABILITIES               42,556           41,693

    LONG-TERM LIABILITIES:
    Long-term loans                              9,800            7,522
    Capital leases                               3,393            2,625
    Accrued severance pay                        3,172            3,276
    Other long-term liabilities                    634              560
    Deferred income taxes                        1,922            1,988
                                                 -----            -----
        TOTAL LONG-TERM LIABILITIES             18,921           15,971

    EQUITY:
    Share capital
    Common shares of NIS 0.01 par value
    Authorized: 100,000,000 shares at
     December 31, 2008 and September
     30, 2009; Issued and outstanding:
     16,423,740 shares at December 31,
     2008 and September 30, 2009                    37               37
    Additional paid-in capital                  67,362           67,733
    Accumulated other comprehensive income      (2,637)            (876)
    Retained earnings                           22,007           31,451
                                                ------           ------
        Total Shamir Optical Industry Ltd.
         Shareholders' equity                   86,769           98,345
    Non-controlling interests                    1,250            2,287
                                                 -----            -----
        TOTAL  EQUITY                           88,019          100,632
                                                ------          -------
        TOTAL LIABILITIES AND EQUITY          $149,496         $158,296
                                              ========         ========

    (1) Net of allowance for doubtful accounts of $2,159 and $2,691 as of
        December 31, 2008 and September 30, 2009, respectively.



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

                           Three Months Ended        Nine Months Ended
                               September 30,            September 30,
                          ---------------------     --------------------
                          2008 (1)         2009     2008 (1)        2009
                          --------         ----     --------        ----
                        (Unaudited)    (Unaudited) (Unaudited)  (Unaudited)

    Revenues, net         $36,118        $36,157    $111,171     $105,311
    Cost of revenues       17,098         16,410      51,272       48,748
                           ------         ------      ------       ------
    Gross profit           19,020         19,747      59,899       56,563

    Operating Expenses:
        Research and
         development costs    868            802       2,607        2,332
        Selling and
         marketing
         expenses          10,472         10,274      33,527       30,422
        General and
         administrative
         expenses           4,733          3,828      13,308       11,023
                            -----          -----      ------       ------
    Total operating
     expenses              16,073         14,904      49,442       43,777
                           ------         ------      ------       ------
    Operating income        2,947          4,843      10,457       12,786

    Financial expenses
     and other, net           369            335         869          237
                              ---            ---         ---          ---
    Income before taxes
     on income              2,578          4,508       9,588       12,549
    Taxes on income           379            826       2,063        2,877
                              ---            ---       -----        -----
    Income after taxes
     on income              2,199          3,682       7,525        9,672

    Equity in losses
     (earnings) of
     affiliates, net           11             13         (14)         (48)
                              ---            ---         ---          ---
    Net income              2,188          3,669       7,539        9,720
    Net income (loss)
     attributable to
     non-controlling
     interests                (18)            43        (180)         276
                              ---            ---        ----          ---
    Net income attributable
     to Shamir Optical
     Industry Ltd.
     Shareholders          $2,206         $3,626      $7,719       $9,444
                           ======         ======      ======       ======

    Net earnings per share:
        Basic               $0.13          $0.22       $0.47        $0.58
                            =====          =====       =====        =====
        Diluted             $0.13          $0.22       $0.47        $0.57
                            =====          =====       =====        =====


    Number of shares:
        Basic              16,424         16,424      16,424       16,424
        Dilutive           16,527         16,546      16,532       16,499

    (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         Nine Months Ended
                               September 30,              September 30,
                             -----------------         -----------------
                             2008         2009         2008         2009
                             ----         ----         ----         ----
                         (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

    Operating income        $2,947       $4,843      $10,457      $12,786

    Non-GAAP adjustment:
        Stock based
         compensation          (45)         (60)        (593)        (372)
        Amortization of
         intangible assets    (345)        (272)      (1,036)        (761)
        Compensation to
         former Chief
         Executive Officers   (434)           -         (434)        (303)
                              ----          ---         ----         ----
    Non-GAAP operating
     income                 $3,771       $5,175      $12,520      $14,222
                            ======       ======      =======      =======

    Net income attributable
     to Shamir Optical
     Industry Ltd.
     Shareholders           $2,206       $3,626       $7,719       $9,444

    Non-GAAP adjustment:
        Stock based
         compensation          (45)         (60)        (593)        (372)
        Amortization of
         intangible assets,
         net                  (264)        (207)        (820)        (579)
        Compensation to
         former Chief
         Executive
         Officers, net        (378)           -         (378)        (227)
                              ----          ---         ----         ----
    Non-GAAP net income
     attributable to
     Shamir Optical
     Industry Ltd.
     Shareholders           $2,893       $3,893       $9,510      $10,622
                            ======       ======       ======      =======

    Net earnings per share:
        Basic                $0.18        $0.24        $0.58        $0.65
                             =====        =====        =====        =====
        Diluted              $0.18        $0.24        $0.58        $0.64
                             =====        =====        =====        =====

    Number of shares:
        Basic               16,424       16,424       16,424       16,424
        Dilutive            16,527       16,546       16,532       16,499

SOURCE Shamir Optical Industries Ltd.


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SOURCE Shamir Optical Industries Ltd.
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