Shamir Optical Industry Reports Fourth Quarter and Year-End 2010 Results
KIBBUTZ SHAMIR, Israel, March 14, 2011 /PRNewswire/ — 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, 2010.
For the quarter ended December 31, 2010, revenues increased 5.4% to $39.1 million, compared with revenues of $37.1 million for the same period in 2009. Gross profit for the quarter was $21.1 million, or 54.0% of revenues, compared with gross profit of $20.4 million, or 55.0% of revenues for the same period last year.
For the quarter ended December 31, 2010, operating income was $3.3 million, or 8.6% of revenues, compared with operating income of $4.5 million, or 12.3% of revenues for the same period last year. The reduction in operating income year-over-year was primarily due to the mix of products sold which negatively affected gross profit, costs associated with the Company’s previously announced transaction with Essilor International, restructuring costs in France and an increase in marketing and selling expenses.
Net income for the quarter was $3.0 million, compared with net income of $3.5 million for the same period in 2009. Net income attributable to Shamir’s shareholders was $2.8 million or $0.16 per diluted share, compared with $3.3 million or $0.20 per diluted share for the same period in 2009.
Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, restructuring costs in France in 2010 and Essilor transaction costs in 2010, operating income for the quarter was $4.6 million, or 11.8% of revenues, compared with operating income of $5.0 million, or 13.5% of revenues, for the same period last year.
Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, accretion of redeemable non-controlling interest, restructuring costs in France in 2010 and Essilor transaction costs in 2010, all net of tax, net income attributable to Shamir’s shareholders for the quarter was $3.9 million, or $0.22 per diluted share, compared with net income of $3.6 million, or $0.22 per diluted share for the same period last year.
For the year ended December 31, 2010, revenues increased 11.0% to $158.0 million, compared with revenues of $142.4 million for the year 2009. Gross profit for the year 2010 was $86.5 million, or 54.8% of revenues, compared with gross profit of $76.9 million, or 54.0% of revenues for last year.
For the year ended December 31, 2010, operating income increased 14.0% to $19.8 million, or 12.5% of revenues, compared with operating income of $17.3 million, or 12.2% of revenues for last year.
Net income for the year increased 17.5% to $15.6 million, compared with net income of $13.3 million for the year 2009. Net income attributable to Shamir’s shareholders increased 15.8% to $14.8 million or $0.87 per diluted share, compared with $12.8 million or $0.77 per diluted share for the year 2009.
Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, restructuring costs in France in 2010, Essilor transaction costs in 2010 and compensation to the Company’s former chief executive officer in 2009, operating income for the year was $23.4 million, or 14.8% of revenues, compared with operating income of $19.2 million, or 13.5% of revenues, for last year.
Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, accretion of redeemable non-controlling interest, restructuring costs in France in 2010, Essilor transaction costs in 2010 and compensation to the Company’s former chief executive officer in 2009, all net of tax, net income attributable to Shamir’s shareholders for the year increased 24.2% to $17.7 million, or $1.05 per diluted share, compared with net income of $14.3 million or $0.86 per diluted share for 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 December 31, 2010, the Company had cash and cash equivalents, including short-term investments of $28.4 million.
Commenting on the results, Amos Netzer, Chief Executive Officer of Shamir, said, “I am satisfied with our results for 2010. During the year, we continued to successfully increase the recognition for Shamir-branded products, a testament to the strength of our organic growth and strategic acquisition strategy. We also continued to have similar success with our efforts to optimize our operations as was demonstrated in the fourth quarter in France, where we went from a two-subsidiary structure, down to a single, more efficient structure.”
Mr. Netzer continued, “Most recently, we expanded our reach in Israel through the acquisition of the operations of a local distributor. Through this action, we expect to achieve improved access to customers and to drive increased sales volume. In addition, we expect to complete the acquisition of the operation of a local Italian laboratory in the second quarter to expand our footprint in Italy.”
Conference Call:
Shamir has scheduled a conference call for 11:00 a.m. ET today to discuss fourth 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 47057180. For those unable to participate there will be a replay available from 2:00 p.m. ET on March 14, 2011 through 11:59 p.m. ET, March 21, 2011. Please call: (800) 642.1687 (U.S. and Canada) or (706) 645.9291 (International). The ID code for the replay is 47057180.
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 the Company’s 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 Creation(TM), Shamir Piccolo(TM), Shamir Office(TM), Shamir Autograph(TM), Shamir Attitude(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
jgoldberger@kcsa.com /
roni@km-ir.co.il mcsaby@kcsa.com
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,
2009 2010
---- ----
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $19,929 $15,360
Short-term investment 11,679 12,998
Trade receivables (1) 33,648 34,223
Other receivables and prepaid expenses 7,918 8,190
Inventory 26,946 28,728
------ ------
TOTAL CURRENT ASSETS 100,120 99,499
LONG-TERM INVESTMENTS:
Severance pay fund 2,909 3,013
Long-term receivables 427 604
Investments in affiliates 1,306 1,245
----- -----
TOTAL LONG-TERM INVESTMENTS 4,642 4,862
PROPERTY, PLANT AND EQUIPMENT, NET 38,568 37,927
OTHER ASSETS 7,439 6,069
GOODWILL 12,945 13,942
------ ------
TOTAL ASSETS $163,714 $162,299
======== ========
CURRENT LIABILITIES:
Short-term bank credit and loans $11,033 $8,404
Current maturities of long-term loans 6,879 4,972
Trade payables 11,680 13,133
Accrued expenses and other liabilities 15,447 15,920
------ ------
TOTAL CURRENT LIABILITIES 45,039 42,429
LONG-TERM LIABILITIES:
Long-term loans 12,599 8,866
Capital leases 2,367 1,237
Accrued severance pay 3,270 3,411
Other long-term liabilities 2,763 353
Deferred income taxes 2,224 1,875
----- -----
TOTAL LONG-TERM LIABILITIES 23,223 15,742
Redeemable non-controlling interests 690 2,248
--- -----
EQUITY:
Share capital
Common shares of NIS 0.01 par value
Authorized: 100,000,000 shares at
December 31, 2009 and December 31,
2010; Issued and outstanding:
16,592,345 and 17,132,267 shares at
December 31, 2009 and December 31,
2010, respectively 37 39
Additional paid-in capital 68,230 73,851
Accumulated other comprehensive income (1,122) (2,056)
Retained earnings 24,795 26,107
------ ------
Total Shamir Optical Industry Ltd.
Shareholders' equity 91,940 97,941
Non-controlling interests 2,822 3,939
----- -----
TOTAL EQUITY 94,762 101,880
------ -------
TOTAL LIABILITIES AND EQUITY $163,714 $162,299
======== ========
(1) Net of allowance for doubtful accounts of $ 3,076 and $ 3,409 as
of December 31, 2009 and December 31, 2010, respectively
SHAMIR OPTICAL INDUSTRY LTD.
Consolidated Statements of Income
(US dollars in thousands, except per share data)
Three Months Ended
December 31,
------------------
2009 2010
---- ----
(Unaudited) (Unaudited)
Revenues, net $37,073 $39,073
Cost of revenues 16,700 17,972
------ ------
Gross profit 20,373 21,101
Operating Expenses:
Research and development costs 907 1,334
Selling and marketing expenses 10,537 12,236
General and administrative
expenses 4,387 4,187
-----
Total operating expenses 15,831 17,757
------ ------
Operating income 4,542 3,344
Financial expenses and other, net 158 51
--- ---
Income before taxes on income 4,384 3,293
Taxes on income 822 253
--- ---
Income after taxes on income 3,562 3,040
Equity in losses (earnings) of
affiliates, net 17 59
Net income 3,545 2,981
Net income attributable to non-
controlling interests 201 165
--- ---
Net income attributable to Shamir
Optical Industry Ltd. Shareholders $3,344 $2,816
====== ======
Net earnings per share:
Basic $0.20 $0.17
=====
Diluted $0.20 $0.16
=====
Number of shares:
Basic 16,480 16,847
Dilutive 16,623 17,279
Year Ended December
31,
--------------------
2009 2010
---- ----
(Unaudited)
Revenues, net $142,384 $157,991
Cost of revenues 65,448 71,485
------ ------
Gross profit 76,936 86,506
Operating Expenses:
Research and development costs 3,239 4,579
Selling and marketing expenses 40,959 44,937
General and administrative
expenses 15,410 17,238
------
Total operating expenses 59,608 66,754
------ ------
Operating income 17,328 19,752
Financial expenses and other, net 395 220
--- ---
Income before taxes on income 16,933 19,532
Taxes on income 3,699 3,834
----- -----
Income after taxes on income 13,234 15,698
Equity in losses (earnings) of
affiliates, net (31) 114
Net income 13,265 15,584
Net income attributable to non-
controlling interests 477 772
--- ---
Net income attributable to Shamir
Optical Industry Ltd. Shareholders $12,788 $14,812
======= =======
Net earnings per share:
Basic $0.78 $0.88
=====
Diluted $0.77 $0.87
=====
Number of shares:
Basic 16,438 16,771
Dilutive 16,530 16,945
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
December 31, 31,
------------------ --------------------
2009 2010 2009 2010
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating
income $4,542 $3,344 $17,328 $19,752
Non-GAAP
adjustment:
Stock based
compensation 79 138 451 565
Amortization
of
intangible
assets 385 375 1,148 1,452
Essilor
transaction
costs - 410 - 1,253
Restructuring
costs in
France - 340 - 340
Compensation
to former
Chief
Executive
Officer - - 303 -
--- ---
Non-GAAP
operating
income $5,006 $4,607 $19,230 $23,362
====== ====== ======= =======
Net income
attributable
to Shamir
Optical
Industry
Ltd.
Shareholders $3,344 $2,816 $12,788 $14,812
Non-GAAP
adjustment:
Stock based
compensation 79 138 451 565
Amortization
of
intangible
assets, net 284 276 863 1,075
Essilor
transaction
costs, net - 408 - 1,040
Restructuring
costs in
France, net - 228 - 228
Accretion of
redeemable
non
controlling
interest (64) (1) (64) 2
Compensation
to former
Chief
Executive
Officer, net - - 227 -
--- ---
Non-GAAP net
income
attributable
to Shamir
Optical
Industry
Ltd.
Shareholders $3,643 $3,865 $14,265 $17,722
====== ====== ======= =======
Net earnings
per share:
Basic $0.22 $0.23 $0.87 $1.06
===== ===== ===== =====
Diluted $0.22 $0.22 $0.86 $1.05
===== ===== ===== =====
Number of
shares:
Basic 16,480 16,847 16,438 16,771
Dilutive 16,623 17,279 16,530 16,945
SOURCE Shamir Optical Industries Ltd.
