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Shamir Optical Industry Reports Fourth Quarter and Year-End 2010 Results

March 14, 2011

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.


Source: newswire