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Shamir Optical Industry Ltd. (US Headquarters) (SHMR) Reports Second Quarter 2007 Results


8/22/2007 9:24:18 AM

KIBBUTZ SHAMIR, Israel, Aug. 22 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd. ("Shamir"), a leading provider of innovative products and technology to the progressive ophthalmic lens market, today announced unaudited financial results for the second quarter ended June 30, 2007.

For the quarter ended June 30, 2007, revenues increased by 19.8% to $29.6 million, compared to $24.7 million for the second quarter of 2006. Gross profit for the quarter increased by 13.8% to $15.6 million, or 52.8% of revenues, compared to gross profits of $13.7 million, or 55.6% of revenues for the same period last year.

For the quarter ended June 30, 2007, operating income increased by 33.5% to $2.7 million, or 9.1% of revenues, compared to operating income of $2.0 million, or 8.2% of revenues for the same period last year. Net income for the quarter increased by 20.8% to $2.0 million, or $0.12 per diluted share, compared to net income of $1.7 million for the comparable period in 2006.

Excluding the effects of non-cash stock-based compensation expenses, operating income was $2.8 million, or 9.6% of revenues, compared to operating income of $2.4 million, or 9.9% of revenues, for the same period of 2006.

Excluding the effects of non-cash stock-based compensation expenses, net income for the quarter was $2.2 million, or $0.13 per diluted share, an increase of 4.1% from net income of $2.1 million for the comparable period in 2006.

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 June 30, 2007, the Company had cash and cash equivalents, including short-term investments of $39.6 million.

Commenting on the results, Giora Ben-Ze'ev, Chief Executive Officer of Shamir, said, "During the second quarter Shamir delivered steady results across all of our businesses, which have been performing within their respective budgets."

Mr. Ben-Ze'ev continued, "We made progress in advancing our distribution network by purchasing the remaining 50% of our Israeli marketing company from our partner in August, and the remaining 10% in Shamir Insight from our partner in July. Following these two purchases we are now the sole owner of these operations. In addition, we re-branded our Israeli marketing operation under the name Shamir Israel Optical Marketing Ltd. to capitalize on the growing worldwide recognition of the Shamir brand."

Mr. Ben-Ze'ev concluded, "In terms of our overall strategy, we continue to invest for long-term growth, while monitoring the operational expenses. We believe that our overall performance both for the quarter and the entire first half will position us to achieve these goals. Based on our results through the first six month of 2007, we are increasing our top-line growth forecast for the fiscal year ending on December 31, 2007, from the previously provided range of 10%-18% revenue growth, to 12%-20%."

Conference Call:

Shamir has scheduled a conference call for 9:00 a.m. today to discuss first quarter results. To participate in the call, please dial 888-694-4676 (U.S. and Canada) or 973-582-2737 (International). The conference ID for this event is 9071331. For those unable to participate there will be replay available from 12:00 p.m. EDT on August 22, 2007 through 11:59 p.m. EDT, August 29, 2007. Please call: 1-877-519-4471 (U.S. and Canada) 1-973-341-3080 (International). The ID code for the replay is 9071331.

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, 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 progressive 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 Worldwide +972-3-516-7620 212-896-1249/212-896-1236 roni@km-ir.co.iljgoldberger@kcsa.com / 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 June 30, ---------------- -------------- 2006 2007 ---------------- -------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 23,205 $21,318 Short-term investment 16,911 18,234 Trade receivables (1) 23,903 31,440 Other receivables and prepaid expenses 6,579 7,877 Inventory 27,898 25,035 ---------------- -------------- TOTAL CURRENT ASSETS 98,496 103,904 LONG-TERM INVESTMENTS: Severance pay fund 2,542 2,888 Loan to a related party 1,297 71 Loan to others 240 - Investments in affiliates 3,513 4,336 ---------------- -------------- TOTAL LONG-TERM INVESTMENTS 7,592 7,295 PROPERTY, PLANT AND EQUIPMENT, NET 28,368 33,118 OTHER ASSETS 5,362 5,702 GOODWILL 7,178 7,218 ---------------- -------------- TOTAL ASSETS $146,996 $157,237 ================ ============== CURRENT LIABILITIES: Short-term bank credit and loans $ 13,654 $ 14,933 Current maturities of long-term loans 4,428 5,508 Trade payables 8,930 12,041 Dividend payable - 4,000 Accrued expenses and other liabilities 11,544 11,416 ---------------- -------------- TOTAL CURRENT LIABILITIES 38,556 47,898 LONG-TERM LIABILITIES: Long-term loans 17,995 18,317 Capital leases 4,304 4,074 Accrued severance pay 2,828 3,167 Other long-term liabilities - 480 Deferred income taxes 1,287 1,183 ---------------- -------------- TOTAL LONG-TERM LIABILITIES 26,414 27,221 MINORITY INTERESTS 2,223 1,718 ---------------- -------------- SHAREHOLDERS' EQUITY: Share capital Common shares of NIS 0.01 par value Authorized: 100,000,000 shares at December 31, 2006 and June 30, 2007; Issued and outstanding: 16,256,514 shares at December 31, 2006 and June 30, 2007 37 37 Additional paid-in capital 65,599 66,092 Accumulated other comprehensive income 958 1,061 Retained earnings 13,209 13,210 ---------------- -------------- TOTAL SHAREHOLDERS' EQUITY 79,803 80,400 ---------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $146,996 $157,237 ================ ============== (1) Net of allowance for doubtful accounts of $ 1,053 and $ 1,362 as of December 31, 2006 and June 30, 2007, 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, ----------------------- ----------------------- 2006 2007 2006 2007 --------- --------- --------- --------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues, net $24,661 $29,551 $47,773 $58,889 Cost of revenues 10,953 13,948 20,780 27,875 --------- --------- --------- --------- Gross profit 13,708 15,603 26,993 31,014 Operating Expenses: Research and development costs 600 632 1,141 1,262 Selling and marketing expenses 8,521 9,200 16,293 17,508 General and administrative expenses 2,570 3,078 5,147 6,210 --------- --------- --------- --------- Total operating expenses 11,691 12,910 22,581 24,980 --------- --------- --------- --------- Operating income 2,017 2,693 4,412 6,034 Financial expenses and other, net 268 100 277 158 --------- --------- --------- --------- Income before taxes on income 1,749 2,593 4,135 5,876 Taxes on income 668 1,043 1,653 2,075 --------- --------- --------- --------- Income after taxes on income 1,081 1,550 2,482 3,801 Equity in losses (earnings) of affiliates, net 67 (26) 79 3 Minority interest in losses of subsidiaries (658) (444) (1,343) (532) --------- --------- --------- --------- Net income $1,672 $2,020 $3,746 $4,330 ========= ========= ========= ========= Net earnings per share: Basic $0.10 $ 0.12 $ 0.23 $ 0.27 ========= ========= ========= ========= Diluted $0.10 $ 0.12 $ 0.23 $ 0.26 ========= ========= ========= ========= Number of shares: Basic 16,257 16,257 16,257 16,257 Dilutive 16,549 16,548 16,552 16,545 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, ----------------------- ----------------------- 2006 2007 2006 2007 --------- --------- --------- --------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating income $2,017 $2,693 $4,412 $6,034 Non-GAAP adjustment: Stock based compensation (419) (157) (712) (493) --------- --------- --------- --------- Non-GAAP operating income $ 2,436 $2,850 5,124 6,527 ========= ========= ========= ========= Net income $1,672 $2,020 $3,746 $4,330 Non-GAAP adjustment: Stock based compensation, net (419) (157) (712) (493) ========= ========= ========= ========= Non-GAAP net income $ 2,091 $2,177 $4,458 $4,823 ========= ========= ========= ========= Non-GAAP net earnings per share : Basic $0.13 $ 0.13 $ 0.27 $ 0.30 ========= ========= ========= ========= Diluted $0.13 $ 0.13 $ 0.27 $ 0.29 ========= ========= ========= ========= Number of shares: Basic 16,257 16,257 16,257 16,257 Dilutive 16,549 16,548 16,552 16,545

Shamir Optical Industry Ltd.

CONTACT: Roni Gavrielov, KM - KCSA Investor Relations, +972-3-516-7620,roni@km-ir.co.il; or Jeffrey Goldberger, +1-212-896-1249,jgoldberger@kcsa.com, or Marybeth Csaby, +1-212-896-1236, mcsaby@kcsa.com,both of KCSA Worldwide


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