Shamir Optical Industry Ltd. Reports Third Quarter 2010 Results

KIBBUTZ SHAMIR, Israel, Nov. 23, 2010 /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, 2010.

For the quarter ended September 30, 2010, revenues increased 4.7% to $37.8 million, compared with revenues of $36.2 million for the same period in 2009. Gross profit for the quarter was $20.8 million, or 54.9% of revenues, compared with gross profit of $19.7 million, or 54.6% of revenues for the same period last year.

For the quarter ended September 30, 2010, operating income decreased 7.0% to $4.5 million, or 11.9% of revenues, compared with operating income of $4.8 million, or 13.4% of revenues for the same period last year.  The reduction in operating income year-over-year was primarily the result of increased research and development costs and elevated general and administrative costs associated with the Company's recently announced transaction with Essilor International.

Net income for the quarter increased 18.5% to $4.3 million, compared with net income of $3.7 million for the same period in 2009. Net income attributable to Shamir's shareholders was $4.2 million or $0.25 per diluted share, compared with $3.6 million or $0.22 per diluted share for the same period in 2009.

Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets and Essilor transaction costs in 2010, operating income  for the quarter was $5.5 million, or 14.5% of revenues, compared with operating income of $5.2 million, or 14.3% of revenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses, amortization of intangible assets, net of tax, accretion of redeemable non-controlling interest and Essilor transaction costs, net of tax in 2010, net income attributable to Shamir's shareholders for the quarter was $4.8 million, or $0.29 per diluted share, compared with net income of $3.9 million, or $0.24 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, 2010, the Company had cash and cash equivalents, including short-term investments of $37.8 million.  As was previously announced, the Company declared a dividend in the amount of $13.5 million (approximately $0.804 per share) to be paid on November 24, 2010.

Commenting on the results, Amos Netzer, Chief Executive Officer of Shamir, said, "I am pleased with our results for the third quarter of 2010  We executed solidly and continued to make important inroads in many of our operating markets, with the goal of advancing the recognition for Shamir-branded products. Concurrent with these efforts, we continue to stress the importance of strict cost controls, which has always been a major component of our operating philosophy."

Mr. Netzer continued, "To support our long range goals of expanding our worldwide sales, we recently executed an agreement with a local distributor of our products in the Netherlands. We are confident in our ability to penetrate and expend our holdings in this market and to promote the Shamir brand in the Benelux region."

For the fiscal year ending December 31, 2010, Shamir confirmed its estimate for 2010 revenue growth to be in the range of 11%-15%, under the assumption of December 2009 exchange rates.

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 23919422.  For those unable to participate there will be a replay available from 1:00 p.m. ET on November 23, 2010, through 11:59 p.m. ET, November 30, 2010.  Please call: (800) 642.1687 (U.S. and Canada) or (706) 645.9291 (International).  The ID code for the replay is 23919422.

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 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.

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SOURCE Shamir Optical Industry Ltd.