First Quarter Revenues of $23.1 Million KIBBUTZ SHAMIR, Israel, May
16 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd
(NASDAQ:SHMR), a leading provider of innovative products and
technology to the progressive ophthalmic lens market, today
announced financial results for the first quarter ended March 31,
2006. For the first quarter of 2006, revenues were $23.1 million,
an increase of 11.9% compared to revenues of $20.7 million for the
first quarter of 2005. Revenues for the quarter include the
recognition of $0.8 million sales of products that were shipped
during the fourth quarter of 2005. Gross profit for the quarter was
$13.3 million, or 57.5% of revenues, an increase of 21.4% from
gross profit of $10.9 million, or 53.0% of revenues in the same
period last year. Operating income was $2.4 million or 10.4% of
revenues for the first quarter of 2006, representing a decrease of
36.2% from operating income of $3.8 million, or 18.2% of revenues
in the same period last year. The combined efforts to solidify
Shamir's new operations in Turkey and France resulted in a decrease
in operating income of approximately $1.2 million in the quarter.
Net income for the quarter was $2.1 million or $0.13 per diluted
share compared to $1.9 million for the comparable period in 2005.
Excluding the effects of non-cash stock-based compensation
expenses, for the first quarter of 2006, operating income was $2.7
million, or 11.6% of revenues. This was a decrease of 29.8% from
operating income of $3.8 million, or 18.5% of revenues in the same
period last year. Excluding the effects of non-cash stock-based
compensation expenses, and in 2005 also excluding the non-cash tax
expense related to change of tax status, net income for the quarter
was $2.4 million, the same as the comparable period in 2005. The
reconciliation of GAAP net income to adjusted net income is set
forth below in this release. Commenting on the results, Giora
Ben-Zeev, Chief Executive Officer of Shamir Optical said, "Our
results this quarter reflected positive momentum companywide. We
achieved our overall financial objectives, and we made considerable
progress relative to operational goals in several of our business
units." "Shamir Insight Inc., our subsidiary in the United States,
continued to experience significant revenue growth, and performance
from our European division was according to plan. Additionally,
this quarter was the first quarter to reflect Shamir's controlling
interest in our South African subsidiary." Mr. Ben-Zeev continued,
"During the first quarter we continued ramping up our activities in
Altra Turkey. In Altra France we continued to establish our
platform and completed most of the necessary preparations to
support our activities, which we expect will start to contribute to
our results in the second quarter of 2006. However, our efforts to
build out these operations during the quarter resulted in the
aforementioned decline in operating income." "Finally, we are in
the process of acquiring up to a 51% interest in a laboratory in
Thailand. We are excited about this opportunity, which will not
only allow us to penetrate the Thai market, but will also serve as
a platform to support our worldwide operations. A purchase
agreement has been signed. The closing is subject to legal and
financial due diligence and to the approval of Shamir's board of
directors." Mr. Ben-Zeev concluded, "Throughout the remainder of
2006, we will focus on expanding the presense of Shamir's products
and services in existing markets, and in new markets through
strategic acquisitions and partnerships." Conference Call: Shamir
Optical has scheduled a conference call for 9 a.m. EDT today, May
16, to discuss the first quarter results. To participate in the
call, please dial 888-802-8571 (U.S. and Canada), or 973-582-2794
(International). The ID code for the conference call is 7369641.
For those unable to participate there will be a replay available
from 12:00 p.m. EDT on May 16, 2006 through 11:59 p.m. EDT, May 23,
2006. To listen to the replay, please call: 877-519-4471 (U.S. and
Canada), 973-341-3080 (International). The ID code for the replay
is 7369641. The call will be available as a live, listen-only
webcast at http://www.kcsa.com/. An archive of the webcast will be
available approximately 2 hours after the conclusion of the live
call. To listen to the live call, please go to the KCSA Web site at
least 15 minutes prior to the scheduled start time to register,
download and install any necessary audio software. About non-GAAP
financial measures This press release includes a financial measure
defined as a non-GAAP financial measure by the Securities and
Exchange Commission: adjusted operating income and adjusted net
income. This measure may be different from non-GAAP financial
measures used by other companies. 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 Optical
Industry Ltd believes that adjusted operating income and adjusted
net income provides meaningful supplemental information in that
these numbers exlude the non-cash, one-time charge related to tax
effects from when we changed the structure of our company from an
A.C.S. into an Israeli limited liability company, and the effect of
non-cash stock-based compensation expenses. 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), and Shamir Autograph(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 This press release does not constitute an offer to sell
or the solicitation of an offer to buy, nor shall there be any sale
of, any securities described herein in any state in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
Statements concerning Shamir's business outlook or future economic
performance; product introductions and plans and objectives related
thereto; and statements concerning 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 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; possible
business disruptions from acquisitions; 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. SHAMIR OPTICAL INDUSTRY LTD Consolidated Balance Sheet (US
dollars in thousands, except share and per share data) As of
December 31, As of March 31, ------------------ ---------------
2005 2006 ------------------ --------------- Cash and cash
equivalents $27,502 $22,394 Short-term investment 14,474 19,453
Trade receivables (1) 17,230 20,770 Other receivables and prepaid
expenses 3,648 4,023 Inventory 19,735 24,325 ------------------
--------------- TOTAL CURRENT ASSETS 82,589 90,965 LONG-TERM
INVESTMENTS: Severance pay fund 2,032 2,130 Long-term loan to a
related party 311 418 Investments in affiliates 679 719
------------------ --------------- TOTAL LONG-TERM INVESTMENTS
3,022 3,267 PROPERTY, PLANT AND EQUIPMENT, NET 19,903 22,957 OTHER
ASSETS 4,402 5,112 GOODWILL 6,745 7,027 ------------------
--------------- TOTAL ASSETS $116,661 $129,328 ==================
=============== CURRENT LIABILITIES: Short-term bank credit and
loans $8,403 $8,681 Current maturities of long-term loans 2,447
2,425 Trade payables 8,072 10,563 Accrued expenses and other
liabilities 8,996 10,677 ------------------ --------------- TOTAL
CURRENT LIABILITIES 27,918 32,346 LONG-TERM LIABILITIES: Long-term
loans 7,718 13,261 Accrued severance pay 2,256 2,390 Deferred
income taxes 886 1,089 ------------------ --------------- TOTAL
LONG-TERM LIABILITIES 10,860 16,740 MINORITY INTERESTS 6,772 6,617
------------------ --------------- SHAREHOLDERS' EQUITY: Share
capital Common shares of NIS 0.01 par value Authorized: 100,000,000
shares at December 31, 2005 and March 31, 2006; Issued and
outstanding: 16,256,514 shares at December 31, 2005 and March 31,
2006 37 37 Additional paid-in capital 64,778 64,189 Deferred stock
compensation (882) - Accumulated other comprehensive income 429 577
Retained earnings 6,749 8,822 ------------------ ---------------
TOTAL SHAREHOLDERS' EQUITY 71,111 73,625 ------------------
--------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $116,661
$129,328 ================== =============== (1) Net of allowance
for doubtful accounts of $ 474 and $ 585 as of December 31, 2005
and March 31, 2006, respectively. SHAMIR OPTICAL INDUSTRY LTD
Consolidated Statement of Income (US dollars in thousands, except
per share data) Three Months Ended March 31,
---------------------------- 2005 2006 ----------- -----------
(Unaudited) (Unaudited) Revenues, net $20,654 $23,112 Cost of
revenues 9,713 9,827 ----------- ----------- Gross profit 10,941
13,285 Operating Expenses: Research and development costs 434 541
Selling and marketing expenses 5,139 7,772 General and
administrative expenses 1,613 2,577 ----------- ----------- Total
operating expenses 7,186 10,890 ----------- ----------- Operating
income 3,755 2,395 Financial expenses (income) and other, net (54)
9 ----------- ----------- Income before taxes on income 3,809 2,386
Taxes on income 1,661 985 ----------- ----------- Income after
taxes on income 2,148 1,401 Equity in losses of affiliates, net -
12 Minority interest in earnings (losses) of subsidiaries 268 (685)
----------- ----------- Net income $1,880 $2,074 ===========
=========== Non-GAAP adjustment: Non-cash tax expenses related to
change of tax status (414) - Stock based compensation, net (72)
(293) ----------- ----------- Non-GAAP net income $2,366 $2,367
=========== =========== Net earnings per share: Basic $0.14 $0.13
=========== =========== Diluted $0.14 $0.13 =========== ===========
Non-GAAP net earnings per share : Basic $0.18 $0.15 ===========
=========== Diluted $0.17 $0.14 =========== =========== Number of
shares: Basic 13,278 16,256 Dilutive 13,717 16,555 FOR FURTHER
INFORMATION CONTACT Investor Relations Contacts: Jeffrey Goldberger
/ Marybeth Csaby Roni Gavrielov / Asaf Porat KCSA Worldwide KM /
KCSA Investor Relations 212-896-1249 / 212-896-1236 +972-3-516-7620
/ / DATASOURCE: Shamir Optical Industry Ltd CONTACT: Investor
Relations Contacts - Jeffrey Goldberger, +1-212-896-1249, , or
Marybeth Csaby, +1-212-896-1236, , both of KCSA Worldwide; Roni
Gavrielov, , or Asaf Porat, , both of KM/KCSA Investor Relations,
+972-3-516-7620
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