Shamir Optical Industry
Shamir Optical Industry Ltd. Reports Fourth Quarter and Year-End 2007 Results
Thursday 06 March 2008
KIBBUTZ SHAMIR, Israel, March 6 /PRNewswire-FirstCall/ -- Shamir Optical Industry Ltd. (NASDAQ: SHMR) ("Shamir"), a leading provider of innovative products and technology to the progressive ophthalmic lens market, today announced unaudited financial results for the fourth quarter and year ended December 31, 2007.
For the fourth quarter of 2007, revenues increased 20.3% to $30.6 million, compared to revenues of $25.4 million for the fourth quarter of 2006. Gross profit for the quarter was $17.4 million, or 56.7% of revenues, compared to gross profit of $13.3 million, or 52.4% of revenues for the same period last year. The gross profit for the fourth quarter of 2007 was influenced, by among other things, from a special grant received by one of our subsidiaries from its local government. The impact of this grant on the Company's gross profit for the fourth quarter of 2007 was approximately $0.6 million or 2% of revenues.
For the fourth quarter of 2007, operating income increased 112.9% to $2.7 million, or 8.8% of revenues, compared to operating income of $1.3 million, or 5% of revenues for the same period last year.
Net income for the fourth quarter increased 11.9% to $1.6 million or $0.09 per diluted share, compared to net income of $1.4 million, or $0.08 per diluted share, for the comparable period in 2006.
During this quarter we provided a valuation allowance on deferred tax assets related to our European subsidiaries. The impact of this valuation allowance on our tax expenses this quarter was an additional expense of $1.1 million, while the impact on our net profit was $0.6 million.
Excluding the effects of non-cash stock-based compensation expenses for the fourth quarter of 2007, operating income increased 88% to $3 million, or 9.8% of revenues, compared to operating income of $1.6 million, or 6.2% of revenues, for the same period last year.
Excluding the effect of non-cash stock-based compensation expenses and valuation allowance provided on deferred tax assets, net of minority interest, the net income for the quarter increased 41.2% to $2.4 million, compared to $1.7 million for the comparable period in 2006. The reconciliation of GAAP net income to non-GAAP net income is set forth below.
For the year ended December 31, 2007, revenues increased 23.8% to $120.4 million, compared to revenues of $97.3 million for the same period of 2006. Gross profit for the year increased 21.3% to $64.6 million, or 53.6% of revenues, compared to a gross profit of $53.2 million, or 54.7% of revenues for the same period last year.
For the year ended December 31, 2007, operating income increased 67.9% to $11.9 million, or 9.9% of revenues, compared to operating income of $7.1 million, or 7.3% of revenues for the same period last year. Net income for the year was $8.2 million or $0.50 per diluted share, an increase of 27.0% compared to net income of $6.5 million or $0.39 per diluted share for the comparable period in 2006
For the year ended December 31, 2007, excluding the effects of non-cash stock-based compensation expenses, operating income was $12.9 million, or 10.7% of revenues, compared to operating income of $8.5 million, or 8.8% of revenues, for the same period last year.
Excluding the effect of non-cash stock-based compensation expenses and valuation allowance provided on deferred tax assets, net of minority interest, the net income for the year was $9.8 million, or 8.1% of revenues, an increase of 24.3% from net income of $7.9 million, or 8.1% of revenues, 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 December 31, 2007, the Company had cash and cash equivalents, including short-term investments of $33.3 million.
Commenting on its fourth quarter results, Giora Ben-Ze'ev, Chief Executive Officer of Shamir, said, "Throughout 2007 Shamir made considerable operational progress in each of its markets. Our increased revenue is a strong reflection of the quality of Shamir's products and services, and a testament to our growing sales and marketing capabilities. During the year, we dedicated considerable resources to bolstering our ability to deliver the highest quality lenses and to further developing our relationships with our partners and customers. We are confident that the investments we have made in our people, technology and geographic expansion was money well spent, and better positions Shamir for long-term growth."
"Much of our strength during the quarter came out of our European and US operations, where we focused on building sales and marketing capabilities, establishing local management and controlling expense levels. We have recently begun to realize the benefits of these actions."
Mr. Ben-Ze'ev added, "Recently, we increased our interest in our lab in Mexico to approximately 51%, reflecting the strength of this operation and the opportunity we believe that exists in the country."
Mr. Ben-Ze'ev concluded, "Our revenue growth initiatives in 2007 have helped us gain additional market share and will support our future progress. Our geographic expansion program continues to gain momentum and we are working diligently to grow our operations in a controlled manner. We will continue to monitor our expense levels and remain committed to increasing profitability, while delivering quality and innovative progressive lenses, molds and technology solutions to our customers in 2008."
For the fiscal year ending on December 31, 2008, Shamir currently estimates its 2008 operations revenues growth in the range of 8%-14%, under the assumption of December 2007 exchange rates.
Conference Call:
Shamir has scheduled a conference call for 9:00 a.m. today to discuss fourth quarter results. To participate in the call, please dial (800) 254- 5933 (U.S. and Canada) or (973) 409-9255 (International). The conference ID for this event is #36436398. For those unable to participate there will be replay available from 12:00 p.m. EST on March 6, 2008, through 11:59 p.m. EDT, March 13, 2008. Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International). The ID code for the replay is #36436398.
The call will be available as a live, listen-only webcast at http://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 and the valuation allowance provided on deferred tax assets, net of minority interest, 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 Genesisâ„¢, Shamir Piccoloâ„¢, Shamir Officeâ„¢, Shamir Nanoâ„¢, Shamir Autographâ„¢ and Shamir Smartâ„¢. 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.
(Tables to follow)
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,
------------------ ------------------
2006 2007
------------------ ------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $23,205 $18,953
Short-term investment 16,911 14,375
Trade receivables (1) 23,903 30,719
Other receivables and prepaid
expenses 6,579 7,579
Inventory 27,898 27,972
------------------ ------------------
TOTAL CURRENT ASSETS 98,496 99,598
LONG-TERM INVESTMENTS:
Severance pay fund 2,542 3,089
Loan to a related party 1,297 -
Loan to others 240 -
Long-term receivables - 1,299
Investments in affiliates 3,513 4,437
------------------ ------------------
TOTAL LONG-TERM INVESTMENTS 7,592 8,825
PROPERTY, PLANT AND EQUIPMENT, NET 28,368 39,170
OTHER ASSETS 5,362 5,356
GOODWILL 7,178 7,542
------------------ ------------------
TOTAL ASSETS $146,996 $160,491
================== ==================
CURRENT LIABILITIES:
Short-term bank credit and loans $13,654 $15,950
Current maturities of long-term
loans 4,428 7,689
Trade payables 8,930 10,852
Accrued expenses and other
liabilities 11,544 12,735
------------------ ------------------
TOTAL CURRENT LIABILITIES 38,556 47,226
LONG-TERM LIABILITIES:
Long-term loans 17,995 17,491
Capital leases 4,304 4,303
Accrued severance pay 2,828 3,337
Other long-term liabilities - 753
Deferred income taxes 1,287 1,358
------------------ ------------------
TOTAL LONG-TERM LIABILITIES 26,414 27,242
MINORITY INTERESTS 2,223 800
------------------ ------------------
SHAREHOLDERS' EQUITY:
Share capital
Common shares of NIS 0.01 par value
Authorized: 100,000,000 shares at
December 31, 2006 and December 31,
2007; Issued and outstanding:
16,256,514 and 16,423,740 shares
at December 31, 2006 and
December 31, 2007, respectively 37 37
Additional paid-in capital 65,599 66,629
Accumulated other comprehensive income 958 1,628
Retained earnings 13,209 16,929
------------------ ------------------
TOTAL SHAREHOLDERS' EQUITY 79,803 85,223
------------------ ------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $146,996 $160,491
================== ==================
(1) Net of allowance for doubtful accounts of $ 1,053 and $ 2,140 as
of December 31, 2006 and December 31, 2007, respectively.
SHAMIR OPTICAL INDUSTRY LTD.
Consolidated Statements of Income
(US dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
--------------------- ----------------------
2006 2007 2006 2007
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited)
Revenues, net $25,437 $30,596 $97,280 $120,419
Cost of revenues 12,105 13,234 44,038 55,856
-------- --------- --------- ---------
Gross profit 13,332 17,362 53,242 64,563
Operating Expenses:
Research and
development costs 632 663 2,372 2,564
Selling and marketing
expenses 8,462 10,083 32,798 36,552
General and
administrative expenses 2,972 3,921 10,986 13,549
-------- --------- --------- ---------
Total operating expenses 12,066 14,667 46,156 52,665
-------- --------- --------- ---------
Operating income 1,266 2,695 7,086 11,898
Financial expenses
(income) and other, net (111) 106 159 239
-------- --------- --------- ---------
Income before taxes on
income 1,377 2,589 6,927 11,659
Taxes on income (84) 1,661 2,179 5,013
-------- --------- --------- ---------
Income after taxes on
income 1,461 928 4,748 6,646
Equity in losses (gains)
of affiliates, net 150 (65) 245 (46)
Minority interest in
losses of subsidiaries (90) (575) (1,957) (1,509)
-------- --------- --------- ---------
Net income $1,401 $1,568 $6,460 $8,201
======== ========= ========= =========
Net earnings per share:
Basic $0.09 $0.10 $0.40 $0.50
======== ========= ========= =========
Diluted $0.08 $0.09 $0.39 $0.50
======== ========= ========= =========
Number of shares:
Basic 16,257 16,424 16,257 16,339
Dilutive 16,546 16,548 16,548 16,552
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 31, December 31,
----------------------- ---------------------
2006 2007 2006 2007
----------- ----------- --------- -----------
(Unaudited) (Unaudited) (Unaudited)
Operating income $1,266 $2,695 $7,086 $11,898
Non-GAAP adjustment:
Stock based compensation (321) (289) (1,426) (1,030)
----------- ----------- --------- -----------
Non-GAAP operating income $1,587 $2,984 $8,512 $12,928
=========== =========== ========= ===========
Net income
$1,401 $1,568 $6,460 $8,201
Non-GAAP adjustment:
Deferred taxes valuation
allowance net of
minority interest - (575) - (575)
Stock based compensation,
net (321) (289) (1,426) (1,030)
----------- ----------- --------- -----------
Non-GAAP net income $1,722 $2,432 $7,886 $9,806
=========== =========== ========= ===========
Non-GAAP net earnings per
share :
Basic $0.11 $0.15 $0.49 $0.60
=========== =========== ========= ===========
Diluted $0.10 $0.15 $0.48 $0.59
=========== =========== ========= ===========
Number of shares:
Basic 16,257 16,424 16,257 16,339
Dilutive 16,546 16,548 16,548 16,552
SOURCE: Shamir Optical Industry Ltd.
CONTACT: Investors, Roni Gavrielov, KM, KCSA Investor Relations for
Shamir Optical Industry Ltd., +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 Strategic Communications for
Shamir Optical Industry Ltd.
Web site: http://www.kcsa.com/