Shamir Optical Industry Ltd Reports First Quarter 2006 Results17 May 2006
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
jgoldberger@kcsa.com/ mcsaby@kcsa.com roni@km-ir.co.il/asaf@km-ir.co.il
Source: prnewswire
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