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Shamir Optical Industry Ltd. Reports Fourth Quarter and Year-End 2007 Results

Thursday, March 6, 2008 General News J E 4
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KIBBUTZ SHAMIR, Israel, March 6 Shamir OpticalIndustry Ltd. (Nasdaq: SHMR) ("Shamir"), a leading provider of innovativeproducts and technology to the progressive ophthalmic lens market, todayannounced unaudited financial results for the fourth quarter and year endedDecember 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. Grossprofit for the quarter was $17.4 million, or 56.7% of revenues, compared togross profit of $13.3 million, or 52.4% of revenues for the same period lastyear. The gross profit for the fourth quarter of 2007 was influenced, by amongother things, from a special grant received by one of our subsidiaries fromits local government. The impact of this grant on the Company's gross profitfor the fourth quarter of 2007 was approximately $0.6 million or 2% ofrevenues.

For the fourth quarter of 2007, operating income increased 112.9% to $2.7million, or 8.8% of revenues, compared to operating income of $1.3 million, or5% of revenues for the same period last year.

Net income for the fourth quarter increased 11.9% to $1.6 million or $0.09per diluted share, compared to net income of $1.4 million, or $0.08 perdiluted share, for the comparable period in 2006.

During this quarter we provided a valuation allowance on deferred taxassets related to our European subsidiaries. The impact of this valuationallowance on our tax expenses this quarter was an additional expense of $1.1million, while the impact on our net profit was $0.6 million.

Excluding the effects of non-cash stock-based compensation expenses forthe fourth quarter of 2007, operating income increased 88% to $3 million, or9.8% of revenues, compared to operating income of $1.6 million, or 6.2% ofrevenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses andvaluation 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 netincome to non-GAAP net income is set forth below.

For the year ended December 31, 2007, revenues increased 23.8% to $120.4million, 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% ofrevenues, compared to a gross profit of $53.2 million, or 54.7% of revenuesfor 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 $7.1million, or 7.3% of revenues for the same period last year. Net income forthe 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 thecomparable period in 2006

For the year ended December 31, 2007, excluding the effects of non-cashstock-based compensation expenses, operating income was $12.9 million, or10.7% of revenues, compared to operating income of $8.5 million, or 8.8% ofrevenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses andvaluation 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 increaseof 24.3% from net income of $7.9 million, or 8.1% of revenues, for the sameperiod last year.

The reconciliation of GAAP operating income and net income to non-GAAPoperating 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 ExecutiveOfficer of Shamir, said,
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