================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
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REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
REPORT ON FORM 6-K DATED OCTOBER 13, 2010
Commission File Number: 000-51183
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SHAMIR OPTICAL INDUSTRY LTD.
(Translation of Registrant's Name Into English)
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Kibbutz Shamir, Upper Galilee, 12135
(Address of principal executive offices)
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(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form 20-F [X] Form 40-F [_]
(Indicate by check whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes [_] No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b);82-_______)
This report on Form 6-K is hereby incorporated by reference into the
registration statements on Form S-8 filed by the Registrant with the Securities
and Exchange Commission on September 28, 2006 (File No. 333-137628), on
September 10, 2007 (File No. 333-137628) and on September 10, 2008 (File No.
333-153396).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Shamir Optical Industry Ltd.
(Registrant)
Date: October 13, 2010
By: /s/ David Bar-Yosef
------------------------------
David Bar-Yosef, Advocate
General Counsel
SHAMIR OPTICAL INDUSTRY LTD.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2010
IN U.S. DOLLARS
UNAUDITED
INDEX
PAGE
---------
INTERIM CONSOLIDATED BALANCE SHEETS 2 - 3
INTERIM CONSOLIDATED STATEMENTS OF INCOME 4
INTERIM STATEMENTS OF EQUITY 5
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 6 - 7
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8 - 15
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
DECEMBER 31, JUNE 30,
2009 2010
-------- --------
UNAUDITED
--------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,929 $ 19,078
Short-term investments 11,679 14,909
Trade receivables (Net of allowance for doubtful accounts of $ 3,076 and
$ 3,021 at December 31, 2009 and June 30, 2010, respectively) 33,648 35,513
Other accounts receivable and prepaid expenses 7,918 7,968
Inventory 26,946 25,471
-------- --------
TOTAL current assets 100,120 102,939
-------- --------
LONG-TERM INVESTMENTS:
Severance pay fund 2,909 2,761
Long-term receivables 427 371
Investments in affiliates and others 1,306 1,257
-------- --------
TOTAL long-term investments 4,642 4,389
-------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 38,568 35,165
-------- --------
OTHER ASSETS 7,439 6,365
-------- --------
GOODWILL 12,945 13,218
-------- --------
TOTAL assets $163,714 $162,076
======== ========
The accompanying notes are an integral part of the interim consolidated
financial statements.
2
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31, JUNE 30,
2009 2010
--------- ---------
UNAUDITED
---------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and loans $ 11,033 $ 8,349
Current maturities of long-term loans and capital leases 6,879 4,917
Trade payables 11,680 13,903
Accrued expenses and other liabilities 15,447 14,233
--------- ---------
TOTAL current liabilities 45,039 41,402
--------- ---------
LONG-TERM LIABILITIES:
Long-term loans 12,599 9,232
Capital leases 2,367 1,726
Accrued severance pay 3,270 3,180
Other long-term liabilities 2,763 1,368
Deferred tax liabilities 2,224 2,075
--------- ---------
TOTAL long-term liabilities 23,223 17,581
--------- ---------
Redeemable non-controlling interests 690 2,022
--------- ---------
EQUITY:
Shamir Optical Industry Ltd.'s shareholders' equity:
Share capital -
Ordinary shares of NIS 0.01 par value -
Authorized: 100,000,000 shares at December 31, 2009 and June 30, 2010; Issued
and outstanding: 16,592,345 and 16,778,908 shares at December 31, 2009 and
June 30, 2010, respectively 37 38
Additional paid-in capital 68,230 70,019
Accumulated other comprehensive loss (1,122) (5,036)
Retained earnings 24,795 32,640
--------- ---------
TOTAL Shamir Optical Industry Ltd. shareholders' equity: 91,940 97,661
Non-controlling interests 2,822 3,410
--------- ---------
TOTAL equity 94,762 101,071
--------- ---------
TOTAL liabilities and equity $ 163,714 $ 162,076
========= =========
The accompanying notes are an integral part of the interim consolidated
financial statements.
3
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
2009 2010 2009 2010
----------- ----------- ----------- -----------
UNAUDITED
--------------------------------------------------------------------
Revenues, net $ 35,234 $ 40,978 $ 69,154 $ 81,073
Cost of revenues 16,273 18,181 32,338 36,438
----------- ----------- ----------- -----------
Gross profit 18,961 22,797 36,816 44,635
----------- ----------- ----------- -----------
Operating expenses:
Research and development 789 1,058 1,530 2,147
Selling and marketing 10,283 10,807 20,148 21,977
General and administrative 3,815 4,492 7,195 8,606
----------- ----------- ----------- -----------
Total operating expenses 14,887 16,357 28,873 32,730
----------- ----------- ----------- -----------
Operating income 4,074 6,440 7,943 11,905
Financial income (expenses) and other, net 931 (851) 98 (1,017)
----------- ----------- ----------- -----------
Income before taxes on income 5,005 5,589 8,041 10,888
Taxes on income 1,184 1,233 2,051 2,510
----------- ----------- ----------- -----------
Income after taxes on income 3,821 4,356 5,990 8,378
Equity in gains (losses) of affiliates, net 34 (28) 61 (27)
Accretion of redeemable non-controlling
interest - 12 - (95)
----------- ----------- ----------- -----------
Net income 3,855 4,340 6,051 8,256
Net income attributable to non-controlling
interests (159) (188) (233) (411)
----------- ----------- ----------- -----------
Net income attributable to Shamir Optical
Industry Ltd. $ 3,696 $ 4,152 $ 5,818 $ 7,845
=========== =========== =========== ===========
Net earnings per share:
Basic $ 0.23 $ 0.25 $ 0.35 $ 0.47
=========== =========== =========== ===========
Diluted $ 0.22 $ 0.25 $ 0.35 $ 0.47
=========== =========== =========== ===========
The accompanying notes are an integral part of the interim consolidated
financial statements.
4
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM STATEMENTS OF EQUITY (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
ACCUMULATED
ADDITIONAL OTHER TOTAL
NUMBER SHARE PAID-IN COMPREHENSIVE RETAINED COMPREHENSIVE NON-CONTROLLING TOTAL
SIX MONTHS ENDED JUNE 30, 2009 OF SHARES CAPITAL CAPITAL LOSS EARNINGS INCOME INTERESTS EQUITY
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance as of January 1, 2009 16,423,740 $ 37 $ 67,362 $*)(2,637) $ 22,007 $ 1,250 $ 88,019
Stock based compensation related to options granted
to employees - - 312 - - - 312
Distribution of earnings to non-controlling interests - - - - - (37) (37)
Comprehensive income:
Foreign currency translation adjustments - - - 695 - $ 695 178 873
Unrealized gain on short-term investments, net
of tax - - - 52 - 52 - 52
Net income - - - - 5,818 5,818 233 6,051
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total comprehensive income $ 6,565
==========
Balance as of June 30, 2009 16,423,740 $ 37 $ 67,674 $*)(1,890) $ 27,825 $ 1,624 $ 95,270
========== ========== ========== ========== ========== ========== ==========
ACCUMULATED
ADDITIONAL OTHER TOTAL
NUMBER SHARE PAID-IN COMPREHENSIVE RETAINED COMPREHENSIVE NON-CONTROLLING TOTAL
SIX MONTHS ENDED JUNE 30, 2010 OF SHARES CAPITAL CAPITAL LOSS EARNINGS INCOME INTERESTS EQUITY
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance as of January 1, 2010 16,592,345 $ 37 $ 68,230 $*)(1,122) $ 24,795 $ 2,822 $ 94,762
Stock based compensation related to options granted
to employees - - 288 - - - 288
Exercise of options granted to employees 186,563 1 1,501 1,502
Issuance of shares to non-controlling interest
(Shamir)ens Thailand) - - - 133 133
Comprehensive income:
Foreign currency translation adjustments - - - (3,932) - $ (3,932) 44 (3,888)
Unrealized gain on short-term investments,
net of tax - - - 18 - 18 - 18
Net income - - - - 7,845 7,845 411 8,256
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total comprehensive income $ 3,931
==========
Balance as of June 30, 2010 16,778,908 $ 38 $ 70,019 $*)(5,036) $ 32,640 $ 3,410 $ 101,071
========== ========== ========== ========== ========== ========== ==========
*) Represent an amount of $ (2,633), $ (1,939), $ (1,305) and $ (5,238)
foreign currency translation adjustment as of January 1, 2009, June 30,
2009, January 1, 2010 and June 30, 2010, respectively, and $ (4), $ 49, $
183 and $ 202 gain (loss) on short-term investment, net of tax, as of
January 1, 2009, June 30, 2009, January 1, 2010 and June 30, 2010,
respectively.
The accompanying notes are an integral part of the interim consolidated
financial statements.
5
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
SIX MONTHS ENDED JUNE 30,
------------------------
2009 2010
-------- --------
UNAUDITED
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,051 $ 8,256
Adjustments required to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 4,017 4,395
Stock based compensation 312 288
Accrued severance pay, net (109) 58
Currency fluctuations of long-term loans (6) (15)
Decrease (Increase) in deferred tax assets, net (233) 217
Accretion of redeemable non controlling interest - 95
Equity in losses (gains) of affiliates, net (61) 27
Interest receivable on short-term investments 20 35
Foreign currency translation losses (gains) (663) 491
Increase in trade receivables (4,088) (4,199)
Decrease (increase) in other accounts receivable and prepaid expenses and long-term
receivables 1,505 (845)
Decrease (increase) in inventory 907 (338)
Increase in trade payables 3,040 2,878
Increase in accrued expenses and other liabilities and in other long-term
liabilities 1,910 132
Others (12) (66)
-------- --------
Net cash provided by operating activities 12,590 11,409
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans granted to affiliates (65) -
Investment in affiliates (331) -
Consideration for Shamir Insight Inc. ("SII") share acquisitions (357) (799)
Purchase of intangible assets (100) -
Purchase of property, plant and equipment (1,365) (3,047)
Proceeds from sale of property and equipment 53 121
Purchase of short-term investments (12,374) (3,756)
Proceeds from sale of short-term investments 5,112 515
-------- --------
Net cash used in investing activities (9,427) (6,966)
-------- --------
The accompanying notes are an integral part of the interim consolidated
financial statements.
6
SHAMIR OPTICAL INDUSTRY LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30,
------------------------
2009 2010
-------- --------
UNAUDITED
------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution of earnings to shareholders - (514)
Short-term bank credit and loans, net (1,452) (1,377)
Issuance of shares to non-controlling interest - 133
Proceeds from exercise of options granted to employees - 1,502
Repayment of long-term loans (6,162) (3,737)
Repayment of capital lease obligations (1,142) (864)
-------- --------
Net cash used in financing activities (8,756) (4,857)
-------- --------
Effect of exchange rate differences on cash and cash equivalents 179 (437)
-------- --------
Decrease in cash and cash equivalents (5,414) (851)
Cash and cash equivalents at beginning of period 18,276 19,929
-------- --------
Cash and cash equivalents at end of the period $ 12,862 $ 19,078
======== ========
SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Purchase of property, plant and equipment by capital lease $ - $ 120
======== ========
Consideration for acquisition of non-controlling interest in Shamir Optic GmbH $ - $ 230
======== ========
Consideration for SII share acquisition $ 99 $ 229
======== ========
The accompanying notes are an integral part of the interim consolidated
financial statements
7
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 1:- GENERAL
The financial information in this interim report includes the results of
Shamir Optical Industry Ltd. (the "Company"), and its subsidiaries. The
Company was incorporated under the laws of the State of Israel in the early
1970s. Shamir and its subsidiaries (collectively - "Shamir") design,
develop, manufacture and market optical progressive and other lenses and
molds. As of June 30, 2010, Shamir had 20 subsidiaries all over the world.
Some of the subsidiaries engage in production of Shamir products, some are
optical laboratories that process lenses for the opticians, and some engage
in marketing and distributing of ophthalmic products.
On March 16, 2005, the Company completed an Initial Public Offering ("IPO")
on the NASDAQ stock exchange and issued 3,400,000 Ordinary shares of NIS
0.01 par value in a net consideration of approximately $ 42,275 (excluding
tax benefit of $ 1,453).
Most of the raw materials used in the manufacture of lenses, including
Shamir's products, are available from a limited number of suppliers. Shamir
purchases its raw materials from some of these suppliers. In addition, a
certain part of the production process of Shamir's lenses is supplied by a
limited number of worldwide sub-contractors. The loss of any one of these
suppliers or sub-contractors, or a significant decrease in the supply of
monomers or services, would require Shamir to obtain these raw materials or
services elsewhere. If Shamir is unable to obtain monomers or services from
its suppliers (or alternative suppliers) or sub-contractors at acceptable
prices, Shamir may realize lower margins and experience difficulty in
meeting its customers' requirements.
As for major customer data, see Note 8d.
NOTE 2:- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include
all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three and
six months ended June 30, 2010, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2010.
b. The interim consolidated financial statements incorporate the
financial statements of the Company and all of its subsidiaries. All
significant intercompany balances and transactions have been
eliminated upon consolidation.
c. The significant accounting policies applied in the annual consolidated
financial statements of the Company as of December 31, 2009, contained
in the Company's Annual Report on Form 20-F filed with the Securities
and Exchange Commission on June 28, 2010, have been applied
consistently in these unaudited interim consolidated financial
statements.
8
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 3:- NEW ACCOUNTING PRONOUNCEMENTS
In April 2010, the Financial Accounting Standards Board (the "FASB")
issued guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for
research or development transactions. The guidance is effective on a
prospective basis for milestones achieved in fiscal years, and interim
periods within those years, beginning on or after June 15, 2010, with
early adoption permitted. The Company does not expect a material
impact on the Company's consolidated financial statements upon the
adoption of the new accounting standard.
In January 2010, the FASB issued Accounting Standards Update "ASU" No.
2010-06, "Improving Disclosures about Fair Value Measurements," which
requires disclosures about inputs and valuation techniques used to
measure fair value, as well as disclosures about significant
transfers, beginning in the first quarter of 2010. Additionally, these
amended standards require presentation of disaggregated activity
within the reconciliation for fair value measurements using
significant unobservable inputs (Level 3) beginning in the first
quarter of 2011. The adoption of the effective portions of this ASU
did not impact the Company's consolidated financial position, results
of operations or cash flows. The Company does not expect that the
adoption of the remaining portions of this ASU will have any impact on
the Company's consolidated financial position, results of operations
or cash flows.
NOTE 4:- FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted the provisions of Accounting Standard Codification
("ASC") 820, "Fair Value Measurements and Disclosures effective January 1,
2008. Under this standard, fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability (i.e., the "exit
price") in an orderly transaction between market participants at the
measurement date.
In determining fair value, the Company uses various valuation approaches.
ASC 820 establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used
when available. Observable inputs are inputs that market participants would
use in pricing the asset or liability developed based on market data
obtained from sources independent of the Company. Unobservable inputs are
inputs that reflect the Company's assumptions about the assumptions market
participants would use in pricing the asset or liability developed based on
the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as
follows:
o Level 1 - Valuations based on quoted prices in active markets for
identical assets that the Company has the ability to access. Valuation
adjustments and block discounts are not applied to Level 1
instruments. Since valuations are based on quoted prices that are
readily and regularly available in an active market, valuation of
these products does not entail a significant degree of judgment.
o Level 2 - Valuations based on one or more quoted prices in markets
that are not active or for which all significant inputs are
observable, either directly or indirectly.
o Level 3 - Valuations based on inputs that are unobservable and
significant to the overall fair value measurement.
9
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 4:- FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT.)
The availability of observable inputs can vary from investment to
investment and is affected by a wide variety of factors, including, for
example, the type of investment, the liquidity of markets and other
characteristics particular to the transaction. To the extent that valuation
is based on models or inputs that are less observable or unobservable in
the market, the determination of fair value requires more judgment and the
investments are categorized as Level 3.
The Company's marketable securities are traded in markets that are not
considered to be active, but are valued based on quoted market prices,
broker or dealer quotations, or alternative pricing sources with reasonable
levels of price transparency and accordingly are categorized as Level 2.
Foreign currency and interest rate derivative contracts are classified
within Level 2 as the valuation inputs are based on quoted prices and
market observable data of similar instruments. The following table presents
the Company's assets and liabilities measured at fair value on a recurring
basis at December 31, 2009 and June 30, 2010:
DECEMBER 31, 2009
------------------------
FAIR VALUE MEASUREMENTS
USING INPUT TYPE
------------------------
LEVEL 2 TOTAL
-------- --------
MARKETABLE SECURITIES:
Corporate debentures $ 8,568 $ 8,568
Non-U.S. governments bonds 3,047 3,047
DERIVATIVES:
Foreign currencies assets 164 164
Foreign currencies liabilities (5) (5)
Interest rates (276) (276)
-------- --------
Total $ 11,498 $ 11,498
======== ========
JUNE 30, 2010
------------------------
FAIR VALUE MEASUREMENTS
USING INPUT TYPE
------------------------
LEVEL 2 TOTAL
-------- --------
UNAUDITED
------------------------
MARKETABLE SECURITIES:
Corporate debentures $ 11,764 $ 11,764
Non-U.S. governments bonds 3,024 3,024
DERIVATIVES:
Foreign currencies assets 29 29
Foreign currencies liabilities (91) (91)
Interest rates (249) (249)
-------- --------
Total $ 14,477 $ 14,477
======== ========
The carrying amounts of financial instruments carried at cost, including
cash and cash equivalents, trade receivables, short-term deposits, other
current assets, trade payables and other liabilities approximate their fair
value due to the short-term maturities of such instruments.
10
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 5:- DERIVATIVES
The Company accounts for derivative instruments in accordance with ASC No.
815 "Derivatives and Hedging". Due to the Company's global operations, it
is exposed to foreign currency exchange rate fluctuations in the normal
course of its business.
Shamir from time to time enters into forward contracts and option
strategies (together: "derivative instruments") intended to protect against
changes in foreign currencies. Shamir has also entered into interest-rate
swaps. The derivative instruments were not qualified for hedge accounting
under ASC 815. All the derivatives are recognized on the balance sheet at
their fair value, with changes in the fair value carried to the statements
of income and included in financial income (expenses) and other, net. The
changes in derivatives fair value for the six months ended June 30, 2009
and 2010 were an income of $ 22 and a loss of $ 108, respectively.
NOTE 6:- SHORT-TERM INVESTMENTS
a. The following is a summary of the Shamir's investments in marketable
securities:
DECEMBER 31, 2009
-----------------------------------
NET FAIR
AMORTIZED UNREALIZED MARKET
COST GAIN VALUE
------- ------- -------
AVAILABLE-FOR-SALE:
Corporate debentures $ 8,369 $ 199 $ 8,568
Non-U.S. governments bonds 3,002 45 3,047
------- ------- -------
Total $11,371 $ 244 11,615
======= =======
Accrued interest 64
-------
$11,679
=======
JUNE 30, 2010
--------------------------------
NET FAIR
AMORTIZED UNREALIZED MARKET
COST GAIN VALUE
------- ------- -------
UNAUDITED
--------------------------------
AVAILABLE-FOR-SALE:
Corporate debentures $11,542 $ 222 $11,764
Non-U.S. governments bonds 2,979 45 3,024
------- ------- -------
Total $14,521 $ 267 14,788
======= =======
Accrued interest 121
-------
$14,909
=======
As of June 30, 2010, the gross unrealized gains amounted to $ 269 and the
gross unrealized losses amounted to $ 2.
11
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 6:- SHORT-TERM INVESTMENTS (CONT.)
b. The amortized cost and fair value of marketable securities as of June
30, 2010, by contractual maturity, are shown below:
JUNE 30, 2010
---------------------
AMORTIZED COST FAIR MARKET VALUE
------- -------
UNAUDITED
---------------------
Matures in one year $ 2,998 $ 2,974
Matures after one year through five years 11,523 11,814
------- -------
Total $14,521 $14,788
======= =======
NOTE 7:- INVENTORY
Inventories are composed of the following:
DECEMBER 31, JUNE 30,
2009 2010
------- -------
UNAUDITED
-------
Raw materials $ 6,151 $ 5,343
Work-in-progress 237 373
Finished goods 20,558 19,755
------- -------
$26,946 $25,471
======= =======
NOTE 8:- GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA
a. Shamir manages its business on the basis of one reportable segment.
The data is presented in accordance with Accounting Standard
Codification 280, "Segments Reporting" ("ASC 280"). Total revenues are
attributed to geographic areas based on the location of end customers.
b. The following table presents total revenues for the six months ended
June 30, 2009 and 2010, and long-lived assets as of December 31, 2009,
and June 30, 2010, as follows:
TOTAL REVENUES LONG LIVED ASSETS
--------------------- ---------------------
SIX MONTHS ENDED JUNE 30,
--------------------- DECEMBER 31, JUNE 30,
2009 2010 2009 2010
------- ------- ------- -------
Israel $ 1,994 $ 2,399 $14,447 $14,285
United States 20,902 23,884 530 581
Europe 33,644 37,815 18,156 14,499
Asia 4,905 4,915 2,360 2,529
Others 7,709 12,060 3,075 3,271
------- ------- ------- -------
$69,154 $81,073 $38,568 $35,165
======= ======= ======= =======
12
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 8:- GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA (CONT.)
c. Product lines:
Total revenues from external customers divided on the basis of
Shamir's product lines are as follows:
SIX MONTHS ENDED
JUNE 30,
---------------------
2009 2010
------- -------
Lenses and Direct Lens Technology $66,938 $78,827
Design services 2,216 2,246
------- -------
$69,154 $81,073
======= =======
d. Major customer data as a percentage
of total revenues:
Customer A 18.2% 15.1%
======= =======
NOTE 9: NET EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted net
earnings per share:
SIX MONTHS ENDED JUNE 30,
---------------------
2009 2010
------- -------
a. Numerator:
Numerator for basic and diluted net earnings per share -
Net income available to shareholders $ 5,818 $ 7,845
======= =======
b. Denominator (in thousands):
Denominator for basic net earnings per share -
Weighted average shares - Shareholders' equity 16,424 16,728
------- -------
Weighted average number of shares 16,424 16,728
------- -------
Effect of dilutive securities:
Add - Employee stock options 51 82
------- -------
Denominator for diluted net earnings per share -
adjusted weighted average shares 16,475 16,810
======= =======
13
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 10:- CONTINGENCIES:
From time to time, Shamir may be involved in lawsuits, claims,
investigations or other legal or arbitral proceedings that arise in the
ordinary course of business. These proceedings may include general
commercial disputes and claims regarding intellectual property or labor
disputes with former employees. Shamir is involved in two disputes
concerning allegations of breach of third parties' patents, as described
below.
In September 2003, Shamir received a notice from a large lens manufacturer
regarding a claim of patent infringement relating to lens produced using
Shamir software. Shamir has denied any such infringement, and numerous
discussions between the companies (and counsel) ensued in order to resolve
the matter without resorting to litigation.
In January 2008, Shamir received a notice from a shareholder of one of its
subsidiaries claiming unlawful use of the subsidiaries' intellectual
property and unjust enrichment. Shamir denied any such infringement, and
numerous discussions between the parties (and counsel) ensued in order to
resolve the matter without resorting to litigation.
Shamir currently cannot predict the development or ultimate outcome of the
discussions with regard to these claims.
NOTE 11:- INVESTMENTS IN AFFILIATES AND OTHER
a. Affiliated companies are as follows:
DECEMBER 31, JUNE 30,
2009 2010
------------------ --------------------
PERCENTAGE OF OWNERSHIP OF
OUTSTANDING SHARE CAPITAL
----------------------------------------
Optispeed Laboratory (PTY) Ltd, ("Optispeed") *) 25% 25%
Emerald Lens and Coating Technologies (PTY) Ltd,
("Emerald")**) 28% 28%
e-Vision LLC ***) ***)
*) On November 1, 2008, Shamir (through its subsidiary Spherical
Optical (PTY) Ltd. ("Spherical")) acquired 25% of the ownership
interest and the voting power in Optispeed, an optical laboratory
in South Africa.
**) On June 19, 2009, Shamir (through its subsidiary Spherical)
acquired 28% of the ownership interest and the voting power in
Emerald, an optical laboratory in South Africa.
***) Less than 20% ownership. Shamir does not exercise significant
influence over operating and financial policy of the affiliate.
The investment is accounted for according to the cost method.
b. Composition of investments:
DECEMBER 31, JUNE 30,
2009 2010
------ ------
Optispeed 162 150
Emerald 468 431
e-Vision LLC 676 676
------ ------
$1,306 $1,257
====== ======
14
SHAMIR OPTICAL INDUSTRY LTD.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
NOTE 12:- INCOME TAXES
A reconciliation of Shamir's effective tax rate to the statutory tax rate
in Israel is as follows:
SIX MONTHS ENDED
JUNE 30,
--------------------------
2009 2010
--------- ---------
UNAUDITED UNAUDITED
--------- ---------
Income before taxes on income $ 8,041 $ 10,888
========= =========
Statutory tax rate in Israel 26% 25%
--------- ---------
Increase (decrease) in tax expenses resulting from:
"Approved Enterprise" benefits (0.2)% (2.0)%
Net operating losses and temporary differences which are tax
exempt or for which valuation allowance was created 0.7% (2.2)%
Taxes in respect of prior years (3.5)% (1.1)%
Subsidiaries with a different tax rate 1.4% 2.7%
Others 1.1% 0.7%
--------- ---------
Effective tax rate 25.5% 23.1%
========= =========
NOTE 13:- SUBSEQUENT EVENT
On October 13, 2010, Shamir declared a dividend of $ 13,500 (approximately
$0.804 per share).
15