ORBK Orbotech Ltd. - Ordinary Shares

ORBOTECH LTD. (NASDAQ/NM SYMBOL: ORBK) today announced its consolidated financial results for the first quarter ended March 31, 2006. Revenues for the first quarter of 2006 totaled $101.4 million, compared to the $100.5 million recorded in the first quarter a year ago. Net income for the first quarter of 2006 was $14.1 million, or $0.43 per share (diluted), compared with net income for the first quarter of 2005 of $10.6 million, or $0.32 per share (diluted). These results reflect the adoption, on January 1, 2006, of revised Financial Accounting Standard No.123, "Share Based Payment", which resulted in increased compensation expenses totaling approximately $1.5 million in the first quarter without any reduction in income taxes (comprised of $0.1 million in costs of revenues, $0.4 million in research and development expenses and $1.0 million in selling, general and administrative expenses), and a corresponding decrease in diluted earnings per share of $0.04. Sales of equipment to the printed circuit board ("PCB") industry relating to bare PCBs were $41.0 million in the first quarter of 2006, compared to $38.4 million in the fourth quarter, and $30.1 million in the first quarter, of 2005. Sales of flat panel display ("FPD") inspection equipment were $30.0 million, compared to $28.1 million in the fourth quarter, and $43.2 million in the first quarter, of last year. FPD revenues in the first quarter of 2005 included $17.5 million from the recognition of initial revenues relating to the Company's 7th generation in-line FPD-AOI systems, delivered to Samsung Electronics Co. Ltd. in the second half of 2004. Sales of equipment to the PCB industry relating to assembled PCBs were $9.2 million, compared to $8.4 million in the fourth quarter, and $6.2 million in the first quarter, of last year. Sales of automatic check reading products were $2.3 million, compared to $2.1 million in the fourth quarter, and $2.3 million in the first quarter, of 2005. In addition, service revenue for the first quarter of 2006 was $18.9 million compared to $19.3 million in the fourth quarter of 2005, and $18.7 million in the first quarter of that year. The Company completed the quarter with cash equivalents and marketable securities of $207.9 million, compared with $211.4 million at the end of 2005. This decrease primarily reflected the longer payment terms traditionally associated with sales in Japan, which geographically has accounted for a growing proportion of the Company's revenues over the last two quarters. Non-operating disbursements totaled approximately $1.7 million, comprised mainly of capital expenditures. The Company's results for the first quarter reflect the continued, positive business environment in the electronics industry, as well as the Company's ability to capitalize on the resulting opportunities. These have led, in turn, to strong gross, operating and net margins, with gross margins in the first quarter exceeding 45%. The Company continues to benefit from high levels of demand for its major bare and assembled PCB products, and during the quarter it delivered, and recognized revenues from, a record quarterly number of AOI and direct imaging systems. Recently, the Company received, from a customer in the Far East, its largest order ever from a single electronics manufacturer for multiple PCB-AOI systems, totaling in excess of $15 million and scheduled for delivery throughout the last three quarters of 2006. Demand for the Company's FPD products continues to be driven by expanding investments being made by FPD manufacturers, designed to enable them to increase capacity to meet the current and future demand for LCD televisions. LCD manufacturers are reportedly expanding their investment plans over the next two years to accommodate the increased capacity needs of the industry. As previously announced, during the first quarter of 2006, the Company delivered, installed and recognized revenues from its FPD-AOI systems for the first 8th generation fabrication plants, for use in the inspection of large panels for production of LCD televisions. The Company today also announced changes in senior management which became effective May 8, 2006. Mr. Raanan (Rani) Cohen, 51, who has been with the Company since 1984 and has served as a co-president since 2002, replaced Mr. Yochai Richter as the Chief Executive Officer of the Company. Mr. Richter has become Active Chairman of the Board of Directors, and will serve as Chairman of the Board of Directors together with Dr. Shlomo Barak for an interim period until December 31, 2006, after which Dr. Barak will cease to hold the position of chairman but will remain a member of the Board. In addition, Mr. Arie Weisberg, 55, who has been with the Company since 1991 and has also served as a co-president since 2002, was appointed to the position of President and Chief Operating Officer of the Company and will report to the Chief Executive Officer. Mr. Eyal Harel, who served as the third co-president, will be leaving the Company following 18 years of service. Commenting on the results, Rani Cohen said: "Our strong first quarter operating results mark the beginning of what we expect will be a successful 2006. With yield-management playing an increasingly important role in advanced technologies and improved profitability, our products and solutions enable our customers to achieve manufacturing successes in ramping up their current and future production lines, and enable us to maintain our position as an industry leader." Mr. Yochai Richter added the following remarks on the management changes: "Since joining the Company over two decades ago, Rani Cohen has accumulated very extensive knowledge and expertise in all areas of Orbotech's business; and during his tenure as a co-president he has demonstrated vision and leadership that make him ideally suited to the position of Chief Executive Officer. The Board is also very pleased with Arie Weisberg's appointment to the position of President and Chief Operating Officer, in which he will draw on his vast knowledge and experience in the management of global resources. Both he and Rani Cohen have my unequivocal support and that of the entire Board of Directors, and we wish them and the Company every success in the future. In addition, the Company wishes to express to Eyal Harel its sincere appreciation for his years of outstanding dedication and service, and for his singular contribution to the Company's development and success." An earnings conference call is scheduled for Tuesday, May 9, 2006, at 9:00 a.m. EDT. The dial-in number for the conference call is 210-234-8000, and a replay will be available on telephone number 402-220-9732 until May 23, 2006. The pass code is Q1. A live web cast of the conference call and a replay can also be heard by accessing the investor relations section on the Company's website at www.orbotech.com. About Orbotech Ltd. Orbotech is a world leader in providing yield-enhancing, production support solutions for specialized applications in the supply chain of the electronics industry, principally for printed circuit boards (PCBs) and flat panel displays (FPDs). The Company designs, develops, manufactures, markets and services automated optical inspection (AOI) systems for bare and assembled PCBs and for FPDs, and imaging solutions for PCB production. The Company's innovative AOI, imaging and computer-aided manufacturing (CAM) technologies enable customers to achieve the increased yields and throughput essential to remaining at the forefront of electronics production. Through its subsidiary, Orbograph Ltd., the Company also develops and markets automatic check reading software to banks and other financial institutions. Of Orbotech's employees, more than one quarter are scientists and engineers, who integrate their multi-disciplinary knowledge, talents and skills to develop and provide sophisticated solutions and technologies designed to meet customers' long-term needs. Orbotech maintains its headquarters and its primary research, development and manufacturing facilities in Israel, and more than 35 offices worldwide. The Company's extensive network of marketing, sales and customer support teams throughout North America, Europe, the Pacific Rim, China and Japan deliver its knowledge and expertise directly to customers the world over. For more information visit www.orbotech.com. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties which could cause the actual results to differ materially from those projected, including industry trends, the timing and strength of product and service offerings, changes in business or pricing strategies, changes in the prevailing political and regulatory framework in which the relevant parties operate or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and other risks detailed from time to time in the Company's SEC reports. The Company assumes no obligation to update the information in this press release. -0- *T ORBOTECH LTD. CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 2006 December 31 December 31 2005 2004 ------------ ------------ U.S. dollars in thousands ------------------------- Assets -------------------------------------------- CURRENT ASSETS: -------------------------------------------- Cash and cash equivalents 154,996 156,112 Marketable securities 27,081 24,165 Accounts receivable: Trade 142,806 126,101 Other 19,326 16,884 Deferred income taxes 3,546 3,856 Inventories 72,791 70,885 ------------ ------------ Total current assets 420,546 398,003 ------------ ------------ INVESTMENTS AND NON-CURRENT ASSETS: -------------------------------------------- Marketable securities 25,824 31,096 Other long-term Investments 8,474 8,539 Non-current trade receivables 737 887 Severance pay fund 15,605 15,374 Deferred income taxes 1,057 1,264 ------------ ------------ 51,697 57,160 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT, net of -------------------------------------------- accumulated depreciation and amortization 19,177 19,149 ------------ ------------ GOODWILL AND OTHER INTANGIBLE ASSETS, net of -------------------------------------------- accumulated amortization 14,785 14,930 ------------ ------------ ------------ ------------ 506,205 489,242 ============ ============ Liabilities and shareholders' equity -------------------------------------------- CURRENT LIABILITIES: -------------------------------------------- Accounts payable and accruals: Trade 35,124 35,781 Other 56,869 59,830 ------------ ------------ Total current liabilities 91,993 95,611 ACCRUED SEVERANCE PAY 27,678 26,584 -------------------------------------------- ------------ ------------ Total liabilities 119,671 122,195 ------------ ------------ MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 709 659 -------------------------------------------- ------------ ------------ SHAREHOLDERS' EQUITY: -------------------------------------------- Share capital 1,643 1,635 Additional paid-in capital 116,858 104,813 Deferred stock compensation (8,352) (1,484) Retained earnings 305,006 290,889 Accumulated other comprehensive income 218 83 ------------ ------------ 415,373 395,936 Less treasury stock, at cost (29,548) (29,548) ------------ ------------ Total shareholders' equity 385,825 366,388 ------------ ------------ ------------ ------------ 506,205 489,242 ============ ============ ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2006 12 months 3 months ended ended March 31 December 31 ----------------- ------------ 2006 2005 2005 -------- -------- ------------ U.S. dollars in thousands (except per share data) ------------------------------ REVENUES 101,402 100,455 379,923 --------------------------------------- COST OF REVENUES 55,623 60,560 216,732 --------------------------------------- -------- -------- ------------ GROSS PROFIT 45,779 39,895 163,191 --------------------------------------- RESEARCH AND DEVELOPMENT COSTS - net 13,993 13,565 55,761 --------------------------------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 16,569 14,393 59,389 --------------------------------------- AMORTIZATION OF OTHER INTANGIBLE ASSETS 145 577 2,635 --------------------------------------- -------- -------- ------------ OPERATING INCOME 15,072 11,360 45,406 --------------------------------------- FINANCIAL INCOME - net 1,289 523 3,503 --------------------------------------- -------- -------- ------------ INCOME BEFORE TAXES ON INCOME 16,361 11,883 48,909 --------------------------------------- TAXES ON INCOME 2,054 1,229 5,598 --------------------------------------- -------- -------- ------------ INCOME FROM OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES AND JOINT VENTURE 14,307 10,654 43,311 --------------------------------------- MINORITY INTEREST IN PROFITS OF CONSOLIDATED SUBSIDIARY (50) (34) (156) --------------------------------------- SHARE IN PROFITS (LOSSES) OF AN ASSOCIATED COMPANY (140) (34) 102 --------------------------------------- -------- -------- ------------ NET INCOME 14,117 10,586 43,257 --------------------------------------- ======== ======== ============ EARNINGS PER SHARE: --------------------------------------- BASIC $0.43 $0.33 $1.32 --------------------------------------- ======== ======== ============ DILUTED $0.43 $0.32 $1.30 --------------------------------------- ======== ======== ============ WEIGHTED AVERAGE NUMBER OF SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER SHARE: --------------------------------------- BASIC 32,513 32,367 32,658 --------------------------------------- ======== ======== ============ DILUTED 33,016 33,100 33,338 --------------------------------------- ======== ======== ============ *T