ORBK Orbotech Ltd. - Ordinary Shares

ORBOTECH LTD. (NASDAQ/NM SYMBOL: ORBK) today announced its consolidated financial results for the third quarter and nine months ended September 30, 2006. Revenues for the third quarter of 2006 were $106.9 million, compared to $104.9 million recorded in the second quarter of 2006 and $93.7 million in the third quarter a year ago. Net income for the third quarter of 2006 was $16.2 million, or $0.49 per share (diluted), compared to net income of $15.3 million, or $0.46 per share (diluted), in the second quarter of 2006 and $11.1 million, or $0.33 per share (diluted), in the third quarter of 2005. These results incorporate the adoption, on January 1, 2006, of revised Financial Accounting Standard No.123, �Share Based Payment�, which resulted in increased compensation expenses totaling approximately $1.6 million, without any reduction in income taxes, and a corresponding decrease in diluted earnings per share of $0.05 for the third quarter. Excluding these compensation expenses, net income would have been $17.8 million, or $0.53 per share, for the third quarter of 2006. Revenues for the first nine months of 2006 totaled $313.2 million, compared to $283.5 million recorded during the same period in 2005. Net income for the first nine months of 2006 was $45.6 million, or $1.38 per share (diluted), compared to net income of $31.2 million, or $0.94 per share (diluted), for the same period last year. Sales of equipment to the printed circuit board (�PCB�) industry relating to bare PCBs were $44.0 million in the third quarter of 2006, unchanged from the second quarter this year, and increased from the $37.3 million recorded in the third quarter of 2005. Sales of equipment to the PCB industry relating to assembled PCBs were $9.3 million this quarter, compared to $9.4 million in the second quarter this year, and $9.1 million in the third quarter of 2005. Sales of flat panel display (�FPD�) inspection equipment were $30.5 million this quarter, compared to $29.3 million in the second quarter this year, and $26.3 million in the third quarter of 2005. Sales of automatic check reading products were $1.5 million in the third quarter of 2006, compared to $1.9 million in the second quarter this year, and $1.6 million in the third quarter of 2005. In addition, service revenues for the third quarter increased to $21.3 million from $20.1 million in the second quarter of 2006, and $19.3 million recorded in the third quarter of 2005. The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $256.4 million, compared to $236.1 million at the end of the second quarter, due principally to a positive operating cash flow for the quarter of approximately $19 million. Non-operating disbursements, comprised mainly of capital expenditures, totaled approximately $1.7 million. During the third quarter the Company sold a record number of its Discovery PCB-AOI series systems, reflecting the continuing strong demand for this product. Although sales of the Company�s Paragon solid state laser direct imaging systems decreased from the second quarter, the Company still expects to record a unit increase exceeding 30% year over year for 2006, and believes that it is poised for further growth in 2007. The Company recently introduced its new Discovery and Paragon systems for inspecting and imaging high density interconnect �HDI� applications at the TPCA trade show in Taiwan, where they were very well received. While demand for LCD television displays remains healthy, and prices stable, certain leading FPD manufacturers have delayed several investment decisions for the coming months. Current forecasts suggest that overall expenditure on LCD equipment can be expected to decline by approximately 20% in 2007, reflecting the cyclicality in this industry; and this would impact the Company�s FPD revenues for 2007. However, the Company believes that it will be strongly positioned to benefit once customers reemphasize their capital investments in LCD fabrication plants, and given the positive long term outlook for the FPD industry the Company is continuing to invest substantial amounts in research and development for this important area. Commenting on the results, Rani Cohen, Chief Executive Officer, said: �We are pleased to report excellent financial results once again this quarter, which reflect the quality and competitiveness of our product portfolio, the strength of our operational capabilities and the effectiveness of our worldwide sales and support infrastructure. Despite the delay in FPD capital expenditures, we continue to invest consistently in the research and development of new products and solutions for this and the other industries that we serve.� An earnings conference call is scheduled for Monday, November 6, 2006, at 9:00 a.m. EST. The dial-in number for the conference call is 210-795-2680, and a replay will be available at 203-369-3824, until November 20, 2006. The pass code is Q3. A live web cast of the conference call 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. ORBOTECH LTD. CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2006 � September 30 December 31 2006� 2005� U. S. dollars in thousands A s s e t s � CURRENT ASSETS: Cash and cash equivalents 187,208� 156,112� Marketable securities 18,187� 24,165� Accounts receivable: Trade 140,515� 126,101� Other 20,540� 16,884� Deferred income taxes 3,776� 3,856� Inventories 76,303� 70,885� T o t a l current assets 446,529� 398,003� � INVESTMENTS AND NON-CURRENT ASSETS: Marketable securities 51,017� 31,096� Other long-term Investments 8,237� 8,539� Non-current trade receivables 48� 887� Severance pay fund 17,906� 15,374� Deferred income taxes 1,353� 1,264� � � 78,561� 57,160� PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and�amortization 19,002� 19,149� GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization 14,495� 14,930� � � 558,587� 489,242� � � Liabilities and shareholders' equity � CURRENT LIABILITIES: Accounts payable and accruals: Trade 25,694� 35,781� Other 71,062� 59,830� T o t a l current liabilities 96,756� 95,611� � ACCRUED SEVERANCE PAY 31,841� 26,584� � � T o t a l liabilities 128,597� 122,195� � MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 712� 659� � SHAREHOLDERS' EQUITY: Share capital 1,660� 1,635� Additional paid-in capital 131,204� 104,813� Deferred stock compensation (10,857) (1,484) Retained earnings 336,475� 290,889� Accumulated other comprehensive income 344� 83� 458,826� 395,936� Less treasury stock, at cost (29,548) (29,548) T o t a l shareholders' equity 429,278� 366,388� � � 558,587� 489,242� ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTH AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2006 � � � � 12 months ended 9 months ended 3 months ended September 30 September 30 December 31 2006� 2005� 2006� 2005� 2005� U.S. dollars in thousands (except per share data) � REVENUES 313,166� 283,470� 106,881� 93,682� 379,923� � COST OF REVENUES 169,732� 163,436� 57,084� 52,650� 216,732� � � � � � GROSS PROFIT 143,434� 120,034� 49,797� 41,032� 163,191� � RESEARCH AND DEVELOPMENT COSTS - net 43,704� 41,127� 15,209� 13,744� 55,761� � SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 51,607� 43,991� 17,799� 15,018� 59,389� � AMORTIZATION OF OTHER INTANGIBLE ASSETS 435� 1,905� 145� 595� 2,635� � � � � � OPERATING INCOME 47,688� 33,011� 16,644� 11,675� 45,406� � FINANCIAL INCOME - net 4,926� 2,450� 2,144� 945� 3,503� � WRITE-DOWN OF LONG-TERM INVESTMENTS (205) (205) � � � � � INCOME BEFORE TAXES ON INCOME 52,409� 35,461� 18,583� 12,620� 48,909� � TAXES ON INCOME 6,583� 4,240� 2,359� 1,537� 5,598� � INCOME FROM OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES AND JOINT VENTURE � � � 45,826� 31,221� 16,224� 11,083� 43,311� � MINORITY INTEREST IN (PROFITS) LOSSES OF CONSOLIDATED SUBSIDIARY (53) (56) 23� 14� (156) � SHARE IN PROFITS (LOSSES) OF AN ASSOCIATED COMPANY (187) 60� (62) 40� 102� � � � � � NET INCOME 45,586� 31,225� 16,185� 11,137� 43,257� � � EARNINGS PER SHARE: BASIC $1.39� $0.96� $0.49� $0.34� $1.32� � DILUTED $1.38� $0.94� $0.49� $0.33� $1.30� � � WEIGHTED AVERAGE NUMBER OF SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER SHARE: � BASIC 32,842� 32,583� 33,147� 32,583� 32,658� � DILUTED 33,048� 33,357� 33,328� 33,576� 33,338� ORBOTECH LTD. (NASDAQ/NM SYMBOL: ORBK) today announced its consolidated financial results for the third quarter and nine months ended September 30, 2006. Revenues for the third quarter of 2006 were $106.9 million, compared to $104.9 million recorded in the second quarter of 2006 and $93.7 million in the third quarter a year ago. Net income for the third quarter of 2006 was $16.2 million, or $0.49 per share (diluted), compared to net income of $15.3 million, or $0.46 per share (diluted), in the second quarter of 2006 and $11.1 million, or $0.33 per share (diluted), in the third quarter of 2005. These results incorporate the adoption, on January 1, 2006, of revised Financial Accounting Standard No.123, "Share Based Payment", which resulted in increased compensation expenses totaling approximately $1.6 million, without any reduction in income taxes, and a corresponding decrease in diluted earnings per share of $0.05 for the third quarter. Excluding these compensation expenses, net income would have been $17.8 million, or $0.53 per share, for the third quarter of 2006. Revenues for the first nine months of 2006 totaled $313.2 million, compared to $283.5 million recorded during the same period in 2005. Net income for the first nine months of 2006 was $45.6 million, or $1.38 per share (diluted), compared to net income of $31.2 million, or $0.94 per share (diluted), for the same period last year. Sales of equipment to the printed circuit board ("PCB") industry relating to bare PCBs were $44.0 million in the third quarter of 2006, unchanged from the second quarter this year, and increased from the $37.3 million recorded in the third quarter of 2005. Sales of equipment to the PCB industry relating to assembled PCBs were $9.3 million this quarter, compared to $9.4 million in the second quarter this year, and $9.1 million in the third quarter of 2005. Sales of flat panel display ("FPD") inspection equipment were $30.5 million this quarter, compared to $29.3 million in the second quarter this year, and $26.3 million in the third quarter of 2005. Sales of automatic check reading products were $1.5 million in the third quarter of 2006, compared to $1.9 million in the second quarter this year, and $1.6 million in the third quarter of 2005. In addition, service revenues for the third quarter increased to $21.3 million from $20.1 million in the second quarter of 2006, and $19.3 million recorded in the third quarter of 2005. The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $256.4 million, compared to $236.1 million at the end of the second quarter, due principally to a positive operating cash flow for the quarter of approximately $19 million. Non-operating disbursements, comprised mainly of capital expenditures, totaled approximately $1.7 million. During the third quarter the Company sold a record number of its Discovery PCB-AOI series systems, reflecting the continuing strong demand for this product. Although sales of the Company's Paragon solid state laser direct imaging systems decreased from the second quarter, the Company still expects to record a unit increase exceeding 30% year over year for 2006, and believes that it is poised for further growth in 2007. The Company recently introduced its new Discovery and Paragon systems for inspecting and imaging high density interconnect "HDI" applications at the TPCA trade show in Taiwan, where they were very well received. While demand for LCD television displays remains healthy, and prices stable, certain leading FPD manufacturers have delayed several investment decisions for the coming months. Current forecasts suggest that overall expenditure on LCD equipment can be expected to decline by approximately 20% in 2007, reflecting the cyclicality in this industry; and this would impact the Company's FPD revenues for 2007. However, the Company believes that it will be strongly positioned to benefit once customers reemphasize their capital investments in LCD fabrication plants, and given the positive long term outlook for the FPD industry the Company is continuing to invest substantial amounts in research and development for this important area. Commenting on the results, Rani Cohen, Chief Executive Officer, said: "We are pleased to report excellent financial results once again this quarter, which reflect the quality and competitiveness of our product portfolio, the strength of our operational capabilities and the effectiveness of our worldwide sales and support infrastructure. Despite the delay in FPD capital expenditures, we continue to invest consistently in the research and development of new products and solutions for this and the other industries that we serve." An earnings conference call is scheduled for Monday, November 6, 2006, at 9:00 a.m. EST. The dial-in number for the conference call is 210-795-2680, and a replay will be available at 203-369-3824, until November 20, 2006. The pass code is Q3. A live web cast of the conference call 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 SEPTEMBER 30, 2006 September 30 December 31 2006 2005 ------------ ------------ U. S. dollars in thousands ------------------------- A s s e t s CURRENT ASSETS: Cash and cash equivalents 187,208 156,112 Marketable securities 18,187 24,165 Accounts receivable: Trade 140,515 126,101 Other 20,540 16,884 Deferred income taxes 3,776 3,856 Inventories 76,303 70,885 ------------ ------------ T o t a l current assets 446,529 398,003 ------------ ------------ INVESTMENTS AND NON-CURRENT ASSETS: Marketable securities 51,017 31,096 Other long-term Investments 8,237 8,539 Non-current trade receivables 48 887 Severance pay fund 17,906 15,374 Deferred income taxes 1,353 1,264 ------------ ------------ 78,561 57,160 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and amortization 19,002 19,149 GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization 14,495 14,930 ------------ ------------ ------------ ------------ 558,587 489,242 ============ ============ Liabilities and shareholders' equity CURRENT LIABILITIES: Accounts payable and accruals: Trade 25,694 35,781 Other 71,062 59,830 ------------ ------------ T o t a l current liabilities 96,756 95,611 ACCRUED SEVERANCE PAY 31,841 26,584 ------------ ------------ T o t a l liabilities 128,597 122,195 ------------ ------------ MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 712 659 ------------ ------------ SHAREHOLDERS' EQUITY: Share capital 1,660 1,635 Additional paid-in capital 131,204 104,813 Deferred stock compensation (10,857) (1,484) Retained earnings 336,475 290,889 Accumulated other comprehensive income 344 83 ------------ ------------ 458,826 395,936 Less treasury stock, at cost (29,548) (29,548) ------------ ------------ T o t a l shareholders' equity 429,278 366,388 ------------ ------------ ------------ ------------ 558,587 489,242 ============ ============ *T -0- *T ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTH AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2006 12 months 9 months ended 3 months ended ended September 30 September 30 December 31 ----------------- ---------------- ----------- 2006 2005 2006 2005 2005 -------- -------- -------- ------- ----------- U.S. dollars in thousands (except per share data) ------------------------------------------------ REVENUES 313,166 283,470 106,881 93,682 379,923 COST OF REVENUES 169,732 163,436 57,084 52,650 216,732 -------- -------- -------- ------- ----------- GROSS PROFIT 143,434 120,034 49,797 41,032 163,191 RESEARCH AND DEVELOPMENT COSTS - net 43,704 41,127 15,209 13,744 55,761 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 51,607 43,991 17,799 15,018 59,389 AMORTIZATION OF OTHER INTANGIBLE ASSETS 435 1,905 145 595 2,635 -------- -------- -------- ------- ----------- OPERATING INCOME 47,688 33,011 16,644 11,675 45,406 FINANCIAL INCOME - net 4,926 2,450 2,144 945 3,503 WRITE-DOWN OF LONG- TERM INVESTMENTS (205) (205) -------- -------- -------- ------- ----------- INCOME BEFORE TAXES ON INCOME 52,409 35,461 18,583 12,620 48,909 TAXES ON INCOME 6,583 4,240 2,359 1,537 5,598 INCOME FROM OPERATIONS OF THE COMPANY AND -------- -------- -------- ------- ----------- ITS SUBSIDIARIES AND JOINT VENTURE 45,826 31,221 16,224 11,083 43,311 MINORITY INTEREST IN (PROFITS) LOSSES OF CONSOLIDATED SUBSIDIARY (53) (56) 23 14 (156) SHARE IN PROFITS (LOSSES) OF AN ASSOCIATED COMPANY (187) 60 (62) 40 102 -------- -------- -------- ------- ----------- NET INCOME 45,586 31,225 16,185 11,137 43,257 ======== ======== ======== ======= =========== EARNINGS PER SHARE: BASIC $1.39 $0.96 $0.49 $0.34 $1.32 ======== ======== ======== ======= =========== DILUTED $1.38 $0.94 $0.49 $0.33 $1.30 ======== ======== ======== ======= =========== WEIGHTED AVERAGE NUMBER OF SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER SHARE: BASIC 32,842 32,583 33,147 32,583 32,658 ======== ======== ======== ======= =========== DILUTED 33,048 33,357 33,328 33,576 33,338 ======== ======== ======== ======= =========== *T