ORBOTECH LTD. (NASDAQ/GSM SYMBOL: ORBK) today announced its
consolidated financial results for the first quarter ended March
31, 2009.
Revenues for the first quarter of 2009 totaled $91.9 million,
compared to $129.2 million recorded in the fourth quarter of 2008
and the $100.5 million recorded in the first quarter a year ago.
GAAP (generally accepted accounting principles) net loss for the
first quarter of 2009 was $7.9 million, or $0.23 per share
(diluted), compared to GAAP net loss of $101.2 million, or $2.98
per share�(diluted), for the fourth quarter of 2008 and GAAP net
income of $3.7 million, or $0.11 per share (diluted), in the first
quarter of 2008.
Non-GAAP net loss for the first quarter of 2009 was $1.4
million, or $0.04 per share (diluted), compared to non-GAAP net
income of $6.0 million, or $0.18 per share (diluted), in the first
quarter of 2008. Detailed non-GAAP adjustments are explained in the
accompanying reconciliation of GAAP to non-GAAP results (the
"Reconciliation").
Sales of flat panel display (�FPD�) inspection equipment were
$50.0 million, compared to $76.4 million in the fourth quarter, and
$20.4 million in the first quarter, of last year. Sales of
equipment to the printed circuit board (�PCB�) industry were $10.6
million in the first quarter of 2009, compared to $14.7 million in
the fourth quarter, and $36.5 million in the first quarter, of
2008. Sales of automatic check reading products were $1.4 million,
compared to $3.0 million in the fourth quarter, and $2.0 million in
the first quarter, of 2008. Sales of medical imaging equipment in
the first quarter of 2009 were $3.7 million, compared to $3.7
million in the fourth quarter, and $8.0 million in the first
quarter, of last year. In addition, service revenue for the first
quarter of 2009 was $25.5 million, compared to $28.8 million in the
fourth quarter, and $25.5 million in the first quarter, of 2008.
Revenue data presented in respect of the first quarter of 2008 does
not include revenues attributable to the business of Photon
Dynamics, Inc. (�PDI�), which was acquired on October 2, 2008.
The Company completed the quarter with cash, cash equivalents
and marketable securities of approximately $119 million, compared
with approximately $125 million at the end of 2008 and $160 million
in debt, which it borrowed from Israel Discount Bank in connection
with the PDI acquisition. The Company�s marketable securities
included approximately $18.2 million of auction rate securities
primarily tied to student loans, in respect of which the Company
recorded a $2.4 million impairment to the income statement during
the quarter.
As previously announced, during the second half of 2008, in
light of the difficult worldwide economic conditions, the Company
adopted measures designed to re-align its infrastructure. These
measures, combined with the operational synergies relating to the
PDI acquisition, have resulted in quarterly cost savings to date of
approximately $18 million. Additionally, the strength in the United
States dollar vis-�-vis the Sheqel positively impacted the
Company�s results by approximately two cents per share in the first
quarter of 2009 compared with the fourth quarter of 2008.
In April 2009, the Company received acceptance for its new
FPD-AOI systems delivered to Sharp�s Generation 10 LCD
manufacturing facility in Japan during the fourth quarter of 2008.
Revenues for these systems will be recognized in the second quarter
of 2009 and revenues for future systems for this facility, most of
which are also expected to be delivered in the second quarter of
2009, will be recognized upon delivery.
Recently, electronics industry manufacturers have been reporting
lower inventory levels, which have led to some degree of LCD panel
and PCB price stabilization, in turn giving rise to an increase in
customers� capacity utilization. Nevertheless, there can be no
assurance as the extent to which this may continue, since overall
industry visibility remains relatively limited.
Commenting on the results, Rani Cohen, Chief Executive Officer,
said: �Our financial results for the quarter are in line with our
expectations, and reflect the current circumstances of global
recession, which continued to impact upon our customers� capital
equipment expenditures during the first quarter. The Company is
benefiting from disciplined implementation of its cost-saving
measures, careful management of its cash flows and close monitoring
of discretionary spending. We remain optimistic as to the long-term
demand for our principal products, and continue to place emphasis
on providing our customers with the best support and new and
innovative solutions.�
The Company today also announced certain changes in senior
management which will become effective on July 1, 2009. Mr. Arie
Weisberg, who currently serves as President and Chief Operating
Officer of the Company, has decided to retire from the Company
following 18 years of service. Mr. Asher Levy, who has been with
the Company since 1990, has been named to the position of Deputy
Chief Executive Officer - Global Business; Mr. Amichai Steimberg,
who has been with the Company since 1992, has been named to the
position of Deputy Chief Executive Officer - Global Finance and
Operations; and Mr. Erez Simha, who has been with the Company since
2004, has been named to the position of Chief Financial
Officer.
Referring to these management changes, Mr. Cohen added: �I would
like to express to Arie Weisberg, personally and on the Company�s
behalf, my sincere appreciation for many years of outstanding
dedication and service, and for his singular contribution to the
Company�s development and success. We are pleased to announce the
appointments of Asher Levy and Amichai Steimberg to the positions
of Deputy Chief Executive Officer, and of Erez Simha as Chief
Financial Officer. Asher, Amichai and Erez will draw on their
substantial knowledge and experience in their particular areas of
expertise and in the capital equipment industry in general, and
have my unequivocal support as well as that of the entire Board of
Directors.�
An earnings conference call is scheduled for Monday, May 4,
2009, at 9:00 a.m. EDT. The dial-in number for the conference call
is 210-795-2680, and a replay will be available on telephone number
203-369-3176 until May 18, 2009. 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 principally engaged in the design, development,
manufacture, marketing and service of yield-enhancing and
production solutions for specialized applications in the supply
chain of the electronics industry. Orbotech�s products include
automated optical inspection (AOI), production and process control
systems for printed circuit boards (PCBs) and AOI, test and repair
systems for flat panel displays (FPDs). The Company also markets
computer-aided manufacturing and engineering (CAM) solutions for
PCB production. In addition, through its subsidiary, Orbograph
Ltd., the Company develops and markets character recognition
solutions to banks and other financial institutions, and has
developed a proprietary technology for web-based,
location-independent data entry for check processing and forms
processing; and, through its subsidiaries, Orbotech Medical Denmark
A/S and Orbotech Medical Solutions Ltd., is engaged in the research
and development, manufacture and sale of specialized products for
application in medical nuclear imaging. 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 30 offices
worldwide. Orbotech�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 within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. These
statements relate to, among other things, future prospects,
developments and business strategies and involve certain risks and
uncertainties. The words �anticipate,� �believe,� �could,� �will,�
�plan,� �expect� and �would� and similar terms and phrases,
including references to assumptions, have been used in this press
release to identify forward-looking statements. These
forward-looking statements are made based on management�s
expectations and beliefs concerning future events affecting
Orbotech and are subject to uncertainties and factors relating to
its operations and business environment, all of which are difficult
to predict and many of which are beyond the Company�s control. Many
factors could cause the actual results to differ materially from
those projected, including cyclicality in the industries in which
the Company operates, a sustained continuation or worsening of the
worldwide economic slowdown, the timing and strength of product and
service offerings by the Company and its competitors, 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 in the
Company�s SEC reports, including the Company�s Annual Report on
Form 20-F. The Company assumes no obligation to update the
information in this press release to reflect new information,
future events or otherwise, except as required by law.
�
ORBOTECH LTD. CONDENSED CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2009 � � March 31 December 31 2 0 0 9 2 0 0 8
U. S. dollars in thousands
A s s e t s
�
CURRENT ASSETS:
Cash and cash equivalents 100,636 105,127 Marketable securities 285
320 Accounts receivable: Trade 155,786 180,701 Other 29,223 27,106
Deferred income taxes 4,212 5,222 Inventories 122,578 � 122,152 �
Total current assets
412,720 � 440,628 � �
INVESTMENTS AND NON-CURRENT ASSETS:
Marketable securities 18,153 19,241 Other long-term Investments 29
29 Funds in respect of employee rights upon retirement 10,542
12,521 Deferred income taxes 9,324 8,795 � � 38,048 � 40,586 � �
PROPERTY, PLANT AND EQUIPMENT, net
of�
accumulated depreciation and
amortization
35,911 � 39,325 � �
GOODWILL
12,715 � 12,747 � �
OTHER INTANGIBLE ASSETS, net of�
accumulated amortization
96,571 � 101,575 � � � 595,965 � 634,861 � � �
Liabilities and equity
�
CURRENT LIABILITIES:
Short-term loan 160,000 160,000 Accounts payable and accruals:
Trade 23,594 36,377 Other 42,234 56,428 Deferred income 18,620 �
22,473 �
Total current liabilities
244,448 275,278 �
LONG-TERM LIABILITIES:
Liability for employee rights upon retirement 24,108 27,678 Tax
liabilities 14,454 16,208 Other long-term liability 2,667 � 2,667 �
Total long-term liabilities
41,229 46,553 � �
Total liabilities
285,677 � 321,831 � �
EQUITY:
Share capital 1,734 1,727 Additional paid-in capital 163,395
161,914 Retained earnings 203,256 211,142 Accumulated other
comprehensive loss (2,444 ) (6,123 ) 365,941 368,660 Less treasury
stock, at cost (57,192 ) (57,192 )
Total Orbotech Ltd. shareholders'
equity
308,749 311,468 Non-controlling interest 1,539 � 1,562 �
Total equity
310,288 � 313,030 � � � 595,965 � 634,861 � � �
ORBOTECH
LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR
THE THREE MONTH PERIOD ENDED MARCH 31, 2009 � � � �
�
3 months ended
12 months�ended
March 31
December 31
2 0 0 9 2 0 0 8 2 0 0 8 U.S. dollars in thousands (except per share
data) �
REVENUES 91,862 100,484 429,546 �
COST
OF REVENUES: COST 57,863 59,621 260,639
WRITE DOWN OF INVENTORIES 3,348 � � �
GROSS
PROFIT 33,999 40,863 165,559 �
RESEARCH AND
DEVELOPMENT COSTS - net 16,679 19,154 76,602 �
SELLING, GENERAL AND
ADMINISTRATIVE�EXPENSES
15,926 17,868 73,346 �
�
AMORTIZATION OF OTHER
INTANGIBLE�ASSETS
5,041 1,139 8,099 �
IN-PROCESS RESEARCH AND DEVELOPMENT
CHARGES 6,537 �
RESTRUCTURING CHARGES 8,800 �
IMPAIRMENT OF GOODWILL 110,403 �
IMPAIRMENT OF
OTHER INTANGIBLE ASSETS 21,260 � � �
OPERATING INCOME
(LOSS) (3,647) 2,702 (139,488) �
FINANCIAL INCOME
(EXPENSES) - net (5,031) 1,574 (1,324) � � �
INCOME
(LOSS) BEFORE TAXES ON INCOME (8,678) 4,276 (140,812) �
INCOME TAX EXPENSES (BENEFIT) (769) 571 (5,739) � � �
�
NET INCOME (LOSS) (7,909) 3,705 (135,073) �
LESS: NET INCOME (LOSS)
ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST
(23) 39 232 � � �
NET INCOME (LOSS) ATTRIBUTABLE TO ORBOTECH
LTD. (7,886) 3,666 (135,305) � �
EARNINGS (LOSS) ATTRIBUTABLE
TO ORBOTECH LTD.� ORDINARY SHAREHOLDERS PER SHARE:
BASIC ($0.23) $0.11 ($4.04) �
DILUTED
($0.23) $0.11 ($4.04) � �
WEIGHTED AVERAGE NUMBER OF
SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER
SHARE:
BASIC 34,206 33,256 33,512 �
DILUTED
34,206 33,256 33,512 � � � �
ORBOTECH LTD. RECONCILIATION
OF GAAP TO NON-GAAP RESULTS FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2009 � �
�
3 months ended
12 months�ended
March 31
December 31 2 0 0 9 2 0 0 8 2 0 0 8 U.S. dollars in thousands
(except per share data) �
Non-GAAP Net Income (Loss)
�
Reported net income (loss) attributable to Orbotech Ltd. on
GAAP basis (7,886 ) �
3,666 � �
(135,305 ) Non-operating income (expenses):
Financial income (expenses) (5,031 ) 1,574 (1,324 ) Income tax
benefit (expenses) 769 (571 ) 5,739 Net loss (profit) attributable
to the non-controlling interest 23 � � (39 ) � (232 ) (4,239 ) �
964 � � 4,183 � � � � �
Reported operating income (loss) on GAAP
basis (3,647 ) 2,702 (139,488
) Equity based compensation expenses 1,489 1,230 5,275
Amortization of intangible assets 5,041 1,139 8,099 In-process
research and development charges (1) 6,537 Restructuring charges
(2) 8,800 Impairment of goodwill (3) 110,403 Impairment of other
intangible assets (4) � � � 21,260 �
Non-GAAP operating
income 2,883 5,071 20,886 �
Non-operating income
(expenses) (4,239 ) 964 4,183 Income tax effect of non-GAAP
adjustment (5) (6,011 ) � � �
Non-GAAP net income (loss)
(1,356 ) � 6,035 � � 19,058 � �
Non-GAAP Net Income (loss) per
diluted Share ($0.04 ) $ 0.18 � $ 0.55 � �
Shares used in
diluted shares calculation 34,206 � � 33,256 � � 34,743 � � � �
� � � �
(1)
� �
In-process research and
development charges in 2008 were associated with the PDI
acquisition. For more information�about the PDI acquisition, see
the Company�s Annual Report on Form 20-F filed with the SEC.
(2)
The restructuring charges of
$8,800,000 in 2008 relate to reductions in the Company�s workforce
and rationalizations�of certain of its research and development,
manufacturing and operating activities, in order to realign the
Company's�infrastructure. For more information about the PDI
acquisition, see the Company�s Annual Report on Form 20-F filed
with the SEC.
(3)
The impairment charge of
$110,403,000 in 2008 is comprised of: a write-off of $87,977,000 of
goodwill associated with the Company's FPD business; a write-down
of $17,035,000 of the goodwill Orbotech Medical Denmark A/S
("OMD"); and a write-off of $5,391,000�of goodwill associated with
the Company�s assembled PCB business.
(4)
The impairment charge of
$21,260,000 in 2008 was related to a write-down of the intellectual
property of OMD.�For more information about OMD and the related
impairment, see the Company�s Annual Report on Form 20-F filed�with
the SEC.
(5)
The income tax effect in 2008 was
related to the impairment associated with OMD that occurred in the
third quarter�of 2008. The adjustments in the first quarter 2008
and 2009 do not have a related income tax effect.
Non-GAAP net income (loss) and non-GAAP earnings (loss) per
share detailed in the Reconciliation exclude charges related to one
or more of the following: (i) equity-based compensation expenses;
(ii) certain items associated with acquisitions, including
amortization of intangibles; (iii) restructuring and asset
impairments; and/or (iv) tax credits relating to the above items,
in each case as described in more detail in the Reconciliation.
Management uses non-GAAP net income (loss) and non-GAAP earnings
(loss) per share to evaluate the Company�s operating and financial
performance in light of business objectives and for planning
purposes. These measures are not in accordance with GAAP and may
differ from non-GAAP methods of accounting and reporting used by
other companies. Orbotech believes that these measures enhance
investors� ability to review the Company�s business from the same
perspective as the Company�s management and facilitate comparisons
with results for prior periods. The presentation of this additional
non-GAAP information should not be considered in isolation or as a
substitute for net income (loss) or earnings (loss) per share
prepared in accordance with GAAP, and should be read only in
conjunction with the Company�s consolidated financial statements
prepared in accordance with GAAP. For a detailed explanation of the
adjustments made to comparable GAAP measures, the reasons why
management uses these measures, the usefulness of these measures
and the material limitations on the usefulness of these measures
please see the Reconciliation.
To supplement the Company�s financial results presented on a
GAAP basis, the Company uses the non-GAAP measures indicated in the
Reconciliation, which exclude equity based compensation expenses,
amortization of intangible assets, in-process research and
development charges and impairment and restructuring charges, as
well as certain financial expenses that are believed to be helpful
in understanding past operating and financial performance and
future results. However, the non-GAAP measures presented are
subject to limitations as an analytical tool because they do not
include certain recurring items as described below and because they
do not reflect certain cash expenditures that are required to
operate the Company�s business, such as interest expense and taxes.
Accordingly, these non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable GAAP
measures and should be read only in conjunction with the Company�s
consolidated financial statements prepared in accordance with GAAP.
Management regularly utilizes supplemental non-GAAP financial
measures internally to understand, manage and evaluate the
Company�s business and make operating decisions. These non-GAAP
measures are among the primary factors management uses in planning
for and forecasting future periods. Non-GAAP financial measures
reflect adjustments based on the following items, as well as the
related income tax effects.
The effect of equity-based compensation expenses has been
excluded from the non-GAAP net income (loss) measure. Although
equity-based compensation is a key incentive offered to employees,
and the Company believes such compensation contributed to the
revenues earned during the periods presented and also believes it
will contribute to the generation of future period revenues, the
Company continues to evaluate its business performance excluding
equity based compensation expenses. Equity based compensation
expenses will recur in future periods.
The effect of amortization of intangible assets, in-process
research and development charges and impairment charges have also
been excluded from the non-GAAP net income (loss) measure. These
items are inconsistent in amount and frequency and are
significantly affected by the timing and size of acquisitions.
These items were significantly higher in the fourth quarter of 2008
and first quarter of 2009 primarily as a result of the Company�s
acquisitions, including the PDI acquisition in October 2008.
Investors should note that the use of intangible assets contributed
to revenues earned during the periods presented and will contribute
to future period revenues as well. Amortization of intangible
assets will recur in future periods and the Company may be required
to record additional impairment charges in the future. The Company
believes that it is useful for investors to understand the effects
of these items on total operating expenses. Although these expenses
are not recurring with respect to past acquisitions, these types of
expenses will generally be incurred in connection with any future
acquisitions. Restructuring expenses relate to realignment
initiatives announced in 2008. For more information about these
items, see the Company�s Annual Report on Form 20-F filed with the
SEC.
The effects of income tax expenses (benefit) and financial
income (expenses) have also been excluded from the non-GAAP net
income (loss) measure. Because of fluctuations in the applicable
tax rate based on jurisdictional and other factors, as well as the
fact that the Company did not have any indebtedness in the first
quarter 2008, for comparison purposes, the Company�s business
performance is evaluated excluding income tax expenses (benefit)
and financial income (expenses). Both income tax expenses (benefit)
and financial income (expenses) will recur in future periods and
will fluctuate depending upon the amount and geographic mix of the
Company�s revenues and the amount of the Company�s debt and the
interest payable with respect thereto.
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