ORBK Orbotech Ltd. - Ordinary Shares

ORBOTECH LTD. (NASDAQ/NM SYMBOL: ORBK) today announced its consolidated financial results for the second quarter and six months ended June 30, 2006. Revenues for the second quarter of 2006 totaled $104.9 million, compared to $101.4 million recorded in the first quarter of 2006 and $89.3 million in the second quarter a year ago. Net income for the second quarter of 2006 was $15.3 million, or $0.46 per share (diluted), compared to net income of $14.1 million, or $0.43 per share (diluted), in the first quarter of 2006 and $9.5 million, or $0.29 per share (diluted), in the second quarter of 2005. 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 $1.4 million, without any reduction in income taxes, and a corresponding decrease in diluted earnings per share of $0.04 for the second quarter. Excluding these compensation expenses, net income would have been $16.7 million, or $0.50 per share, for the second quarter of 2006. Revenues for the first six months of 2006 totaled $206.3 million, compared to $189.8 million recorded in the first half of 2005. Net income for the first six months of 2006 was $29.4 million, or $0.89 per share (diluted), compared to net income of $20.1 million, or $0.61 per share (diluted), in the first six months of 2005. Sales of equipment to the printed circuit board ("PCB") industry relating to bare PCBs were $44.0 million in the second quarter of 2006, compared to $41.0 million in the first quarter of 2006, and $35.1 million in the second quarter of 2005. Sales of flat panel display ("FPD") inspection equipment were $29.3 million, compared to $30.0 million in the first quarter of 2006, and $27.5 million in the second quarter of last year. Sales of equipment to the PCB industry relating to assembled PCBs were $9.4 million, compared to $9.2 million in the first quarter this year, and $5.4 million in the second quarter of 2005. Sales of automatic check reading products were $1.9 million in the second quarter of 2006, compared to $2.3 million in the first quarter of 2006, and $2.0 million recorded in the second quarter of 2005. In addition, service revenue for the second quarter increased to $20.1 million from $18.9 million in the first quarter of 2006, and $19.3 million in the second quarter of 2005. The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $236.1 million, compared to $207.9 million at the end of the first quarter, due principally to a positive operating cash flow for the quarter of approximately $24 million. Non-operating disbursements totaled approximately $1.6 million, comprised mainly of capital expenditures. The increase in revenues from bare and assembled PCB equipment reflects the continued strong sales of the Company's Discovery PCB-AOI series, the Paragon solid state laser direct imaging systems and the Symbion Assembly AOI series, and contributed to another quarter of record AOI and Direct Imaging systems delivered to its customers. In the FPD industry, several manufacturers have recently announced delays in their capacity expansion plans due to excess inventories. While this is expected to affect the Company's 2006 FPD revenues, the Company believes this will be short lived as end-user LCD product demand is expected to pick up in late 2006. Commenting on the results, Rani Cohen, Chief Executive Officer, said: "We are pleased with our strong financial results for the quarter, which are a reflection of our diverse product portfolio and strong operational capabilities. While the PCB industry remains strong, the FPD industry may have somewhat over-extended its capacity expansion in the short term. However, we do not anticipate any change in the long term outlook for the LCD television sector of this industry, which is still in its early stages, and believe that we are well positioned to benefit from the future growth opportunities that it will offer." An earnings conference call is scheduled for Monday, August 7, 2006, at 9:00 a.m. EDT. The dial-in number for the conference call is 201-234-8000, and a replay will be available, until August 21, 2006, on telephone number 402-530-8093. The pass code is Q2. A live web cast of the conference call and 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 JUNE 30, 2006 June 30 December 31 2006 2005 ----------- ----------- U.S. dollars in thousands --------------------------- Assets ------ CURRENT ASSETS: --------------- Cash and cash equivalents 177,317 156,112 Marketable securities 21,104 24,165 Accounts receivable: Trade 142,583 126,101 Other 18,923 16,884 Deferred income taxes 3,826 3,856 Inventories 75,800 70,885 ----------- ----------- Total current assets 439,553 398,003 ----------- ----------- INVESTMENTS AND NON-CURRENT ASSETS: ----------------------------------- Marketable securities 37,672 31,096 Other long-term Investments 8,425 8,539 Non-current trade receivables 132 887 Severance pay fund 16,784 15,374 Deferred income taxes 713 1,264 ----------- ----------- 63,726 57,160 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, net of ------------------------------ accumulated depreciation and amortization 19,117 19,149 ----------- ----------- GOODWILL AND OTHER INTANGIBLE ASSETS, net of ------------------------------------- accumulated amortization 14,640 14,930 ----------- ----------- ----------- ----------- 537,036 489,242 =========== =========== Liabilities and shareholders' equity ------------------------------------ CURRENT LIABILITIES: -------------------- Accounts payable and accruals: Trade 32,881 35,781 Other 64,443 59,830 ----------- ----------- Total current liabilities 97,324 95,611 ACCRUED SEVERANCE PAY 29,939 26,584 --------------------- ----------- ----------- Total liabilities 127,263 122,195 ----------- ----------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 735 659 -------------------------------------------- ----------- ----------- SHAREHOLDERS' EQUITY: --------------------- Share capital 1,653 1,635 Additional paid-in capital 122,981 104,813 Deferred stock compensation (7,202) (1,484) Retained earnings 320,290 290,889 Accumulated other comprehensive income 864 83 ----------- ----------- 438,586 395,936 Less treasury stock, at cost (29,548) (29,548) ----------- ----------- Total shareholders' equity 409,038 366,388 ----------- ----------- ----------- ----------- 537,036 489,242 =========== =========== *T -0- *T ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTH AND THREE MONTH PERIODS ENDED JUNE 30, 2006 12 months 6 months ended 3 months ended ended June 30 June 30 December 31 ----------------- ----------------- ----------- 2006 2005 2006 2005 2005 -------- -------- -------- -------- ----------- U.S. dollars in thousands (except per share data) ----------------------------------------------------- REVENUES 206,285 189,788 104,883 89,333 379,923 -------- COST OF REVENUES 112,648 110,786 57,025 50,226 216,732 ---------------- ------- -------- -------- -------- ----------- GROSS PROFIT 93,637 79,002 47,858 39,107 163,191 ------------ RESEARCH AND DEVELOPMENT ------------------------ COSTS - net 28,495 27,383 14,502 13,818 55,761 ----- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 33,808 28,972 17,239 14,579 59,389 -------------------- AMORTIZATION OF OTHER INTANGIBLE ASSETS 290 1,310 145 733 2,635 --------------------- ------- -------- -------- -------- ----------- OPERATING INCOME 31,044 21,337 15,972 9,977 45,406 ---------------- FINANCIAL INCOME - net 2,782 1,505 1,493 982 3,503 ---------------- ------- -------- -------- -------- ----------- INCOME BEFORE TAXES ON INCOME 33,826 22,842 17,465 10,959 48,909 ---------------------- TAXES ON INCOME 4,224 2,703 2,170 1,474 5,598 --------------- INCOME FROM OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES AND JOINT ------- -------- -------- -------- ---------- VENTURE 29,602 20,139 15,295 9,485 43,311 ---------------------- MINORITY INTEREST IN PROFITS OF CONSOLIDATED SUBSIDIARY (76) (70) (26) (36) (156) ------------------------ SHARE IN PROFITS (LOSSES) OF AN ASSOCIATED COMPANY (125) 20 15 54 102 ------------------- ------- -------- -------- -------- ----------- NET INCOME 29,401 20,089 15,284 9,503 43,257 ---------- ======= ======== ======== ======== =========== EARNINGS PER SHARE: ------------------- BASIC $0.90 $0.62 $0.47 $0.29 $1.32 ------ ======= ======== ======== ======== =========== DILUTED $0.89 $0.61 $0.46 $0.29 $1.30 ------- ======= ======== ======== ======== =========== WEIGHTED AVERAGE NUMBER OF SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER SHARE: --------------------------- BASIC 32,678 32,391 32,818 32,391 32,658 ------ ======= ======== ======== ======== =========== DILUTED 33,138 33,147 33,303 33,115 33,338 ------- ======= ======== ======== ======== =========== *T