ORBK Orbotech Ltd. - Ordinary Shares

ORBOTECH LTD. (NASDAQ/GSM SYMBOL: ORBK) today announced its consolidated financial results for the second quarter and six months ended June 30, 2008. Revenues for the second quarter of 2008 totaled $105.1 million, compared to $100.5 million recorded in the first quarter of 2008 and $88.6 million in the second quarter a year ago. Net income for the second quarter of 2008 was $5.3 million, or $0.16 per share (diluted), compared to net income of $3.7 million, or $0.11 per share (diluted), in the first quarter of 2008, and a net loss of $3.4 million, or $0.10 per share (diluted), in the second quarter of 2007. Revenues for the first six months of 2008 totaled $205.6 million, compared to $174.7 million recorded in the first half of 2007. Net income for the first six months of 2008 was $9.0 million, or $0.27 per share (diluted), compared to net income of $2.2 million, or $0.07 per share (diluted) in the first six months of 2007. Sales of equipment to the printed circuit board (�PCB�) industry relating to bare PCBs were $34.5 million in the second quarter of 2008, compared to $36.5 million in the first quarter of 2008, and $44.4 million in the second quarter of 2007. Sales of flat panel display (�FPD�) inspection equipment were $29.8 million, compared to $20.4 million in the first quarter of 2008, and $11.2 million in the second quarter of last year. Sales of equipment to the PCB industry relating to assembled PCBs were $7.5 million, compared to $8.1 million in the first quarter this year, and $7.5 million in the second quarter of 2007. Sales of automatic check reading products were $2.7 million in the second quarter of 2008, compared to $2.0 million in the first quarter of 2008, and $2.8 million recorded in the second quarter of 2007. Sales of medical imaging equipment were $4.4 million in the second quarter of 2008, compared to $7.3 million in the first quarter of 2008 (the Company acquired this business in August 2007). In addition, service revenue for the second quarter of 2008 increased to $26.2 million from $25.5 million in the first quarter of 2008, and $22.5 million in the second quarter of 2007. The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $196.0 million, compared to $202.3 million at the end of the first quarter of 2008. Non-operating disbursements totaled approximately $2.4 million, comprised mainly of capital expenditures. The Company�s marketable securities currently include approximately $27.6 million of auction rate securities (ARS) which are tied to student loans. While the Company believes that there is no credit risk attached to its ARS portfolio, due to a lack of liquidity which these securities have experienced during the last few months the Company recorded a temporary write-down of approximately $1.1 million against these ARS and reclassified them as long-term marketable securities. The continued weakness in the United States dollar vis-�-vis the Sheqel adversely impacted net income during the second quarter of 2008 by approximately three cents per share compared with the first quarter of 2008. If the Sheqel-Dollar exchange rate remains at current levels, a similar adverse impact on net income would be expected to result in the third quarter of 2008. The decrease in revenues from the Company�s bare PCB business reflects the continuing global economic uncertainty, which is impacting bare PCB customers� capital investment plans. Nevertheless, the Company is maintaining and strengthening its leadership in this industry, through its broad portfolio of product offerings, including production, as well as yield-enhancing, solutions and ongoing investments in its worldwide customer support infrastructure. By contrast, the growth in sales of FPD-AOI equipment, driven by the greater worldwide demand for panels, is a function of the increased capital investments by LCD manufacturers. During the quarter the Company announced an agreement to acquire Photon Dynamics, Inc., a leading provider of test and repair systems for the LCD flat panel display industry. Orbotech will pay $15.60 per share in cash for all of the issued and outstanding shares of Photon Dynamics� common stock, making an aggregate consideration of approximately $290 million. This acquisition, the largest ever by Orbotech, is a key part of the Company�s strategy for growth in its flat panel display business and is expected to close during the second half of 2008. Commenting on the results, Rani Cohen, Chief Executive Officer, said: �Our financial results for the quarter are in line with our expectations, particularly given the current uncertain economic environment. The FPD industry remains robust, and our acquisition of Photon Dynamics will not only strengthen our FPD product portfolio and increase our overall opportunities in this currently expanding industry, but will also open the door to significant enhancements in FPD yield management and process control. In light of the current economic conditions, we will continue to monitor our expenditures very closely, while at the same time tailoring our investments to support our planned growth, maintain our position of technological pre-eminence and provide superior equipment and service and support solutions for our customers.� An earnings conference call for the Company�s second quarter 2008 results is scheduled for Monday, August 4, 2008, 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 203-369-0639 until August 18, 2008. The pass code is Q2. 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�) and process control systems for bare and assembled printed circuit boards (�PCB�s) and for flat panel displays (�FPD�s), and imaging solutions for PCB production. Orbotech also markets computer-aided manufacturing and engineering (�CAM�) solutions for PCB production. In addition, through its subsidiary, Orbograph Ltd., Orbotech develops and markets automatic check reading 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 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 JUNE 30, 2008 � � June 30 December 31 2008 2007 U. S. dollars in thousands Assets � CURRENT ASSETS: Cash and cash equivalents 128,299 120,913 Marketable securities 25,734 52,713 Accounts receivable: Trade 149,351 151,173 Other 23,615 22,964 Deferred income taxes 4,664 4,317 Inventories 98,339 � 77,570 � Total current assets 430,002 � 429,650 � � INVESTMENTS AND NON-CURRENT ASSETS: Marketable securities 41,964 32,410 Other long-term Investments 279 780 Funds in respect of employee rights upon retirement 15,360 14,099 Non-current trade receivables 214 231 Deferred income taxes 702 843 � � 58,519 � 48,363 � � PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and amortization 28,254 � 28,142 � � GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization 67,722 � 67,016 � � � 584,497 � 573,171 � � � Liabilities and shareholders' equity � CURRENT LIABILITIES: Accounts payable and accruals: Trade 35,768 34,405 Deferred income 14,998 15,445 Other 29,624 � 37,194 � Total current liabilities 80,390 87,044 � ACCRUED SEVERANCE PAY 30,906 28,610 DEFERRED TAX LIABILITY 17,468 � 16,565 � Total liabilities 128,764 � 132,219 � � MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 1,368 � 1,330 � � SHAREHOLDERS' EQUITY: Share capital 1,704 1,699 Additional paid-in capital 149,399 144,991 Retained earnings 355,441 346,447 Accumulated other comprehensive income 5,013 � 3,677 � 511,557 496,814 Less treasury stock, at cost (57,192 ) (57,192 ) Total shareholders' equity 454,365 � 439,622 � � � 584,497 � 573,171 � ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTH AND THREE MONTH PERIODS ENDED JUNE 30, 2008 � � � � � � 12 months 6 months ended 3 months ended ended June 30 June 30 December 31 2008 2007 2008 2007 2007 U.S. dollars in thousands (except per share data) � REVENUES 205,573 174,721 105,089 88,616 360,662 � COST OF REVENUES: COST 121,423 100,582 61,802 50,699 210,616 WRITE DOWN OF INVENTORY 4,821 4,821 4,821 � � � � � GROSS PROFIT 84,150 69,318 43,287 33,096 145,225 � RESEARCH AND DEVELOPMENT COSTS - net 38,752 31,980 19,598 16,405 67,923 � SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 36,551 32,710 18,683 16,315 66,989 � AMORTIZATION OF OTHER INTANGIBLE ASSETS 2,107 490 968 345 4,728 � RESTRUCTURING CHARGES 510 � IMPAIRMENT OF GOODWILL AND INTELLECTUAL PROPERTY 4,739 � GAIN ON SALE OF FIXED ASSET 611 611 � � � � � OPERATING INCOME 7,351 4,138 4,649 31 336 � FINANCIAL INCOME - net 2,925 4,991 1,351 2,300 9,110 � WRITE-DOWN OF LONG-TERM INVESTMENTS (5,000 ) (5,000 ) (5,000 ) � � � � � INCOME (LOSS) BEFORE TAXES ON INCOME 10,276 4,129 6,000 (2,669 ) 4,446 � TAXES ON INCOME 1,244 1,446 673 483 2,280 � � � � � � � INCOME (LOSS) FROM OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES AND JOINT VENTURE 9,032 2,683 5,327 (3,152 ) 2,166 � MINORITY INTEREST IN LOSSES (PROFITS) OF CONSOLIDATED SUBSIDIARY (38 ) (136 ) 1 (94 ) (416 ) � SHARE IN LOSSES OF AN ASSOCIATED COMPANY (348 ) (125 ) (266 ) � � � � � NET INCOME (LOSS) � 8,994 � � 2,199 � 5,328 � (3,371 ) � 1,484 � � � EARNINGS (LOSS) PER SHARE: BASIC $ 0.27 � $ 0.07 � 0.16 $ (0.10 ) $ 0.04 � � DILUTED $ 0.27 � $ 0.07 � 0.16 $ (0.10 ) $ 0.04 � � � WEIGHTED AVERAGE NUMBER OF SHARES (IN THOUSANDS) USED IN COMPUTATION OF EARNINGS PER SHARE: BASIC � 33,304 � � 33,077 � 33,333 � 32,949 � � 33,091 � � DILUTED � 33,304 � � 33,203 � 33,333 � 32,949 � � 33,190 �