ORBOTECH LTD. (NASDAQ/GSM SYMBOL: ORBK) today announced its
consolidated financial results for the fourth quarter and full year
ended December 31, 2008.
Revenues for the fourth quarter of 2008 were $129.2 million,
compared to $94.8 million in the third quarter of 2008 and $103.6
million recorded in the fourth quarter of 2007. Revenues for the
fourth quarter of 2008 include $45.2 million attributable to the
business of Photon Dynamics, Inc. (�PDI�), which was acquired by
the Company on October 2, 2008. Net loss for the fourth quarter of
2008, including an impairment charge of $88.0 million, was $101.2
million, or $2.98 per share (diluted). This compares to a net loss
of $43.1 million, or $1.29 per share (diluted), in the third
quarter of 2008, and a net loss of $1.1 million, or $0.03 per share
(diluted), in the fourth quarter of 2007.
Net loss for the fourth quarter of 2008 reflects:
(a) the above-noted impairment charge of $88.0 million related
to goodwill associated with the Company�s flat panel display
(�FPD�) business, which was triggered primarily by the decrease in
the Company�s market capitalization and was recorded in compliance
with FASB Statement No. 142 �Goodwill and Other Intangible
Assets�;
(b) $5.1 million in amortization of intangible assets arising
principally from the PDI acquisition and a write-off of $6.5
million relating to in-process research and development relating to
that transaction;
(c) a charge of $5.1 million in connection with the scaling down
of the Company�s assembled printed circuit board (�PCB�)
operations, including the write-down of $3.3 million of raw
material inventories relating to this business; and
(d) a restructuring charge of $3.4 million relating to the
second phase of the Company�s previously announced 2008 cost
reduction program.
Revenues for the year ended December 31, 2008 totaled $429.5
million, compared to the $360.7 million recorded in 2007. Net loss
for the year ended December 31, 2008 was $135.3 million, or $4.04
per share (diluted), compared to net income of $1.5 million, or
$0.04 per share (diluted), for the year ended December 31,
2007.
Sales of equipment to the PCB industry relating to bare PCBs in
the fourth quarter of 2008 were $14.7 million, compared to $27.7
million in the third quarter of 2008 and $50.0 million in the
fourth quarter of 2007. Sales of FPD equipment in the fourth
quarter of 2008 were $76.4 million ($40.9 million of which was
attributable to the business of PDI), compared to $31.7 million in
the third quarter of 2008 and $10.6 million in the fourth quarter
of 2007. Sales of equipment to the PCB industry relating to
assembled PCBs in the fourth quarter of 2008 were $2.6 million,
compared to $3.9 million in the third quarter of 2008 and $8.3
million in the fourth quarter of 2007. Sales of automatic check
reading products in the fourth quarter of 2008 were $3.0 million,
compared to $2.0 million in the third quarter of 2008 and $3.6
million in the fourth quarter of 2007. Sales of medical imaging
equipment in the fourth quarter of 2008 were $3.7 million, compared
to $3.4 million in the third quarter of 2008 and $6.1 million in
the fourth quarter of 2007. In addition, service revenue for the
fourth quarter increased to $28.8 million ($4.3 million of which
was attributable to the business of PDI), from $26.0 million
recorded in the third quarter of 2008 and $25.0 million in the
fourth quarter of 2007.
The Company completed the quarter and the year with cash, cash
equivalents, marketable securities and long-term investments of
approximately $125 million, including $19.2 million of auction-rate
securities (ARS) primarily tied to student loans; and $160 million
in debt, which it borrowed from Israel Discount Bank in connection
with the PDI acquisition. This loan is for an initial term expiring
on December 31, 2009, is extendable at the Company�s option for up
to five years and currently bears interest at three-month LIBOR +
1.45%. The Company is in compliance with all applicable covenants
with respect to this loan. The Company continues to place a very
high priority on the management of its cash flows and believes that
its proven ability to manage cash, including in times of
difficulty, will be a critical factor in enabling Orbotech to
emerge strongly from the current global recession.
Commencing in the third quarter of 2008, as part of the
re-focusing of its strategic plan, the Company scaled back its
activities in the assembled PCB business. During the first quarter
of 2009, the Company signed an agreement with Orpro Services s.r.l.
of Italy, for the sale of Orbotech�s assembled PCB business in
Europe and the Americas. The transaction is subject to customary
conditions to closing, including any requisite regulatory
approvals. Prodelec S.p.A., an affiliate of Orpro Services, has
been one of the Company�s business partners for the past twelve
years; and Orbotech is committed to working together with Orpro
Services and its affiliates to ensure a smooth transition and
minimal disruption to its client base of European and American PCB
assembly houses. The Company plans to continue to support and
service its installed base of assembled PCB systems in the Asia
Pacific region.
Beginning in the fourth quarter of 2008, the Company has been
experiencing a decline in new FPD equipment orders. The current
overall limited market visibility makes it difficult to predict
exactly when FPD manufacturers will renew their fabrication
expansion plans.
The Company is investing substantial effort in the integration
of PDI into the Orbotech group, which is proceeding ahead of
schedule and is already in its second phase. The Company expects to
realize operational synergies of approximately $20 million related
to the PDI acquisition in 2009.
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, including
a reduction in the Company�s worldwide workforce in the second half
of 2008 and other cost-cutting measures. These measures, combined
with the operational synergies relating to the PDI acquisition, are
anticipated to result in total cost savings of approximately $65-70
million in 2009. The costs associated with these savings are
reflected in the restructuring charges recorded in 2008.
Commenting on the results, Rani Cohen, Chief Executive Officer,
said: �We have taken prompt and decisive steps to re-align the
Company�s cost structure in light of the downturn in our business
resulting from the worldwide economic situation. As has been our
consistent practice in the past, even in these challenging times we
will continue to develop and provide to our customers new and
innovative FPD, PCB, recognition and medical solutions, based on
the latest and most advanced technology - a recent example of which
is our delivery, during the fourth quarter of 2008, of the world�s
first FPD-AOI system for Generation 10 glass panels. This will
enable the Company to maintain its leadership position in the
industries that it serves and, looking forward, to capitalize on
the business opportunities that will arise when economic conditions
improve.�
An earnings conference call is scheduled for Monday, February
23, 2009, 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
203-369-1278, until March 9, 2009. The pass code is Q4. 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 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 bare printed circuit boards (�PCB�s), imaging
solutions for PCB production and AOI, test and repair systems for
flat panel displays (�FPD�s). The Company 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 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 DECEMBER 31, 2008 � � December 31 � December 31
2008
2007
U.S. dollars in thousands
Assets
�
CURRENT ASSETS:
Cash and cash equivalents 105,127 120,913 Marketable securities 320
52,713 Accounts receivable: Trade 180,701 151,173 Other 27,106
22,964 Deferred income taxes 5,222 4,317 Inventories 122,152 �
77,570 �
Total current assets
440,628 � 429,650 � �
INVESTMENTS AND NON-CURRENT ASSETS:
Marketable securities 19,241 32,410 Other long-term Investments 29
780
Funds in respect of employee
rights upon retirement
12,521
14,099
Non-current trade receivables 231 Deferred income taxes 8,795 843 �
� 40,586 � 48,363 � �
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation and amortization 39,325 � 28,142 � �
GOODWILL AND OTHER INTANGIBLE ASSETS, net
of
accumulated amortization 114,322 � 67,016 � � � 634,861 � 573,171 �
�
Liabilities and shareholders'
equity
�
CURRENT LIABILITIES:
Short term loan 160,000 Accounts payable and accruals: Trade 36,377
34,405 Deferred income 22,473 15,445 Other 56,428 � 37,194 �
Total current liabilities
275,278 87,044 �
LONG TERM LIABILITIES:
Accrued severance pay 27,678 28,610 Deferred tax liabilities 16,208
16,565 Other long term liability 2,667 � �
Total long term liabilities
46,553 45,175 � �
Total liabilities
321,831 � 132,219 � �
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY
1,562 � 1,330 � �
SHAREHOLDERS' EQUITY:
Share capital 1,727 1,699 Additional paid-in capital 161,914
144,991 Retained earnings 211,142 346,447 Accumulated other
comprehensive income (6,123 ) 3,677 � 368,660 496,814 Less treasury
stock, at cost (57,192 ) (57,192 )
Total shareholders' equity
311,468 � 439,622 � � � 634,861 � 573,171 �
ORBOTECH LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE
TWELVE MONTH AND THREE MONTH PERIODS ENDED DECEMBER 31, 2008 �
� � �
12 months ended
3 months ended
December 31
December 31
2008
2007
2008
2007
U.S. dollars in thousands (except per share data) �
REVENUES
429,546 360,662 129,213 103,621 �
COST OF REVENUES:
COST
260,639 210,616 80,536 61,124
WRITE DOWN OF INVENTORIES
3,348 4,821 3,348 � � � �
GROSS PROFIT
165,559 145,225 45,329 42,497 �
RESEARCH AND DEVELOPMENT COSTS - net
76,602 67,923 20,742 19,454 �
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
73,346 66,989 19,551 18,022 �
AMORTIZATION OF OTHER INTANGIBLE
ASSETS
8,099 4,308 5,053 1,947 �
IN
PROCESS RESEARCH AND DEVELOPMENT CHARGES
6,537 420 6,537 �
RESTRUCTURING CHARGES
8,800 510 5,124 510 �
IMPAIRMENT OF GOODWILL AND INTELLECTUAL
PROPERTY
131,663 4,739 87,819 4,739 � � � �
OPERATING INCOME (LOSS)
(139,488 ) 336 (99,497 ) (2,175 ) �
FINANCIAL INCOME (EXPENSES) - net
(1,324 ) 9,110 (2,760 ) 1,629 �
WRITE-DOWN OF LONG-TERM INVESTMENTS
(5,000 ) � � � �
INCOME (LOSS) BEFORE TAXES ON INCOME
(140,812 ) 4,446 (102,257 ) (546 ) �
INCOME TAX EXPENSES (BENEFIT)
(5,739 ) 2,280 (1,152 ) 455 �
INCOME (LOSS) FROM OPERATIONS OF THE COMPANY
AND
� � � �
ITS
SUBSIDIARIES AND JOINT VENTURE
(135,073 ) 2,166 (101,105 ) (1,001 ) �
MINORITY INTEREST IN PROFITS OF CONSOLIDATED
SUBSIDIARY
(232 ) (416 ) (75 ) (242 ) �
SHARE IN PROFITS (LOSSES) OF AN ASSOCIATED
COMPANY
(266 ) 109 � � � �
NET
INCOME (LOSS)
(135,305 ) 1,484 � (101,180 ) (1,134 ) � �
EARNINGS (LOSS) PER SHARE:
BASIC
($4.04 ) $0.04 � ($2.98 ) ($0.03 ) �
DILUTED
($4.04 ) $0.04 � ($2.98 ) ($0.03 ) �
WEIGHTED AVERAGE NUMBER OF SHARES (IN
THOUSANDS)
USED IN COMPUTATION OF EARNINGS PER
SHARE:
BASIC
33,512 � 33,091 � 33,936 � 33,177 � �
DILUTED
33,512 � 33,190 � 33,936 � 33,177 �
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