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Orbotech Announces Third Quarter 2011 Results

The effect of equity-based compensation expenses has been excluded from the non-GAAP measures. 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 effects of amortization of intangible assets have also been excluded from the measures. This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions. 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. For more information about these items, see the Reconciliation and the Company’s Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2010.

 
ORBOTECH LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2011
     
September 30 December 31
2 0 1 1 2 0 1 0
U. S. dollars in thousands

A s s e t s

 

CURRENT ASSETS:

Cash and cash equivalents 158,528 179,503
Short-term bank deposits 130,267 2,780
Accounts receivable:
Trade 197,003 153,518
Other 28,293 29,919
Deferred income taxes 5,929 5,913
Inventories 120,928 112,812
Assets of discontinued operations   12,351  
T o t a l current assets 640,948   496,796  
 

INVESTMENTS AND NON-CURRENT ASSETS:

Marketable securities 2,549
Funds in respect of employee rights upon retirement 12,056 13,017
Deferred income taxes 9,946 12,679
Other long-term investments 1,420   29  
23,422   28,274  
 

PROPERTY, PLANT AND EQUIPMENT, net

24,149   24,842  
 

GOODWILL

12,444   12,034  
 

OTHER INTANGIBLE ASSETS, net

57,582   66,395  
   
758,545   628,341  
 
 

Liabilities and equity

 

CURRENT LIABILITIES :

Current maturities of long-term bank loan 32,000 32,000
Accounts payable and accruals:
Trade 39,806 26,535
Other 54,795 55,290
Deferred income 29,277 24,421
Liabilities of discontinued operations   2,172  
T o t a l current liabilities 155,878 140,418
 

LONG-TERM LIABILITIES :

Long-term bank loan 72,000 96,000
Liability for employee rights upon retirement 27,447 27,501
Deferred income taxes 1,806 2,188
Other tax liabilities 14,991   12,679  
T o t a l long-term liabilities 116,244 138,368
   
T o t a l liabilities 272,122   278,786  
 

EQUITY:

Share capital 2,087 1,758
Additional paid-in capital 269,783 174,940
Retained earnings 271,601 226,809
Accumulated other comprehensive income (loss) (1,742 ) 1,454  
541,729 404,961
Less treasury shares, at cost (57,192 ) (57,192 )
T o t a l Orbotech Ltd. shareholders' equity 484,537 347,769
Non-controlling interest 1,886   1,786  

T o t a l equity

486,423   349,555  
   
758,545   628,341  
             
ORBOTECH LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2011
 
12 months

9  m o n t h s  e n d e d

3  m o n t h s  e n d e d

ended

S e p t e m b e r  3 0

S e p t e m b e r  3 0

December 31
2 0 1 1 2 0 1 0 2 0 1 1 2 0 1 0 2 0 1 0
U.S. dollars in thousands (except per share data)
 

REVENUES

431,980 400,979 144,364 156,092 529,355
 

COST OF REVENUES

251,405 232,255 83,675 90,043 312,901
         

GROSS PROFIT

180,575 168,724 60,689 66,049 216,454
 

RESEARCH AND DEVELOPMENT COSTS - net

62,582 57,246 21,332 20,236 78,327
 

SELLING, GENERAL AND ADMINISTRATIVE

EXPENSES

53,689 49,925 17,993 17,836 66,264
 

AMORTIZATION OF INTANGIBLE ASSETS

9,213 10,632 3,071 3,544 14,176
         

OPERATING INCOME

55,091 50,921 18,293 24,433 57,687
 

FINANCIAL EXPENSES- net

5,706 5,989 1,810 1,456 7,284
         

INCOME FROM CONTINUING OPERATIONS BEFORE TAXES ON INCOME

49,385 44,932 16,483 22,977 50,403
 

TAXES ON INCOME

5,822 8,027 1,703 3,647 7,397
         
43,563 36,905 14,780 19,330 43,006
 

SHARE IN LOSSES OF ASSOCIATED COMPANY

109 49
         

NET INCOME FROM CONTINUING OPERATIONS

43,454 36,905 14,731 19,330 43,006
 

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX

1,363 (6,728) (3,128) (8,717)
         

NET INCOME

44,817 30,177 14,731 16,202 34,289
 

NET INCOME ATTRIBUTABLE TO

THE NON-CONTROLLING INTEREST

25 18 25 53 144
         

NET INCOME ATTRIBUTABLE TO ORBOTECH LTD.

44,792 30,159 14,706 16,149 34,145
 

AMOUNTS ATTRIBUTABLE TO ORBOTECH LTD.:

INCOME FROM CONTINUING OPERATIONS

43,429 36,887 14,706 19,277 42,862
 

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX

1,363 (6,728) (3,128) (8,717)
         

NET INCOME ATTRIBUTABLE TO ORBOTECH LTD.

44,792 30,159 14,706 16,149 34,145
 
 

EARNINGS PER SHARE:

INCOME FROM CONTINUING OPERATIONS:

BASIC

$1.12 $1.06 $0.34 $0.55 $1.23
 

DILUTED

$1.09 $1.03 $0.34 $0.54 $1.20
 

NET INCOME ATTRIBUTABLE TO ORBOTECH LTD.:

BASIC

$1.15 $0.86 $0.34 $0.46 $0.98
 

DILUTED

$1.13 $0.84 $0.34 $0.45 $0.95
 
 

WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION

OF EARNINGS PER SHARE - IN THOUSANDS:

BASIC

38,785 34,877 43,177 34,924 34,911
 

DILUTED

39,759 35,743 43,872 35,810 35,778
             
ORBOTECH LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2011
   
 
12 months

9  m o n t h s  e n d e d

3  m o n t h s  e n d e d

ended

S e p t e m b e r  30

S e p t e m b e r  30

December 31
2 0 1 1 2 0 1 0 2 0 1 1 2 0 1 0 2 0 1 0
U.S. dollars in thousands

CASH FLOWS FROM OPERATING ACTIVITIES :

 
Net income 44,817 30,177 14,731 16,202 34,289
Adjustment to reconcile net income to net cash
provided by operating activities:
Loss (income) from discontinued operations (1,363) 6,728 3,128 8,717
Depreciation and amortization 15,073 17,785 5,095 5,750 23,665
Compensation relating to equity awards granted to
employees and others - net 2,915 3,575 778 1,011 4,725
Increase (decrease) in liability for employee rights upon retirement (54) 2,532 (516) 2,342 2,589
Deferred income taxes 2,335 449 1,038 (1,035) (3,866)
Loss from sales and write down of marketable securities 395 920 966 1,252
Other, including capital loss (gain) 1,069 (330) 1,023 (608) (1,147)
Decrease (increase) in accounts receivable:
Trade (43,485) (33,965) (12,703) (2,673) (5,755)
Other 1,121 (6,163) 1,524 (4,795) (4,673)
Increase (decrease) in accounts payable and accruals:
Trade 13,271 22,863 (12,841) 5,789 1,434
Deferred income and other 5,753 12,833 3,508 13,126 15,870
Decrease (increase) in inventories (8,116) (21,458) 1,805 (13,802) (19,018)
Net cash provided by operating activities - continuing operations 33,731 35,946 3,442 25,401 58,082
Net cash used in operating activities - discontinued operations (740) (7,059)   (1,315) (8,972)
Net cash provided by operating activities 32,991 28,887 3,442 24,086 49,110
 

CASH FLOWS FROM INVESTING ACTIVITIES :

 
Purchase of property, plant and equipment (5,188) (3,506) (2,803) (1,277) (6,752)
Placement of bank deposits (127,300) (67,300) (2,780)
Sales of marketable securities 1,967 6,742 6,742 6,742
Other investment (2,310) (810)
Proceeds from disposal of property, plant and equipment 35 21 21 20
Decrease (increase) in funds in respect of employee
rights upon retirement (13) (624) 200 (336) (617)

Net cash provided by (used in) investing activities - continuing operations

(132,809) 2,633 (70,713) 5,150 (3,387)
Net cash provided by (used in) investing activities - discontinued operations 9,155 (106)   (151) (268)
Net cash provided by (used in) investing activities (123,654) 2,527 (70,713) 4,999 (3,655)
 

CASH FLOWS FROM FINANCING ACTIVITIES :

 
Repayment of long-term bank loan (24,000) (24,000) (8,000) (8,000) (32,000)
Employee stock options excercised 1,649 69 219 12 902
Proceeds from issuance of shares, net 90,683
Acquisition of non-controlling interest   (511)     (511)
Net cash provided by (used in) financing activities 68,332 (24,442) (7,781) (7,988) (31,609)
         
Currency translation adjustments on cash and cash equivalents   (147)   27 (220)
         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22,331) 6,825 (75,052) 21,124 13,626
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 180,859 167,233 233,580 152,934 167,233
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD 158,528 174,058 158,528 174,058 180,859
 
LESS - CASH AND CASH EQUIVALENTS OF DISCONTINUED
OPERATIONS AT END OF PERIOD 810 810 1,356
CASH AND CASH EQUIVALENTS OF CONTINUING          
OPERATIONS AT END OF PERIOD 158,528 173,248 158,528 173,248 179,503
             
ORBOTECH LTD.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS FROM CONTINUING OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2011
 
 
12 months

9  m o n t h s  e n d e d

3  m o n t h s  e n d e d

ended

S e p t e m b e r  3 0

S e p t e m b e r  3 0

December 31
2 0 1 1 2 0 1 0 2 0 1 1 2 0 1 0 2 0 1 0
U.S. dollars in thousands (except per share data)
 
 

Reported net income attributable to Orbotech Ltd. on GAAP basis

44,792 30,159 14,706 16,149 34,145
 
Non-operating income (expenses):
Financial expenses - net (5,706) (5,989) (1,810) (1,456) (7,284)
Taxes on income (5,822) (8,027) (1,703) (3,647) (7,397)
Net income attributable to the non-controlling interest (25) (18) (25) (53) (144)
Share in losses of associated company (109) (49)
Income (loss) from discontinued operations* 1,363 (6,728)   (3,128) (8,717)
(10,299) (20,762) (3,587) (8,284) (23,542)
         
 
Reported operating income on GAAP basis 55,091 50,921 18,293 24,433 57,687
 
Equity based compensation expenses 2,915 3,575 778 1,011 4,725
Amortization of intangible assets 9,213 10,632 3,071 3,544 14,176
Non-GAAP operating income 67,219 65,128 22,142 28,988 76,588
 
Non-operating expenses (10,299) (20,762) (3,587) (8,284) (23,542)
Income (loss) from discontinued operations* 1,363 (6,728) (3,128) (8,717)
         

Non-GAAP net income from continuing operations

55,557 51,094 18,555 23,832 61,763
 
Non-GAAP earnings per diluted share $1.40 $1.43 $0.42 $0.67 $1.73
 
Shares used in earnings per diluted share calculation-in thousands 39,759 35,743 43,872 35,810 35,778

* The loss from discontinued operations, net of tax, was attributable to the re-classification during 2010 of OMS and OMD as discontinued operations.

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