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Orbotech Announces Third Quarter 2012 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, 2011.

 
ORBOTECH LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2012
   
September 30 December 31

2012

2011

U.S. dollars in thousands

A s s e t s

 

CURRENT ASSETS:

Cash and cash equivalents 231,617 151,237
Short-term bank deposits 29,708 145,292
Marketable securities 3,810
Accounts receivable:
Trade 179,434 196,232
Other 28,098 26,163
Deferred income taxes 7,600 6,580
Inventories 97,936 105,109
   
T o t a l current assets 578,203   630,613  
 

INVESTMENTS AND NON-CURRENT ASSETS:

Marketable securities 11,106
Funds in respect of employee rights upon retirement 11,758 11,846
Deferred income taxes 11,598 8,999
Other long-term investments 2,221   2,426  
36,683   23,271  
 

PROPERTY, PLANT AND EQUIPMENT, net

25,729   26,664  
 

GOODWILL

12,444   12,444  
 

OTHER INTANGIBLE ASSETS, net

15,595   54,491  
   
668,654   747,483  
 
 

Liabilities and equity

 

CURRENT LIABILITIES:

Current maturities of long-term bank loan 32,000 32,000
Accounts payable and accruals:
Trade 34,733 32,357
Other 47,654 57,590
Deferred income 19,367 25,910
   
T o t a l current liabilities 133,754 147,857
 

LONG-TERM LIABILITIES:

Long-term bank loan 40,000 64,000
Liability for employee rights upon retirement 27,240 26,797
Deferred income taxes 1,708 1,759
Other tax liabilities 17,216   16,938  
T o t a l long-term liabilities 86,164 109,494
   
T o t a l liabilities 219,918   257,351  
 

EQUITY:

Share capital 2,101 2,092
Additional paid-in capital 274,071 270,966
Retained earnings 229,303 274,148
Accumulated other comprehensive income (loss) (112 ) (1,460 )
505,363 545,746
Less treasury shares, at cost (57,192 ) (57,192 )
T o t a l Orbotech Ltd. shareholders' equity 448,171 488,554
Non-controlling interest 565   1,578  
T o t a l equity 448,736   490,132  
   
668,654   747,483  
 
 
ORBOTECH LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2012
         
12 months

9 months ended

3 months ended

ended

September 30

September 30

December 31

2012

 

2011

2012

 

2011

2011

U.S. dollars in thousands (except per share data)
 

REVENUES

300,430 431,980 98,876 144,364 565,313
 

COST OF REVENUES

174,246 251,405 59,568 83,675 329,442
 

WRITE-DOWN OF INVENTORIES

14,255 14,255 6,743
         

GROSS PROFIT

111,929 180,575 25,053 60,689 229,128
 

RESEARCH AND DEVELOPMENT COSTS - net

54,062 62,582 17,938 21,332 84,180

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

57,160 53,689 19,203 17,993 72,583
 

AMORTIZATION OF INTANGIBLE ASSETS

8,916 9,213 2,852 3,071 12,304
 

RESTRUCTURING CHARGES

1,918
 

IMPAIRMENT OF INTANGIBLE ASSETS

29,980 29,980
         

OPERATING INCOME (LOSS)

(40,107 ) 55,091 (44,920 ) 18,293 60,061
 

FINANCIAL EXPENSES - net

5,247 5,706 1,808 1,810 6,551
         

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES ON INCOME

(45,354 ) 49,385 (46,728 ) 16,483 53,510
 

TAXES ON INCOME (TAX BENEFIT)

222 5,822 (742 ) 1,703 7,677
         
(45,576 ) 43,563 (45,986 ) 14,780 45,833
 

SHARE IN LOSSES OF ASSOCIATED COMPANY

115 109 50 49 179
         

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

(45,691 ) 43,454 (46,036 ) 14,731 45,654
 

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

1,363 1,363
         

NET INCOME (LOSS)

(45,691 ) 44,817 (46,036 ) 14,731 47,017
 

NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST

(846 ) 25 (342 ) 25 (322 )
         

NET INCOME (LOSS) ATTRIBUTABLE TO ORBOTECH LTD.

(44,845 ) 44,792 (45,694 ) 14,706 47,339  
 

AMOUNTS ATTRIBUTABLE TO ORBOTECH LTD.:

INCOME (LOSS) FROM CONTINUING OPERATIONS

(44,845 ) 43,429 (45,694 ) 14,706 45,976
 

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

1,363 1,363
         

NET INCOME (LOSS) ATTRIBUTABLE TO ORBOTECH LTD.

(44,845 ) 44,792 (45,694 ) 14,706 47,339  
 
 

EARNINGS PER SHARE:

INCOME (LOSS) FROM CONTINUING OPERATIONS:

BASIC

($1.03 ) $1.12 ($1.05 ) $0.34 $1.15  
 

DILUTED

($1.03 ) $1.09 ($1.05 ) $0.34 $1.13  
 

NET INCOME (LOSS) ATTRIBUTABLE TO ORBOTECH LTD.:

BASIC

($1.03 ) $1.15 ($1.05 ) $0.34 $1.19  
 

DILUTED

($1.03 ) $1.13 ($1.05 ) $0.34 $1.16  

 

 

WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF EARNINGS PER SHARE - IN THOUSANDS:

BASIC

43,482   38,785 43,537   43,177 39,909  
 

DILUTED

43,482   39,759 43,537   43,872 40,816  
 
 
ORBOTECH LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2012
         
12 months

9 months ended

3 months ended

ended

September 30

September 30

December 31

2012

2011

2012

2011

2011

U.S. dollars in thousands

CASH FLOWS FROM OPERATING ACTIVITIES:

 
Net income (loss) (45,691 ) 44,817 (46,036 ) 14,731 47,017

Adjustment to reconcile net income to net cash provided by operating activities:

Income from discontinued operations (1,363 ) (1,363 )
Depreciation and amortization 14,724 15,073 4,791 5,095 19,958
Impairment of Intangible assets 29,980 29,980

Compensation relating to equity awards granted to employees and others - net

2,286 2,915 480 778 3,728
Increase (decrease) in liability for employee rights upon retirement 720 (54 ) 626 (516 ) (704 )
Non-cash expenses in respect of restructuring 601
Deferred income taxes (3,670 ) 2,335 (2,471 ) 1,038 2,584
Loss from sales and write down of marketable securities 395 395
Others 1,142 1,069 847 1,023 1,224
Decrease (increase) in accounts receivable:
Trade 16,798 (43,485 ) 2,889 (12,703 ) (42,714 )
Other (1,860 ) 1,121 (462 ) 1,524 2,698
Increase (decrease) in accounts payable and accruals:
Trade 2,376 13,271 5,008 (12,841 ) 5,822
Deferred income and other (15,161 ) 5,753 739 3,508 6,105
Decrease (increase) in inventories 7,574   (8,116 ) 11,504   1,805   6,870  
Net cash provided by operating activities - continuing operations 9,819 33,731 7,895 3,442 51,620
Net cash used in operating activities - discontinued operations   (740 )   0   (787 )
Net cash provided by operating activities 9,819   32,991   7,895   3,442   50,833  
 

CASH FLOWS FROM INVESTING ACTIVITIES:

 
Purchase of property, plant and equipment (6,561 ) (5,188 ) (3,102 ) (2,803 ) (7,554 )
Withdraw (placement) of bank deposits 115,584 (127,300 ) 50,010 (67,300 ) (142,325 )
Realization (purchase) of marketable securities (14,935 ) 1,967 1,967
Other investment (2,310 ) (810 ) (2,810 )
Proceeds from disposal of property, plant and equipment 35 35

Decrease (increase) in funds in respect of employee rights upon retirement

(189 ) (13 ) 41   200   331  
Net cash provided by (used in) investing activities - continuing operations 93,899 (132,809 ) 46,949 (70,713 ) (150,356 )
Net cash provided by investing activities - discontinued operations   9,155       9,155  
Net cash provided by (used in) investing activities 93,899   (123,654 ) 46,949   (70,713 ) (141,201 )
 

CASH FLOWS FROM FINANCING ACTIVITIES:

 
Repayment of long-term bank loan (24,000 ) (24,000 ) (8,000 ) (8,000 ) (32,000 )
Employee stock options exercised 662 1,649 51 219 2,063
Proceeds from issuance of shares, net   90,683       90,683  
Net cash provided by (used in) financing activities (23,338 ) 68,332   (7,949 ) (7,781 ) 60,746  
         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 80,380 (22,331 ) 46,895 (75,052 ) (29,622 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 151,237 180,859 184,722 233,580 180,859
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD

231,617

  158,528 231,617   158,528   151,237  
 
 
ORBOTECH LTD.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS FROM CONTINUING OPERATIONS
FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2012
         
 
12 months

9 months ended

3 months ended

ended

September 30

September 30

December 31

2012

2011

2012

2011

2011

U.S. dollars in thousands (except per share data)
 
 

Reported operating income (loss) on GAAP basis

(40,107 ) 55,091   (44,920 ) 18,293 60,061  
 
Equity based compensation expenses 2,230 2,915 480 778 3,728
Restructuring charges 1,918
Impairment of Intangible assets 29,980 29,980
Amortization of intangible assets 8,916   9,213   2,852   3,071 12,304  
Non-GAAP operating income 2,937   67,219   (11,608 ) 22,142 76,093  
 

Reported net income (loss) attributable to Orbotech Ltd. on GAAP basis

(44,845 ) 44,792   (45,694 ) 14,706 47,339  
 
Equity based compensation expenses 2,230 2,915 480 778 3,728
Amortization of intangible assets 8,916 9,213 2,852 3,071 12,304
Income from discontinued operations (1,363 ) (1,363 )
Restructuring charges 1,918
Impairment of Intangible assets 29,980 29,980
Share in losses of associated company 115 109 50 49 179
         

Non-GAAP net income (loss) from continuing operations

(1,686 ) 55,666   (12,332 ) 18,604 62,187  
 
Non-GAAP earnings per diluted share ($0.04 ) $1.40   ($0.28 ) $0.42 $1.52  
 
Shares used in earnings per diluted share calculation-in thousands 43,482   39,759   43,537   43,872 40,816  




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