Orbotech Reports Second Quarter 2017 Results

YAVNE, Israel, Aug. 2, 2017 /PRNewswire/ --

2017 second quarter highlights

    --  Revenues of $210.7 million
    --  Gross margin of 46.8%
    --  GAAP EPS of $0.51 (diluted); non-GAAP EPS of $0.67 (diluted)
    --  Record quarterly bookings

2017 second half guidance

    --  Revenue range: $460 million to $480 million, split about evenly between
        the third and the fourth quarters of 2017
    --  Gross margin range 47.0%-47.5% based on current expectations of product
        mix

ORBOTECH LTD. (NASDAQ: ORBK) (the "Company") today announced its consolidated financial results for the second quarter of 2017.

Commenting on the results, Asher Levy, Chief Executive Officer, said: "We are very pleased to report robust financial results for the second quarter of 2017. Each of our operating divisions performed strongly and we achieved overall record quarterly bookings. While these results certainly echo the current favorable industry conditions, they are also the fruit of the Company's steady and selective investment in research and development over the long-term, and reflect the technological leadership which our solutions offer in the highly competitive industries that we serve. New and emerging growth opportunities in areas such as advanced smartphones, automotive and flat panel displays, mean that our total addressable market continues to expand. Our strong backlog and order book reinforce our belief that we will meet our execution plans for 2017."

Revenues for the second quarter of 2017 totaled $210.7 million, compared with $196.0 million in the second quarter of 2016, and $187.6 million in the first quarter of 2017.

In the Company's Production Solutions for Electronics Industry segment:

    --  Revenues from the Company's printed circuit board ("PCB") business were
        $82.5 million (including $51.1 million in equipment sales) in the second
        quarter of 2017.  This compares to PCB revenues of $72.6 million
        (including $43.8 million in equipment sales) in the second quarter of
        2016.
    --  Revenues from the Company's flat panel display ("FPD") business were
        $69.7 million (including $58.6 million in equipment sales) in the second
        quarter of 2017.  This compares to FPD revenues of $49.9 million
        (including $39.8 million in equipment sales) in the second quarter of
        2016.
    --  Revenues from the Company's semiconductor device ("SD") business were
        $54.9 million (including $44.1 million in equipment sales) in the second
        quarter of 2017.  This compares to SD revenues of $67.5 million
        (including $53.6 million in equipment sales) in the second quarter of
        2016.

Revenues in the Company's other segments totaled $3.6 million in the second quarter of 2017, compared with $6.0 million in the second quarter of 2016.

Service revenues for the second quarter of 2017 were $55.3 million, compared with $55.0 million in the second quarter of 2016.

Gross profit and gross margin in the second quarter of 2017 were $98.6 million and 46.8%, respectively, compared with $89.9 million and 45.9%, respectively, in the second quarter of 2016.

GAAP net income and GAAP net income margin in the second quarter of 2017 were $25.0 million and 11.9% respectively, compared with $13.3 million, and 6.8% respectively in the second quarter of 2016.

GAAP earnings per share (diluted) for the second quarter of 2017 were $0.51, compared with $0.30, for the second quarter of 2016.

Adjusted EBITDA (as defined below) and adjusted EBITDA margin for the second quarter of 2017 were $44.3 million and 21.0%, respectively, compared with $39.1 million and 20.0%, respectively, in the second quarter of 2016.

Non-GAAP net income and non-GAAP net income margin for the second quarter of 2017 were $32.9 million and 15.6%, respectively, compared with $27.0 million and 13.8%, respectively, for the second quarter of 2016.

Non-GAAP earnings per share (diluted) for the second quarter of 2017 were $0.67, compared with $0.60 per share, for the second quarter of 2016.

A reconciliation of each of the Company's non-GAAP measures to the comparable GAAP measure (the "Reconciliation") is included at the end of this press release.

As of June 30, 2017, the Company had cash, cash equivalents, short term bank deposits and marketable securities of $226.3 million, and debt of $72.3 million. During the second quarter of 2017, the Company generated cash from operations of $27.1 million. As of June 30, 2017, the actual number of ordinary shares outstanding was approximately 47.9 million.

Second half 2017 Guidance

The Company expects revenues for the second half of 2017 to be in the range of $460 million to $480 million, split about evenly between the third and the fourth quarters of 2017. The Company expects gross margin for the second half of 2017 to be in the range of 47.0%-47.5%, based on current expectations of product mix.

Conference Call

An earnings conference call for the Company's second quarter 2017 results is scheduled for today, August 2, 2017, at 8:30 a.m. EDT. The dial-in number for the conference call is + 1-212-444-0481 or (US toll-free) 877-280-2342 and a replay will be available on telephone number +1-347-366-9565 or (US toll-free) 866-932-5017 until August 16, 2017. The pass code is 7122808 or Orbotech Q2. A live webcast of the conference call can also be heard by accessing the Company's website at: https://edge.media-server.com/m6/p/t7znkw2r. The webcast will remain available for 12 months at: http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-audioarchives.

About Orbotech Ltd.

Orbotech Ltd. is a leading global supplier of yield-enhancing and process-enabling solutions for the manufacture of electronics products. Orbotech provides cutting-edge solutions for use in the manufacture of PCBs, FPDs and SDs, designed to enable the production of innovative, next generation electronic products and improve the cost effectiveness of existing and future electronics production processes. Orbotech's core business lies in enabling electronic device manufacturers to inspect and understand PCBs and FPDs to verify their quality ('reading'); pattern the desired electronic circuitry on the relevant substrate and perform three dimensional shaping of metalized circuits on multiple surfaces ('writing'); and utilize advanced vacuum deposition and etching processes in SD and semiconductor manufacturing ('connecting'). Orbotech refers to this 'reading', 'writing' and 'connecting' as enabling the 'Language of Electronics'. For further information, visit http://www.orbotech.com.

Cautionary Statement Regarding Forward-Looking Statements

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 Orbotech's 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, without limitation, cyclicality in the industries in which the Company operates, the Company's production capacity, timing and occurrence of product acceptance (the Company defines 'bookings' and 'backlog' as purchase arrangements with customers that are based on mutually agreed terms, which, in some cases for bookings and backlog, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty), fluctuations in product mix, within and among divisions, worldwide economic conditions generally, especially in the industries in which the Company operates, 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, including as a result of the 'Brexit' process and administration change in the United States, or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis, the level of consumer demand for sophisticated devices such as smartphones, tablets and other electronic devices as well as automobiles, the Company's global operations and its ability to comply with varying legal, regulatory, exchange, tax and customs regimes, the timing and outcome of tax audits, including the ongoing audit of tax years 2012-2014 in Israel (see below), the Company's ability to achieve strategic initiatives, including related to its acquisition strategy, the Company's debt and corporate financing activities; the final timing and outcome, and impact of the criminal matter and ongoing investigation in Korea, including any impact on existing or future business opportunities in Korea and elsewhere, any civil actions related to the Korean matter brought by third parties, including the Company's customers, which may result in monetary judgments or settlements, expenses associated with the Korean matter, and ongoing or increased hostilities in Israel and the surrounding areas.

In addition, in May 2017 the Company received a $58 million assessment from the Israel Tax Authority with respect to the ongoing tax audit in Israel. The Company believes that it has provided adequately for any reasonably foreseeable outcomes related to the tax audit; however, future results may include unfavorable material adjustments to estimated tax liabilities in the period when the assessment is resolved or the audit is closed. In addition, the Israel Tax Authority is investigating the Company's tax positions. Given that the process is in its preliminary stages, the Company cannot assure the outcome or timing of completion of the assessment process or investigation, including the amount of tax ultimately payable, and additional penalties, criminal sanctions, fines and other amounts that may be imposed as a result of the assessment and investigation, which may be material in amount or in adverse impact on the Company's results of operations, financial position and reputation. The outcome may also impact the Company's results of operations as a result of tax positions taken for subsequent fiscal years.

Furthermore, during the second quarter of 2017, the Company elected to implement certain provisions of the Israeli Law for the Encouragement of Capital Investments related to preferred enterprises in Israel. Although the Company is unable to predict the precise impact of this tax election, it believes the tax election will be beneficial over the long term and it does not expect that the tax election will result in a material increase in its effective tax rate for 2017.

The foregoing information should be read in connection with the Company's Annual Report on Form 20-F for the year ended December 31, 2016, and subsequent SEC filings. The Company is subject to the foregoing and other risks detailed in those reports. 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.

Non-GAAP Financial Measures

Non-GAAP net income, non-GAAP net income margin, non-GAAP net income per share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, including amortization of intangibles and acquisition costs; (iii) certain items associated with sale or disposition of businesses; (iv) tax impact; (v) share in losses of equity method investee and amounts associated with non-controlling interests company; and/or (vi) charges associated with the financing activities related to the retirement of the Company's credit Agreement entered into in 2014.

The Company uses the non-GAAP measures indicated in the Reconciliation to supplement the Company's financial results presented on a GAAP basis. These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial and other expenses and items that are believed to be helpful in understanding and comparing past operating and financial performance with current results. Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods. In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, financial expense and amortization of intangible assets) as described below and in the Reconciliation. The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.

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 and dispositions. 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 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.

The effects of a sale or disposition of a business have also been excluded from the non-GAAP measures. This item is inconsistent in amount and frequency. By excluding the item from the non-GAAP measures, management is better able to evaluate the Company's ability to utilize its existing businesses and estimate the long-term value that remaining businesses will generate for the Company. Furthermore, the Company believes that this adjustment correlates more closely with the sustainability of the Company's operating performance.

Adjusted EBITDA is also a non-GAAP financial measure. The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude taxes on income, financial expenses (income) - net and depreciation. The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry. Adjusted EBITDA margin is a measurement of Orbotech's adjusted EBITDA as a percentage of its revenues. Although the Company believes its presentation of adjusted EBITDA is useful, its adjusted EBITDA measure may not be comparable to similarly named measures presented by other companies.

For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2016, and its other SEC filings.


                                                                                    ORBOTECH LTD.

                                                                        CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                             U. S. dollars  in  thousands

                                                                                      (Unaudited)

                                                                                                              June 30,            December 31,

                                                                                                                             2017                    2016
                                                                                                                             ----                    ----

    ASSETS


    CURRENT ASSETS:

        Cash and cash equivalents                                                                                        $214,608                $216,292

        Restricted cash                                                                                                                         12,487

        Marketable securities                                                                                                 204

        Short-term bank deposits                                                                                            3,442                     789

        Accounts receivable - trade                                                                                       361,237                 326,343

        Prepaid expenses and other current assets                                                                          48,316                  47,258

        Inventories                                                                                                       152,142                 132,435

                  T o t a l  current assets                                                                               779,949                 735,604


    INVESTMENTS AND NON-CURRENT ASSETS:

        Marketable securities                                                                                               8,064                   7,012

        Funds in respect of employee rights upon retirement                                                                10,121                   8,375

        Deferred income taxes                                                                                              21,740                  19,840

        Equity method investee and other receivables                                                                        5,191                   9,113

                                                                                                                           45,116                  44,340


    PROPERTY, PLANT AND EQUIPMENT, net                                                                                     65,092                  62,375


    OTHER INTANGIBLE ASSETS, net                                                                                           80,263                  84,210


    GOODWILL                                                                                                              176,804                 176,374
                                                                                                                          -------                 -------


                  T o t a l  assets                                                                                    $1,147,224              $1,102,903
                                                                                                                       ==========              ==========



    LIABILITIES AND EQUITY


    CURRENT LIABILITIES:

       Current maturities of long-term loan                                                                               $16,364                 $16,364

        Accounts payable and accruals:

          Trade                                                                                                            84,494                  72,085

          Other                                                                                                           102,719                 114,692

        Deferred income                                                                                                    31,009                  28,576

                  T o t a l  current liabilities                                                                          234,586                 231,717


    LONG-TERM LIABILITIES:

        Long-term loan, net                                                                                                55,886                  72,002

        Liability with respect to Applied Microstructure, Inc. ("AMST")                                                     1,471                   1,471

        Liability for employee rights upon retirement                                                                      23,753                  22,973

        Deferred income taxes                                                                                              13,169                  14,392

        Other tax liabilities                                                                                               9,226                   7,567
                                                                                                                            -----                   -----

                  T o t a l  long-term liabilities                                                                        103,505                 118,405


                  T o t a l  liabilities                                                                                  338,091                 350,122


    EQUITY:

        Share capital                                                                                                       2,386                   2,381

        Additional paid-in capital                                                                                        425,919                 420,185

        Retained earnings                                                                                                 480,109                 440,159

        Accumulated other comprehensive loss                                                                              (2,732)                (9,221)
                                                                                                                           ------                  ------

                                                                                                                          905,682                 853,504

        Less treasury shares, at cost                                                                                    (99,539)               (99,539)
                                                                                                                          -------                 -------

                   T o t a l  Orbotech Ltd. equity                                                                        806,143                 753,965

        Non-controlling interest                                                                                            2,990                 (1,184)
                                                                                                                            -----                  ------

                   T o t a l  equity                                                                                      809,133                 752,781


                  T o t a l  liabilities and equity                                                                    $1,147,224              $1,102,903
                                                                                                                       ==========              ==========




                                                                         ORBOTECH LTD.

                                                        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                                          (Unaudited)


                                                                                                    Six months ended             Three months ended

                                                                                                        June 30,                       June 30,
                                                                                                        --------                       --------

                                                                                                          2017               2016                      2017           2016
                                                                                                          ----               ----                      ----           ----


    Revenues                                                                                          $398,312           $386,407                  $210,663       $195,980

    Cost of revenues                                                                                   212,572            210,895                   112,048        106,071
                                                                                                       -------            -------                   -------        -------

    Gross profit                                                                                       185,740            175,512                    98,615         89,909


    Operating expenses:

    Research and development, net                                                                       58,741             52,704                    30,066         26,135

    Selling, general and administrative                                                                 66,456             61,289                    32,503         31,266

    Equity in earnings of Frontline                                                                    (2,355)           (1,677)                  (1,305)       (1,041)

    Amortization of intangible assets                                                                   12,264             13,135                     6,371          6,840

    Total operating expenses                                                                           135,106            125,451                    67,635         63,200
                                                                                                       -------            -------                    ------         ------


    Operating income                                                                                    50,634             50,061                    30,980         26,709

    Financial expenses - net                                                                             3,573             14,147                     1,567          9,483


    Income before taxes on income                                                                       47,061             35,914                    29,413         17,226

    Taxes on income                                                                                      7,687              6,714                     4,819          3,869

    Share in losses of equity method investee                                                                        300                                    150


    Net income                                                                                          39,374             28,900                    24,594         13,207

    Net loss attributable to non-controlling interests                                                   (576)             (194)                    (436)         (133)
                                                                                                          ----               ----                      ----           ----


    Net income attributable to Orbotech Ltd.                                                           $39,950            $29,094                   $25,030        $13,340
                                                                                                       =======            =======                   =======        =======



    Basic earnings per share                                                                             $0.83              $0.67                     $0.52          $0.30
                                                                                                         =====              =====                     =====          =====


    Diluted earnings per share                                                                           $0.82              $0.65                     $0.51          $0.30
                                                                                                         =====              =====                     =====          =====


    Weighted average number (in thousands) of shares

    used in computation of:

    Basic earnings per share                                                                            47,909             43,603                    47,907         44,019

    Diluted earnings per share                                                                          48,806             44,527                    48,868         44,992


                                                                                          ORBOTECH LTD.

                                                                           RECONCILIATION OF GAAP TO NON-GAAP RESULTS

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

                                                                                           (Unaudited)



                                                                                                                          Six months ended             Three months ended

                                                                                                                               June 30,                     June 30,
                                                                                                                               --------                     --------

                                                                                                                               2017                2016                    2017           2016
                                                                                                                               ----                ----                    ----           ----



    Reported operating income on GAAP basis                                                                                 $50,634             $50,061                 $30,980        $26,709

    Equity-based compensation expenses                                                                                        4,502               2,958                   2,284          1,278

    Amortization of intangible assets                                                                                        12,264              13,135                   6,371          6,840

    Non-GAAP operating income                                                                                               $67,400             $66,154                 $39,635        $34,827
                                                                                                                            =======             =======                 =======        =======


    Reported net income attributable to Orbotech Ltd. on GAAP basis                                                         $39,950             $29,094                 $25,030        $13,340

    Equity-based compensation expenses                                                                                        4,502               2,958                   2,284          1,278

    Amortization of intangible assets                                                                                        12,264              13,135                   6,371          6,840

    Tax effect of non-GAAP adjustments                                                                                      (1,496)            (1,523)                  (748)         (794)

    Share in losses of equity method investee                                                                                              300                                    150

    Charges associated with the retirement of the 2014 Credit Agreement                                                                  6,228                                  6,228

    Non-GAAP net income                                                                                                     $55,220             $50,192                 $32,937        $27,042
                                                                                                                            =======             =======                 =======        =======


    GAAP earnings per diluted share                                                                                           $0.82               $0.65                   $0.51          $0.30
                                                                                                                              =====               =====                   =====          =====


    Non-GAAP earnings per diluted share                                                                                       $1.13               $1.13                   $0.67          $0.60
                                                                                                                              =====               =====                   =====          =====


    Shares used in earnings per diluted share computation- in thousands                                                      48,806              44,527                  48,868         44,992


                                                                              ORBOTECH LTD.

                                                           RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

                                                                        U.S. dollars in thousands

                                                                                (Unaudited)



                                                                                                              Six months ended        Three months ended

                                                                                                                   June 30,                June 30,
                                                                                                                   --------                --------

                                                                                                                   2017           2016                    2017    2016
                                                                                                                   ----           ----                    ----    ----



    Net income attributable to Orbotech Ltd. on GAAP basis                                                      $39,950        $29,094                 $25,030 $13,340

    Minority interest and equity losses                                                                           (576)           106                   (436)     17

    Taxes on income                                                                                               7,687          6,714                   4,819   3,869

    Financial expenses - net                                                                                      3,573         14,147                   1,567   9,483

    Depreciation and amortization                                                                                21,648         21,398                  10,997  11,147

    Equity-based compensation expenses                                                                            4,502          2,958                   2,284   1,278

    ADJUSTED EBITDA                                                                                             $76,784        $74,417                 $44,261 $39,134
                                                                                                                =======        =======                 ======= =======


                                                                                                                                     ORBOTECH LTD.

                                                                                                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                               U.S. dollars in thousands

                                                                                                                                        (Unaudited)

                                                                                                                                                                               Six months ended                            Three months ended

                                                                                                                                                                                 June 30,                                  June 30,
                                                                                                                                                                                 --------                                  --------

                                                                                                                                                                                   2017                    2016                         2017                   2016
                                                                                                                                                                                   ----                    ----                         ----                   ----

    CASH FLOWS FROM OPERATING ACTIVITIES:


    Net income                                                                                                                                                       $39,374                $28,900                $24,594                     $13,207

    Adjustment to reconcile net income to net cash

    provided by operating activities:

                                                                           Depreciation and amortization                                                                         21,648                  21,398                       10,997                 11,147

                                                                           Compensation relating to equity awards granted to

                                                                           employees and others - net                                                                             4,502                   2,958                        2,284                  1,278

                                                                            Increase in liability for employee rights upon retirement,
                                                                            net                                                                                                     157                     879                          287                    632

                                                                           Long- term loans discount amortization                                                                                        1,866                                              1,566

                                                                           Deferred financing costs amortization                                                                                         5,460                        (132)                 4,662

                                                                           Deferred income taxes                                                                                (5,461)                (1,678)                     (5,783)                 (464)

                                                                            Amortization of premium and accretion of discount on
                                                                            marketable

                                                                           Securities, net                                                                                            1                      94                          334                     28

                                                                           Equity in earnings of Frontline, net of dividend received                                              (383)                    839                        (409)                   650

                                                                           Other                                                                                                    417                     388                          327                    238

                                                                           Increase in accounts receivable:

                                                                           Trade                                                                                               (34,893)                (7,224)                     (7,452)               (2,899)

                                                                           Other                                                                                                (2,927)                (3,703)                     (8,396)                 (986)

                                                                           Increase (decrease) in accounts payable and accruals:

                                                                           Trade                                                                                                 12,358                 (3,672)                      13,504                (5,310)

                                                                           Deferred income                                                                                        2,433                 (1,544)                       1,217                (2,394)

                                                                           Other                                                                                                (1,487)                (6,396)                       5,425                  (652)

                                                                           Decrease (increase) in inventories                                                                  (17,904)                (1,115)                     (9,722)                 1,015

    Net cash provided by operating activities                                                                                                                                  17,835                  37,450                       27,075                 21,718


    CASH FLOWS FROM INVESTING ACTIVITIES:


    Purchase of property, plant and equipment                                                                                                                                (11,914)               (12,115)                     (6,935)               (6,358)

    Consideration received for the sale of the Thermal product business                                                                                                          12,000                                              12,000

    Withdraw of (investment in) bank deposits                                                                                                                                 (2,653)                  6,488                      (2,641)                  (19)

    Purchase of marketable securities                                                                                                                                         (1,994)                (2,244)                       (702)                 (976)

    Redemption of marketable securities                                                                                                                                  804                  2,337                                             1,180

    Investment in equity method investee                                                                                                                                        (1,000)

    Decrease (increase) in funds in respect of employee

                                                                           rights upon retirement                                                                               (1,122)                    126                         (65)                    66

    Net cash provided by (used in) investing activities*                                                                                                                     (16,879)                  5,592                     (10,343)                 5,893


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayment of long-term loan                                                                                                                                               (239,635)                                          (214,028)

    Repayment of bank loan                                                                                                                                          (16,364)                                    (16,364)

    Bank loan, net of $2 million financing costs                                                                                                                                108,031                                             108,031

    Issuance of shares, net                                                                                                                                                      99,962                                              99,962

    Employee share options exercised                                                                                                                                            1,237                   3,464                          570                  1,389

    Net cash used in financing activities                                                                                                                                    (15,127)               (28,178)                    (15,794)               (4,646)


    Net increase (decrease) in cash, cash equivalents and restricted cash*                                                                                                   (14,171)                 14,864                          938                 22,965

    Cash, cash equivalents and restricted cash at beginning of period*                                                                                                        228,779                 175,719                      213,670                167,618
                                                                                                                                                                              -------                 -------                      -------                -------


    CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD*                                                                                                    $214,608               $190,583               $214,608                    $190,583
                                                                                                                                                                    ========               ========               ========                    ========


                                                                           * Reclassified

Company Contact:
Rami Rozen
Director of Investor Relations
Orbotech Ltd
Tel: +972-8-942 3582
Rami.rozen@orbotech.com

Tally Kaplan Porat
Director of Corporate Marketing
Orbotech Ltd
Tel: +972-8-942 3603
Tally-Ka@orbotech.com

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SOURCE Orbotech Ltd.