Company Contact:
Anat Earon-Heilborn
Director of Investor Relations

Orbotech Ltd

Tel: +972-8-942 3582

anat.earon-heilborn@orbotech.com

Ann Michael

Senior Corporate Marketing Communications Manager

Orbotech Ltd

Tel: +972-8-942 3148

ann.michael@orbotech.com

ORBOTECH LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U. S. dollars  in  thousands

(Unaudited)

June 30

December 31

2015

2014

ASSETS

CURRENT ASSETS:

    Cash and cash equivalents 

$168,797

$136,367

    Restricted cash 

12,979

10,000

    Short-term bank deposits

8,535

10,000

    Accounts receivable:

      Trade

241,567

248,071

      Other

49,957

39,076

    Deferred income taxes 

7,124

8,213

    Inventories

142,250

157,030

              T o t a l  current assets

631,209

608,757

INVESTMENTS AND NON-CURRENT ASSETS:

    Marketable securities

5,966

5,890

    Funds in respect of employee rights upon retirement

10,062

9,755

    Deferred income taxes 

11,540

13,067

    Equity method investee and other receivable

9,440

8,926

    Deferred financing costs

6,432

7,470

43,440

45,108

PROPERTY, PLANT AND EQUIPMENT, net

52,055

55,580

OTHER INTANGIBLE ASSETS, net

123,830

145,082

GOODWILL

170,177

179,445

              T o t a l  assets

$1,033,972

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

   Current maturities of long-term loan

$9,762

$2,636

    Accounts payable and accruals:

      Trade

51,797

64,683

      Other

76,476

81,747

    Deferred income

29,503

38,008

              T o t a l  current liabilities

167,538

187,074

LONG-TERM LIABILITIES:

    Long-term  loan

266,372

293,851

    Liability for employee rights upon retirement

23,256

22,763

    Deferred income taxes

18,328

20,185

    Other tax liabilities

12,700

13,218

              T o t a l  long-term liabilities

320,656

350,017

              T o t a l  liabilities

488,194

537,091

EQUITY: 

    Share capital 

2,187

2,163

    Additional paid-in capital

300,942

293,056

    Retained earnings

328,755

303,950

    Accumulated other comprehensive income (loss)

780

(1,980)

632,664

597,189

    Less treasury shares, at cost

(99,539)

(99,539)

               T o t a l  Orbotech Ltd. shareholders' equity

497,650

    Non-controlling interest

(608)

(769)

               T o t a l  equity

532,517

496,881

              T o t a l  liabilities and equity

$1,020,711

$1,033,972

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

 (Unaudited)

6 months ended

3 months ended

June 30

June 30

2015

2014

2015

2014

Revenues 

$373,779

$217,978

$188,995

$113,185

Cost of revenues

204,938

123,649

103,231

64,513

Gross profit

168,841

94,329

85,764

48,672

Operating expenses: 

Research and development, net

50,819

37,571

25,040

19,110

Selling, general and administrative

59,027

40,166

30,055

20,574

Equity in earnings of Frontline

(2,222)

(3,558)

(1,351)

(2,054)

Amortization of intangible assets

16,028

2,020

7,110

1,010

Gain from the sale of the Thermal activity

(628)

(628)

Total operating expenses

123,024

76,199

60,226

38,640

Operating income

45,817

18,130

25,538

10,032

Financial expenses (income) - net

12,268

(64)

5,796

(391)

Income before taxes on income

33,549

18,194

19,742

10,423

Taxes on income

8,368

2,991

6,616

1,641

Share in losses of equity method investee

215

213

115

144

Net income

24,966

14,990

13,011

8,638

Net income (loss) attributable to 

the non-controlling interests

161

111

8

46

Net income attributable to Orbotech Ltd. 

$24,805

$14,879

$13,003

$8,592

Basic earnings per share

$0.59

$0.36

$0.31

$0.21

Diluted earnings per share

$0.58

$0.35

$0.30

$0.20

Weighted average number of shares (in thousands)

used in computation of:

Basic earnings per share

42,120

41,781

42,279

41,721

Diluted earnings per share

43,110

42,832

43,360

42,830

ORBOTECH LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS 

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

 (Unaudited)

6 months ended

3 months ended

June 30

June 30

2015

2014

2015

2014

Reported operating income on GAAP basis

$45,816

$18,130

$25,538

$10,032

Equity based compensation expenses

1,749

1,553

860

751

Amortization of intangible assets

16,028

2,020

7,110

1,010

Gain from the sale of the Thermal activity

(628)

(628)

Non-GAAP operating income

$62,965

$21,703

$32,880

$11,793

Reported net income attributable to Orbotech Ltd. on GAAP basis

$24,805

$14,879

$13,003

$8,592

Equity- based compensation expenses

1,749

1,553

860

751

Amortization of intangible assets

16,028

2,020

7,110

1,010

Gain from the sale of the Thermal activity

(628)

(628)

Tax adjustments re non-GAAP adjustments

1,511

2,460

Share in losses of associated company

215

213

115

144

Non-GAAP net income

$43,680

$18,665

$22,920

$10,497

Non-GAAP earnings per diluted share

$1.01

$0.44

$0.53

$0.25

Shares used in earnings per diluted share calculation-in thousands

43,110

42,832

43,360

42,830

ORBOTECH LTD.

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

U.S. dollars in thousands  

 (Unaudited)

6 months ended

3 months ended

June 30

June 30

2015

2014

2015

2014

Net income attributable to Orbotech Ltd. on GAAP basis

$24,805

$14,879

$13,003

$8,592

Minority interest and equity losses 

376

324

123

190

Taxes on income

8,368

2,991

6,616

1,641

Financial expenses, net

12,268

(64)

5,796

(391)

Depreciation and amortization 

23,518

6,842

10,858

3,371

Gain from the sale of the Thermal activity

(628)

(628)

Equity- based compensation expenses

1,749

1,553

860

737

ADJUSTED EBITDA

$70,455

$26,525

$36,628

$14,140

ORBOTECH LTD.

RECONCILIATION OF GAAP NET INCOME TO CREDIT FACILITY EBITDA

U.S. dollars in thousands  

 (Unaudited)

12 months ended

  June 30

2015

Net income attributable to Orbotech Ltd. on GAAP basis

$45,307

Minority interest and equity losses 

554

Tax expenses

8,796

Financial expenses

21,378

Depreciation and amortization 

47,008

Equity- based compensation expenses

3,388

SPTS acquisition costs

6,761

SPTS full 12 months contribution ⁽¹⁾

(5,262)

Gain from the sale of the Thermal activity

(628)

Litigation expenses

1,090

Other ⁽²⁾

CREDIT FACILITY EBITDA ⁽³⁾

$128,391

⁽¹⁾ The SPTS Acquisition was completed on August 7, 2014.  This adjustment gives full year effect to the SPTS Acquisition by reflecting SPTS's contribution to Credit Facility EBITDA for the period from July 1, 2014 to August 7, 2014, determined in accordance with the Credit Agreement.  This adjustment has been derived from SPTS's books and records, is unaudited and does not correspond to SPTS's historical accounting periods. This presentation does not reflect our pro forma results and should not used as indicative of our future results. The positive contribution of SPTS to adjusted EBITDA and net income of Orbotech in the third quarter of 2014 after August 7, 2014 was greater than should be expected in a typical quarter, due to the timing of revenues and the mid-quarter closing of the SPTS acquisition.  

⁽²⁾ Reflects adjustments permitted by the Credit Agreement, including with respect to employee and other matters.

⁽³⁾ Credit Facility EBITDA does not reflect any annualized expense reductions anticipated as a result of operational changes made as part of the SPTS Acquisition estimated by us in good faith as permitted by the Credit Agreement.  Because we are in the preliminary stages of assessing our operations after the SPTS Acquisition, this adjustment does not include any amount of cost savings, business optimization opportunities or synergies that we believe may be available.  Although we are carefully assessing the efficiency of our business, we may not identify or achieve any cost savings in the timeframe or amount we anticipate, if at all.  Accordingly, you should not place undue reliance on our ability to achieve cost savings or synergies.

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 (Unaudited)

6 months ended

3 months ended

June 30

June 30

2015

2014

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

24,966

14,990

13,011

8,638

Adjustment to reconcile net income to net cash 

provided by operating activities:

Depreciation and amortization

23,518

6,842

10,858

3,371

Compensation relating to equity awards granted to 

employees and others - net

1,749

1,553

860

737

Increase (decrease) in liability for employee rights upon retirement, net

(207)

(1,264)

(383)

(374)

Long- term loans discount amortization

397

277

Deferred financing costs amortization

1,038

726

Deferred income taxes

803

(95)

(1,531)

(350)

Amortization of premium and accretion of discount on marketable

Securities, net

99

504

49

347

Equity in earnings of Frontline, net of dividend received 

602

(458)

(34)

(263)

Other

614

441

115

235

Loss from sales of marketable securities

Gain from the sale of the Thermal activity 

(628)

(628)

Decrease (increase) in accounts receivable:

Trade

5,558

7,029

7,226

(1,148)

Other

569

(2,476)

(2,524)

(3,082)

Increase (decrease) in accounts payable and accruals:

Trade

(12,887)

(940)

(15,198)

2,212

Deferred income and other

(9,552)

(8,781)

1,202

1,935

Decrease (increase) in inventories

10,274

(7,682)

11,246

(627)

Net cash provided by operating activities 

46,913

9,663

25,272

11,631

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment

(7,119)

(5,932)

(3,937)

(2,358)

Consideration received for the sale of the Thermal activity 

10,000

10,000

Withdraw (placement) of bank deposits

1,465

12,074

(1,511)

15,598

Purchase of marketable securities

(154)

(14,242)

(154)

(11,752)

Redemption of marketable securities

8,838

6,083

SPTS net of cash acquired

Investment in equity method investee 

(1,500)

(250)

(250)

Proceeds from disposal of property, plant and equipment 

15

6

Increase (Decrease) in restricted cash 

(2,979)

265

Increase in funds in respect of employee

rights upon retirement

393

(72)

393

(2)

Net cash provided by investing activities

106

431

5,056

7,325

CASH FLOWS FROM FINANCING ACTIVITIES:

Long term loan,net of $8 millions financing costs 

Repayment of long-term loan 

(20,750)

(20,000)

Employee stock options exercised

6,161

5,746

4,009

2,223

Acquisition of treasury shares 

(12,993)

(8,819)

Net cash (used in) financing activities

(14,589)

(7,247)

(15,991)

(6,596)

Net increase in cash and cash equivalents

32,430

2,847

14,337

12,360

Cash and cash equivalents at beginning of period

136,367

161,155

154,460

151,642

CASH AND CASH EQUIVALENTS AT END OF PERIOD

168,797

164,002

168,797

164,002