To supplement the Company’s financial results presented on a GAAP basis, the Company uses the non-GAAP measures indicated in the Reconciliation, which exclude equity based compensation expenses, amortization of intangible assets, in-process research and development charges, share in losses/profits of associated companies and impairment and restructuring charges, as well as certain financial expenses and non-recurring income items that are believed to be helpful in understanding and comparing past operating and financial performance with current results. However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as equity compensation and amortization of intangible assets) as described below and because they do not reflect certain cash expenditures that are required to operate the Company’s business, such as interest expense and taxes. Accordingly, these non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Management regularly utilizes supplemental non-GAAP financial measures internally to understand, manage and evaluate the Company’s business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.
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, 2013.
| ORBOTECH LTD. | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| AT MARCH 31, 2014 | ||||
| March 31 | December 31 | |||
| 2014 | 2013 | |||
| U. S. dollars in thousands | ||||
|
A s s e t s |
||||
|
CURRENT ASSETS: |
||||
| Cash and cash equivalents | 151,642 | 161,155 | ||
| Short-term bank deposits | 42,174 | 38,650 | ||
| Marketable securities | 5,133 | 5,265 | ||
| Accounts receivable: | ||||
| Trade | 190,026 | 198,203 | ||
| Other | 30,888 | 31,546 | ||
| Deferred income taxes | 8,253 | 8,094 | ||
| Inventories | 100,993 | 93,938 | ||
|
T o t a l current assets |
529,109 | 536,851 | ||
|
INVESTMENTS AND NON-CURRENT ASSETS: |
||||
| Marketable securities | 12,637 | 13,106 | ||
| Funds in respect of employee rights upon retirement | 11,042 | 11,024 | ||
| Deferred income taxes | 14,714 | 15,130 | ||
| Equity method investee and other recievable | 9,845 | 9,911 | ||
| 48,238 | 49,171 | |||
|
PROPERTY, PLANT AND EQUIPMENT, net |
28,633 | 27,715 | ||
|
GOODWILL |
|
12,444 | 12,444 | |
|
OTHER INTANGIBLE ASSETS, net |
9,392 | 10,401 | ||
| 627,816 | 636,582 | |||
| Liabilities and equity | ||||
|
CURRENT LIABILITIES: |
||||
| Accounts payable and accruals: | ||||
| Trade | 40,511 | 43,663 | ||
| Other | 50,629 | 55,482 | ||
| Deferred income | 21,366 | 24,854 | ||
| T o t a l current liabilities | 112,506 | 123,999 | ||
|
LONG-TERM LIABILITIES: |
||||
| Liability for employee rights upon retirement | 24,955 | 25,845 | ||
| Deferred income taxes | 2,406 | 2,406 | ||
| Other tax liabilities | 14,610 | 17,178 | ||
| T o t a l long-term liabilities | 41,971 | 45,429 | ||
| T o t a l liabilities | 154,477 | 169,428 | ||
|
EQUITY: |
||||
| Share capital | 2,141 | 2,124 | ||
| Additional paid-in capital | 285,467 | 281,159 | ||
| Retained earnings | 274,857 | 268,570 | ||
| Accumulated other comprehensive income | 77 | 409 | ||
| 562,542 | 552,262 | |||
| Less treasury shares, at cost | -89,120 | -84,946 | ||
| T o t a l Orbotech Ltd. shareholders' equity | 473,422 | 467,316 | ||
| Non-controlling interest | -83 | -162 | ||
| T o t a l equity | 473,339 | 467,154 | ||
| 627,816 | 636,582 | |||
| ORBOTECH LTD. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2014 | ||||||||||||
|
3 m o n t h s e n d e d |
12 months ended | |||||||||||
| March 3 1 | December 31 | |||||||||||
| 2014 | 2013 | 2013 | ||||||||||
|
REVENUES |
104,793 | 95,477 | 439,995 | |||||||||
|
COST OF REVENUES |
59,136 | 55,347 | 248,455 | |||||||||
|
WRITE- DOWN OF INVENTORIES |
||||||||||||
|
|
||||||||||||
|
GROSS PROFIT |
45,657 | 40,130 | 191,540 | |||||||||
|
RESEARCH AND DEVELOPMENT COSTS - net |
18,461 | 16,314 | 69,573 | |||||||||
|
SELLING, GENERAL AND ADMINISTRATIVE |
||||||||||||
| EXPENSES | 19,592 | 17,262 | 75,948 | |||||||||
|
EQUITY IN EARNINGS OF FRONTLINE |
(1,504 | ) | (1,183 | ) | (5,553 | ) | ||||||
|
AMORTIZATION OF INTANGIBLE ASSETS |
1,010 | 1,010 | 4,041 | |||||||||
|
RESTRUCTURING CHARGES |
||||||||||||
|
IMPAIRMENT OF INTANGIBLE ASSETS |
||||||||||||
|
OPERATING INCOME |
8,098 | 6,727 | 47,531 | |||||||||
|
FINANCIAL EXPENSES - net |
327 | 678 | 1,191 | |||||||||
|
INCOME FROM OPERATIONS BEFORE TAXES ON INCOME |
7,771 | 6,049 | 46,340 | |||||||||
|
TAXES ON INCOME |
1,350 | 1,164 | 6,927 | |||||||||
| 6,421 | 4,885 | 39,413 | ||||||||||
|
SHARE IN LOSSES OF ASSOCIATED COMPANY |
69 | 45 | 252 | |||||||||
|
NET INCOME |
6,352 | 4,840 | 39,161 | |||||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO |
||||||||||||
| THE NON-CONTROLLING INTEREST | 65 | (171 | ) | (840 | ) | |||||||
|
NET INCOME ATTRIBUTABLE TO ORBOTECH LTD. |
6,287 | 5,011 | 40,001 | |||||||||
|
EARNINGS PER SHARE: |
||||||||||||
| INCOME FROM OPERATIONS: | ||||||||||||
| BASIC | $ | 0.15 | $ | 0.12 | $ | 0.94 | ||||||
| DILUTED | $ | 0.15 | $ | 0.11 | $ | 0.92 | ||||||
|
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION |
||||||||||||
| OF EARNINGS PER SHARE - IN THOUSANDS: | ||||||||||||
| BASIC | 41,842 | 43,321 | 42,571 | |||||||||
|
|
||||||||||||
| DILUTED | 42,835 | 43,739 | 43,253 | |||||||||
| ORBOTECH LTD. | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2014 | ||||||
| 3 m o n t h s e n d e d | 12 months ended | |||||
| March 3 1 | December 31 | |||||
| 2014 | 2013 | 2013 | ||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||
| Net income | 6,352 | 4,840 | 39,161 | |||
| Adjustment to reconcile net income to net cash | ||||||
| provided by operating activities: | ||||||
| Depreciation and amortization | 3,471 | 2,812 | 13,261 | |||
| Impairment of Intangible assets | ||||||
| Compensation relating to equity awards granted to | ||||||
| employees and others - net | 816 | 773 | 3,182 | |||
| Increase (decrease) in liability for employee rights upon retirement | (890) | (640) | 624 | |||
| Deferred income taxes | 257 | (53) | (1,558) | |||
| Non-cash expenses in respect of restructuring | ||||||
| Amortization of premium and accretion of discount on marketable | ||||||
| Securities, net | 157 | 91 | 554 | |||
| Equity in earnings of Frontline, net of dividend received | (195) | 902 | 446 | |||
| Other | 207 | 246 | 268 | |||
| Decrease (increase) in accounts receivable: | ||||||
| Trade | 8,177 | (15,483) | (33,721) | |||
| Other | 606 | (1,031) | (2,954) | |||
| Increase (decrease) in accounts payable and accruals: | ||||||
| Trade | (3,152) | (4,058) | 11,377 | |||
| Deferred income and other | (10,718) | (1,361) | 15,511 | |||
| Decrease (increase) in inventories | (7,055) | 6,251 | (190) | |||
| Net cash provided by (used in) operating activities | (1,967) | (6,711) | 45,961 | |||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||
| Purchase of property, plant and equipment | (3,574) | (3,361) | (12,978) | |||
| Withdraw (placement) of bank deposits | (3,524) | (10,986) | (35,636) | |||
| Purchase of marketable securities | (2,490) | (570) | (9,936) | |||
| Redemption of marketable securities | 2,755 | 306 | 6,037 | |||
| Investment in equity method investee | (2,250) | |||||
| Proceeds from disposal of property, plant and equipment | 9 | 39 | ||||
| Increase in funds in respect of employee | ||||||
| rights upon retirement | (71) | (63) | (262) | |||
| Net cash used in investing activities | (6,895) | (14,674) | (54,986) | |||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||
| Repayment of long-term bank loan | (40,000) | (64,000) | ||||
| Employee stock options exercised | 3,523 | 273 | 3,312 | |||
| Acquisition of treasury shares | (4,174) | (2,208) | (25,795) | |||
| Net cash used in financing activities | (651) | (41,935) | (86,483) | |||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (9,513) | (63,320) | (95,508) | |||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 161,155 | 256,663 | 256,663 | |||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 151,642 | 193,343 | 161,155 | |||
| ORBOTECH LTD. | ||||||
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS FROM CONTINUING OPERATIONS | ||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2014 | ||||||
| 3 m o n t h s e n d e d | 12 months ended | |||||
| March 3 1 | December 31 | |||||
| 2014 | 2013 | 2013 | ||||
| U.S. dollars in thousands (except per share data) | ||||||
|
Reported operating income on GAAP basis |
8,098 | 6,727 | 47,531 | |||
| Equity based compensation expenses | 816 | 773 | 3,182 | |||
| Amortization of intangible assets | 1,010 | 1,010 | 4,041 | |||
| Non-GAAP operating income | 9,924 | 8,510 | 54,754 | |||
|
Reported net income attributable to Orbotech Ltd. on GAAP basis |
6,287 | 5,011 | 40,001 | |||
| Equity based compensation expenses | 816 | 773 | 3,182 | |||
| Amortization of intangible assets | 1,010 | 1,010 | 4,041 | |||
| Share in losses of associated company | 69 | 45 | 252 | |||
|
Non-GAAP net income from operations |
8,182 | 6,839 | 47,476 | |||
| Non-GAAP earnings per diluted share | $0.19 | $0.16 | $1.10 | |||
| Shares used in earnings per diluted share calculation-in thousands | 42,835 | 43,739 | 43,253 | |||
