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SMT & Inspection | February 20, 2007

Orbotech increased profit in 2006

Revenues for Orbotech's fourth quarter of 2006 were $103.3 million, compared to $106.9 million recorded in the third quarter of 2006 and $96.5 million in the fourth quarter a year ago.
Net income for the fourth quarter of 2006 was $9.4 million, or $0.28 per share (diluted), compared with net income of $12.0 million, or $0.36 per share (diluted), in the fourth quarter of last year. Net income for the fourth quarter of 2006 includes a restructuring charge of $3.3 million in connection with the Company's program to centralize its assembled PCB research and development activities at corporate headquarters in Israel. These results incorporate the adoption, on January 1, 2006, of revised Financial Accounting Standard No.123, “Share Based Payment", which resulted in increased compensation expenses totaling approximately $0.8 million, without any reduction in income taxes.

Revenues for the year ended December 31, 2006 totaled $416.5 million, compared with the $379.9 million recorded in 2005. Net income for the year ended December 31, 2006 was $55.0 million, or $1.65 per share (diluted), compared with net income of $43.3 million, or $1.30 per share (diluted), for the year ended December 31, 2005.

Sales of equipment to the PCB industry relating to bare PCBs in the fourth quarter of 2006 were $40.8 million, compared with $44.0 million in the third quarter of 2006 and $38.4 million in the fourth quarter of 2005. Sales of equipment to the PCB industry relating to assembled PCBs were $8.5 million this quarter, compared with $9.3 million in the third quarter of 2006 and $8.4 million in the fourth quarter of 2005. Sales of FPD inspection equipment in the fourth quarter of 2006 were $27.8 million, compared with $30.5 million in the third quarter of 2006 and $28.1 million in the fourth quarter of 2005. Sales of automatic check reading products in the fourth quarter of 2006 were $3.2 million, compared with $1.5 million in the third quarter of 2006 and $2.1 million in the fourth quarter of 2005. In addition, service revenue for the fourth quarter of 2006 increased to $22.9 million from $21.3 million in the third quarter of 2006 and $19.3 million in the fourth quarter of 2005.

The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $270 million, compared with approximately $256 million at the end of the third quarter, due principally to positive operating cash flow for the quarter of approximately $13.4 million. Non- operating disbursements totaled approximately $12.2 million, including $9.1 million for the repurchase of approximately 357,000 Ordinary Shares of the Company pursuant to the Company's previously announced program, and $3.1 million in capital expenditures.

The Company's results for the fourth quarter conclude a year in which it posted record annual revenues and strong margins despite sequentially lower revenues in the fourth quarter. The PCB business environment remains healthy, and the Company believes that customers' expansion plans in 2007 will continue to drive sales of its flagship PCB product offerings, the Discovery, Paragon and Symbion systems.

The Company's FPD results for the quarter reflect the current trend in an industry where, although consumer demand for LCD televisions remains strong, some FPD manufacturers have, out of caution and in light of a certain degree of overcapacity, delayed additional investments until industry developments become clearer. The Company remains focused on developing and introducing new products for this industry in anticipation of the next upswing in capital expenditure by FPD manufacturers.

Commenting on the results, Rani Cohen, Chief Executive Officer, said: “Our financial results for the quarter close out another strong year, which was marked by record revenues and significantly increased profitability compared with 2005. Through our focused investments in research and development and in our worldwide customer support infrastructure, we remain committed to ensuring that our customers meet the critical and growing challenges they are facing. We anticipate a challenging 2007 due to the current decrease in capital expenditure in the FPD industry; however, our excellent product portfolio will enable us to maintain our strong leadership position in the industries that we serve."

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