SMT & Inspection | November 17, 2008
Orbotech to exit Assembly PCB business
UPDATED 14:15 Commencing in the third quarter of 2008, the company began scaling back its activities in the assembled PCB business, but will continue to service its installed base of products. However this has nothing to do with the division of the equipment to the printed circuit board ("PCB") industry. Orbotech has issued a clarification (18.11.2008) about this decision.
In light of the current worldwide economic conditions the Company is re-focusing its strategic plan. Commencing in the third quarter of 2008, the Company began scaling back its activities in the assembled PCB business. This process will continue through the end of the year, after which the Company will no longer develop and market assembled PCB equipment, but will continue to service its installed base of products. Additionally, the Company has adopted certain measures designed to re-align its infrastructure, including: an approximately 15% reduction in the Company's worldwide workforce in the third and fourth quarters of 2008; a 15% reduction in corporate management salaries; lesser reductions in other employee salaries; and other cost-cutting measures. Revenues for the third quarter of 2008 were $94.8 million, compared to $105.1 million recorded in the second quarter of 2008 and $82.3 million in the third quarter a year ago. Net loss for the third quarter of 2008 was $43.1 million, compared to net income of $5.3 million, in the second quarter of 2008, and net income of $0.4 million, in the third quarter of 2007. Net loss for the third quarter of 2008 reflects: (a) an impairment charge of $38.5 million ($32.8 million net of taxes) relating to a write-down of substantially all of the goodwill and intellectual property of Orbotech Medical Denmark A/S following a determination that the carrying value of that good will and intellectual property exceeded its fair value. This followed an updated forecasted discounted cash flow analysis which was based on a decline in the Company's business outlook in Orbotech's medical imaging segment; (b) an impairment charge of $5.4 million relating to a write-off of the remaining goodwill of the Company's assembled PCB business; and (c) a restructuring charge of $3.7 million ($3.3 million net of taxes) in connection with the first phase of the Company's 2008 cost reduction program. An additional restructuring charge will be recorded in the fourth quarter of 2008 for the second phase of this program. Revenues for the first nine months of 2008 totaled $300.3 million, compared to $257.0 million recorded during the corresponding period in 2007. Net loss for the first nine months of 2008 was $34.1 million, or $1.02 per share (diluted), compared to net income of $2.6 million, or $0.08 per share (diluted), for the corresponding period last year. Net loss for the first nine months of 2008 includes the impairment and restructuring charges mentioned above. Sales of equipment to the printed circuit board ("PCB") industry relating to bare PCBs were $27.7 million in the third quarter of 2008, compared to $34.5 million in the second quarter of 2008, and $37.2 million in the third quarter of 2007. Sales of flat panel display ("FPD") inspection equipment were $31.7 million, compared to $29.8 million in the second quarter of 2008, and $8.8 million in the third quarter of last year. Sales of equipment to the PCB industry relating to assembled PCBs were $3.9 million, compared to $7.5 million in the second quarter this year, and $5.7 million in the third quarter of 2007. Sales of automatic check reading products were $2.0 million in the third quarter of 2008, compared to $2.7 million in the second quarter of 2008, and $2.9 million recorded in the third quarter of 2007. Sales of medical imaging equipment were $3.4 million in the third quarter of 2008, compared to $4.4 million in the second quarter of 2008, and $3.4 million in the third quarter of 2007 (the Company acquired this business on August 6, 2007). In addition, service revenue for the third quarter of 2008 was $26.0 million, a slight decrease compared to the $26.2 million recorded in the second quarter of 2008. Service revenue in the third quarter of 2007 was $24.3 million.
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