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,

2018

2017

2018

2017

Net income attributable to Orbotech Ltd. on GAAP basis

$66,386

$39,950

$36,119

$25,030

Net loss attributable to non-controlling interests

(762)

(576)

(394)

(436)

Taxes on income

13,257

7,687

5,586

4,819

Financial expenses - net

1,790

3,573

3,435

1,567

Depreciation and amortization 

23,406

21,648

11,777

10,997

Equity-based compensation expenses

6,193

4,502

3,161

2,284

Transaction cost pending merger with KLA

3,762

1,281

ADJUSTED EBITDA

$114,032

$76,784

$60,965

$44,261

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 (Unaudited)

Six months ended

Three months ended

June 30,

June 30,

2018

2017

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$65,624

$39,374

$35,725

$24,594

Adjustments to reconcile net income to net cash 

provided by operating activities:

Depreciation and amortization

23,406

21,648

11,777

10,997

Compensation relating to equity awards granted to 

employees and others - net

6,193

4,502

3,161

2,284

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

1,143

157

(156)

287

Deferred financing costs amortization

231

116

(132)

Deferred income taxes

12,412

(5,461)

610

(5,783)

Amortization of premium and accretion of discount on marketable

Securities, net

77

1

39

334

Equity in earnings of Frontline, net of dividend received 

(1,117)

(383)

(536)

(409)

Other

(58)

417

(58)

327

Decrease (increase) in accounts receivable:

Trade

(13,075)

(34,893)

22,220

(7,452)

Other

(5,206)

(2,927)

(1,190)

(8,396)

Increase (decrease) in accounts payable and accruals:

Trade

(12,070)

12,358

(7,830)

13,504

Deferred income

32,313

2,433

29,098

1,217

Other

(26,800)

(1,487)

(5,689)

5,425

Increase in inventories

(23,321)

(17,904)

(7,089)

(9,722)

Net cash provided by operating activities 

59,752

17,835

80,198

27,075

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment

(14,115)

(11,914)

(8,231)

(6,935)

Proceeds from sale of property, plan and equipment

(45)

(50)

Investment in bank deposits

(5,022)

(2,653)

(4,994)

(2,641)

Purchase of marketable securities

(250)

(1,994)

(250)

(702)

Redemption of marketable securities

804

Deposits of funds in respect of employee

rights upon retirement

(152)

(1,122)

(75)

(65)

Net cash used in investing activities

(19,584)

(16,879)

(13,600)

(10,343)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of bank loan

(16,364)

(16,364)

(16,364)

(16,364)

Employee share options exercised

1,491

1,237

808

570

Net cash used in financing activities

(14,873)

(15,127)

(15,556)

(15,794)

Net (Decrease) increase in cash, cash equivalents and restricted cash

25,295

(14,171)

51,042

938

Cash, cash equivalents and restricted cash at beginning of period

315,803

228,779

290,056

213,670

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$341,098

$214,608

$341,098

$214,608