ORBOTECH LTD.

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

U.S. dollars in thousands  

 (Unaudited)

Nine months ended

Three months ended

September 30,

September 30,

2018

2017

2018

2017

Net income attributable to Orbotech Ltd. on GAAP basis

$95,609

$76,504

$29,224

$36,554

Net loss attributable to non-controlling interests

(929)

(979)

(167)

(403)

Taxes on income

18,857

14,256

5,600

6,569

Financial expenses - net

4,538

4,890

2,747

1,317

Depreciation and amortization 

35,217

32,749

11,811

11,101

Equity-based compensation expenses

10,015

6,982

3,822

2,480

Transaction cost pending merger with KLA

4,706

944

ADJUSTED EBITDA

$168,013

$134,402

$53,981

$57,618

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 (Unaudited)

Nine months ended

Three months ended

September 30,

September 30,

2018

2017

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$94,680

$75,525

$29,057

$36,151

Adjustments to reconcile net income to net cash 

provided by operating activities:

Depreciation and amortization

35,217

32,749

11,811

11,101

Compensation relating to equity awards granted to 

          employees and others - net

10,015

6,982

3,822

2,480

Increase in liability for employee rights upon retirement, net

2,112

842

969

685

Deferred financing costs amortization

347

363

116

363

Deferred income taxes

11,524

(6,788)

(888)

(1,327)

Amortization of premium and accretion of discount on marketable

          Securities, net

119

37

42

36

Equity in earnings of Frontline, net of dividend received 

(1,278)

(363)

(161)

20

Other

(119)

127

(61)

(290)

Decrease (increase) in accounts receivable:

          Trade

26,188

(59,138)

39,263

(24,245)

          Other

(8,886)

(7,286)

(3,680)

(4,359)

Increase (decrease) in accounts payable and accruals:

          Trade

(14,393)

10,747

(2,323)

(1,611)

          Deferred income

7,773

4,936

(24,540)

2,503

          Other

(17,653)

16,690

9,147

18,177

Increase in inventories

(32,960)

(29,811)

(9,639)

(11,907)

Net cash provided by operating activities 

112,686

45,612

52,935

27,777

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment

(19,384)

(19,850)

(5,224)

(7,936)

Withdrawal of (investment in) bank deposits

(9,969)

(184)

(4,947)

2,469

Purchase of marketable securities

(500)

(1,994)

(250)

Redemption of marketable securities

804

Deposits of funds in respect of employee

(149)

(1,187)

3

(65)

Net cash used in investing activities

(30,002)

(22,411)

(10,418)

(5,532)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of bank loan

(16,364)

(16,364)

Employee share options exercised

1,752

2,138

261

901

Net cash provided by (used in) financing activities

(14,612)

(14,226)

261

901

Net increase in cash, cash equivalents and restricted cash

68,072

8,975

42,777

23,146

Cash, cash equivalents and restricted cash at beginning of period

315,803

228,779

341,098

214,608

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$383,875

$237,754

$383,875

$237,754