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Corporate Presentation- Confidential -

Corporate Presentation+ Q3 Financial Results 2008

January 2009

2- Confidential - Corporate Presentation

Disclaimer

Private Securities Litigation Reform Act of 1995 Safe HarborExcept for historical information, the matters discussed in this presentation are forward-looking statements that are subject to certain risks and uncertainties which could cause the actual results to differ materially from those projected, including industry trends, the timing and strength of the Company's or competitors’ new product and service offerings, the mix of product and service revenues, changes in the Company's or competitors’ business or pricing strategies, changes in the prevailing political and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and other risks detailed from time to time in the Company’s SEC reports. The Company assumes no obligation to update the information herein contained.


A World Leader

Virtually every electronic device in the world is produced using Orbotech systems

• A world leader in yield-enhancing and production solutions for the electronics industry

• A leading provider of specialized application products for nuclear medical imaging

• A leading provider of recognition solutions for check processing and business process outsourcing


The Industries We Serve

Medical Imaging

Recognition

Bare PCB Production5500 systems installed

FPD Manufacturing1200 systems installed


Growth StrategyN

ew T

echn

olog

ies

for C

ore

Mar

kets

Bare PCBs

Flat Panel Displays

RecognitionSolutions

AOI

CAM

Plotting

DirectImaging

Inkjet

AOR

ProcessControl

AOI

Metrology

YieldMgmt

Test

Repair

Medical Imaging

New Markets for Core Technologies


Orbocar3%

Medical Imaging

7%

PCB Bareboard44%

Display37%

PCB Assembly9%

Sales Distribution Q1-3 2008By Product Lines


Global Infrastructure

IsraelHeadquartersMain R&D CenterProduction

Europe8 Offices 3 CS Centers3 R&D Centers

N. America3 Offices 5 CS Centers

Japan1 Office1 CS Center 1 R&D CenterPacific

18 Offices 20 CS Centers

Over 1600 Employees in over 30 Offices


Sales Distribution Q1-3 2008

Europe10%

North America

15%Other

4%

Korea23%

Taiwan13%

Japan10%

China25%

By Region


R&D Investment• Significant product sales are from products

introduced over the last 24 months

• Over 450 Scientists and Engineers

• Over $65M annual R&D budget


Bare PCB Production


Bare PCB Production

Orbotech is the world leader• Automated Optical Inspection (AOI)

• Automated Optical Repair (AOR)

• Laser Direct Imaging (LDI)

• Laser Plotting

• Inkjet Legend Printing

• CAM / Engineering

Over 5500 Systems Installed


2009 PCB market• Challenging market conditions

• Forecasted decline in PCB $ value and area

• Recovery expected to begin in H2 2009

• Weakness in market driving applications• Mobile phones to grow by low single digit

at best• PC to grow at ~4%

• No major geographical shift• Minor shifts in China• Limited investments in Vietnam

PCB market growth forecast

11.1%

5.6%

3.4%

-6.5%

3.3%

9.0%10.5%

5.5%

2006

2007

2008E

2009F

2010F

2011F

2012F

2013F


PCB End Applications

Computers & Communication are Largest Markets

Computers32%

Communication22%

Consumer15%

Automotive4%

Industrial/Medical7%

Aerospace/Military5%

Semiconductor15%

2007 PCB Production Value by End Application

Source: Prismark (05/’08)


Single Digit Growth in Mobile Phones

• Gartner forecast -1% to -4% decline in mobile shipments• Samsung targets 11% growth; expects market to grow by single digit

or negative• LG targets 5% growth

Mobile Phone Shipments [M units]

9951144

12931228 1201

22%

15%

7%

-2%

8%

-5%

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008 2009 2010

Actual Forecast Growth

Source: IDC (12/2008)


Slower Growth in Computers

PC Shipments [M units]

236

271

312300

354

9%

15%

11%

4%

13%

2006 2007 2008 2009 2010

Actual Forecast Growth

Source: Henderson Ventures (10/’08)


The Electronics Industry will Continue to Grow in the Long Run – ~ Double $

• New markets• BRIC

• MEA

• Latin America

• New applications

• Digitization & reliance on data – data handling & storage

• Mobility –wireless & miniaturization

Electronics Consumption/Capita (2006)

$17

$100

$150

$495

$700

$1,100

India

China

Brazil

S.Korea

Germany

US

2006 average: $2152020 average: $395

Developed countries: $500 and up

Source: Prismark EIR (01/2008)


Strong Growth in the High-End Segment from 2010

PCB production by segment [$M]

Commodity

4 & 6 layer

MLB

Microvia

IC Substrate

Flex

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2009-2013 CAGR

2.8%

6.0%

6.3%

9.0%

9.8%

9.0%

Commodity

4 & 6 layer

MLB

Microvia

IC Substrate

Flex

We are here

-8.6%

-7.5%

-4.9%

-5.0%

-6.9%

-5.7%

Source: Prismark (10/2008)


iPhone ExampleTwo Main PCBs, Several Flex, Many IC Substrates

Wireless board Application board

Source: Prismark (06/’07)


Bare PCB Solutions


Product Line Summary

Discovery™ AOI Systems

Paragon™ LDI Systems

PerFix™ AOR Systems

LP™-9 Laser Plotters

Sprint™ Inkjet Legend Printers

Frontline CAM / Engineering Software


Discovery™ AOI Systems

Industry’s Best Selling AOI Solution

• Simple with Push-to-Scan™• The easiest AOI solution in the industry

• Intelligent with Visual Intelligence™• Detect all you want and only

• Powerful impact with new AOI economics• Maximum output with maximum availability

Over 1000 Sold Worldwide


Paragon™ & Paragon Ultra™ LDI

Industry’s Only Field Proven Laser Direct Imaging (LDI) System

• Enabling technology for complex and advanced applications

• Increased adoption for high-end mainstream applications

• Used in all segments including packaging and solder mask

Over 1000 sold worldwideOver 300 Sold Worldwide


Perfix™ Automated Optical Repair

The Industry’s Only Automated Solution

• Accurately repairs any type of excess copper short on fine-line PCBs

• Overcomes traditional limitations of manual repair

• Significant cost-savings by reducing panel scrap

New Introduction


Sprint™ Inkjet Legend Printers

Next Generation Solution• High speed, high accuracy

direct legend imaging• Integrated UV ink curing• High performance, high yields• Significantly cuts cycle time, cost-effective• Provides efficiency, reliability and flexibility• Supports the use of multiple commercial inks• MIL approved

New Introduction


LP ™-9 Laser Plotters

Top Quality, Automated Solution

• Builds upon success of LP series

• Designed as 24/7 workhorse

• Models for all manufacturing needs

• Ultra-fast throughput

• Sophisticated plotting for leading-edge design challenges

• Unattended operation

New Introduction


CAM / Engineering Software

Frontline PCB Solutions

• Automates entire pre-production process

• Engineering process planning systems expedite the decision-making stage

Joint Venture Company


Flat Panel Display Manufacturing


FPD Manufacturing

Orbotech is the world leader in yield management

• Automated Optical Inspection (AOI)

• Test

• Repair

Over 1200 Systems Installed


Orbotech Presence

• Presence at all LCD fabs• Proven solutions for all generations• Future-proof technology: OLED, plastic-based & other

specialties


Market Assumptions and Trends

• Reduction in demand• Significant over supply for the next

few quarters• Panel makers experience rapid

deterioration in bookings• Tight inventory control and AR / CF focus dictates

significant cuts in production volumes• Taiwan in the 50% levels (AUO, CMO, HDS – 50%, CPT – 30%)• Korea in the 70-75% levels (SEC recently reduced to 70%)• Japan in the 80% range

• Short term price cuts do not increase demand (Deflation)


Market Assumptions and TrendsModule Shipments (000s) and ASP

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Oct'07

Nov'07

Dec'07

Jan'0

8Feb

'08Mar'

08Apr'

08May

'08Ju

n'08

Jul'08

Aug'08

Sep'08

Oct'08

$0

$50

$100

$150

$200

$250

NoteBooksPC MonitorsTVLA ASP ($/Unit)

Large Module Sales (US$ millions)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Oct'07

Nov'07

Dec'07

Jan'0

8Feb

'08Mar'

08Apr'

08May

'08Ju

n'08

Jul'08

Aug'08

Sep'08

Oct'08

Sal

es ($

M)

OthersTMDisplaySVA NECSharpSamsungLG DisplayInnoluxInfovisionHydisHannStarCPTCMOBOEAUO

Source: DisplaySearch Q3 ’08 Supply/Demand


TV Demand Forecast by Technology


The World’s Largest LCD TV

53”134cm

94”239 cm


The Way To Reach Price & Size Goals

Substrate SizeAspect

ratio 16:9

Glass Size 32" 37" 42" 46" 57" 65" 75" 85" 95" 105"

G5 1100x1300 3 2 2 2 1

G5.5 1300x1500 6 3 2 2 2 1

G6 1500x1850 8 6 3 3 2 2 1

G7 1870x2200 10 8 6 6 3 2 2 1 1

G7.5 1950x2250 12 8 8 6 3 2 2 2 1

G8 2160x2460 15 10 8 8 3 2 2 2 1 1

G8.5 2200x2500 15 10 8 8 3 2 2 2 1 1

G9 2400x2800 18 12 10 8 6 3 2 2 2 1

G10 2850x3050 24 18 15 10 8 6 3 2 2 2

GEN

Source: ADR Nov., 2006


Implications of Large-Size TVs

TV Market Manufacturing Yield Management

• Image Quality

• Cheaper

• Larger

• More & NewTest Methods

• Rigorous QA& Repair

• Cost-EffectiveProcess Control

• Complex Design

• MinimizeHandling

• HugeGlass

FPD product strategy requires an integrated, multi-function yield management solution


PDI Integration update• Achievements

• Field activityDAP is working as one unified organizationWorking according to the same processes and policiesIntegrated Locations

• Cross training programs are in place and in process• Original cost saving targets were achieved (Pacific and SJ).

2009 budget represents much higher cost reductions mainly due to market conditions.• The division's president was relocated to SJ and manages the division from there• A division CTO was put in place, relocated to SJ and oversees R&D from there

• Still to do…• Complete actions by 31/1/09 as set by steering committee• People and cultural Integration – creating ONE team• Large elements of IT integration• Revenue synergy/product roadmap within budget constraints


Products & Solutions


Product Line Summary

InVision™ In-Line AOI

SuperVision™ Off-Line AOI

FPI™ 6XXX AOI

FPI™ 7XXX AOI

Array Checker Test

Array Saver Repair

Value Added Applications


Value Added Applications

• Orbotech ClearSight™ Technology

• Peripheral Inspection

• Macro Inspection

• Metrology

• Defect Classification

• Eyes-2020

• Remote Review Station


Medical Imaging


Worldwide Medical Imaging Industry

5.5

4.5

4.2

3.4

2.1

2009E

4.4 4.7 4.9

3.3 3.4 3.8

3.3 3.53.6

2.62.9

2.91.5

1.61.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2002 2003 2004

Global sales of medical imaging equipment (2009)

X-ray

Ultrasound

MRI

CT

Nuclear

19.6

+2.3%

+3.6%

+3.2%

+3.0%

+4.0%

Worldwide nuclear medical imaging equipment sales are expected to reach $2.1B by 2009

15.116.0

17.0

$ Billion

Source: BCC report 2005

CAGR 2002-2009: +3.1%


Global Sales of Nuclear Imaging Equipment (2009E)

5.5

4.5

4.2

3.4

2.1

2009E

X-ray

Ultrasound

MRI

CT

Nuclear

19.6

0.8

1.3

Source: BCC report 2005

0.80

0.36

0.12

USA

ROW

Standalone SPECT

SPECT/CT

PET,PET/CT

2.1$ Billion 1.30

The standalone SPECT segment represents $120M from an end-user price standpoint


Medical Imaging Market Summary

• Growth rate: +4.0% (CAGR 2004-2009E)

• Main end-markets: • Cardiologist private clinics

• Cardiology departments in hospitals

• Product drivers (global macro perspective): • Aging population

• High prevalence of cardiac diseases

• Effort to reduce overall healthcare costs

• Increasing needs for outpatients management (shorter stays in hospital)


Orbotech Diversification Strategy Through Medical Imaging

Vision• Become a leading global developer & manufacturer of

innovative medical imaging solutions

Objectives • Be the leading OEM supplier of imaging systems, based on disruptive

technology, for industry’s leading vendors (GE, Siemens, Philips, Toshiba)

Short Term Objectives • Be a leading supplier of nuclear imaging cardiac

systems for the industry’s leading vendors• Set the platform for future growth development


Nuclear Medical Imaging

Leveraging our Core Expertise

• Specialized products for nuclear medical imaging industry

• Acquisition of Danish company, DDD

• A world leader in single and dual detector gamma cameras mainly dedicated to cardiac applications

Orbotech Medical Denmark A/S is leading manufacturer of dedicated imaging equipment for Nuclear Cardiology


Main Products

• Philips CardioMD • Siemens c-cam

Component Supplier to Major OEMs

Supply partner to 2 of 3 major OEMs worldwide


Orbotech Medical Denmark

• Sells mainly medical imaging equipment for nuclear cardiology (~$100M market)

• Leading OEM supplier of nuclear medicine gamma cameras in the U.S.

• Largest installed base of cardiac cameras worldwide (1,600 units of 2,400 total IB)

• Supply partner to 2 of 3 major OEMs worldwide (Philips and Siemens)

• Has a pipeline of new products expected in 2009, offering long-term growth potential


Orbograph


Recognition Solutions

Orbograph Ltd.

• Leading developer of recognition solutions for U.S. check processing and business process outsourcing markets

• Processing millions of documents each day

• Reduces costs, improves operational efficiencies with rapid ROI

http://www.orbograph.com/index.aspx


Recognition Software

• Check amount recognition (Orbocar)

• Field recognition (payer, payee, MICR)

• Image quality and field usability (IQUA)

• Image-based fraud detection• PNV

• Forgery

• Counterfeit

• Data mining for marketing



Outsourcing Solutions

Patented Key-Pay Technology

• Secure, scalable platform enabling “on-demand” access to certified data completion resources

• Web-based application delivers true anytime, anywhere functionality




Patented Key-Pay Technology

• Hub for remote keying personnel

• Removes geographic barriers between people & jobs

Cost-Effective for Rapid and Accurate Daily Item Processing




Products Using Key-Pay

• OrboCAR APEX• For check processing applications

• Outstanding for load balancing & leveling, disaster recovery, MICR repair automation

• Key-Pay® Convene™• For form processing applications

• Unique data completion solution ensures customer anonymity

• Ideal for medical, tax & other documents



Customer Support


Customer Support

• Strategic & necessary for customer relationships

• Differentiating factor vs. our competition

• Source of recurring revenue

• Consistent contributor to profitability

• On-going presence at customer sites


Customer Support Infrastructure

• Over 500 employees in 30 countries

• Supporting over 7800 AOI systems (PCB, ASM, FPD), 600 Test & Repair systems, 650 Plotters, 300 LDI and 4000 CAM stations

• 5 response centers, 5 customer training centers


Customer Support Services

• Response centers• Training centers• Remote access• Software upgrades & ECOs• Spare parts inventories• Application support• Consulting and site audits• Preventive maintenance• Local satellite offices• Local adaptation


Customer Support Example

• Convenient, efficient “hotline”

• Expert-level staff

• Remote diagnostic capabilities

• Many calls closed over the phone

• Dispatched calls for on-site service with diagnostic information

Increases Customer Satisfaction & Our Profitability

Response Centers


Cost cutting measures

• Over 15% reduction in worldwide workforce

• Reducing corporate management salaries by 15%

• Reducing employee salaries by lesser amount

• Carefully monitoring all expenditures

• Operational synergies from PDI acquisition of $20m in 2009

• Scaling down activities in PCB Assembly business

• Estimated annual savings - $60 million


Financials


Revenues

($ Millions)

303.3

76.6

333.3

83.1

266.6

94.2

187.9

69.1

222.6

77.7

0

50

100

150

200

250

300

350

400

2005 2006 2007 Q1-3 07 Q1-3 08

ServiceSales

379.9416.5

360.7

300.3

257


Revenues By Quarter

($ Millions)

101.4

86.1

100.5104.9

88.6

105.1 106.9

82.3

94.7103.3 103.6

0

20

40

60

80

100

120

Q1 Q2 Q3 Q4

200620072008


Net Income

1.30

1.75

0.49

0.08 0.22

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2005 2006 2007 Q1-3 07 Q1-3 08

($ per share) from ongoing operations


Net Income By Quarter($ per share) from ongoing operations

0.43

0.170.11

0.46

0.180.16

0.49

0.01

-0.05

0.38

0.12

-0.10

0.10.20.30.40.50.60.70.8

Q1 Q2 Q3 Q4

2006

2007

2008


Margin Analysis

43.0 45.5 41.6 40.0

0

10

20

30

40

50

2005 2006 2007 Q1-3

12.0 12.0

2.9 2.5

0

2

4

6

8

10

12

2005 2006 2007 Q1-3

11.4

14

4.52.5

0

2

4

6

8

10

12

14

2005 2006 2007 Q1-3

Gross Margin(On-going Operations)

Operating Income(On-going Operations) (On-going Operations)

Net Income


Financial Ratios

12/31 2005

12/312006

12/312007

4.64.9

133

77

41.6

4.5

126

77

45.5

14.0

4.2

120

75

43.0

11.4

9/302008

2.6

132

59

40.0

2.5

Current Ratio

Day’s Sales Outstanding

Equity/Assets (%)

Gross Profit (%)

Net Profit to Revenues(% ongoing operations)


Thank You!

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