corporate presentation h1 2008 - iis windows...
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Corporate Presentation- Confidential -
Corporate PresentationH1 2008October 2008
2- Confidential - Corporate Presentation
Except 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.
Disclaimer
Private Securities Litigation Reform Act of 1995 Safe Harbor
3- Confidential - Corporate Presentation
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
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The Industries We Serve
Medical Imaging
Recognition
Bare PCB Production5500 systems installed
PCB Assembly1600 systems installed
FPD Manufacturing1200 systems installed
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PCB Assembly10%
Display33%
PCB Bareboard
46%
Medical Imaging
8%
Orbograph3%
Sales Distribution H1 2008
By Product Lines
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Global Presence
Israel• Headquarters• Main R&D Center• Main Manufacturing Center
North America• Sales & Support • R&D Center (FPD)
Close to 2000 Employees in over 30 Offices
Europe• Sales & Support • R&D Centers(PCB & MED)
Pacific• Sales & Support • Manufacturing (FPD)
Japan• Sales & Support • R&D Center (FPD)
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Europe12%
North America
15%Other
4%
Korea23%
Taiwan9%
Japan11%
China26%
Sales Distribution H1 2008
By Region
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R&D Investment• Significant product sales are from products
introduced over the last 24 months
• Over 500 Scientists and Engineers
• Over $85M annual R&D budget
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Growth StrategyN
ew T
echn
olog
ies
for C
ore
Mar
kets
New Markets for Core Technologies
Bare PCBs
Flat Panel Displays
Assembled PCBs
RecognitionSolutions
Medical Imaging
AOI
CAM
Plotting
DirectImaging
Inkjet
AOR
ProcessControl
AOI
Metrology
YieldMgmt
Test
Repair
AOI
ProcessControl
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Bare PCB Production
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Bare PCB Production
Orbotech is the world leader
• Automated Optical Inspection (AOI)
• Laser Direct Imaging (LDI)
• Laser Plotting
• Inkjet Legend Printing
• CAM / Engineering
Over 5500 Systems Installed
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Bare PCB Examples
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Bare PCB Market Summary
• Expected 5-7% growth in next few years
• Over 80% of the market in the Far East• China is world’s largest PCB producer
• Cell phones and PCs driving the industry• Over 1BN phones in 2007
• Fast growing segments: microvia, IC substrates, flex
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Electronic Production Growth
9.6% 9.1%6.4% 7.5%
8.8%
-5%
0%
5%
10%
15%
20%
25%
2006 2007 2008 2009 2010
TotalUSW. EuropeJapanAsian TigersChina
Growth Slowing, Especially in China
Global Electronic Equipment Production Growth
Source:
15- Confidential - Corporate PresentationSource: Prismark (05/’08), N.T.Information (07/’08)
$3.8B-1%$4.6B
1%
$5.5B0%
$11.5B3%
$3.6B6%
$7.4B3%
$15.0B8%
$51.1B4%
PCB Market Size
2008 Global PCB Volumes & Growth Forecast
Growing Market Over $51B, Mostly in APAC
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PCB End Applications
Computers32%
Communication22%
Consumer15%
Automotive4%
Industrial/Medical7%
Aerospace/Military5%
Semiconductor15%
Source: Prismark (05/’08)
Computers & Communication are Largest Markets
2007 PCB Production Value by End Application
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Bare PCB Market Growth Drivers
• Major end applications: computers, telecom, consumer and semiconductors
• Growth drivers for end applications:• Demand in emerging markets
• Mobility & miniaturization
• Increase in data amounts – digitization
• Advanced semiconductor packaging
• New applications
• These drive all PCB segments, but especially the high end, advanced technology segments
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0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Commodity 4-& 6-layer MLB Microvia Si platform Flex
$M
20072012
PCB Growth Segments
Source: Prismark (05/’08)
2007: Total = $47.7Bln 2012: Total = $61.5Bln
1.9%
5.0%
4.7% 6.6% 7.6% 6.0%
CAGR
Highest Growth Expected in Advanced TechnologiesProduction Volume per Segment
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Two Main PCBs, Several Flex, Many IC Substrates
Wireless board Application board
Source: Prismark (06/’07)
iPhone Example
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Bare PCB Solutions
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Product Line Summary
Discovery™ AOI Systems
Paragon™ LDI Systems
PerFix™ AOR Systems
LP™-9 Laser Plotters
Sprint™ Inkjet Legend Printers
Frontline CAM / Engineering Software
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• 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
Discovery™ AOI Systems
Industry’s Best Selling AOI Solution
Over 1000 Sold Worldwide
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• Enabling technology for complex and advanced applications
• Increased adoption for high-end mainstream applications
• Used in all segments including packaging and solder mask
Paragon™ & Paragon Ultra™ LDI
Industry’s Only Field Proven Laser Direct Imaging (LDI) System
Over 1000 sold worldwideOver 300 Sold Worldwide
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Perfix™ Automated Optical Repair
• 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
The Industry’s Only Automated Solution
New Introduction
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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
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LP ™-9 Laser Plotters
• 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
Top Quality, Automated Solution
New Introduction
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CAM / Engineering Software
• Automates entire pre-production process
• Engineering process planning systems expedite the decision-making stage
Frontline PCB Solutions
Joint Venture Company
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PCB Assembly
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PCB Assembly
Orbotech is a leading provider
• Automated Optical Inspection (AOI)
• Process Control Software
Over 1600 Systems Installed
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Assembled PCB Examples
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Assembled PCB AOI Drivers
• Smaller components, finer pitch• Impossible to control by visual inspection
• Multiple stage inspection is required
• Limited access for electrical test
• Traceability• Component version and warranties control
• Production information and process control
• Outsourcing trend (safety margin when not manufactured by OEM)
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Assembled PCB Solutions
Paste Printer
Chip Shooter
IC Mounter
Reflow Oven
Solder Paste AOI Placement & Post-Reflow AOI
ADVISOR Central
Symbion P36 PlusVantage S22
Defect Prevention Software & Database
Symbion S36 Plus
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Defect Prevention Solution
• AOI for every inspection stage
• ADVISOR Central™ database and software tools
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Product Line Summary
Symbion™ P36 Plus Solder Paste AOI Systems
Symbion™ S36 Plus Post-Reflow AOI Systems
Vantage™ S22 Post-Reflow AOI Systems
ADVISOR Central™
Database & Software for Defect Prevention
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Symbion™ Plus Series
New Generation Solder Paste & Post-Reflow AOI Systems
Over 1000 sold worldwideOver 230 New Generation Systems Sold Worldwide
• Specialized 3-D & 2-D detection
• Very simple operation
• Ultra-fast speed
• Integrated process control software
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Flat Panel Display Manufacturing
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FPD Manufacturing
Orbotech is the world leader yield management
• Automated Optical Inspection (AOI)
• Test
• Repair
Over 1200 Systems Installed
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Orbotech Presence
• Presence at all LCD fabs• Proven solutions for all generations• Future-proof technology: OLED, plastic-based & other
specialties
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Forms Global Leader in FPD Yield Management
Orbotech Acquires Photon Dynamics
Recent Acquisition
• Aggregate merger consideration value of approx. $290 million ($15.60 per share)
• Financed through a combination of internally-generated funds and external-source financing
• Acquisition closed in H2 ‘08
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Plans: Looking Ahead
• Increase customer value by:
• Enhancing existing products
• Maximizing synergies between products
• Leverage:
• Customer presence
• Complementary product capabilities
• Introduce new products to:
• Improve panel manufacturing yields
• Improve our competitive advantage
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Implementation
Stage II
• Expand product offering to additional FPD yield management applications
Stage III
• Expand product offering to other FPD production solutions
Stage I
• Offer a full solution Array yield management suite for optical inspection, functional testing and automatic repair
• Validate the solar panel production opportunity
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FPD Manufacturing
Example
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• Demand for LCD panels continues growing• 5-10% for monitors, 15-20% for TVs & notebook PCs• LCD-TV expanded by 2015 to 200M units
• Panel makers are increasing capacity in existing and new fabs
• Total spending 2008-2010 expected to match ’04-’06 levels (~$36Bn)
• At least 3 panel makers showed official plans to skip G9 and go to G10, more expected
• Very few investments in PDP• For the next 3 years the estimate is only ~$2.5Bn.
• Long term – New manufacturing technologies for:• Improving panel quality• Cost reduction purposes
Display Industry Outlook
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TFT-LCD Large Area Applications (Units)
Source: DisplaySearch Q3’07 Quarterly Worldwide FPD Forecast Report
0
50,000
100,000
150,000
200,000
250,000
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1
Uni
ts
LCD TV Notebook PC Desktop Monitor
TVs Grow 32% CAGR from 2005 to 2011• TVs units: 28.5 in 2005 to 155.2 in 2011• Notebook CAGR = 20%, Desktop monitor CAGR = 11%
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TV Demand Forecast by Technology
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The World’s Largest LCD TV
53”134cm
94”239 cm
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222368101518242850x3050G10
12223681012182400x2800G9
1122238810152200x2500G8.5
1122238810152160x2460G8
12223688121950x2250G7.5
11223668101870x2200G7
12233681500x1850G6
1222361300x1500G5.5
122231100x1300G5
105"95"85"75"65"57"46"42"37"32"Glass Size
16:9Aspect ratioGEN
The Way To Reach Price & Size Goals
Source: ADR Nov., 2006
Substrate Size
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Implications of Large-Size TVs
TV Market
• Image Quality
• Cheaper
• Larger
Yield Management
• More & NewTest Methods
• Rigorous QA& Repair
• Cost-EffectiveProcess Control
Manufacturing
• Complex Design
• MinimizeHandling
• HugeGlass
FPD product strategy requires an integrated, multi-function yield management solution
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Products & Solutions
50- Confidential - Corporate Presentation
InVision™ In-Line AOI
SuperVision™ Off-Line AOI
FPI™ 6XXX AOI
FPI™ 7XXX AOI
Array Checker Test
Array Saver Repair
Value Added Applications
Product Line Summary
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• Orbotech ClearSight™ Technology
• Peripheral Inspection
• Macro Inspection
• Metrology
• Defect Classification
• Eyes-2020
• Remote Review Station
Value Added Applications
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Medical Imaging
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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%
Worldwide Medical Imaging Industry
54- Confidential - Corporate Presentation
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
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Leading Nuclear Diagnostic Procedures in the US (2005)
0.4
0.5
0.5
0.7
1.2
3.4
9.8
0.3
0.4
0 2 4 6 8 10 12Source: IMV report
Others
Cardiac
Bone
Liver
Respiratory
Thyroid
Renal
Infection
Tumor
About 50% of nuclear procedures in the US are cardiac related, with a growth rate of +5.5% per year
million procedures+12.2%
-1.4%
+5.5%
-2.5%
-7.3%
+3.8%
N/A
+0%
+0%+5.5%
CAGR 1999 - 2005
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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)
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Objectives
Short Term Objectives
Orbotech Diversification Strategy Through Medical Imaging
VisionBecome a leading global developer & manufacturer of innovative medical imaging solutions
• Be the leading OEM supplier of imaging systems, based on disruptive technology, for industry’s leading vendors (GE, Siemens, Philips, Toshiba)
• Constitute 10% to 15% of Orbotech’s revenues in 5 years
• Be a leading supplier of nuclear imaging cardiacsystems for the industry’s leading vendors
• Set the platform for future growth development
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Nuclear Medical Imaging
• 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
Leveraging our Core Expertise
Orbotech Medical Denmark A/S is leading manufacturer of dedicated imaging equipment for Nuclear Cardiology
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Main Products
• Philips CardioMD • Siemens c-cam
Component Supplier to Major OEMs
Supply partner to 2 of 3 major OEMs worldwide
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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 2008/09, offering long-term growth potential
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Orbograph
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Recognition Solutions
• 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
Orbograph Ltd.
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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
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• Secure, scalable platform enabling “on-demand” access to certified data completion resources
• Web-based application delivers true anytime, anywhere functionality
Outsourcing Solutions
Patented Key-Pay Technology
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Outsourcing Solutions
Patented Key-Pay Technology
• Hub for remote keying personnel
• Removes geographic barriers between people & jobs
Cost-Effective for Rapid and Accurate Daily Item Processing
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Outsourcing Solutions
• 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
Products Using Key-Pay
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Customer Support
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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
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Customer Support Infrastructure
• Over 500 employees in 30 countries
• Supporting over 7800 AOI systems (PCB, ASM, FPD), 650 Plotters, 300 LDI and 4000 CAM stations
• 5 response centers, 5 customer training centers
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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
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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
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Financials
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Revenues
($ Millions)
303.3
76.6
333.3
83.1
266.6
94.2
130.0
44.8
153.9
51.7
0
50
100
150
200
250
300
350
400
2005 2006 2007 H107 H108
ServiceSales
379.9416.5
360.7
205.6174.8
74- Confidential - Corporate Presentation
Revenues By Quarter
($ Millions)
101.4
86.1
100.5104.9
88.6
105.1 106.9
82.3
103.3 103.6
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4
200620072008
75- Confidential - Corporate Presentation
Net Income
1.30
1.75
0.49
0.350.27
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2005 2006 2007 H107 H108
($ per share) from ongoing operations
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Net Income By Quarter($ per share) from ongoing operations
0.43
0.170.11
0.46
0.180.16
0.49
0.01
0.38
0.12
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Q1 Q2 Q3 Q4
2006
2007
2008
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Margin Analysis
43.0 45.5 41.6 40.9
0
10
20
30
40
50
2005 2006 2007 H108
12.0 12.0
2.9 3.3
0
2
4
6
8
10
12
2005 2006 2007 H108
11.4
14
4.54.4
0
2
4
6
8
10
12
14
2005 2006 2007 H108
Gross Margin(On-going Operations)
Operating Income(On-going Operations) (On-going Operations)
Net Income
78- Confidential - Corporate Presentation
4.5
41.6
77
133
4.9
12/312007
14.0
45.5
77
126
4.6
12/312006
11.4
43.0
75
120
4.2
12/31 2005
4.4
40.9
78
133
5.3
6/302008
Net Profit to Revenues(% ongoing operations)
Gross Profit (%)
Equity/Assets (%)
Day’s Sales Outstanding
Current Ratio
Financial Ratios
79- Confidential - Corporate Presentation
Thank You!