Camtek (CAMT) 6-K 2020 Q2 Current report (foreign)

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Exhibit 99.1

Camtek Ltd. and its Subsidiaries

Interim Condensed Consolidated Financial Statements As of June 30, 2020 (Unaudited)

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Financial Statements as at June 30, 2020Contents

	Page
Interim Unaudited Condensed Consolidated Balance Sheets	F-3
Interim Unaudited Condensed Consolidated Statements of Operations	F-4 to F-5
Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity	F-6
Interim Unaudited Condensed Consolidated Statements of Cash Flows	F-7 to F-8
Notes to the Interim Unaudited Condensed Consolidated Financial Statements	F-9 to F-16

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Balance Sheets

		June 30, 2020			December 31, 2019
	Note	U.S. Dollars (in thousands)
Assets
Current assets
Cash and cash equivalents	5A		32,469			38,047
Short-term deposits			69,000			51,500
Trade accounts receivable, net			39,528			31,443
Inventories	5B		29,537			23,803
Other current assets	5C		3,523			2,909
Total current assets			174,057			147,702
Property, plant and equipment, net	5D		18,800			18,526
Long term inventory	5B		3,292			2,791
Deferred tax assets			520			746
Other assets, net			80			113
Intangible assets, net	5E		574			491
			4,466			4,141
Total assets			197,323			170,369
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable			20,561			11,334
Other current liabilities	5F		28,170			20,272
Total current liabilities			48,731			31,606
Long term liabilities
Other long-term liabilities			2,100			2,461
			2,100			2,461
Total liabilities			50,831			34,067
Shareholders’ equity
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2020 and at December 31, 2019;
41,124,714 issued shares at June 30, 2020 and 40,742,355 at December 31, 2019;
39,032,338 shares outstanding at June 30, 2020 and 38,649,979 at December 31, 2019;	3		158			157
Additional paid-in capital			103,428			101,327
Retained earnings			44,804			36,716
			148,390			138,200
Treasury stock, at cost (2,092,376 as of June 30, 2020 and December 31, 2019)			(1,898	)		(1,898	)
Total shareholders' equity			146,492			136,302
Total liabilities and shareholders' equity			197,323			170,369

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 3

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

		Six months ended June 30,						Three months ended June 30,						Year ended December 31,
		2020			2019			2020			2019			2019
	Note	U.S. dollars						U.S. dollars						U.S. dollars
Revenues	4		67,179			68,348			37,000			34,346			134,019
Cost of revenues			36,679			34,623			20,057			17,777			69,235
Gross profit			30,500			33,725			16,943			16,569			64,784
Research and development costs			8,884			7,727			4,754			3,803			16,331
Selling, general and administrative expenses	6A		13,338			12,987			6,779			6,412			26,481
			22,222			20,714			11,533			10,215			42,812
Operating income			8,278			13,011			5,410			6,354			21,972
Financial income, net	6B		651			152			276			135			801
Income from continuing operations before taxes			8,929			13,163			5,686			6,489			22,773
Income tax expense			(841	)		(1,110	)		(378	)		(463	)		(1,950	)
Net income from continuing operations			8,088			12,053			5,308			6,026			20,823
Discontinued operations
Income from discontinued operations
Income before tax expense			-			1,257			-			1,257			1,257
Income tax expense			-			(94	)		-			(94	)		(94	)
Income from discontinued operations			-			1,163			-			1,163			1,163
Net income			8,088			13,216			5,308			7,189			21,986

F - 4

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Operations (contd.)

Net income per ordinary share:

		Six months ended June 30,				Three months ended June 30,				Year ended December 31,
		2020		2019		2020		2019		2019
	Note	U.S. dollars				U.S. dollars				U.S. dollars
Basic earnings from continuing operations			0.21		0.33		0.14		0.16		0.55
Basic earnings from discontinued operations			-		0.03		-		0.03		0.03
Basic net earnings			0.21		0.36		0.14		0.19		0.58
Diluted earnings from continuing operations			0.20		0.32		0.13		0.16		0.54
Diluted earnings from discontinued operations			-		0.03		-		0.03		0.03
Diluted net earnings			0.20		0.35		0.13		0.19		0.57
Weighted average number of ordinary shares outstanding (in thousands):
Basic			38,877		36,644		39,033		36,816		37,626
Diluted			39,785		37,476		39,945		37,734		37,432

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 5

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity

	Ordinary Shares NIS 0.01 par value				Number of Treasury Shares			Treasury capital			Additional paid-in earnings			Retained capital			Total shareholders' equity
	Number of Shares Issued		U.S. Dollars
			(in thousands)		U.S. Dollars (in thousands)
Balances at
December 31, 2018		38,535,445		151		(2,092,376	)		(1,898	)		81,873			21,281			101,407
Share-based
compensation expense		-		-		-			-			645			-			645
Exercise of share options		72,683		*		-			-			189			-			189
Net income		-		-		-			-			-			6,027			6,027
Balances at
March 31, 2019		38,608,128		151		(2,092,376	)		(1,898	)		82,707			27,308			108,268
Issuance of shares		1,700,000		5		-			-			16,048			-			16,048
Share-based
compensation expense		-		-		-			-			605			-			605
Exercise of share options		307,111		1		-			-			109			-			109
Net income		-		-		-			-			-			7,189			7,189
Balances at
June 30, 2019		40,615,239		157		(2,092,376	)		(1,898	)		99,469			34,497			132,225
Issuance of shares		-		-		-			-			(27	)		-			(27	)
Exercise of share options		127,116		*		-			-			243			-			243
Share-based
compensation expense		-		-		-			-			1,642			-			1,642
Dividend distributed		-		-		-			-			-			(6,551	)		(6,551	)
Net income		-		-		-			-			-			8,770			8,770
Balances at
December 31, 2019		40,742,355		157		(2,092,376	)		(1,898	)		101,327			36,716			136,302
Share-based
compensation expense		-		-		-			-			817			-			817
Exercise of share options		23,557		*		-			-			58			-			58
Net income		-		-		-			-			-			2,780			2,780
Balances at
March 31, 2020		40,765,912		157		(2,092,376	)		(1,898	)		102,202			39,496			139,957
Share-based
compensation expense		-		-		-			-			951			-			951
Exercise of share options		358,802		1		-			-			275			-			376
Net income		-		-		-			-			-			5,308			5,308
Balances at
June 30, 2020		41,124,714		158		(2,092,376	)		(1,898	)		103,428			44,804			146,492

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 6

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2020			2019			2020			2019			2019
	U.S. dollars						U.S. dollars						U.S. dollars
Cash flows from operating activities:
Net income		8,088			13,216			5,308			7,189			21,986
Discontinued operations, net of cash		-			(1,163	)		-			(1,163	)		(1,163	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,057			1,051			531			498			2,134
Deferred tax expense		226			816			296			266			1,526
Share based compensation expense		1,768			1,250			951			605			2,892
Change in provision for doubtful debts		-			(205	)		-			(118	)		(29	)
Loss on disposal of fixed assets		-			-			-			-			64
Changes in operating assets and liabilities:
Trade accounts receivable, gross		(8,108	)		5,415			(2,355	)		(829	)		156
Inventories		(7,014	)		57			(3,991	)		2,041			4,798
Due from related parties, net		20			66			51			103			58
Other assets		(601	)		83			(529	)		513			(236	)
Trade accounts payable		9,219			(3,272	)		4,247			(3,345	)		(4,100	)
Other current liabilities		7,765			(3,971	)		6,569			1,253			(3,577	)
Liability for employee severance benefits, net		46			54			48			4			117
Net cash provided by operating activities of continued operations		12,466			13,397			11,126			7,017			24,626
Net cash provided by operating activities		12,466			13,397			11,126			7,017			24,626
Cash flows from investing activities:
Investment in short-term deposits		(17,500	)		-			(27,500	)		-			(51,500	)
Purchase of fixed assets		(775	)		(654	)		(365	)		(196	)		(1,256	)
Purchase of intangible assets		(126	)		(66	)		(122	)		(35	)		(106	)
Net cash used in investing activities from continuing operations		(18,401	)		(720	)		(27,987	)		(231	)		(52,862	)
Net cash provided by investing activities of discontinued operations		-			1,257			-			1,257			1,257
Net cash provided by (used in) investing activities		(18,401	)		537			(27,987	)		1,026			(51,605	)
Cash flows from financing activities:
Share issuance, net		-			16,026			-			16,026			16,026
Proceeds from exercise of share options		334			326			276			138			542
Dividend payment		-			-			-			-			(6,551	)
Net cash provided by financing activities		334			16,352			276			16,164			10,017
Effect of change in exchange rate on cash and cash equivalents		23			47			(32	)		36			74
Net increase (decrease) in cash and cash equivalents		(5,578	)		30,333			(16,617	)		24,243			(16,888	)
Cash and cash equivalents at beginning of the period		38,047			54,935			49,086			61,025			54,935
Cash and cash equivalents at end of the period		32,469			85,268			32,469			85,268			38,047

F - 7

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Cash Flows (contd.)

(In thousands)

	Six months ended June 30,				Three months ended June 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	U.S. dollars				U.S. dollars				U.S. dollars
Supplementary cash flows information:
Income taxes paid		211		386		12		340		666
Lease payments		530		528		260		268		1,077
Non-cash transactions:
Fixed assets purchased with supplier credit		162		124		162		124		154

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 8

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 1 - Nature of Operations

A.Camtek Ltd. (“Camtek” or the “Company”), an Israeli corporation, is jointly controlled 23.73% by Priortech Ltd., an Israeli corporation listed on the Tel-Aviv Stock Exchange and 20% by Chroma Ate Inc., a Taiwanese company (“Chroma”) (See Note 1(B) below). Camtek provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing product yield and reliability, and enabling and supporting customers’ latest technologies in the semiconductor fabrication industry.

B.As detailed in the annual financial statements as of December 31, 2019, since January 2020, the Covid-19 outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. At present, business activity is continuing at all of the Company’s locations, with new routines implemented as required by local Covid-19 regulations.

From the beginning of the outbreak, the Company has been carefully managing the risks and its global operations. The Israeli facility has been able to maintain its required production levels. Worldwide, the Company has benefitted from its strategy of having in place local professional teams in each of its territories that can independently install and support systems. The Company has been able to minimize the impact of the Covid-19 pandemic on its business activity and to deliver most of its orders for the first half of 2020 on time.

C.In February 2019, Chroma acquired approximately 20.5% of Camtek’s shares in a cash transaction. 6,117,440 Camtek shares were purchased from Priortech for $58,100 and an additional 1,700,000 new shares were issued by Camtek to Chroma for $16,200. The cash consideration was calculated based on a share-price of $9.50 per Camtek share, which reflected a 29% premium on Camtek’s closing price as of February 8, 2019.

A voting agreement was signed between Priortech and Chroma according to which the parties agreed to vote together in Camtek’s shareholders’ meetings. According to the voting agreement, after the closing of the transaction, Chroma is entitled to two seats on Camtek’s Board of Directors and Priortech is entitled to three seats.

In addition to the investment, Chroma and Camtek entered into an agreement in which Camtek will in the future license its triangulation technology, a metrology solution, in a fee-bearing license for non-semiconductor applications to be used by Chroma. In addition, Chroma and Camtek agreed to cooperate in potential projects for the semiconductor market based on synergies between their inspection and metrology technologies.

The transaction was completed in June 2019.

D.In September 2017, the Company completed the sale of its PCB inspection and metrology business unit. The buyers acquired all of the assets and liabilities related to the PCB business unit, including 100% equity interests in the Company’s Chinese and Taiwanese subsidiaries. The Company received total cash consideration of $32,000 upon closing and a further $1,257 in 2019 based upon the PCB business unit's financial performance in 2018.

Due to the sale of the Company’s PCB business, the results of this unit ceased to be consolidated in 2017 and are accounted as discontinued operations.

F - 9

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 2 - Basis of Preparation

A.Statement of compliance

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and do not include all of the information required for full annual financial statements. The unaudited condensed consolidated interim statements should be read in conjunction with the Company’s 2019 annual audited consolidated financial statements and footnotes, which were filed with the U.S. Securities and Exchange Commission as part of the Company’s Annual Report on Form 20-F for the year ended December 31, 2019.

In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020 or for any other future period.

B.Recent Accounting Pronouncements

1.

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. The Company adopted the new standard effective January 1, 2020 and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

2.

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020 and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

3.

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

F - 10

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 3 - Shareholders’ Equity

A.General

The Company’s shares are traded on the NASDAQ Global Market under the symbol “CAMT”, and also listed and traded on the Tel-Aviv stock exchange.

B.Changes in Stock Options and RSUs

In the first half of 2020, 382,359 stock options were exercised.

In the first six months of 2020, 396,500 restricted share units (RSUs) were granted by the Company. The RSUs vest over a four-year period.

C.Share-based Compensation Expense

The total share-based compensation expense amounted to $1,768, $1,250, $951, $605 and $2,892 for the six-month periods ended June 30, 2020 and 2019, the three-month periods ended June 30, 2020 and 2019 and the year ended December 31, 2019, respectively.

Note 4 - Segment Information

Substantially all fixed assets are located in Israel and substantially all revenues are derived from shipments to other countries. Revenues are attributable to geographic areas/countries based upon the destination of shipment of products and related services as follows:

	Six months ended June 30,				Three months ended June 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	U.S. Dollars (in thousands)
Asia Pacific		61,914		60,591		35,130		31,781		115,925
United States		3,258		5,422		986		1,630		10,388
Europe		2,007		2,335		884		935		7,706
		67,179		68,348		37,000		34,346		134,019

F - 11

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information

A.Cash and cash equivalents

The Company’s cash and cash equivalent balance at June 30, 2020 and December 31, 2019 is denominated in the following currencies:

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
US Dollars		26,519		32,675
New Israeli Shekels		3,079		3,318
Euro		1,658		707
Other currencies		1,213		1,347
		32,469		38,047

B.Inventories

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Components		17,424		13,822
Work in process		5,906		6,019
Finished products (including systems at customer locations not yet sold)		9,499		6,753
		32,829		26,594

Inventories are presented in:

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Current assets		29,537		23,803
Long-term assets		3,292		2,791
		32,829		26,594

F - 12

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information (cont’d)

C.Other Current Assets

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Due from Government institutions		1,601		955
Interest receivable		633		348
Prepaid expenses		553		476
Income tax receivables		418		846
Deposits for operating leases		184		149
Due from related parties		55		75
Other		79		60
		3,523		2,909

D.Property, Plant and Equipment, Net

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Land		863		863
Building		14,258		14,253
Machinery and equipment		9,575		8,416
Office furniture and equipment		686		625
Computer equipment and software		4,987		4,652
Automobiles		87		87
Leasehold improvements		542		546
Right of use assets		2,606		2,471
		33,604		31,913
Less accumulated depreciation		14,804		13,387
		18,800		18,526

F - 13

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information (cont’d)

E.Intangible Assets, Net

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Patent registration costs		1,837		1,711
Accumulated amortization and impairment		1,263		1,220
Total intangible assets, net		574		491

F.Other Current Liabilities

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Advances from customers and deferred revenues		9,602		2,004
Accrued employee compensation and related benefits		7,673		7,713
Commissions		6,240		5,963
Accrued warranty costs		1,761		1,723
Accrued expenses		1,515		1,343
Operating lease obligations		772		826
Government institutions		607		700
		28,170		20,272

F - 14

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 6 - Statements of Operations

A.Selling, general and administrative expenses

	Six months ended June 30,				Three months ended June 30,				Year ended December 31,
	2020		2019		2020		2019		2019
	U.S. Dollars (in thousands)
Selling (1)		9,551		9,416		4,807		4,618		19,294
General and administrative		3,787		3,571		1,972		1,794		7,187
		13,338		12,987		6,779		6,412		26,481
(1) Including shipping and handling costs		1,137		548		672		271		1,063

B.Financial income (expenses), net

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2020			2019			2020			2019			2019
	U.S. Dollars (in thousands)
Interest income		730			618			344			302			1,412
Other, net (1)		(79	)		(466	)		(68	)		(167	)		(611	)
		651			152			276			135			801
(1) Including foreign currency expense resulting from transactions not denominated in U.S. Dollars		(22	)		(389	)		(39	)		(125	)		(352	)

F - 15

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 7 - Balances with Related Parties

	June 30, 2020		December 31, 2019
	U.S. Dollars (in thousands)
Due from affiliated companies		55		75

Unpaid balances between Priortech and its subsidiaries in Israel and the Company bear interest of 5.5%.

F - 16