conditions. These programs and funding may be terminated in the future or the available benefits may be reduced or impacted, either generally, as a result of the Brexit process or otherwise, or
should, including, among other possible circumstances, SPTS become ineligible to receive such funding by failing to meet the grant funding conditions. In such event, the full costs of any such research and development projects would need to be
undertaken and borne by SPTS, and SPTS may be required to repay grant awards that have previously been received.
For more information
about the above considerations and the risks associated with the Companys operations in Israel and in Wales, see Item 3 - Key Information - Risk Factors (q) and (r).
4.C Organizational Structure
The Companys corporate headquarters, executive and registered offices, as well as its main research and development, engineering and
manufacturing facilities, are located in Yavne, Israel. Orbotech, Inc., a U.S. subsidiary of Orbotech Ltd., maintains its offices in Billerica, Massachusetts. PDI and OLTS operate in San Jose, California. The Companys European operations are
coordinated from Orbotech S.A., a Belgian subsidiary of Orbotech Ltd., in Brussels, and from regional offices in Germany. New System operates from offices in Gorizia, Italy. Laser Imaging Systems GmbH operates from offices in Jena, Germany. SPTS, a
U.K. subsidiary of Orbotech Ltd., operates from Newport, Wales, and from regional offices or subsidiaries in Germany, France, the United States, Taiwan, Singapore, China, Malaysia and Korea. Orbotech Pacific Ltd. and Orbotech Asia Ltd., Hong Kong
subsidiaries of Orbotech Ltd., operate from offices in Hong Kong, and Orbotech Pacific Ltd. also operates from regional offices or subsidiaries in China, Japan, Korea, Singapore and Taiwan. The Companys principal Israeli subsidiary is
Orbograph (owned approximately 94% by Orbotech Ltd.), which is located in Yavne, Israel. Frontline operates from offices in Rehovot, Israel. For more information about the Companys organizational structure, see Item 19 - Exhibits -
Exhibit 8.1 - List of Subsidiaries.
4.D Property, Plant and Equipment
The Company maintains substantial administrative, manufacturing, research and development, corporate sales and marketing operations in and from
leased premises located in Yavne, Israel, comprising a total area of approximately 305,910 square feet with an option to lease additional space. The current lease term will expire in December 2026, and the Company has an option to extend the lease
by five years (upon certain terms and conditions) and a right of first refusal to purchase the facility.
Additionally, the Company,
generally through its subsidiaries, leases approximately 490,633 square feet of floor space, which is used in connection with sales, marketing, customer support, research and development, engineering and production operations. These leases expire on
various dates up to 2026. Also, three of the Companys European subsidiaries, Orbotech S.A., New System and SPTS Technologies Limited, hold interests in real property in Brussels, Belgium, Gorizia, Italy and Newport, Wales, respectively.
The aggregate annual rent paid by the Company for all of the Companys facilities in and outside Israel in the year ended
December 31, 2017 was approximately $8.8 million, compared with $7.9 million in the year ended December 31, 2016 and $7.8 million in the year ended December 31, 2015. For further information, see Note 9a to the Financial Statements.
The Company has invested substantial sums in improving the leased properties that it occupies in order to adapt them to its various
engineering and production activities. The majority of these improvements have been integrated into the leasehold facilities. As of the date of this Annual Report, the facilities available to the Company in Yavne, Israel are generally utilized on a
one-shift basis in the course of the Companys normal operations and the Company considers them to be adequate for such operations; however, the Company has the capability to expand this capacity when needed, including, as it has done in the
past, by scheduling additional production shifts. The Company is not engaged in the construction or material expansion of any additional
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