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photronicsinc_8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
_________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant To Section 13 or 15(d) Of The Securities Exchange Act Of 1934
 
 
Date of report (Date of earliest event reported)     December 6, 2010   
 
  PHOTRONICS, INC.  
  (Exact name of registrant as specified in its charter)  
 
Connecticut       0-15451        06-0854886
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification Number)
 
15 Secor Road, Brookfield, CT       06804
(Address of Principal Executive Offices)   (Zip Code)
 
Registrant's Telephone Number, including area code    (203) 775-9000  
 
 
 
(Former name or former address, if changed since last report)
  
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o      
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
Item
2.02		      Results of Operations and Financial Condition
   
On December 6, 2010, the Company issued a press release reporting fourth quarter and fiscal year 2010 results. A copy of the press release is attached to this 8-K.
 
 
Item 9.01.      Financial Statements and Exhibits
  (d) Exhibits
  99.1  
Press Release dated December 6, 2010
  99.2  
Condensed Consolidated Statements of Operations
  99.3  
Condensed Consolidated Balance Sheets
  99.4  
Condensed Consolidated Statements of Cash Flows
  99.5   Reconciliation of GAAP to Non-GAAP Financial Information
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
PHOTRONICS, INC.
(Registrant)
 
 
 
 
 
 
DATE:  December 7, 2010   BY  /s/ Richelle E. Burr
    Richelle E. Burr
    Vice President, General Counsel

PHOTRONICS, INC.
 
 
 
 
exhibits99-1.htm
For Further Information:
Sean T. Smith
Senior Vice President
Chief Financial Officer
(203)775-9000
ssmith@photronics.com
Press Release
Photronics Reports Fourth Quarter and Fiscal Year 2010 Results
 
     BROOKFIELD, Connecticut December 6, 2010 -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for the fourth quarter and fiscal year ended October 31, 2010.
 
     Constantine (“Deno”) Macricostas, Photronics’ chairman and chief executive officer, commented, “Our 2010 financial results continue to demonstrate the success of our high-end growth strategy. Sales of advanced IC photomasks were steady throughout the fourth quarter, even as we experienced a pause in demand for mainstream products at the beginning of the period. Toward the latter part of the fourth quarter and into the first month of Q1 of fiscal 2011, orders for IC mainstream and FPD photomasks began to increase. As a result of soft demand in August and September, Q4 sales were slightly below our guidance. For this reason, we are particularly pleased that our focus on cost containment enabled us to report non-GAAP diluted EPS of $0.14, which was at the midpoint of our bottom-line guidance range. In addition, our bottom-line p erformance, coupled with our working capital management initiatives, resulted in an improved balance sheet as net cash increased by $43 million year-over-year."
 
     “Going forward, we believe that the investments we have made in leading-edge capabilities position Photronics for significant high-end market share growth,” added Macricostas. “There are several specific opportunities at the advanced nodes, and we expect to see strong demand at the leading edge for both integrated circuits and flat panel displays at least through the first half of the 2011 fiscal year.”
 
     Sales for the fourth quarter were $110.0 million, an increase of 16% compared with $94.7 million for the fourth quarter of fiscal year 2009. Sales of semiconductor photomasks were $85.3 million, or 78% of revenues, during the fourth quarter of fiscal 2010, and sales of flat panel display (FPD) photomasks were $24.7 million, or 22% of revenues. GAAP net income attributable to Photronics, Inc. for the fourth quarter of fiscal 2010 was $8.1 million, or $0.14 earnings per diluted share, compared with net income attributable to Photronics, Inc. of $1.2 million, or $0.11 loss per diluted share, for the fourth quarter of fiscal 2009. The diluted loss per share for the fourth quarter of fiscal 2009 reflects the assumed conversion of warrants to acquire 1.4 million shares originally issued in connect ion with the Company's May 2009 credit facility amendment as well as the associated assumed reversal of $6.5 million in mark-to-market gains which were recorded in other income.
 
1
 
 

     Non-GAAP net income attributable to Photronics, Inc. for the fourth quarter of 2010 was $8.5 million, or $0.14 earnings per diluted share, compared with non-GAAP net loss attributable to Photronics, Inc. of $3.2 million, or $0.07 loss per diluted share, for the fourth quarter of 2009. The section below entitled “Non-GAAP Financial Measures” provides a definition and information about the use of non-GAAP financial measures in this press release, and the attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.’s financial results under GAAP.
 
     Sales for the 2010 fiscal year increased 18% to $425.6 million compared with $361.4 million for the 2009 fiscal year. Sales of semiconductor photomasks were $329.8 million, or 77% of revenues for the 2010 fiscal year, and sales of FPD photomasks were $95.8 million, or 23% of revenues. GAAP net income attributable to Photronics, Inc. for the 2010 fiscal year was $23.9 million, or $0.43 earnings per diluted share, compared with the prior year's net loss of $41.9 million, or $0.97 loss per diluted share. Non-GAAP net income attributable to Photronics, Inc. for the 2010 fiscal year was $21.2 million, or $0.38 earnings per diluted share, compared with non-GAAP net loss attributable to Photronics, Inc. for the 2009 fiscal year of $26.2 million, or $0.63 loss per diluted share.
 
Non-GAAP Financial Measures
 
     Non-GAAP net income (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) per share are “non-GAAP financial measures,” as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. Photronics, Inc. believes that non-GAAP net income (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate Photronics, Inc.’s future on-going performance because they enable a more meaningful comparison of its projected earnings and performance with its historical results from prior periods. These non-GAAP metrics, in particular non-GAAP net income (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) per s hare, are not intended to represent funds available for Photronics, Inc.’s discretionary use and are not intended to represent or be used as a substitute for operating income (loss), net income (loss) or cash flows from operations as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance. Non-GAAP financial information is adjusted for the following items:
 
2
 
 

     The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States. The attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.'s financial results under GAAP.
 
     A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern Time on Tuesday, December 7, 2010. The live dial-in number is (408) 774-4601. The call can also be accessed by logging onto Photronics’ web site at www.photronics.com.
 
#  #  #
 
Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing fa cilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com.
 
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of Photronics, Inc. and its subsidiaries (the Company). The forward-looking statements contained in this press release and other parts of Photronics’ web site involve risks and uncertainties that may affect the Company’s operations, markets, products, services, prices, and other factors. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors. Accordingly, there is no assurance that the Company’s expectations will be realized. For a fuller discussion of the factors that may affect the Company's operations, see "Forward Looking Statements" in the Company's Quarterly and Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K. The Company assumes no obligation to provide revisions t o any forward-looking statements.
 
3
 
exhibits99-2.htm
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
 
    Three Months Ended   Year Ended
    October 31,   November 1,   October 31,   November 1,
        2010       2009       2010       2009
Net sales   $      110,036     $      94,677     $      425,554     $      361,353  
Costs and expenses:                                
       Cost of sales     (84,760 )     (77,660 )     (333,739 )     (304,282 )
       Selling, general and administrative     (10,300 )     (10,166 )     (42,387 )     (41,162 )
       Research and development     (3,949 )     (3,768 )     (14,932 )     (15,423 )
       Consolidation, restructuring and related (charges) credits     168       (811 )     4,979       (13,557 )
       Impairment of long-lived assets     -       -       -       (1,458 )
Gain on sale of facility     -       2,034       -       2,034  
       Operating income (loss)     11,195       4,306       39,475       (12,495 )
Other expense, net     (1,052 )     (1,765 )     (6,922 )     (24,609 )
       Income (loss) before income taxes     10,143       2,541       32,553       (37,104 )
Income tax provision     (1,682 )     (1,398 )     (7,471 )     (4,323 )
       Net income (loss)     8,461       1,143       25,082       (41,427 )
Net (income) loss attributable to noncontrolling interests     (317 )     98       (1,160 )     (483 )
Net income (loss) attributable to Photronics, Inc.   $ 8,144     $ 1,241     $ 23,922     $ (41,910 )
 
Earnings (loss) per share:                                
       Basic   $ 0.15     $ 0.03     $ 0.45     $ (0.97 )
       Diluted   $ 0.14     $ (0.11 )   $ 0.43     $ (0.97 )
Weighted-average number of common shares outstanding                                
       Basic     53,710       47,522       53,433       43,210  
       Diluted     66,145       48,907       65,803       43,210  
                                 
exhibits99-3.htm
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
 
    October 31,   November 1,
        2010       2009
Assets            
 
Current assets:            
       Cash and cash equivalents   $      98,945   $      88,539
       Accounts receivable     82,951     66,920
       Inventories     15,502     14,826
       Other current assets     8,404     9,712
 
              Total current assets     205,802     179,997
 
Property, plant and equipment, net     369,814     347,889
Investment in joint venture     61,127     60,945
Intangible assets, net     47,748     55,054
Other assets     19,388     19,771
 
    $ 703,879   $ 663,656
 
Liabilities and Equity            
 
Current liabilities:            
       Current portion of long-term borrowings   $ 11,467   $ 10,301
       Accounts payable and accrued liabilities     107,762     80,154
 
              Total current liabilities     119,229     90,455
 
Long-term borrowings     78,852     112,137
Deferred income taxes and other liabilities     9,855     11,368
 
Equity     495,943     449,696
 
    $ 703,879   $ 663,656
             
exhibits99-4.htm
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
    Year Ended
    October 31,   November 1,
        2010       2009
Cash flows from operating activities:                
       Net income (loss)   $      25,082     $      (41,427 )
       Adjustments to reconcile net income (loss) to net cash                
       provided by operating activities:                
              Depreciation and amortization     90,300       90,474  
              Gain on sale of facility     -       (2,034 )
              Consolidation, restructuring, and related charges (credits) and impairments of long-lived assets     (5,059 )     11,972  
              Changes in assets and liabilities and other     (14,404 )     9,163  
 
Net cash provided by operating activities     95,919       68,148  
 
Cash flows from investing activities:                
       Purchases of property, plant and equipment     (71,381 )     (34,995 )
       Proceeds from sale of facility     12,880       4,321  
       Distribution from joint venture     -       5,000  
       Proceeds from sales of investments and other     289       996  
 
Net cash used in investing activities     (58,212 )     (24,678 )
 
Cash flows from financing activities:                
       Repayments of long-term borrowings     (72,932 )     (161,841 )
       Proceeds from long-term borrowings     41,680       28,112  
       Net proceeds from convertible debt and common stock offerings     -       97,961  
       Payments of deferred financing fees and other     (1,204 )     (4,734 )
 
Net cash used in financing activities     (32,456 )     (40,502 )
 
Effect of exchange rate changes on cash     5,155       1,808  
 
Net increase in cash and cash equivalents     10,406       4,776  
Cash and cash equivalents, beginning of year     88,539       83,763  
 
Cash and cash equivalents, end of year   $ 98,945     $ 88,539  
 
Supplemental disclosure of cash flow information:                
       Changes in accrual for purchases of property, plant and equipment   $ 28,717     $ (13,551 )
       Change in capital lease obligation for purchases of property, plant and                
       equipment   $ -     $ (28,244 )
       Common stock warrants issuance   $ -     $ 5,320  

exhibits99-5.htm
PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
 
    Three Months Ended   Year Ended
    October 31,   November 1,     October 31,   November 1,
        2010       2009       2010       2009
Reconciliation of GAAP to Non-GAAP Net Income (Loss)                                
Attributable to Photronics, Inc.                                
GAAP net income (loss) attributable to Photronics, Inc.   $      8,144     $      1,241     $      23,922     $      (41,910 )
       (a) Consolidation and restructure charges (credits), net of tax     (168 )     626       (4,979 )     12,913  
       (b) Gain on sale of facility, net of tax     -       (1,474 )     -       (1,474 )
       (c) Deferred financing fees write-off, net of interest savings,                                
              net of tax     -       2,942       1,011       2,942  
       (d) Impact of warrants, net of tax     554       (6,544 )     1,246       304  
       (e) Impairment of long-lived assets, net of tax     -       -       -       1,050  
Non-GAAP net income (loss) attributable to Photronics, Inc.   $ 8,530     $ (3,209 )   $ 21,200     $ (26,175 )
Weighted-average number of diluted shares outstanding:                                
       GAAP     66,145       48,907       65,803       43,210  
       (f) Adjustment to exclude equivalent shares issued                                
              September 16, 2009     -       (5,603 )     -       (1,401 )
       Non-GAAP     66,145       43,304       65,803       41,809  
Earnings (loss) per diluted share:                                
       GAAP   $ 0.14     $ (0.11 )   $ 0.43     $ (0.97 )
       Non-GAAP   $ 0.14     $ (0.07 )   $ 0.38     $ (0.63 )
                                 
(a)   Includes charges related to restructurings in China and United Kingdom.
         
(b)   Represents net gain recognized on sale of Manchester, United Kingdom facility.
 
(c)   Represents write-off of deferred financing fees recorded in interest expense as a result of an amendment to the revolving credit facility and reduced debt, offset in 2009 by reduced interest expense that resulted from debt repayment with the proceeds of the common stock and senior unsecured debt issuance.
 
(d)   Represents market value impact of outstanding warrants, and in 2009 the clawback of warrants, recorded in other income (expense).
 
(e)   Represents long-lived assets impairment charge, net of tax.
 
(f)   Adjustment to reflect the excluded impact on weighted-average shares outstanding during quarter and year in 2009 of the equivalent shares issued on September 16, 2009.