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 8, 2014

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:

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ 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 8, 2014, the Company issued a press release reporting fourth quarter and fiscal year end results. A copy of the press release is attached to this 8-K.

A copy of the press release is furnished as Exhibit 99.1 to this report. The information contained in this Item 2.02 and the attached Exhibits 99.1, 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set forth by specific reference in such filing.

On December 9, 2014, the Company will conduct a conference call during which certain unaudited, non-GAAP financial information related to the Company’s operations for the three months and fiscal year ended November 2, 2014 will be disclosed. This information is set forth in Exhibit 99.6 and 99.7.

EBITDA is a non-GAAP financial measure that the Company defines pursuant to its credit agreement. The Company believes that EBITDA is generally accepted as providing useful information regarding the operational strength and performance of its business, including the ability of the Company to pay interest, service debt and fund capital expenditures. The Company’s method for calculating EBITDA may not be comparable to methods used by other companies but is the same method the Company uses for calculating EBITDA under its credit facility.

Item 9.01.

 

Financial Statements and Exhibits


(d)  Exhibits
    99.1         Press Release dated December 8, 2014
    99.2   Condensed Consolidated Statements of Income
    99.3   Condensed Consolidated Balance Sheets
    99.4   Condensed Consolidated Statements of Cash Flows
    99.5   Reconciliation of GAAP to Non-GAAP Financial Information
    99.6   Reconciliation of GAAP Net Income to EBITDA
    99.7   Reconciliation of GAAP Operating Income to Non-GAAP Operating Income.



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 9, 2014 BY   /s/ Richelle E. Burr
Richelle E. Burr
Vice President, General Counsel

PHOTRONICS, INC.



 

FOR FURTHER INFORMATION:
Pete Broadbent
Vice President, Investor Relations
& Marketing
(203) 775-9000
pbroadbent@photronics.com
Press Release  

PHOTRONICS REPORTS FOURTH QUARTER
AND 
FISCAL 2014 RESULTS

BROOKFIELD, Conn. December 08, 2014 — 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 November 2, 2014.

Constantine ("Deno") Macricostas, Photronics’ chairman and chief executive officer, commented: “Fourth quarter revenues were slightly lower than previously anticipated due to slower than expected ramps in advanced memory nodes and a pause in 28nm demand due to a refresh of the design pipeline at a foundry customer. Our market position remains strong and our qualifications are in place for these customers and we expect the ramps to materialize and drive revenue growth in the new fiscal year.”

Sales for the fourth quarter of fiscal 2014 were $124.3 million, compared with $106.0 million for the fourth quarter of fiscal year 2013. Sales of semiconductor photomasks were $99.4 million, or 80% of revenues, during the fourth quarter of fiscal 2014, and sales of flat panel display (FPD) photomasks were $24.9 million, or 20% of revenues. For the fourth quarter of fiscal 2014, GAAP and Non-GAAP net income attributable to Photronics, Inc. shareholders was $4.3 million, or $0.07 per diluted share, compared with $4.8 million, or $0.08 per diluted share, for the fourth quarter of fiscal 2013. Non-GAAP net income attributable to Photronics, Inc. shareholders for the fourth quarter of 2013, excluding joint venture transaction expenses of $0.8 million, was $5.6 million, or $0.09 per diluted share.

Sales for the 2014 fiscal year were $455.5 million, compared with $422.2 million for the 2013 fiscal year. For the 2014 fiscal year, sales of semiconductor photomasks were $352.7 million, or 77% of revenues, and sales of FPD photomasks were $102.8 million, or 23% of revenues. GAAP net income attributable to Photronics, Inc. shareholders for the 2014 fiscal year was $26.0 million, or $0.41 per diluted share, compared with GAAP net income of $18.0 million, or $0.29 per diluted share, for the 2013 fiscal year. Non-GAAP net income attributable to Photronics, Inc. shareholders for the 2014 fiscal year, excluding the acquisition gain of $16.4 million and expenses related to the joint venture of $2.5 million, was $12.1 million, or $0.19 per diluted share. Non-GAAP net income attributable to Photronics, Inc. shareholders for the 2013 fiscal year, excluding $0.8 million in expenses related to the joint venture, was $18.7 million, or $0.30 per diluted share.

1



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.

Non-GAAP Financial Measures

Non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings 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 attributable to Photronics, Inc. shareholders and non-GAAP earnings 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 Photronics, Inc.'s projected earnings and performance with its historical results of prior periods. These non-GAAP metrics, in particular non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share 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, net income or cash flows from operations data 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:

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.

2



A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern time on Tuesday, December 9, 2014. 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. The call will be archived for instant replay access until the Company reports its fiscal 2015 first quarter results.

# # #

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 facilities 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 as well as decisions we may make in the future regarding our business, capital structure and other matters. These forward-looking statements generally can be identified by phrases such as “believes”, “expects”, “anticipates”, “plans”, “projects”, “could”, “estimate”, “intend”, “may”, “will” and similar expressions. 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 to any forward-looking statements.

11-2014

PLAB – E

3



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

Three Months Ended Year Ended
November 2, November 3, November 2, November 3,
       2014        2013        2014        2013
Net sales $       124,251 $       106,009 $       455,527 $       422,180
Costs and expenses:
       Cost of sales (97,626 ) (79,334 ) (355,181 ) (322,540 )
       Selling, general and administrative (11,547 ) (12,928 ) (49,638 ) (48,213 )
       Research and development (5,801 ) (6,378 ) (21,913 ) (20,758 )
              Operating income 9,277 7,369 28,795 30,669
Gain on acquisition - - 16,372 -
Other expense, net (574 ) (1,384 ) (3,837 ) (3,864 )
              Income before income taxes 8,703 5,985 41,330 26,805
Income tax provision (2,004 ) (1,072 ) (9,295 ) (7,229 )
              Net income 6,699 4,913 32,035 19,576
Net income attributable to noncontrolling interests (2,422 ) (73 ) (6,039 ) (1,610 )
Net income attributable to Photronics, Inc. shareholders $ 4,277 $ 4,840 $ 25,996 $ 17,966
 
Earnings per share:
              Basic $ 0.07 $ 0.08 $ 0.42 $ 0.30
              Diluted $ 0.07 $ 0.08 $ 0.41 $ 0.29
 
Weighted-average number of common shares outstanding:
              Basic 63,106 61,058 61,779 60,644
              Diluted 64,085 61,962 66,679 61,599



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)

November 2, November 3,
2014        2013
Assets
 
Current assets:
       Cash and cash equivalents $       192,929 $       215,615
       Accounts receivable 94,515 73,357
       Inventories 22,478 18,849
       Other current assets 26,570 10,645
 
              Total current assets 336,492 318,466
 
Property, plant and equipment, net 550,069 422,740
Investment in joint venture 93,122 93,124
Intangible assets, net 30,294 34,080
Other assets 19,206 17,519
 
$ 1,029,183 $ 885,929
 
Liabilities and Equity
 
Current liabilities:
       Current portion of long-term borrowings $ 10,381 $ 11,818
       Accounts payable and accrued liabilities 128,736 92,769
 
              Total current liabilities 139,117 104,587
 
Long-term borrowings 131,805 182,203
Other liabilities 18,767 11,308
 
Photronics, Inc. shareholders' equity 628,050 585,314
Noncontrolling interests 111,444 2,517
              Total equity 739,494 587,831
 
$ 1,029,183 $ 885,929



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)

Year Ended
November 2, November 3,
2014        2013
Cash flows from operating activities:
       Net income $       32,035 $       19,576
       Adjustments to reconcile net income to net cash
       provided by operating activities:  
              Gain on acquisition (16,372 ) -
              Depreciation and amortization 80,136 72,942
              Changes in assets and liabilities and other 562 6,883
 
Net cash provided by operating activities 96,361 99,401
 
Cash flows from investing activities:
       Purchases of property, plant and equipment (91,085 ) (63,792 )
       Cash from acquisition 4,508 -
       Other (908 ) (2,445 )
 
Net cash used in investing activities (87,485 ) (66,237 )
 
Cash flows from financing activities:
       Repayments of long-term borrowings (29,782 ) (8,314 )
       Purchase of common stock of subsidiary - (32,374 )
       Payment of deferred financing fees (346 ) (40 )
       Proceeds from share-based arrangements 1,298 884
       Other (711 ) -
 
Net cash used in financing activities (29,541 ) (39,844 )
 
Effect of exchange rate changes on cash (2,021 ) 4,252
 
Net decrease in cash and cash equivalents (22,686 ) (2,428 )
Cash and cash equivalents, beginning of period 215,615 218,043
 
Cash and cash equivalents, end of period $ 192,929 $ 215,615
 
Noncash net assets from acquisition $ 110,211 $ -



PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)

Three Months Ended Year Ended
November 2, November 3, November 2, November 3,
2014        2013        2014        2013
Reconciliation of GAAP to Non-GAAP Net Income
       Attributable to Photronics, Inc. Shareholders
 
GAAP net income attributable to Photronics, Inc. shareholders $ 4,277 $ 4,840 $        25,996 $ 17,966
 
(a) Gain on acquisition, net of tax - - (16,372 ) -
 
(b) Acquisition transaction expenses, net of tax - 773 2,455 773
 
Non-GAAP net income attributable to Photronics, Inc. shareholders  $ 4,277 $ 5,613 $ 12,079 $ 18,739
 
Reconciliation of GAAP to Non-GAAP Net Income
       Applicable to Common Shareholders
 
Weighted average number of diluted shares outstanding
 
              GAAP 64,085 61,962 66,679 61,599
 
              Non-GAAP 64,085 61,962 62,734 61,599
 
Net income per diluted share  
 
              GAAP $ 0.07 $ 0.08 $ 0.41 $ 0.29
 
              Non-GAAP $ 0.07 $ 0.09 $ 0.19 $ 0.30

(a)        Represents gain on acquisition of DNP Photomask Technology Taiwan Co., Ltd (DPTT), a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd
 
(b)   Represents transaction expenses in connection with the acquisition of DPTT.



PHOTRONICS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Net Income to EBITDA
(in thousands)
(Unaudited)

Three Months Ended Year Ended
November 2, November 3, November 2, November 3,
2014        2013        2014        2013
GAAP Net Income (a) $       6,699 $       4,913 $       32,035 $       19,576
 
Add: interest expense 1,638 2,051 7,247 7,756
Add: income tax expense 2,004 1,072 9,295 7,229
Add: depreciation and amortization 21,421 17,453 78,685 71,408
Add (less): special items (b) 941 1,156 (9,846 ) 3,974
EBITDA $ 32,703 $ 26,645 $ 117,416 $ 109,943

(a)        Includes net income attributable to noncontrolling interests.
 
(b)   Special items consist of stock compensation expense, and in 2014 noncash gain on acquisition of DNP Photomask Technology Taiwan, Co., Ltd., a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd., and related acquisition transaction expenses.



PHOTRONICS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income
(in thousands)
(Unaudited)

Three Months Ended Year Ended
November 2, November 3, November 2, November 3,
    2014     2013     2014     2013
$     % $     % $     % $     %
(b) (b) (b) (b)
GAAP Operating Income $    9,277    7.5 % $    7,369    7.0 % $    28,795    6.3 % $    30,669    7.3 %
       (a) Acquisition transaction expenses 773 0.7 2,455 0.6 773 0.1
 
Non-GAAP Operating Income $ 9,277 7.5 % $ 8,142 7.7 % $ 31,250 6.9 % $ 31,442 7.4 %

(a)        Represents transaction expenses in connection with the acquisition of DNP Photomask Technology Taiwan Co., Ltd., a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd.
 
(b)   Represents percentage of net sales.