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) August 18, 2015

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 August 18, 2015, the Company issued a press release reporting third quarter 2015 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 August 19, 2015 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 ended August 2, 2015 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 August 18, 2015

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: August 18, 2015 BY  /s/ Richelle E. Burr
  Richelle E. Burr
  Vice President, General Counsel

PHOTRONICS, INC.




 

For Further Information:
Troy Dewar
Director, Investor Relations
(203) 775-9000
tdewar@photronics.com

Press Release

PHOTRONICS REPORTS THIRD QUARTER FISCAL 2015 RESULTS

Quarterly sales of $131.7 million, up $4.4 million sequentially
 

Diluted EPS of $0.17 (above guided range of $0.06 to $0.13)
 

Sequential gross and operating margin improvement of 230 and 240 BPS, respectively
 

Flat panel display sales increase 18% sequentially to $27.7 million
 

Non-GAAP EBITDA of $42 million, up 20% sequentially
 

Working capital of $179 million, up $28 million sequentially
 

Net cash of $57 million, up $18 million sequentially

BROOKFIELD, Connecticut August 18, 2015 Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for the fiscal 2015 third quarter ended August 2, 2015.

Peter Kirlin, Photronics’ chief executive officer commented, “High-end flat panel display sales led by increased demand for AMOLED photomasks helped us achieve revenues near the high end of our expectations for the quarter. This was the second consecutive quarter with sales up on a sequential as well as a year-over-year basis. Our continuously improving manufacturing efficiencies enabled us to leverage our incremental revenue growth into bottom line performance above our guided range.”

Sales for the third quarter of fiscal 2015 were $131.7 million, a sequential increase of 3% compared with $127.3 million for the second quarter of fiscal 2015. Sales for the third quarter of 2014 were $124.9 million. Sales of semiconductor photomasks were $104.0 million, or 79% of revenues, during the third quarter of fiscal 2015, and sales of flat panel display (FPD) photomasks were $27.7 million, or 21% of revenues.

GAAP and non-GAAP net income attributable to Photronics, Inc. shareholders for the third quarter of fiscal 2015 was $12.1 million, or $0.17 per diluted share. GAAP and non-GAAP net income attributable to Photronics, Inc. shareholders for the third quarter of fiscal 2014 was $4.2 million, or $0.07 per diluted share.



Sales for the first nine months of fiscal 2015 were $382.5 million, compared with $331.3 million for the first nine months of fiscal 2014. For the first nine months of fiscal 2015, sales of semiconductor photomasks were $309.3 million, or 81% of revenues, and sales of FPD photomasks were $73.2 million, or 19% of revenues. GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2015 was $26.0 million, or $0.37 per diluted share, compared with $21.7 million, or $0.34 per diluted share for the first nine months of fiscal 2014. Non-GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2015, which excludes financing expenses of $0.9 million, was $26.9 million, or $0.39 per diluted share. Non-GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2014, which excludes a non-cash gain on acquisition of $16.4 million and transaction expenses of $2.5 million, was $7.8 million, or $0.13 per diluted share.

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:

Financing expenses in fiscal 2015 related to the exchange of convertible senior notes are excluded because they are not a part of ongoing operations.
  

Non-cash acquisition gain and transaction expenses in fiscal 2014 related to the joint venture, PDMC, in Taiwan are excluded because they are not part of ongoing operations.
 



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 Wednesday, August 19, 2015. The call can be accessed by logging onto Photronics’ web site at www.photronics.com. The live dial-in number is (408) 774-4601. The call will be archived for instant replay access until the Company reports its fiscal 2015 fourth quarter results.

# # #

About Photronics

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”, 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.

15-2015



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

      Three Months Ended Nine Months Ended
August 2,       August 3,       August 2,       August 3,
2015 2014 2015 2014
Net sales $       131,699 $       124,852 $       382,513 $       331,276
Costs and expenses:
       Cost of sales (94,456 ) (96,202 ) (283,991 ) (257,554 )
       Selling, general and administrative (12,430 ) (12,394 ) (36,795 ) (38,092 )
       Research and development (6,253 ) (5,199 ) (16,743 ) (16,111 )
              Operating income 18,560 11,057 44,984 19,519
Gain on acquisition - - - 16,372
Other income (expense), net 240 (1,168 ) (2,500 ) (3,264 )
              Income before income taxes 18,800 9,889 42,484 32,627
Income tax provision (3,390 ) (2,545 ) (7,775 ) (7,291 )
              Net income 15,410 7,344 34,709 25,336
Net income attributable to noncontrolling interests (3,304 ) (3,158 ) (8,706 ) (3,617 )
Net income attributable to Photronics, Inc. shareholders $ 12,106 $ 4,186 $ 26,003 $ 21,719
   
Earnings per share:
              Basic $ 0.18 $ 0.07 $ 0.39 $ 0.35
              Diluted $ 0.17 $ 0.07 $ 0.37 $ 0.34
   
Weighted-average number of common shares outstanding
              Basic 66,454 61,436 66,250 61,336
              Diluted 78,569 62,432 78,300 77,706



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

August 2, November 2,
2015 2014
Assets
 
Current assets:      
       Cash and cash equivalents $        191,562 $        192,929
       Accounts receivable 104,701 94,515
       Inventories 23,266 22,478
       Other current assets 21,037 26,570
 
              Total current assets 340,566 336,492
 
Property, plant and equipment, net 568,921 550,069
Investment in joint venture 93,040 93,122
Intangible assets, net 26,280 30,294
Other assets 17,284 19,206
  
$ 1,046,091 $ 1,029,183
  
 
Liabilities and Equity
 
Current liabilities:
       Current portion of long-term borrowings $ 16,577 $ 10,381
       Accounts payable and accrued liabilities 144,959 128,736
 
              Total current liabilities 161,536 139,117
 
Long-term borrowings 118,457 131,805
Other liabilities 20,051 18,767
 
Photronics, Inc. shareholders’ equity 628,771 628,050
Noncontrolling interests 117,276 111,444
              Total equity 746,047 739,494
 
  $ 1,046,091 $ 1,029,183



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

Nine Months Ended
August 2, August 3,
2015       2014
Cash flows from operating activities:
       Net income $        34,709 $        25,336
       Adjustments to reconcile net income to net cash
              provided by operating activities:
                     Depreciation and amortization 61,465 58,412
                     Gain on acquisition -       (16,372 )
                     Changes in assets and liabilities and other (4,347 ) (5,538 )
 
Net cash provided by operating activities 91,827 61,838
 
Cash flows from investing activities:
              Purchases of property, plant and equipment (80,107 ) (58,278 )
              Cash from acquisition - 4,508
              Other (283 ) (759 )
 
Net cash used in investing activities (80,390 ) (54,529 )
 
Cash flows from financing activities:
              Repayments of long-term borrowings (7,152 ) (27,432 )
              Payment of deferred financing fees - (336 )
              Proceeds from share-based arrangements 2,375 1,043
              Other (171 ) (597 )
 
Net cash used in financing activities (4,948 ) (27,322 )
 
Effect of exchange rate changes on cash (7,856 ) 736
 
Net decrease in cash and cash equivalents (1,367 ) (19,277 )
Cash and cash equivalents, beginning of period 192,929 215,615
 
Cash and cash equivalents, end of period $ 191,562 $ 196,338
 
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 Nine Months Ended
      August 2,       August 3,       August 2,       August 3,
2015 2014 2015 2014
Reconciliation of GAAP to Non-GAAP Net Income
       Attributable to Photronics, Inc. Shareholders
     
GAAP net income attributable to Photronics, Inc. shareholders $ 12,106 $ 4,186 $ 26,003 $ 21,719
 
       (a) Financing expenses, net of tax - - 901 -
 
       (b) Gain on acquisition, net of tax - - -    (16,372 )
 
       (c) Acquisition transaction expenses, net of tax - - - 2,455
 
Non-GAAP net income attributable to Photronics, Inc. shareholders $ 12,106 $ 4,186 $ 26,904 $ 7,802
 
Reconciliation of GAAP to Non-GAAP Net Income
       Applicable to Common Shareholders
 
Weighted average number of diluted shares outstanding
 
              GAAP 78,569 62,432 78,300 77,706
 
              Non-GAAP 78,569 62,432 78,300 62,283
 
Net income per diluted share  
 
              GAAP $ 0.17 $ 0.07 $ 0.37 $ 0.34
 
              Non-GAAP $ 0.17 $ 0.07 $ 0.39 $ 0.13

(a)    Represents financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes, recorded in other expense, net
 
(b) Represents gain on acquisition of DNP Photomask Technology Taiwan Co., Ltd (DPTT), a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd.
 
(c) Represents transaction expenses in connection with the acquisition of DPTT
 


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

Three Months Ended Nine Months Ended
August 2, August 3, August 2, August 3,
2015 2014 2015 2014
GAAP Net Income (a)       $        15,410       $        7,344       $        34,709       $        25,336
 
Add: interest expense 1,209 1,809 3,813 5,609
Add: income tax expense 3,390 2,545 7,775 7,291
Add: depreciation and amortization 20,976 21,292 60,876 57,264
Add (less): special items (b) 948 981 3,685 (10,787 )
Non-GAAP EBITDA $ 41,933 $ 33,971 $ 110,858 $ 84,713

(a)    Includes net income attributable to noncontrolling interests.
 
(b) Special items consist of stock compensation expense, and in 2015 financing expenses in connection with the exchange of $57.5 million of 3.25% convertible senior notes, 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 Nine Months Ended
August 2, August 3, August 2, August 3,
2015 2014 2015 2014
$ % $ % $ % $ %
(a) (a) (a) (a)
GAAP Operating Income       $      18,560          14.1 %       $      11,057          8.9 %       $      44,984          11.8 %       $      19,519          5.9 %
     Acquisition transaction expenses (b) - - - - - - 2,455 0.7
 
Non-GAAP Operating Income $ 18,560 14.1 % $ 11,057 8.9 % $ 44,984 11.8 % $ 21,974 6.6 %

(a)    Represents percentage of net sales
 
(b) 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.