-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L0IKpziQQGAKNneK8fcdtRm9wW+X9iXn8CQstLZfSXOrZ1jcpf6RrfN4sXGH0eJw AL8ECcBGjLPIkLXQKHUWOA== 0000810136-00-000006.txt : 20000313 0000810136-00-000006.hdr.sgml : 20000313 ACCESSION NUMBER: 0000810136-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000130 FILED AS OF DATE: 20000310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOTRONICS INC CENTRAL INDEX KEY: 0000810136 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 060854886 STATE OF INCORPORATION: CT FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15451 FILM NUMBER: 566769 BUSINESS ADDRESS: STREET 1: 1061 INDIANTOWN RD STREET 2: SUITE 318 CITY: JUPITER STATE: FL ZIP: 33477 BUSINESS PHONE: 5617451222 MAIL ADDRESS: STREET 1: 15 SECOR ROAD STREET 2: P O BOX 5226 CITY: BROOKFIELD STATE: CT ZIP: 06804 FORMER COMPANY: FORMER CONFORMED NAME: PHOTRONIC LABS INC DATE OF NAME CHANGE: 19900514 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ......January 30, 2000.... OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.............. to ............. Commission file number...0-15451... ...PHOTRONICS, INC... (Exact name of registrant as specified in its charter) ...Connecticut... ...06-0854886... (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ......1061 East Indiantown Road, Jupiter, FL...... ..33477.. (Address of principal executive offices) (Zip Code) ...(561) 745-1222... (Registrant's telephone number, including area code) .............................. (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ..X.. No ..... Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at January 30, 2000 Common Stock, $.01 par value 24,096,933 Shares PHOTRONICS, INC. AND SUBSIDIARIES INDEX Page PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements Condensed Consolidated Balance Sheet at January 30, 2000 (unaudited) and October 31, 1999 3-4 Condensed Consolidated Statement of Earnings for the Three Months Ended January 30, 2000 and January 31, 1999 (unaudited) 5 Condensed Consolidated Statement of Cash Flows for the Three Months Ended January 30, 2000 and January 31, 1999 (unaudited) 6 Condensed Consolidated Statement of Shareholders' Equity for the Three Months Ended January 30, 2000 and January 31, 1999 (unaudited) 7 Notes to Condensed Consolidated Financial Statements (unaudited) 8-9 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10-12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements PHOTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheet (in thousands) ASSETS
January 30, October 31, 2000 1999 ----------- ----------- (Unaudited) Current assets: Cash and cash equivalents $ 8,951 $ 16,269 Accounts receivable (less allowance for doubtful accounts of $235 in 2000 and 1999) 42,497 41,293 Inventories 14,398 13,888 Other current assets 15,321 14,757 -------- -------- Total current assets 81,167 86,207 Property, plant and equipment (less accumulated depreciation of $147,476 in 2000 and $139,742 in 1999) 276,191 282,157 Intangible assets (less accumulated amortization of $8,607 in 2000 and $8,062 in 1999) 30,030 28,357 Investments and other assets 18,699 13,635 -------- -------- $406,087 $410,356 ======== ========
See accompanying notes to condensed consolidated financial statements. PHOTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheet (dollars in thousands, except share and per share amounts) LIABILITIES AND SHAREHOLDERS' EQUITY
January 30, October 31, 2000 1999 ----------- ----------- (Unaudited) Current liabilities: Current portion of long-term debt $ 252 $ 261 Accounts payable 35,270 45,608 Accrued salaries and wages 3,427 2,490 Other accrued liabilities 3,934 8,657 ------- ------- Total current liabilities 42,883 57,016 Long-term debt 116,634 116,703 Deferred income taxes and other liabilities 32,108 28,937 ------- ------- Total liabilities 191,625 202,656 ------- ------- Commitments and contingencies Shareholders' equity: Preferred stock, $0.01 par value, 2,000,000 shares authorized, none issued and outstanding - - Common stock, $0.01 par value, 75,000,000 shares authorized, 24,096,933 shares issued in 2000 and 23,948,807 shares in 1999 241 239 Additional paid-in capital 83,005 80,242 Retained earnings 133,772 130,759 Accumulated other comprehensive loss (2,527) (3,489) Deferred compensation on restricted stock (29) (51) -------- -------- Total shareholders' equity 214,462 207,700 -------- -------- $406,087 $410,356 ======== ========
See accompanying notes to condensed consolidated financial statements. PHOTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Statement of Earnings (in thousands, except per share amounts) (Unaudited)
Three Months Ended ---------------------------- January 30, January 31, 2000 1999 ----------- ----------- Net sales $58,316 $47,815 Costs and expenses: Cost of sales 39,928 35,287 Selling, general and administrative 8,174 7,263 Research and development 4,493 3,519 ------- ------- Operating income 5,721 1,746 Other expense, net (1,008) (729) ------- ------- Income before income taxes 4,713 1,017 Provision for income taxes 1,700 400 ------- ------- Net income $ 3,013 $ 617 ======= ======= Earnings per share: Basic $0.13 $0.03 ===== ===== Diluted $0.13 $0.03 ===== ===== Weighted average number of common shares outstanding: Basic 23,983 24,102 ====== ====== Diluted 23,983 24,102 ====== ======
See accompanying notes to condensed consolidated financial statements. PHOTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Statement of Cash Flows (in thousands) (Unaudited)
Three Months Ended ------------------------ January 30, January 31, 2000 1999 ----------- ----------- Cash flows from operating activities: Net income $ 3,013 $ 617 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 10,709 9,350 Other (1,695) (235) Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable (1,330) 1,381 Inventories (545) 291 Other current assets (588) (285) Accounts payable and other liabilities (14,254) 6,348 ------- ------- Net cash provided by (used in) operating activities (4,690) 17,467 ------- ------- Cash flows from investing activities: Deposits on and purchases of property, plant and equipment (4,671) (20,863) Net change in short-term investments - 1,449 Other 445 616 ------- ------- Net cash used in investing activities (4,226) (18,798) ------- ------- Cash flows from financing activities: Repayment of long-term debt (62) (1,869) Proceeds from issuance of common stock 2,765 1,882 Purchase and retirement of common stock - (3,425) Other (5) (301) ------- ------- Net cash provided by (used in) financing activities 2,698 (3,713) ------- ------- Effect of exchange rate changes on cash flows (1,100) (163) ------- ------- Net decrease in cash and cash equivalents (7,318) (5,207) Cash and cash equivalents at beginning of period 16,269 23,841 ------- ------- Cash and cash equivalents at end of period $ 8,951 $18,634 ======= ======= Cash paid during the period for: Interest $3,192 $3,120 Income taxes $ 22 $ 185
See accompanying notes to condensed consolidated financial statements. PHOTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Statement of Shareholders' Equity (in thousands) (unaudited)
Accumulated Other Comprehensive Income (Loss) ------------------------- Deferred Unreal- Compen- ized Foreign sation- Total Common Stock Add'l Invest- Currency on Re- Share- -------------- Paid-In Retained ment Trans- stricted holders' Shares Amount Capital Earnings Gains lation Total Stock Equity ------ ------ ------- -------- ------ ------- ------ -------- -------- Balance at November 1, 1998 24,164 $ 242 $82,377 $120,091 $1,167 $(3,308) $(2,141) $ (139) $200,430 Comprehensive income: Net income - - - 617 - - - - 617 Change in unrealized gains on investments - - - - 1,340 - 1,340 - 1,340 Foreign currency translation adjustment - - - - - (35) (35) - (35) -------- ----- ------ ----- ------- Total comprehensive income - - - 617 1,340 (35) 1,305 - 1,922 Sale of common stock through employee stock option and purchase plans 116 1 1,881 - - - - - 1,882 Amortization of restricted stock to compensation expense - - - - - - - 22 22 Common stock repurchases (250) (3) (3,422) - - - - - (3,425) ------ ---- ------- -------- ------ ------- ------- ----- -------- Balance at January 31, 1999 24,030 $240 $80,836 $120,708 $2,507 $(3,343) $ (836) $(117) $200,831 ====== ==== ======= ======== ====== ======= ======= ===== ======== Balance at October 31, 1999 23,949 $239 $80,242 $130,759 $2,524 $(6,013) $(3,489) $ (51) $207,700 Comprehensive income: Net income - - - 3,013 - - - - 3,013 Change in unrealized gains on investments - - - - 3,041 - 3,041 - 3,041 Foreign currency translation adjustment - - - - - (2,079) (2,079) - (2,079) -------- ------ ------ ------ ------- Total comprehensive income - - - 3,013 3,041 (2,079) 962 - 3,975 Sale of common stock through employee stock option and purchase plans 148 2 2,763 - - - - - 2,765 Amortization of restricted stock to compensation expense - - - - - - - 22 22 ------ ---- ------- -------- ------ ------- ------- ---- -------- Balance at January 30, 2000 24,097 $241 $83,005 $133,772 $5,565 $(8,092) $(2,527) $(29) $214,462 ====== ==== ======= ======== ====== ======= ======= ==== ========
See accompanying notes to Condensed Consolidated Financial Statements. PHOTRONICS, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Three Months Ended January 30, 2000 and January 31, 1999 (Unaudited) NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended January 30, 2000 are not necessarily indicative of the results that may be expected for the year ending October 30, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in Company's Annual Report on Form 10-K for the year ended October 31, 1999. NOTE 2 - EARNINGS PER SHARE Basic Earnings Per Share ("EPS") is based on the weighted average number of common shares outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. A reconciliation of basic and diluted EPS for the three months ended January 30, 2000 and January 31, 1999 is as follows (in thousands, except per share amounts): Average Net Shares Earnings Income Outstanding Per Share ------- ----------- --------- 2000: Basic $3,013 23,983 $0.13 Effect of potential dilution ===== from exercise of stock options and conversion of notes (a) - - ------ ------ Diluted $3,013 23,983 $0.13 ====== ====== ===== 1999: Basic $ 617 24,102 $0.03 Effect of potential dilution ===== from exercise of stock options and conversion of notes (a) - - ------- ------ Diluted $ 617 24,102 $0.03 ======= ====== ===== (a) The effect of the exercise of stock options and the conversion of notes for the three months ended January 30, 2000 and January 31, 1999 is anti- dilutive. NOTE 3 - COMPREHENSIVE INCOME The Company's comprehensive income as reported in the Condensed Consolidated Statement of Shareholders' Equity, consists of net earnings, and all changes in equity during a period except those resulting from investments by owners and distributions to owners, which are presented before tax. The Company does not provide for U.S. income taxes on foreign currency translation adjustments because it does not provide for such taxes on undistributed earnings of foreign subsidiaries. Other comprehensive income (loss) consists of unrealized gains and losses on certain investments in equity securities and foreign currency translation adjustments. The related tax effects allocated to each component of other comprehensive income (loss) for the three months ended January 30, 2000 and January 31, 1999 were as follows: Before-Tax Tax (Expense) Net-of-Tax Amount or Benefit Amount ---------- ------------ ---------- 2000: Foreign currency translation adjustment $(8,092) $ - $(8,092) ------- ------ ------- Unrealized gains on investments: Unrealized holding gains arising during the period 11,745 (4,463) 7,282 Less: reclassification adjustment for gains realized in net income (2,769) 1,052 (1,717) ------- ------- ------- Net unrealized gains 8,976 (3,411) 5,565 ------- ------- ------- Other comprehensive income (loss) $ 884 $(3,411) $(2,527) ======= ======= ======= 1999: Foreign currency translation adjustment $(3,343) $ - $(3,343) ------- ------- ------- Unrealized losses on investments: Unrealized holding gains arising during the period 4,578 (1,740) 2,838 Less: reclassification adjustment for gains realized in net income (534) 203 (331) ------- ------- ------- Net unrealized gains 4,044 (1,537) 2,507 ------- ------- ------- Other comprehensive income (loss) $ 701 $(1,537) $ (836) ======= ======= ======= Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Material Changes in Results of Operations Three Months ended January 30, 2000 versus January 31, 1999. Net sales for the three months ended January 30, 2000 increased 22.0% to $58.3 million compared with $47.8 million for the three months ended January 31, 1999, primarily due to an increase in new design releases, principally in the United States, and a better mix of orders for high-end technology products. The first quarter of fiscal 1999 reflected the downturn in the global semi-conductor industry which resulted in extended customer shut-downs, a slow-down in the releases of new designs, and price reductions for mature products. The Company continues to see a weakness in selling prices for mature technologies but has benefitted from its investment in high-end manufacturing capability through a mix shift toward high-end technology products. Sales outside of the U.S. were consistent in the first quarter of 2000 compared to the first quarter of 1999 at approximately 23% of total sales. Cost of sales for the three months ended January 30, 2000, increased 13.2% to $39.9 million, compared with $35.3 million for the same period in the prior fiscal year. Gross margins increased to 31.5% of sales in the first quarter of fiscal 2000, compared with 26.2% for the first quarter of 1999. The gross margin increase was primarily attributable to an increase in higher margin .25 micron and below product shipments, partially offset by increases in costs, principally higher depreciation and service contract expenses from the Company's expansion of its technological capability. Selling, general and administrative expenses increased 12.5% to $8.2 million for the three months ended January 30, 2000, compared with $7.3 million for the same period in the prior fiscal year. As a percentage of net sales, selling, general and administrative expenses decreased to 14.0% for the three months ended January 30, 2000, compared with 15.2% for the same period in the prior fiscal year. The higher expenses were due principally to staffing and other costs associated with the Company's expansion, both domestically and internationally, together with increases in information systems and communications costs. Research and development expenses for the three months ended January 30, 2000, increased 27.7% to $4.5 million, compared with $3.5 million for the same period in the prior fiscal year. This increase reflects the continuing development efforts on high-end, more complex photomasks such as phase shift and optical proximity correction applications, and on process enhancements for the manufacture of high-end photomasks. In addition, R&D expenses in the current year increased as a result of the new Mask Center of Competency, a joint effort with IBM, established in the second half of fiscal 1999. As a percentage of net sales, research and development was 7.7% for the three months ended January 30, 2000 compared to 7.4% for the quarter ended January 31, 1999. Net other expenses of approximately $1.0 million in the first quarter of 2000 was comprised principally of interest expense on the convertible notes offset by interest and other income earned on investments. This compares to $0.7 million of net interest and other expenses in the first quarter of 1999. The prior year included higher income earned on investments whereas the current year included higher interest expense as a result of utilization of revolving credit lines. Net income for the three months ended January 30, 2000, increased to $3.0 million, or $0.13 per share on a basic and a diluted basis, compared with $0.6 million or $0.03 per basic and diluted share for the corresponding prior year period. LIQUIDITY AND CAPITAL RESOURCES Photronics' cash and cash equivalents decreased $7.3 million during the three months ended January 30, 2000, largely as a result of capital expenditures for equipment of approximately $5 million and the timing of payments of amounts accrued at the end of fiscal 1999, including semi-annual interest on the Company's convertible notes. Accounts receivable increased 2.9% from October 31, 1999 due to higher international sales, especially in Asia, and a stretch-out in days sales outstanding. Inventory increased by 3.7% during the quarter as a result of the Company's strategic decision to increase quantities of certain critical materials in anticipation of any potential Year 2000 issues. Property, plant and equipment decreased to $276.2 million at January 30, 2000, from $282.2 million at October 31, 1999, primarily as a result of depreciation expense, offset by approximately $5 million of new capital additions. Intangible and other non-current assets increased $6.7 million during the quarter ended January 30, 2000, principally due to an increase in the market value of investments available for sale. Accounts payable and accruals decreased 24.9% or $14.1 million from October 31, 1999, due to the timing of payments principally for capital equipment, interest on the convertible notes and property taxes. Photronics' commitments represent investments in additional manufacturing capability as well as advanced equipment for research and development of high- end, more complex photomasks. At January 30, 2000, Photronics had commitments outstanding for capital expenditures of approximately $30 million. Additional commitments for capital requirements are expected to be incurred during fiscal 2000. Photronics will continue to use its working capital and bank lines of credit to finance its capital expenditures. Photronics believes that its currently available resources, together with its capacity for substantial growth and its access to other debt and equity financing sources, are sufficient to satisfy its currently planned capital expenditures, as well as its anticipated working capital requirements for the foreseeable future. YEAR 2000 As of the date of this filing, the Company has not experienced any Year 2000 problems that have affected its operations, the realization of financial assets, or the Company's results of operations. The Company will continue to monitor its operations for non-compliant components. The Company is also monitoring its open transactions with customers and vendors to ensure that there are no undetected problems that could have a future impact. As of the date of this filing, the Company believes there are no remaining significant risks or exposure as a result of the Year 2000 issue. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Except for historical information, the matters discussed above may be considered forward-looking statements and may be subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected, including uncertainties in the market, pricing, competition, procurement and manufacturing efficiencies, and other risks. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K During the quarter for which this report is filed, the following reports on Form 8-K were filed by the Company, each reporting information under Item 5, as follows: (i) Form 8-K dated November 4, 1999 reported certain information with respect to Photronics' withdrawal and refiling of a notification and report under the Hart- Scott-Rodino Antitrust Improvements Act ("Hart-Scott") related to Photronics' proposed acquisition of Align-Rite International, Inc. ("Align-Rite"). (ii) Form 8-K dated November 29, 1999 reported certain additional information regarding Photronics' and Align- Rite's receipt from the United States Department of Justice of a request for additional information related to the Hart-Scott filing. (iii) Form 8-K dated January 14, 2000 reported that Photronics and Align-Rite entered into an amendment of the merger agreement pursuant to which Photronics would acquire Align-Rite. 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 thereunto duly authorized. PHOTRONICS, INC. (Registrant) By:______ROBERT J. BOLLO_________ Robert J. Bollo Vice President/Finance (Duly Authorized Officer and Principal Financial Officer) Date: March 10, 2000 EX-27 2
5 This schedule contains summary financial information extracted from the Condensed Consolidated Statement of Earnings and the Consolidated Balance Sheet and is qualified in its entirety by reference to such financial statements. 1000 3-MOS OCT-30-2000 JAN-30-2000 8,951 0 42,732 235 14,398 81,167 423,667 147,476 406,087 42,883 116,634 0 0 241 214,221 406,087 58,316 58,316 39,928 39,928 0 0 1,804 4,713 1,700 3,013 0 0 0 3,013 0.13 0.13
-----END PRIVACY-ENHANCED MESSAGE-----