ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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PREFERRED STOCK PURCHASE RIGHTS
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N/A
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N/A
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☒
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Accelerated Filer
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☐
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Non-Accelerated Filer
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☐
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Smaller Reporting Company
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Emerging growth company
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☐
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Proxy Statement for the 2022
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||
Annual Meeting of Shareholders
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Incorporated into Part III
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to be held on March 10, 2022
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of this Form 10-K
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Page
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3
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4
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PART I:
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5
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10
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20
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20
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21
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21
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PART II:
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21
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22
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22
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35
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36
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69
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69
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71
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71
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PART III:
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71
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71
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71
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71
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72
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PART IV:
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72
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76
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AMOLED
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Active-matrix organic light-emitting diode. A technology used in mobile devices.
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ASC
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Accounting Standards Codification
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ASP
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Average Selling Price
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ASU
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Accounting Standards Update
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Chip stacking
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Placement of a computer chip on top of another computer chip, resulting in the reduction of the distance between the chips in a circuit board
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COVID-19
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Covid virus 2019, an infectious disease that was declared a pandemic by the World Health Organization in March 2020
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DNP
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Dai Nippon Printing Co., Ltd.
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EUV
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A wafer lithography technology using the industry standard extreme ultraviolet (EUV) wavelength. EUV photomasks function by selectively reflecting or blocking light, in contrast to conventional photomasks which function by selectively
transmitting or blocking light
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Exchange Act
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The Securities Exchange Act of 1934 (as amended)
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FASB
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Financial Accounting Standards Board
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Form 10-K
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Annual Report on Form 10-K
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Form 10-Q
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Quarterly Report on Form 10-Q
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FPDs
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Flat-panel displays, or “displays”
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Generation
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In reference to flat panel displays, refers to the size range of the underlying substrate to which a photomask is applied. Higher generation (or “G”) numbers represent larger substrates
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High-end (photomasks)
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For IC, photomasks that are 28nm or smaller; for FPD, AMOLED, G10.5+, and LTPS photomasks
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ICs
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Integrated circuits, or semiconductors
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LIBOR
|
London Inter-Bank Offered Rate
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LTPS
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Low-Temperature Poly Silicon, a polycrystalline silicon synthesized at relatively low temperatures; polycrystalline silicon in thin-film transistors (TFTs) are used in liquid-crystal display (LCD) flat panels and to drive organic
light-emitting diode (OLED) displays
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MLA
|
Master Lease Agreement
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Optical proximity
correction
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A photolithography enhancement technique applied to compensate for the limitations of light to maintain the edge placement integrity of an original design, after processing, into the etched image on a silicon wafer
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PDMCX
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Xiamen American Japan Photronics Mask Co., Ltd., a joint venture of Photronics and DNP
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Phase-shift photomasks
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Photomasks that take advantage of the interference generated by phase differences to improve image resolution in
photolithography
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RMB
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Chinese renminbi
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ROU (assets)
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Right-of-use asset
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SEC
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Securities and Exchange Commission
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Securities Act
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The Securities Act of 1933 (as amended)
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U.S. GAAP
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Accounting principles generally accepted in the United States of America
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Wafer
|
A wafer, or silicon wafer, is a thin slice of semiconductor material that, in the fabrication of microelectronics, serves as the substrate for microelectronic devices built in and upon the wafer
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• |
Regulations, such as those under the Foreign Corrupt practices Act that prohibit providing remuneration to government officials for the purpose of obtaining or securing business in the jurisdictions in which they serve;
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• |
Regulations that require the minimization and proper disposal of
the by-products of our manufacturing processes;
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• |
Regulations that require us to provide a safe working environment for our employees;
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• |
Regulations that restrict our ability to transfer assets between operations not within the same legal jurisdiction;
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• |
Regulations that require us to provide information through the submission of government surveys;
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• |
Regulations that require us to maintain an effective system of internal accounting controls;
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• |
Regulations that prohibit us from engaging in business in specified countries, or with specified customers;
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• |
Regulations that require us to protect the personal information of our customers and employees;
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• |
Regulations that require us to accurately determine our liabilities to taxing authorities, and to settle such liabilities within their statutorily prescribed time periods;
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• |
Regulations that require us to withhold and timely remit taxes on our employees’ compensation to government authorities;
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• |
Regulations that require us to contribute to government-sponsored social insurance plans;
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• |
Regulations that require us to contribute to employee severance plans;
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• |
Regulations that prohibit us from disseminating material nonpublic information prior to the public announcement of such information;
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• |
Regulations pertaining to financial reporting, insider transactions, executive compensation, and other areas overseen by the SEC and governing bodies in other countries in which our operations are located;
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• |
we will be able to adequately protect our technology;
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• |
competitors will not independently develop similar technology;
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• |
international intellectual property laws will adequately protect our intellectual property rights.
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• |
loss of any of our key customers or suppliers;
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• |
additions or departures of key personnel;
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• |
third party sales of common stock;
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• |
our ability to execute our business plan, including but not limited to, our expansion into China;
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• |
announcements and consummations of business acquisitions;
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• |
operating results that fall below or exceed expectations;
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• |
announcements of forecasted earnings or material transactions;
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• |
issuances or repurchases of our common stock;
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• |
intellectual property disputes;
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• |
industry developments;
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• |
news or disclosures by competitors or customers;
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• |
business combinations, divestitures, or bankruptcies by customers, suppliers, or competitors;
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• |
economic and other external factors including (but not limited to) recessions, natural disasters, military actions, political instability, or social unrest; and
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• |
period to period fluctuations in our financial results.
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Location
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Type of
Interest
|
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Allen, Texas
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Owned
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Boise, Idaho
|
Owned
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Brookfield, Connecticut
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Owned
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Bridgend, Wales
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Leased
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Cheonan, Korea
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Owned
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Hefei, China
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Owned (1)
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Dresden, Germany
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Leased
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Hsinchu, Taiwan
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Owned (1)
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Hsinchu, Taiwan
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Leased
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Taichung, Taiwan
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Owned (1)
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Xiamen, China
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Owned (1)
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Total Number of
Shares Purchased
(in millions)
|
Average Price
Paid
Per share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Program (in millions)
|
Dollar Value of
Shares That May
Yet Be Purchased
(in millions)
|
|||||||||||||
August 2, 2021 – August 29, 2021
|
0.67
|
$
|
13.31
|
0.67
|
$
|
37.8
|
||||||||||
August 30, 2021 – September 26, 2021
|
0.02
|
$
|
13.51
|
0.02
|
$
|
37.6
|
||||||||||
September 27, 2021 – October 31, 2021
|
0.25
|
$
|
13.42
|
0.25
|
$
|
34.3
|
||||||||||
Total
|
0.94
|
0.94
|
Three Months Ended
|
||||||||||||
October 31,
2021
|
August 1,
2021
|
October 31,
2020
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
71.3
|
73.4
|
78.6
|
|||||||||
Gross profit
|
28.7
|
26.6
|
21.4
|
|||||||||
Selling, general and administrative expenses
|
7.9
|
8.8
|
8.6
|
|||||||||
Research and development expenses
|
2.3
|
3.1
|
2.8
|
|||||||||
Other operating income, net
|
-
|
2.1
|
-
|
|||||||||
Operating income
|
18.5
|
16.7
|
10.0
|
|||||||||
Non-operating income (expense), net
|
2.1
|
2.2
|
(1.9
|
)
|
||||||||
Income before income tax provision
|
20.6
|
18.9
|
8.1
|
|||||||||
Income tax provision
|
4.8
|
4.6
|
2.3
|
|||||||||
Net income
|
15.8
|
14.3
|
5.8
|
|||||||||
Net income attributable to noncontrolling interests
|
4.9
|
4.3
|
1.5
|
|||||||||
Net income attributable to Photronics, Inc. shareholders
|
10.9
|
%
|
10.0
|
%
|
4.3
|
%
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
74.8
|
77.9
|
78.1
|
|||||||||
Gross profit
|
25.2
|
22.1
|
21.9
|
|||||||||
Selling, general and administrative expenses
|
8.7
|
8.8
|
9.5
|
|||||||||
Research and development expenses
|
2.8
|
2.8
|
2.9
|
|||||||||
Other operating income, net
|
0.5
|
-
|
-
|
|||||||||
Operating income
|
14.2
|
10.5
|
9.5
|
|||||||||
Non-operating income (expense), net
|
1.1
|
(0.4
|
)
|
(0.3
|
)
|
|||||||
Income before income tax provision
|
15.4
|
10.1
|
9.2
|
|||||||||
Income tax provision
|
3.5
|
3.5
|
1.9
|
|||||||||
Net income
|
11.9
|
6.6
|
7.3
|
|||||||||
Net income attributable to noncontrolling interests
|
3.5
|
1.1
|
1.9
|
|||||||||
Net income attributable to Photronics, Inc. shareholders
|
8.4
|
%
|
5.5
|
%
|
5.4
|
%
|
Q4 FY21 from Q3 FY21
|
Q4 FY21 from Q4 FY20
|
|||||||||||||||||||
Revenue in
Q4 FY21
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
||||||||||||||||
IC
|
||||||||||||||||||||
High-end*
|
$
|
42.6
|
$
|
0.2
|
0.5
|
%
|
$
|
4.4
|
11.6
|
%
|
||||||||||
Mainstream
|
82.9
|
7.4
|
9.9
|
%
|
15.1
|
22.3
|
%
|
|||||||||||||
Total IC
|
$
|
125.4
|
$
|
7.7
|
6.5
|
%
|
$
|
19.5
|
18.4
|
%
|
||||||||||
FPD
|
||||||||||||||||||||
High-end*
|
$
|
41.0
|
$
|
0.3
|
0.8
|
%
|
$
|
9.7
|
30.9
|
%
|
||||||||||
Mainstream
|
14.9
|
2.6
|
21.5
|
%
|
2.8
|
23.2
|
%
|
|||||||||||||
Total FPD
|
$
|
55.8
|
$
|
3.0
|
5.6
|
%
|
$
|
12.5
|
28.8
|
%
|
||||||||||
Total Revenue
|
$
|
181.3
|
$
|
10.6
|
6.2
|
%
|
$
|
32.0
|
21.4
|
%
|
Q4 FY21 from Q3 FY21
|
Q4 FY21 from Q4 FY20
|
|||||||||||||||||||
Revenue in
Q4 FY21
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
||||||||||||||||
Taiwan
|
$
|
69.2
|
$
|
5.3
|
8.3
|
%
|
$
|
12.5
|
22.1
|
%
|
||||||||||
Korea
|
37.8
|
(1.8
|
)
|
(4.5
|
)%
|
1.2
|
3.4
|
%
|
||||||||||||
China
|
38.3
|
5.7
|
17.4
|
%
|
17.3
|
82.6
|
%
|
|||||||||||||
United States
|
26.6
|
1.9
|
7.6
|
%
|
(0.1
|
)
|
(0.4
|
)%
|
||||||||||||
Europe
|
9.0
|
(0.5
|
)
|
(4.9
|
)%
|
1.0
|
13.0
|
%
|
||||||||||||
Other
|
0.4
|
0.0
|
5.4
|
%
|
0.0
|
(4.6
|
)%
|
|||||||||||||
Total revenue
|
$
|
181.3
|
$
|
10.6
|
6.2
|
%
|
$
|
32.0
|
21.4
|
%
|
FY21 from FY20
|
||||||||||||
Revenue in FY21
|
Increase (Decrease)
|
Percent
Change
|
||||||||||
IC
|
||||||||||||
High-end*
|
$
|
163.0
|
$
|
6.8
|
4.4
|
%
|
||||||
Mainstream
|
297.2
|
34.9
|
13.3
|
%
|
||||||||
Total IC
|
$
|
460.2
|
$
|
41.8
|
10.0
|
%
|
||||||
FPD
|
||||||||||||
High-end*
|
$
|
155.7
|
$
|
16.1
|
11.5
|
%
|
||||||
Mainstream
|
47.9
|
(3.8
|
)
|
(7.4
|
)%
|
|||||||
Total FPD
|
$
|
203.6
|
$
|
12.3
|
6.4
|
%
|
||||||
Total Revenue
|
$
|
663.8
|
$
|
54.1
|
8.9
|
%
|
FY21 from FY20
|
||||||||||||
Revenue in
FY21
|
Increase
(Decrease)
|
Percent
Change
|
||||||||||
Taiwan
|
$
|
248.6
|
$
|
9.5
|
4.0
|
%
|
||||||
Korea
|
156.4
|
3.3
|
2.2
|
%
|
||||||||
China
|
115.7
|
36.4
|
45.8
|
%
|
||||||||
United States
|
105.0
|
0.1
|
0.1
|
%
|
||||||||
Europe
|
36.2
|
4.7
|
15.0
|
%
|
||||||||
Other
|
1.8
|
0.1
|
3.6
|
%
|
||||||||
Total Revenue
|
$
|
663.8
|
$
|
54.1
|
8.9
|
%
|
|
Percent Change
|
|||||||||||||||||||
|
Q4 FY21
|
|
Q3 FY21
|
|
Q4 FY20
|
|
Q4 FY21
from Q3
FY21
|
|
Q4 FY21
from Q4
FY20
|
|||||||||||
Gross profit
|
$
|
51.9
|
$
|
45.3
|
$
|
31.9
|
14.6
|
%
|
62.9
|
%
|
||||||||||
Gross margin
|
28.7
|
%
|
26.6
|
%
|
21.4
|
%
|
FY21 |
FY20
|
Percent Change
FY21 from FY20
|
||||||||||
Gross profit
|
$
|
167.0
|
$
|
134.7
|
24.1
|
%
|
||||||
Gross margin
|
25.2
|
%
|
22.1
|
%
|
|
Q4 FY21
|
|
Q3 FY21
|
|
Q4 FY20
|
|||||||
Foreign currency transactions impact, net
|
$
|
4.3
|
$
|
4.3
|
$
|
(2.2
|
)
|
|||||
Interest expense, net
|
(1.0
|
)
|
(1.1
|
)
|
(0.8
|
)
|
||||||
Interest income and other income, net
|
0.5
|
0.5
|
0.1
|
|||||||||
Total other income (expense)
|
$
|
3.8
|
$
|
3.7
|
$
|
(2.9
|
)
|
FY21
|
FY20
|
|||||||
Foreign currency transactions impact, net
|
$
|
8.0
|
$
|
(0.5
|
)
|
|||
Interest expense, net
|
(1.7
|
)
|
(2.4
|
)
|
||||
Interest income and other income, net
|
1.2
|
0.5
|
||||||
Total other income (expense)
|
$
|
7.5
|
$
|
(2.3
|
)
|
|
Q4 FY21
|
|
Q3 FY21
|
|
Q4 FY20
|
|||||||
Income tax provision
|
$
|
8.7
|
$
|
7.8
|
$
|
3.5
|
||||||
Effective income tax rate
|
23.3
|
%
|
24.4
|
%
|
28.8
|
%
|
|
FY21
|
|
FY20 | |||||
Income tax provision
|
$
|
23.2
|
$
|
21.3
|
||||
Effective income tax rate
|
22.7
|
%
|
34.5
|
%
|
|
Year Ended
|
|||||||||||
|
October 31,
2021
|
|
October 31,
2020
|
|
October 31,
2019
|
|||||||
Net cash provided by operating activities
|
$
|
150.8
|
$
|
143.0
|
$
|
68.4
|
||||||
Net cash used in investing activities
|
$
|
(103.5
|
)
|
$
|
(65.7
|
)
|
$
|
(151.4
|
)
|
|||
Net cash used in financing activities
|
$
|
(53.9
|
)
|
$
|
(16.0
|
)
|
$
|
(42.1
|
)
|
• |
Revenue Recognition: Application of GAAP related to the measurement and recognition of revenue requires us to
make judgments and estimates. Specifically, the determination of whether revenues related to our revenue contracts should be recognized over time or at a point in time, as these determinations impact
the timing and amount of our reported revenues and net income. Other significant judgments include the estimation of the point in the manufacturing process at which we are entitled to receive
payment, as well as the progress of the job order to completion in order to determine the amount of arrangement consideration earned for contractual revenue recognized over time.
|
• |
Property, Plant and Equipment: Significant judgment and assumptions are employed when we establish estimated useful lives, depreciation periods and
when depreciation should begin on such assets as this evaluation can significantly impact our gross margin and research and development expenses. Significant judgement is also required when we periodically review property, plant and
equipment for any potential impairment in carrying values, whenever events such as a significant industry downturn, plant closures, technological obsolescence, or other change in circumstances indicate that their carrying amounts may
not be recoverable as the recoverability assessment requires us to forecast future cash flows related to these assets; this evaluation can significantly impact our gross margin and operating expense.
|
• |
Leases: Significant judgement is applied in the determination of whether an arrangement is, or contains, a lease and, in certain instances, whether the
lease should be classified as an operating lease or a finance lease, which can impact the timing and classification of lease costs.
|
• |
Contingencies: We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability
and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. In accounting for the
resolution of contingencies, significant judgment may be necessary to estimate amounts pertaining to periods prior to the resolution that are charged to operations in the period of resolution and amounts related to future periods.
|
• |
Income Taxes: Our annual tax rate is determined based on our income and the jurisdictions where it is earned, statutory tax rates, and the tax impacts
of items treated differently for tax purposes than for financial reporting purposes. Also inherent in determining our annual tax rate are judgments and assumptions regarding the recoverability of certain deferred tax balances, and our
ability to uphold certain tax positions. We are subject to complex tax laws, in the U.S. and numerous foreign jurisdictions, and the manner in which they apply can be open to interpretation. Realization of deferred tax assets is
dependent upon generating sufficient taxable income in the appropriate jurisdiction in future periods, which involves business plans, planning opportunities, and expectations about future outcomes. Our assessment relies on estimates and
assumptions, and may involve a series of complex judgments about future events.
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
Page
|
|
|
37
|
|
|
|
39 |
|
|
|
40
|
|
|
|
41
|
|
|
|
42
|
|
|
|
43
|
|
|
|
44
|
October 31,
2021
|
October 31,
2020
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, net of allowance of $
|
|
|
||||||
Inventories
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property, plant and equipment, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Short-term debt
|
$
|
|
$
|
|
||||
Current portion of long-term debt
|
|
|
||||||
Accounts payable
|
|
|
||||||
Accrued liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term debt
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
|
|
||||||
Equity:
|
||||||||
Preferred stock, $
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive income
|
|
|
||||||
Total Photronics, Inc. shareholders' equity
|
|
|
||||||
Noncontrolling interests
|
|
|
||||||
Total equity
|
|
|
||||||
Total liabilities and equity
|
$
|
|
$
|
|
||||
See accompanying notes to consolidated financial statements.
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Revenue
|
$
|
|
$
|
|
$
|
|
||||||
Cost of goods sold
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Operating expenses:
|
||||||||||||
Selling, general and administrative
|
|
|
|
|||||||||
Research and development
|
|
|
|
|||||||||
Total operating expenses
|
|
|
|
|||||||||
Other operating income, net
|
||||||||||||
Operating income
|
|
|
|
|||||||||
Non-operating income (expense):
|
||||||||||||
Foreign currency transactions’ impacts, net
|
|
(
|
)
|
(
|
)
|
|||||||
Interest expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Interest income and other income, net
|
|
|
|
|||||||||
Income before income tax provision
|
|
|
|
|||||||||
Income tax provision
|
|
|
|
|||||||||
Net income
|
|
|
|
|||||||||
Net income attributable to noncontrolling interests
|
|
|
|
|||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
|
$
|
|
$
|
|
||||||
Earnings per share:
|
||||||||||||
Basic
|
$
|
|
$
|
|
$
|
|
||||||
Diluted
|
$
|
|
$
|
|
$
|
|
||||||
Weighted-average number of common shares outstanding:
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Other comprehensive income (loss), net of tax of $
|
||||||||||||
Foreign currency translation adjustments
|
|
|
(
|
)
|
||||||||
Other
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net other comprehensive income (loss)
|
|
|
(
|
)
|
||||||||
Comprehensive income
|
|
|
|
|||||||||
Less: comprehensive income attributable to noncontrolling interests
|
|
|
|
|||||||||
Comprehensive income attributable to Photronics, Inc. shareholders
|
$
|
|
$
|
|
$
|
|
Photronics, Inc. Shareholders
|
||||||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-In
|
Retained
|
Treasury
|
Accumulated
Other
Comprehensive
|
Non-
Controlling
|
Total
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income (Loss)
|
Interests
|
Equity
|
|||||||||||||||||||||||||
Balance at October 31, 2019
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||
Adoption of ASU 2014-09
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Adoption of ASU 2016-16
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive (loss) income
|
-
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Contribution from noncontrolling interest
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Dividends to noncontrolling interest
|
-
|
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Repurchase of common stock of subsidiary
|
-
|
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Purchases of treasury stock
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Retirement of treasury stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||
Balance at October 31, 2019
|
|
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Contribution from noncontrolling interest
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Dividends to noncontrolling interest
|
-
|
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Repurchase of common stock of subsidiary
|
-
|
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Purchases of treasury stock
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Retirement of treasury stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||
Balance at October 31, 2020
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net income | - | |||||||||||||||||||||||||||||||
Other comprehensive income | - | |||||||||||||||||||||||||||||||
Shares issued under equity plans | ||||||||||||||||||||||||||||||||
Share-based compensation expense
|
- | |||||||||||||||||||||||||||||||
Dividends to noncontrolling interest | - | ( |
) | ( |
) | |||||||||||||||||||||||||||
Purchases of treasury stock
|
( |
) | ( |
) | ||||||||||||||||||||||||||||
Retirement of treasury stock
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Balance at October 31, 2021
|
$ | $ | $ | $ | $ | $ | $ |
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization of property, plant and equipment
|
|
|
|
|||||||||
Amortization of intangible assets
|
|
|
|
|||||||||
Share-based compensation
|
|
|
|
|||||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Changes in assets, liabilities, and other:
|
||||||||||||
Accounts receivable
|
(
|
)
|
|
(
|
)
|
|||||||
Inventories
|
|
(
|
)
|
(
|
)
|
|||||||
Other current assets
|
(
|
)
|
|
(
|
)
|
|||||||
Accounts payable, accrued liabilities and other
|
|
(
|
)
|
(
|
)
|
|||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property, plant and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Government incentives
|
|
|
|
|||||||||
Purchases of intangible assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other
|
|
|
|
|||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from debt
|
|
|
|
|||||||||
Purchases of treasury stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Repayments of debt
|
( |
) | ( |
) | ( |
) | ||||||
Dividends paid to noncontrolling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from share-based arrangements
|
|
|
|
|||||||||
Contributions from noncontrolling interests
|
||||||||||||
Other
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
|
|
|||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(
|
)
|
|
(
|
)
|
|||||||
Cash, cash equivalents, and restricted cash at beginning of year
|
|
|
|
|||||||||
Cash, cash equivalents, and restricted cash at end of year
|
|
|
|
|
|
|
||||||
Less: Ending restricted cash
|
||||||||||||
Cash and cash equivalents at end of year
|
$ |
$ | $ | |||||||||
Supplemental disclosure of non-cash information:
|
||||||||||||
Accrual for property, plant and equipment purchased during year
|
$
|
|
$
|
|
$
|
|
October 31,
2021
|
October 31,
2020
|
|||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|||||||
Finished goods
|
||||||||
$
|
|
$
|
|
October 31,
2021
|
October 31,
2020
|
|||||||
|
||||||||
Recoverable value added taxes
|
$
|
|
$
|
|
||||
Contract assets
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Prepaid and refundable income taxes
|
|
|
||||||
Other
|
|
|
||||||
$
|
|
$
|
|
October 31,
2021
|
October 31,
2020
|
|||||||
Land
|
$
|
|
$
|
|
||||
Buildings and improvements
|
|
|
||||||
Machinery and equipment
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Furniture, fixtures and office equipment
|
|
|
||||||
Construction in progress
|
|
|
||||||
|
|
|||||||
Accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
October 31,
2021
|
October 31,
2020
|
|||||||
Machinery and equipment
|
$
|
|
$
|
|
||||
Accumulated amortization
|
(
|
)
|
|
|||||
$
|
|
$
|
|
October 31, 2021
|
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|||||||||
Customer relationships
|
$ |
|
$ |
(
|
)
|
$ |
|
|||||
Software and other
|
|
(
|
)
|
|
||||||||
$
|
|
$
|
(
|
)
|
$
|
|
||||||
October 31,
2020
|
||||||||||||
Technology license agreement
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Customer relationships
|
|
(
|
)
|
|
||||||||
Software and other
|
|
(
|
)
|
|
||||||||
$
|
|
$
|
(
|
)
|
$
|
|
Fiscal Year
|
||||
2022
|
$
|
|
||
2023
|
$
|
|
||
2024
|
$
|
|
||
2025
|
$
|
|
||
2026
|
$
|
|
||
Thereafter
|
$
|
|
October 31, 2021
|
October 31, 2020
|
|||||||||||||||
Classification
|
Carrying
Amount
|
Photronics
Interest
|
Carrying
Amount
|
Photronics
Interest
|
||||||||||||
Current assets
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Noncurrent assets
|
|
|
|
|
||||||||||||
Total assets
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
||||||||||||
Noncurrent liabilities
|
|
|
|
|
||||||||||||
Total liabilities
|
|
|
|
|
||||||||||||
Net assets
|
$
|
|
$
|
|
$
|
|
$
|
|
October 31,
2021
|
October 31,
2020
|
|||||||
Compensation related expenses
|
$
|
|
$
|
|
||||
Income taxes
|
|
|
||||||
Contract liabilities
|
|
|
||||||
Property, plant, and equipment
|
|
|
||||||
Value added and other taxes
|
|
|
||||||
Operating leases
|
|
|
||||||
Contract manufacturing
|
|
|
||||||
Telecommunications and utilities
|
|
|
||||||
Professional fees
|
|
|
||||||
Inventory
|
|
|
||||||
Other
|
|
|
||||||
Accrued liabilities
|
$
|
|
$
|
|
As of October 31, 2021
|
Xiamen
Project Loans
|
Xiamen
Working
Capital Loans
|
Hefei
Equipment Loan
|
Finance Leases
|
Total
|
|||||||||||||||
Principal due:
|
||||||||||||||||||||
Next 12 months
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Months 13 – 24
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Months 25 – 36
|
|
|
|
|
|
|||||||||||||||
Months 37 – 48
|
|
|
|
|
|
|||||||||||||||
Months 49 – 60
|
|
|
|
|
|
|||||||||||||||
Long-term debt
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Interest rate at balance sheet date
|
|
%
|
|
%
|
|
%
|
(3)
|
|||||||||||||
Basis spread on interest rates
|
|
|
(
|
)
|
N/A
|
|||||||||||||||
Interest rate reset
|
Quarterly
|
Monthly/Annually
|
Annually
|
N/A
|
||||||||||||||||
Maturity date
|
|
|
|
|
||||||||||||||||
Periodic payment amount
|
|
|
|
|
||||||||||||||||
Periodic payment frequency
|
|
|
|
|
||||||||||||||||
Loan collateral (carrying amount)
|
$
|
|
N/A
|
$
|
|
$
|
|
(4)
|
As of October 31, 2020
|
Xiamen
Project Loans
|
Xiamen Working Capital Loans
|
Total
|
|||||||||
Principal due:
|
||||||||||||
Next 12 months
|
$
|
|
$
|
|
$
|
|
||||||
Months 13 – 24
|
$
|
|
$
|
|
$
|
|
||||||
Months 25 – 36
|
|
|
|
|||||||||
Months 37 – 48
|
|
|
|
|||||||||
Months 49 – 60
|
|
|
|
|||||||||
Thereafter
|
|
|
|
|||||||||
Long-term debt
|
$
|
|
$
|
|
$
|
|
||||||
Interest rate at balance sheet date
|
|
%
|
|
%
|
||||||||
Basis spread on interest rates
|
|
|
||||||||||
Loan collateral (carrying amount)
|
$
|
|
N/A
|
Year Ended
|
||||||||||||
Revenue by Product Type
|
October 31, 2021
|
October 31, 2020
|
October 31, 2019
|
|||||||||
IC
|
||||||||||||
High-end
|
$
|
|
$
|
|
$ | |||||||
Mainstream
|
|
|
||||||||||
Total IC
|
$
|
|
$
|
|
$ | |||||||
FPD
|
||||||||||||
High-end
|
$
|
|
$
|
|
$ | |||||||
Mainstream
|
|
|
||||||||||
Total FPD
|
$
|
|
$
|
|
||||||||
$
|
|
$
|
|
$ |
Revenue by Geographic Origin*
|
||||||||||||
Taiwan
|
$
|
|
$
|
|
$ | |||||||
Korea
|
|
|
||||||||||
China
|
|
|
||||||||||
United States
|
|
|
||||||||||
Europe
|
|
|
||||||||||
Other
|
|
|
||||||||||
$
|
|
$
|
|
$ |
Revenue by Timing of Recognition
|
||||||||||||
Over time
|
$
|
|
$
|
|
$ | |||||||
At a point in time
|
|
|
||||||||||
|
$
|
|
$
|
|
$ |
|
- |
Election not to recognize short-term leases on the balance sheet.
|
- |
Practical expedient to not separate lease and non-lease components in a contract.
|
- |
Practical expedient “package” for transitioning to the new guidance:
|
- |
Not reassessing whether any expired or existing contracts are, or contain, leases.
|
- |
Not reassessing lease classification for any existing or expired leases.
|
- |
Not reassessing initial direct costs for any existing leases.
|
Classification
|
October 31,
2021
|
October 31,
2020
|
||||||
ROU Assets – Operating Leases
|
||||||||
|
$
|
|
$
|
|
||||
ROU Assets – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
Lease Liabilities – Operating Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
|||||
Lease Liabilities – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
Fiscal Year
|
Operating Leases
|
Finance Leases
|
||||||
2022
|
$
|
|
$
|
|
||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
Thereafter
|
|
|
||||||
Total lease payments
|
|
|
||||||
Imputed interest
|
|
|
||||||
Lease liabilities
|
$
|
|
$
|
|
Year Ended
|
||||||||
October 31,
2021
|
October 31,
2020
|
|||||||
Operating lease costs
|
$
|
|
$
|
|
||||
Short-term lease costs
|
$
|
|
$
|
|
||||
Variable lease costs
|
$
|
|
$
|
|
||||
Interest on lease liabilities
|
$
|
|
$
|
|
||||
Amortization of ROU assets
|
$
|
|
$
|
|
October 31, 2021
|
October 31, 2020
|
|||||||||||||||
Classification
|
Weighted-average
remaining lease
term (in years)
|
Weighted-average
discount rate
|
Weighted-average
remaining lease
term (in years)
|
Weighted-average
discount rate
|
||||||||||||
Operating leases
|
|
|
%
|
|
|
%
|
||||||||||
Finance leases
|
|
|
%
|
-
|
|
Year Ended
|
||||||||
October 31,
2021
|
October 31,
2020
|
|||||||
Operating cash flows used for operating leases
|
$
|
|
$
|
|
||||
Operating cash flows used for finance leases
|
$
|
|
$
|
|
||||
Financing cash flows used for finance leases
|
$
|
|
$
|
|
||||
ROU assets obtained in exchange for operating lease obligations
|
$
|
|
$
|
|
||||
ROU assets obtained in exchange for finance lease obligations
|
$
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Expense reported in:
|
||||||||||||
Cost of goods sold
|
$
|
|
$
|
|
$
|
|
||||||
Selling, general and administrative
|
|
|
|
|||||||||
Research and development
|
|
|
|
|||||||||
Total expense incurred
|
$
|
|
$
|
|
$
|
|
||||||
Income tax benefits of share-based compensation (in millions)
|
$
|
|
$
|
|
$
|
|
||||||
Share-based compensation cost capitalized
|
$
|
|
$
|
|
$
|
|
October 31, 2021
|
||||||||
Restricted
Stock Awards
|
Stock Options
|
|||||||
Compensation cost not yet recognized
|
$
|
|
$
|
|
||||
Weighted-average amortization period (in years)
|
|
|
Restricted Stock
|
Shares
|
Weighted-Average
Fair Value at
Grant Date
|
||||||
Outstanding at October 31, 2020
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Cancelled
|
(
|
)
|
$
|
|
||||
Outstanding at October 31, 2021
|
|
$
|
|
|||||
Expected to vest as of October 31,
2021
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Number of shares granted
|
|
|
|
|||||||||
Weighted-average grant-date fair value of awards (in dollars per share)
|
$
|
|
$
|
|
$
|
|
||||||
Fair value of awards for which restrictions lapsed
|
$
|
|
$
|
|
$
|
|
Year Ended
|
||||
October 31,
2019
|
||||
Expected volatility
|
|
%
|
||
Risk-free rate of return
|
|
%
|
||
Dividend yield
|
|
%
|
||
Expected term
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining
Contractual Life
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding at October 31, 2020
|
|
$
|
|
||||||||||
Granted
|
|
|
|||||||||||
Exercised
|
(
|
)
|
$
|
|
|||||||||
Cancelled and forfeited
|
(
|
)
|
$
|
|
|||||||||
Outstanding at October 31, 2021
|
|
$
|
|
|
$
|
|
|||||||
Exercisable at October 31, 2021
|
|
$
|
|
|
$
|
|
|||||||
Expected to vest as of October 31, 2021
|
|
$
|
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Total intrinsic value of options exercised
|
$
|
|
$
|
|
$
|
|
||||||
Cash received from option exercises
|
$
|
|
$
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
United States
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Foreign
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
State
|
|
|
|
|||||||||
Foreign
|
|
|
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
|
|
|
|||||||||
State
|
|
|
|
|||||||||
Foreign
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
( |
) | ( |
) | ( |
) | |||||||
Total
|
$
|
|
$
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
U.S. federal income tax at statutory rate
|
$
|
|
$
|
|
$
|
|
||||||
Changes in valuation allowances
|
|
|
|
|||||||||
Foreign tax rate differentials
|
|
|
|
|||||||||
Tax credits
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Uncertain tax positions, including reserves, settlements and resolutions
|
|
|
|
|||||||||
Income tax holiday
|
|
(
|
)
|
(
|
)
|
|||||||
Other, net
|
|
(
|
)
|
|
||||||||
$
|
|
$
|
|
$
|
|
|||||||
Effective tax rate
|
|
%
|
|
%
|
|
%
|
As of
|
||||||||
October 31,
2021
|
October 31,
2020
|
|||||||
Deferred
income tax assets:
|
||||||||
Net operating losses
|
$
|
|
$
|
|
||||
Reserves not currently deductible
|
|
|
||||||
Tax credit carryforwards
|
|
|
||||||
Share-based compensation
|
|
|
||||||
Property, plant and equipment
|
|
|
||||||
Lease liabilities
|
||||||||
Other
|
|
|
||||||
|
|
|||||||
Valuation allowances
|
(
|
)
|
(
|
)
|
||||
|
|
|||||||
Deferred income tax liabilities:
|
||||||||
ROU assets
|
(
|
)
|
|
|||||
(
|
)
|
|
||||||
Net deferred income tax assets
|
$
|
|
$
|
|
||||
Classification
|
||||||||
Deferred income tax assets
|
$
|
|
$
|
|
||||
Other liabilities
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
Operating Loss Carryforwards
|
Amount
|
Expiration
Period
|
||||||
Federal
|
$
|
|
-Indefinite |
|||||
State
|
|
-Indefinite |
||||||
Foreign
|
|
- |
Tax Credit Carryforwards
|
Amount
|
Expiration
Period
|
||||||
Federal research and development
|
$
|
|
- |
|||||
State
|
$ |
|
- |
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Balance at beginning of year before interest and penalties
|
$
|
|
$
|
|
$
|
|
||||||
Additions (reductions) for tax positions in prior years
|
|
|
(
|
)
|
||||||||
Additions based on current year tax positions
|
|
|
|
|||||||||
Settlements
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Lapses of statutes of limitations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance at end of year before interest and penalties
|
|
|
|
|
|
|
||||||
Interest and penalties
|
||||||||||||
Balance at end of year including interest and penalties
|
$ | $ | $ |
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
|
$
|
|
$
|
|
||||||
Effect of dilutive securities:
|
||||||||||||
Interest expense on convertible notes, net of tax
|
|
|
|
|||||||||
Earnings used for diluted earnings per share
|
$
|
|
$
|
|
$
|
|
||||||
Weighted-average common shares computations:
|
||||||||||||
Weighted-average common shares used for basic earnings per share
|
|
|
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Share-based payment awards
|
|
|
|
|||||||||
Convertible notes
|
|
|
|
|||||||||
Potentially dilutive common shares
|
|
|
|
|||||||||
Weighted-average common shares used for diluted earnings per share
|
|
|
|
|||||||||
Basic earnings per share
|
$
|
|
$
|
|
$
|
|
||||||
Diluted earnings per share
|
$
|
|
$
|
|
$
|
|
Year Ended
|
||||||||||||
October 31,
2021
|
October 31,
2020
|
October 31,
2019
|
||||||||||
Share based payment awards
|
|
|
|
|||||||||
Total potentially dilutive shares excluded
|
|
|
|
Fiscal Year
|
Unrecognized Commitments
|
|||
2022
|
$
|
|
||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
Thereafter
|
|
|||
Total
|
$
|
|
Year Ended October 31, 2021
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive income (loss)
|
|
(
|
)
|
|
||||||||
Less: other comprehensive income (loss) attributable to noncontrolling interests
|
|
(
|
)
|
|
||||||||
Balance at October 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
Year Ended October 31, 2020
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2019
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Other comprehensive loss
|
|
(
|
)
|
|
||||||||
Less: other comprehensive income (loss) attributable to noncontrolling interests
|
|
(
|
)
|
|
||||||||
Balance at October 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
October 31, 2021
|
October 31, 2020
|
|||||||||||||||
Property, Plant
and Equipment
|
Net Assets
|
Property, Plant
and Equipment
|
Net Assets
|
|||||||||||||
China
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Taiwan
|
|
|
|
|
||||||||||||
United States
|
|
|
|
|
||||||||||||
Korea
|
|
|
|
|
||||||||||||
Europe and Other
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
2021
Purchases
|
2020
Purchases
|
2019
Purchases
|
||||||||||
Number of shares repurchased
|
|
|
|
|||||||||
Cost of shares repurchased
|
$
|
|
$
|
|
$
|
|
||||||
Average price paid per share
|
$
|
|
$
|
|
$
|
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Page
No.
|
||
|
||
1.
|
36
|
|
2.
|
Financial Statement Schedules
|
|
All schedules are omitted because they are immaterial or not applicable.
|
||
3.
|
73 |
|
|
|
|
Incorporated by Reference
|
|
Filed or
Furnished
Herewith
|
||||
Exhibit
Number
|
|
Description
|
|
Form
|
|
Exhibit
|
|
Filing
Date
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of Incorporation as amended July 9, 1986, April 9, 1990, March 16, 1995, November 13, 1997, April 15, 2002 and June 20, 2005
|
|
10-K
|
3.1
|
12/23/2019
|
|||||
|
|
|
|
|||||||
|
Amended and Restated By-laws of the Company dated as of September 7, 2016
|
|
8-K
|
3.2
|
9/13/2016
|
|||||
|
|
|
|
|||||||
|
Description of Securities of the Company
|
|
10-K
|
4.1
|
12/20/2019
|
|||||
|
|
|
|
|||||||
|
Certificate of Amendment with Respect to Series A Preferred Stock, dated September 24, 2019
|
|
8-K
|
3.1
|
9/24/2019
|
|||||
|
|
|
|
|||||||
|
The Company’s 1992 Employee Stock Purchase Plan
|
|
10-K
|
10.1
|
12/20/2017
|
|||||
|
|
|
|
|||||||
|
Amendment to the Employee Stock Purchase Plan as of March 24, 2004+
|
|
10-K
|
10.2
|
1/6/2017
|
|||||
|
|
|
|
|||||||
|
Amendment to the Employee Stock Purchase Plan as of April 8, 2010+
|
|
10-K
|
10.4
|
1/7/2016
|
|
Amendment to the Employee Stock Purchase Plan as of March 28, 2012+
|
|
10-K
|
10.4
|
12/21/2018
|
|||||
|
|
|
|
|||||||
|
Amendment to the Employee Stock Plan as of December 18, 2019*
|
|
10-K
|
10.5
|
12/23/2019
|
|||||
|
|
|
|
|
|
|||||
|
2016 Equity Incentive Compensation Plan+
|
|
DEF 14A
|
2/29/2016
|
|
|
||||
|
|
|
|
|
|
|||||
|
The Company’s 2007 Long-Term Equity Incentive Plan+
|
|
DEF 14A
|
2/23/2007
|
|
|
Amendment to the 2007 Long-Term Equity Incentive Plan as of April 8, 2010+
|
|
10-K
|
10.7 |
1/7/2016 | |||||
|
|
|
|
|||||||
|
Amendment to the 2007 Long Term Equity Incentive Plan as of April 11, 2014+
|
|
10-K
|
10.7 | 12/23/2019 | |||||
|
|
|
|
|||||||
|
2011 Executive Incentive Compensation Plan effective as of November 1, 2010+
|
|
10-K
|
10.9 | 1/6/2015 | |||||
|
|
|
|
|||||||
|
Joint Venture Framework Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co., Ltd.#
|
|
10-K/A
|
10.19
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
Joint Venture Operating Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co., Ltd.#
|
|
10-K/A
|
10.20
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
Outsourcing Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation#
|
|
10-K/A
|
10.21
|
7/8/2015
|
|
License Agreement dated November 20, 2013, between the Company and Photronics Semiconductor Mask Corporation#
|
|
10-K/A
|
10.22
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
License Agreement dated November 20, 2013, between Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation#
|
|
10-K/A
|
10.23
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
Margin Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation#
|
|
10-K/A
|
10.24
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
Merger Agreement dated November 20, 2013, between Photronics Semiconductor Mask Corporation and DNP Photomask Technology Taiwan Co., Ltd.#
|
|
10-K/A
|
10.25
|
7/8/2015
|
|||||
|
|
|
|
|||||||
|
Executive Employment Agreement between the Company and Christopher J. Progler, Vice President, Chief Technology Officer dated September 10, 2007+
|
|
10-K
|
10.18
|
12/23/2019
|
|||||
|
|
|
|
|||||||
|
Executive Employment Agreement between the Company and Peter S. Kirlin dated May 4, 2015+
|
|
10-Q
|
10.28
|
9/9/2015
|
|||||
|
|
|
|
|||||||
|
Executive Employment Agreement between the Company and Richelle E. Burr dated May 21, 2010+
|
|
10-K
|
10.30
|
1/7/2016
|
|||||
|
|
|
|
|||||||
|
Executive Employment Agreement between the Company and John P. Jordan dated September 5, 2017+
|
|
10-K
|
10.31
|
12/20/2017
|
|||||
|
Employment Agreement dated March 9, 2020, between Photronics Dai Nippon Mask Corporation and Frank Lee
|
|
10-Q
|
10.36
|
3/11/2020
|
|||||
|
Consulting Agreement between the Company and DEMA Associates, LLC dated January 20, 2018
|
|
10-Q
|
10.37
|
3/11/2020
|
|||||
Amendment dated March 9, 2020, between DEMA Associates, LLC and the Company
|
10-Q
|
10.37
|
3/11/2020
|
|||||||
|
Form of Amendment to Executive Employment Agreement dated March 16, 2012+
|
|
10-K
|
|
10.23
|
12/23/2019
|
||||
|
|
|
|
|
|
|
|
|||
|
Fourth Amended and Restated Credit Agreement dated as of September 27, 2018, among Photronics, Inc. the Foreign Subsidiary Borrower Party Thereto, the Lender Party Thereto, JPMorgan Chase Bank, N.A. as
Administrative and Collateral Agent and Bank of America, N.A. as syndication agent
|
|
10-K
|
10.24
|
12/21/2018
|
|||||
|
|
|
|
|||||||
|
Third Amended and Restated Security Agreement entered into as of September 27, 2018, by and among Photronics, Inc., the subsidiaries of the Company and JPMorgan Chase Bank N.A
|
|
10-K
|
10.25
|
12/21/2018
|
|||||
|
|
|
|
|||||||
|
Fixed Asset Loan Agreement between Photronics DNP Mask Corporation Xiamen and Industrial and Commercial Bank China Limited Xiamen Xiang’an Branch
|
|
10-K
|
10.26
|
12/21/2018
|
|||||
|
|
|
|
|||||||
|
Working Capital Loan Agreement between Industrial and Commercial Bureau China Limited Xiamen Xiang’an Branch and Photronics DNP Mask Corporation Xiamen effective as of November 7, 2018
|
|
10-K
|
10.27
|
12/21/2018
|
|||||
|
|
|
|
|||||||
|
Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee and Photronics Singapore Pte. Ltd.
|
|
10-Q
|
10.35
|
9/2/2016
|
|
Amendment No. 1 to the Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee and Photronics Singapore Pte, Ltd. #
|
|
10-Q
|
10.29
|
12/23/2019
|
|
||||
|
|
|
|
|
|
|||||
|
Contribution Agreement dated May 16, 2017 among Dai Nippon Printing Co., Ltd. (“DNP), DNP Asia Pacific Pte. Ltd. (“DNP Asia Pacific”), Photronics, Inc. (“Photronics”), Photronics Singapore Pte. Ltd.,
(“Photronics Singapore”), and Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”)#
|
|
10-Q/A
|
10.26
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Joint Venture Operating Agreement dated May 16, 2017, among Photronics, Photronics Singapore, DNP, and DNP Asia Pacific#
|
|
10-Q/A
|
10.27
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Outsourcing Agreement dated May 16, 2017, among Photronics, DNP, Photronics DNP Photomask Corporation (“PDMC”) and PDMCX#
|
|
10-Q/A
|
10.28
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amended and Restated License Agreement dated May 16, 2017 between DNP and PDMC#
|
|
10-Q/A
|
10.29
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Investment Cooperation Agreement between Hefei State Hi-tech Industry Development Zone and Photronics UK, Ltd.
|
|
10-K
|
10.42
|
12/20/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Section 382 Rights Agreement, dated September 23, 2019, between Photronics, Inc. and Computershare Trust Company, N.A. as rights agent
|
|
8-K
|
4.1
|
9/24/2019
|
|
|
|||
|
|
|
|
|
|
|||||
Master Lease Agreement dated October 12, 2020, between TD Equipment Finance and the Company
|
10-K
|
10.38
|
1/15/2021
|
|||||||
Fixed Asset Loan Contract dated October 1, 2020, Hefei Photronics Mask Corporation and China Construction Bank Corporation
|
10-K
|
10.39
|
1/15/2021
|
|||||||
Maximum Mortgage Contract dated October 1, 2020 between Photronics Mask Corporation Hefei and China Construction Bank Corporation Hefei Shusshan Branch
|
10-K
|
10.40
|
1/15/2021
|
|||||||
|
List of Subsidiaries of the Company
|
|
10-K
|
21
|
12/17/2021
|
|
||||
|
|
|
|
|
||||||
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
|
|
10-K
|
23.1
|
12/17/2021
|
|
||||
|
|
|
|
|
||||||
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
10-K
|
31.1
|
12/17/2021
|
|
||||
|
|
|
|
|
||||||
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
10-K
|
32.2
|
12/17/2021
|
|
||||
|
|
|
|
|
||||||
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
10-K
|
32.1
|
12/17/2021
|
|
||||
|
|
|
|
|
||||||
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
10-K
|
32.2
|
12/17/2021
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
10-K
|
101.INS
|
|||||||
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
10-K
|
101.SCH
|
|||||||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
10-K
|
101.CAL
|
|||||||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
10-K
|
101.DEF
|
|||||||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
10-K
|
101.LAB
|
|||||||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
10-K
|
101.PRE
|
|||||||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
|
X |
+
|
Represents a management contract or compensatory plan or arrangement.
|
#
|
Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.
|
PHOTRONICS, INC.
|
|||
(Registrant)
|
|||
By
|
/s/ John P. Jordan |
By
|
/s/ Eric Rivera |
John P. Jordan
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
Eric Rivera
Vice President, Corporate Controller
(Principal Accounting Officer)
|
||
December 17, 2021
|
December 17, 2021
|
By
|
/s/ Peter S. Kirlin | ||
Peter S. Kirlin
Chief Executive Officer
Director
(Principal Executive Officer)
|
December 17, 2021
|
||
By
|
/s/ John P. Jordan | ||
John P. Jordan
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
December 17, 2021
|
||
By
|
/s/ Eric Rivera | ||
Eric Rivera
Vice President, Corporate Controller
(Principal Accounting Officer)
|
December 17, 2021
|
||
By
|
/s/ Constantine S. Macricostas | ||
Constantine S. Macricostas
Chairman of the Board
|
December 17, 2021
|
||
By
|
/s/ Walter M. Fiederowicz | ||
Walter M. Fiederowicz
Director
|
December 17, 2021
|
||
By
|
/s/ Daniel Liao | ||
Daniel Liao
Director
|
December 17, 2021
|
||
By
|
/s/ George Macricostas | ||
George Macricostas
Director
|
December 17, 2021
|
||
By
|
/s/ Mary Paladino | ||
Mary Paladino
Director
|
December 17, 2021
|
||
By
|
/s/ Mitchell G. Tyson | ||
Mitchell G. Tyson
Director
|
December 17, 2021
|
State or Jurisdiction of
Incorporation or
Organization
|
|
Align-Rite International, Ltd.
|
(United Kingdom)
|
Photronics (Wales) Limited
|
(United Kingdom)
|
Photronics California, Inc.
|
(California, USA)
|
Photronics Idaho, Inc.
|
(Idaho, USA)
|
Photronics Texas Allen, Inc.
|
(Texas, USA)
|
Photronics MZD, GmbH
|
(Germany)
|
Photronics Advanced Mask Corporation
|
(Taiwan, R.O.C.)
|
Photronics DNP Mask Corporation (1)
|
(Taiwan, R.O.C.)
|
PDMC Shanghai, Ltd.
|
(Shanghai, P.R.C.)
|
Photronics Singapore Pte, Ltd.
|
(Singapore)
|
Xiamen American Japan Photronics Mask Co., Ltd. (1)
|
(Xiamen, P.R.C.)
|
Photronics UK, Ltd.
|
(United Kingdom)
|
Photronics Mask Corporation Hefei (2)
|
(Hefei, P.R.C.)
|
Photronics Cheonan Co., Ltd.
|
(Republic of Korea)
|
Photronics Mask Corporation Hefei (2)
|
(Hefei, P.R.C.)
|
PKLT Co., Ltd.
|
(Taiwan, R.O.C.)
|
(1) |
50.01% owned by Photronics, Inc. and 49.99% owned by Dai Nippon Printing Co., Ltd.
|
(2) |
64.00% owned by Photronics UK, Ltd. and 36.00% owned by Photronics Cheonan Co., Ltd.
|
1. |
I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this annual report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ PETER S. KIRLIN
|
|
Peter S. Kirlin
|
|
Chief Executive Officer
|
|
December 17, 2021
|
1. |
I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this annual report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JOHN P. JORDAN
|
|
John P. Jordan
|
|
Chief Financial Officer
|
|
December 17, 2021 |
1. |
the Annual Report on Form 10-K of the Company for the year ended October 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ PETER S. KIRLIN
|
|
Peter S. Kirlin | |
Chief Executive Officer | |
December 17, 2021 |
1. |
the Annual Report on Form 10-K of the Company for the year ended October 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JOHN P. JORDAN
|
|
John P. Jordan | |
Chief Financial Officer | |
December 17, 2021 |
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