QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code
|
(
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
PREFERRED STOCK PURCHASE RIGHTS
|
N/A
|
N/A
|
|
☒
|
Accelerated Filer
|
☐
|
Non-Accelerated Filer
|
☐
|
Smaller Reporting Company
|
|
Emerging growth company
|
|
3
|
||
4 |
||
PART I.
|
FINANCIAL INFORMATION
|
|
|
||
Item 1.
|
5
|
|
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
10
|
||
Item 2.
|
25
|
|
Item 3.
|
31
|
|
Item 4.
|
32
|
|
|
||
PART II.
|
OTHER INFORMATION
|
|
Item 1.
|
32
|
Item 2.
|
32
|
|
Item 6.
|
33
|
AMOLED
|
Active-matrix organic light-emitting diode. A technology used in mobile devices.
|
ASC
|
Accounting Standards Codification
|
ASP
|
Average Selling Price
|
ASU
|
Accounting Standards Update
|
Chip stacking
|
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
|
COVID-19
|
Covid virus 2019, an infectious disease that was declared a pandemic by the World Health Organization in March 2020
|
DNP
|
Dai Nippon Printing Co., Ltd.
|
EUV
|
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
|
Exchange Act
|
The Securities Exchange Act of 1934 (as amended)
|
FASB
|
Financial Accounting Standards Board
|
Form 10-K
|
Annual Report on Form 10-K
|
Form 10-Q
|
Quarterly Report on Form 10-Q
|
FPDs
|
Flat-panel displays, or “displays”
|
Generation
|
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
|
High-end (photomasks)
|
For IC, photomasks that are 28nm or smaller; for FPD, AMOLED, G10.5+, and LTPS photomasks
|
ICs
|
Integrated circuits, or semiconductors
|
LIBOR
|
London Inter-Bank Offered Rate
|
LTM (free cash flow)
|
Last Twelve Months Free Cash Flow
|
LTPS
|
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
|
MLA
|
Master Lease Agreement
|
Optical proximity correction
|
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
|
PDMCX
|
Xiamen American Japan Photronics Mask Co., Ltd., a joint venture of Photronics and DNP
|
Phase-shift photomasks
|
Photomasks that take advantage of the interference generated by phase differences to improve image resolution in photolithography
|
RMB
|
Chinese renminbi
|
ROU (assets)
|
Right-of-use asset
|
SEC
|
Securities and Exchange Commission
|
Securities Act
|
The Securities Act of 1933 (as amended)
|
U.S. GAAP
|
Accounting principles generally accepted in the United States of America
|
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
|
January 30,
2022
|
October 31,
2021
|
|||||||
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
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
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
|
$
|
|
$
|
|
Three
Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Revenue
|
$
|
|
$
|
|
||||
Cost of goods sold
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses:
|
||||||||
Selling, general and administrative
|
|
|
||||||
Research and development
|
|
|
||||||
Total operating expenses
|
|
|
||||||
Operating income
|
|
|
||||||
Other income (expense):
|
||||||||
Foreign currency transactions impact, net
|
|
|
||||||
Interest income and other income, net
|
|
|
||||||
Interest expense
|
(
|
)
|
(
|
)
|
||||
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
|
|
|
Three
Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Net income
|
$
|
|
$
|
|
||||
Other comprehensive (loss) income, net of tax of $
|
||||||||
Foreign currency translation adjustments
|
(
|
)
|
|
|||||
Other
|
|
(
|
)
|
|||||
Net other comprehensive (loss) income
|
(
|
)
|
|
|||||
Comprehensive income
|
|
|
||||||
Less: comprehensive income attributable to noncontrolling interests
|
|
|
||||||
Comprehensive income attributable to Photronics, Inc. shareholders
|
$
|
|
$
|
|
Three
Months Ended January 30, 2022
|
||||||||||||||||||||||||||||||||
Photronics, Inc. Shareholders
|
||||||||||||||||||||||||||||||||
Additional
Paid-in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Income
|
Non-
controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance at October 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive (loss) income
|
-
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Contribution from noncontrolling interest |
- | |||||||||||||||||||||||||||||||
Purchase of treasury stock
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Retirement of treasury stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Balance at January 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three
Months Ended January 31, 2021
|
||||||||||||||||||||||||||||||||
Photronics, Inc. Shareholders
|
||||||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-in
|
Retained
|
Treasury
|
Accumulated
Other
Comprehensive
|
Non-
controlling
|
Total
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income
|
Interests
|
Equity
|
|||||||||||||||||||||||||
Balance at October 31, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Purchase of treasury stock
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Balance at January 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Three
Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Share-based compensation
|
|
|
||||||
Changes in assets and liabilities:
|
||||||||
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
|
|
|
||||||
Other
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayments of debt
|
(
|
)
|
(
|
)
|
||||
Purchases of treasury stock
|
(
|
)
|
(
|
)
|
||||
Contribution from noncontrolling interest
|
||||||||
Proceeds from debt
|
|
|
||||||
Proceeds from share-based arrangements
|
|
|
||||||
Net settlements of restricted stock awards
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
|
(
|
)
|
|
|||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
(
|
)
|
|||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
|
||||||
Cash, cash equivalents, and restricted cash at end of period
|
|
|
|
|
||||
Less: Ending restricted cash | ||||||||
Cash and cash equivalents at end of period | $ |
$ |
||||||
Supplemental disclosure of non-cash information:
|
||||||||
Accruals for property, plant and equipment purchased during the period
|
$
|
|
$
|
|
January 30,
2022
|
October 31,
2021
|
|||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|
||||||
Finished goods
|
|
|
||||||
$
|
|
$
|
|
January 30,
2022
|
October 31,
2021
|
|||||||
Land
|
$
|
|
$
|
|
||||
Buildings and improvements
|
|
|
||||||
Machinery and equipment
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Furniture, fixtures and office equipment
|
|
|
||||||
Construction in progress
|
|
|
||||||
|
|
|||||||
Accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
|
January 30,
2022
|
October 31,
2021
|
||||||
Machinery and equipment
|
$
|
|
$
|
|
||||
Accumulated amortization
|
(
|
)
|
(
|
)
|
||||
|
$
|
|
$
|
|
January 30,
2022
|
October 31,
2021
|
|||||||||||||||
Classification
|
Carrying
Amount
|
Photronics
Interest
|
Carrying
Amount
|
Photronics
Interest
|
||||||||||||
Current assets
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Noncurrent assets
|
|
|
|
|
||||||||||||
Total assets
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
||||||||||||
Noncurrent liabilities
|
|
|
|
|
||||||||||||
Total liabilities
|
|
|
|
|
||||||||||||
Net assets
|
$
|
|
$
|
|
$
|
|
$
|
|
As of January 30,
2022
|
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
|
|
|
|
|
|
|||||||||||||||
Long-term debt
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
|
||||||||||||||||||||
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
|
|
|
|
(3) | ||||||||||||||||
Periodic payment amount
|
|
|
|
(3) | ||||||||||||||||
Periodic payment frequency
|
|
|
|
|
||||||||||||||||
Loan collateral (carrying amount)
|
$
|
|
N/A
|
$
|
|
$
|
|
(4) |
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
|
$
|
|
$
|
|
$ |
$ |
$
|
|
||||||||||||
Total |
$ | $ | $ |
$ | $ | |||||||||||||||
|
||||||||||||||||||||
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 |
(3) | |||||||||||||||||||
Periodic payment amount |
(3) | |||||||||||||||||||
Periodic payment frequency |
||||||||||||||||||||
Loan collateral (carrying amount)
|
$
|
|
N/A
|
$ |
$ |
(4) |
Three Months Ended
|
||||||||
|
January 30, 2022
|
January 31, 2021
|
||||||
Revenue by Product Type |
||||||||
IC
|
||||||||
High-end
|
$
|
|
$
|
|
||||
Mainstream
|
|
|
||||||
Total IC
|
$
|
|
$
|
|
||||
FPD
|
||||||||
High-end
|
$
|
|
$
|
|
||||
Mainstream
|
|
|
||||||
Total FPD
|
$
|
|
$
|
|
||||
$
|
|
$
|
|
Three Months Ended
|
||||||||
|
January 30, 2022
|
January 31, 2021
|
||||||
Revenue by Geographic Origin* |
||||||||
Taiwan
|
$
|
|
$
|
|
||||
China
|
|
|
||||||
Korea
|
|
|
||||||
United States
|
|
|
||||||
Europe
|
|
|
||||||
Other
|
|
|
||||||
$
|
|
$
|
|
Three Months Ended
|
||||||||
|
January 30, 2022
|
January 31, 2021
|
||||||
Revenue by Timing of Recognition |
||||||||
Over time
|
$
|
|
$
|
|
||||
At a point in time
|
|
|
||||||
$
|
|
$
|
|
Classification
|
January 30,
2022
|
October 31,
2021
|
||||||
ROU Assets – Operating Leases
|
||||||||
|
$
|
|
$
|
|
||||
ROU Assets – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
Lease Liabilities – Operating Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
|||||
Lease Liabilities – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
Operating Leases
|
Finance Lease
|
|||||||
Remainder of fiscal year 2022
|
$
|
|
$
|
|
||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
Thereafter
|
|
|
||||||
Total lease payments
|
|
|
||||||
Imputed interest
|
(
|
)
|
(
|
)
|
||||
Lease liabilities
|
$
|
|
$
|
|
Three
Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Operating lease costs
|
$
|
|
$
|
|
||||
Short-term lease costs
|
$
|
|
$
|
|
||||
Variable lease costs
|
$
|
|
$
|
|
||||
Interest on lease liabilities
|
$
|
|
$
|
|
||||
Amortization of ROU assets
|
$
|
|
$
|
|
|
January 30,
2022
|
October 31,
2021
|
||||||||||||||
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
|
|
|
%
|
|
|
%
|
Three
Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
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
|
$
|
|
$
|
|
Three Months Ended | ||||||||
January 30, 2022 |
January 31, 2021 |
|||||||
Expense reported in:
|
||||||||
Cost of goods sold
|
$
|
|
$
|
|
||||
Selling, general and administrative
|
|
|
||||||
Research and development
|
|
|
||||||
Total expense incurred
|
$
|
|
$
|
|
||||
Expense by award type:
|
||||||||
Restricted stock awards
|
$
|
|
$
|
|
||||
Stock options
|
|
|
||||||
ESPP
|
|
|
||||||
Total expense incurred |
$
|
|
$
|
|
||||
Income tax benefits of share-based compensation (in millions)
|
$
|
|
$
|
|
||||
Share-based compensation cost capitalized
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
January 30, 2022 |
January 31, 2021 |
|||||||
Number of shares granted in period
|
|
|
||||||
Weighted-average grant-date fair value of awards (in dollars per share)
|
$
|
|
$
|
|
||||
Compensation cost not yet recognized
|
$
|
|
$
|
|
||||
Weighted-average amortization period for cost not yet recognized (in years)
|
|
|
||||||
Shares outstanding at balance sheet date
|
|
|
Three Months Ended
|
||||||||
January 30, 2022 |
January 31, 2021 |
|||||||
Number of options granted in period
|
|
|
||||||
Cash received from option exercised
|
$
|
|
$
|
|
||||
Compensation cost not yet recognized
|
$
|
|
$
|
|
||||
Weighted-average amortization period for cost not yet recognized (in years)
|
|
|
Options
|
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Life (in years)
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding at January 30, 2022
|
|
$
|
|
|
$
|
|
|||||||
Exercisable at January 30, 2022
|
|
$
|
|
|
$
|
|
January 30, 2022 | October 31, 2021 |
|||||||
Unrecognized tax benefits related to uncertain tax positions
|
$
|
|
$
|
|
||||
Unrecognized tax benefits that, if recognized, would impact the effective tax rate
|
$
|
|
$
|
|
||||
Accrued interest and penalties related to uncertain tax positions
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
|
$
|
|
||||
Effect of
dilutive securities
|
|
|
||||||
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
|
|
|
||||||
Potentially dilutive common shares
|
|
|
||||||
Weighted-average common shares used for diluted earnings per share
|
|
|
||||||
Basic earnings per share
|
$
|
|
$
|
|
||||
Diluted earnings per share
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Share-based payment awards
|
|
|
||||||
Total potentially dilutive shares excluded
|
|
|
Three Months Ended January 30, 2022
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive (loss) income, net of tax of $0
|
(
|
)
|
|
(
|
)
|
|||||||
Less: other comprehensive income attributable to noncontrolling interests
|
|
|
|
|||||||||
Balance at January 30, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended January 31, 2021
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive (loss) income, net of tax of $0
|
|
(
|
)
|
|
||||||||
Less: other comprehensive income attributable to noncontrolling interests
|
|
|
|
|||||||||
Balance at January 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended
January 30,
2022
|
Three
Months Ended
January 31,
2021
|
|||||||
Number of shares repurchased (in thousands)
|
|
|
||||||
Cost of shares repurchased
|
$
|
|
$
|
|
||||
Average price paid per share
|
$
|
|
$
|
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
|
||||||||||||
January 30,
2022
|
October 31,
2021
|
January 31,
2021
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
68.5
|
71.3
|
79.9
|
|||||||||
Gross margin
|
31.5
|
28.7
|
20.1
|
|||||||||
Selling, general and administrative expenses
|
8.3
|
7.9
|
9.2
|
|||||||||
Research and development expenses
|
3.1
|
2.3
|
3.1
|
|||||||||
Operating income
|
20.1
|
18.5
|
7.7
|
|||||||||
Other income, net
|
2.5
|
2.1
|
0.4
|
|||||||||
Income before income tax provision
|
22.6
|
20.6
|
8.2
|
|||||||||
Income tax provision
|
5.9
|
4.8
|
1.9
|
|||||||||
Net income
|
16.7
|
15.8
|
6.3
|
|||||||||
Net income attributable to noncontrolling interests
|
4.6
|
4.9
|
1.0
|
|||||||||
Net income attributable to Photronics, Inc. shareholders
|
12.2
|
%
|
10.9
|
%
|
5.3
|
%
|
Q1 FY22 from Q4 FY21
|
Q1 FY22 from Q1 FY21
|
|||||||||||||||||||
Revenue in
Q1 FY22
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
||||||||||||||||
IC
|
||||||||||||||||||||
High-end *
|
$
|
46.5
|
$
|
4.0
|
9.3
|
%
|
$
|
9.8
|
26.5
|
%
|
||||||||||
Mainstream
|
83.2
|
0.4
|
0.4
|
%
|
15.1
|
22.1
|
%
|
|||||||||||||
Total IC
|
$
|
129.8
|
$
|
4.3
|
3.4
|
%
|
$
|
24.8
|
23.6
|
%
|
||||||||||
FPD
|
||||||||||||||||||||
High-end *
|
$
|
46.3
|
$
|
5.3
|
12.9
|
%
|
$
|
11.6
|
33.6
|
%
|
||||||||||
Mainstream
|
13.8
|
(1.1
|
)
|
(7.2
|
)%
|
1.3
|
10.6
|
%
|
||||||||||||
Total FPD
|
$
|
60.1
|
$
|
4.2
|
7.6
|
%
|
$
|
13.0
|
27.5
|
%
|
||||||||||
Total Revenue
|
$
|
189.8
|
$
|
8.5
|
4.7
|
%
|
$
|
37.8
|
24.8
|
%
|
Q1 FY22 from Q4 FY21
|
Q1 FY22 from Q1 FY21
|
|||||||||||||||||||
Revenue in
Q1 FY22
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
||||||||||||||||
Taiwan
|
$
|
67.8
|
$
|
(1.3
|
)
|
(1.9
|
)%
|
$
|
11.3
|
19.9
|
%
|
|||||||||
China
|
46.0
|
7.6
|
19.9
|
%
|
25.0
|
118.9
|
%
|
|||||||||||||
Korea
|
39.5
|
1.7
|
4.6
|
%
|
0.7
|
1.9
|
%
|
|||||||||||||
United States
|
27.2
|
0.6
|
2.3
|
%
|
0.6
|
2.1
|
%
|
|||||||||||||
Europe
|
8.9
|
(0.1
|
)
|
(0.7
|
)%
|
0.3
|
3.9
|
%
|
||||||||||||
Other
|
0.4
|
0.0
|
(4.5
|
)%
|
(0.1
|
)
|
(17.4
|
)%
|
||||||||||||
$
|
189.8
|
$
|
8.5
|
4.7
|
%
|
$
|
37.8
|
24.8
|
%
|
Three Months Ended
|
||||||||||||||||||||
Q1 FY22
|
Q4 FY21
|
Percent
Change
|
Q1 FY21
|
Percent
Change
|
||||||||||||||||
|
||||||||||||||||||||
Gross profit
|
$
|
59.9
|
$
|
51.9
|
15.3
|
%
|
$
|
30.5
|
96.1
|
%
|
||||||||||
Gross margin
|
31.5
|
%
|
28.7
|
%
|
20.1
|
%
|
Three Months Ended
|
||||||||||||
Q1 FY22
|
Q4 FY21
|
Q1 FY21
|
||||||||||
Foreign currency transactions impact, net
|
$
|
5.3
|
$
|
4.3
|
$
|
1.4
|
||||||
Interest expense
|
(0.9
|
)
|
(1.0
|
)
|
(0.8
|
)
|
||||||
Interest income and other income, net
|
0.3
|
0.5
|
0.1
|
|||||||||
Other income (expense)
|
$
|
4.7
|
$
|
3.8
|
$
|
0.7
|
Three Months Ended
|
||||||||||||
Q1 FY22
|
Q4 FY21
|
Q1 FY21
|
||||||||||
Income tax provision
|
$
|
11.2
|
$
|
8.7
|
$
|
2.9
|
||||||
Effective income tax rate
|
26.1
|
%
|
23.3
|
%
|
23.6
|
%
|
Three Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Net cash provided by operating activities
|
$
|
59.1
|
$
|
26.3
|
||||
Net cash used in investing activities
|
$
|
(19.2
|
)
|
$
|
(17.2
|
)
|
||
Net cash used in financing activities
|
$
|
(0.3
|
)
|
$
|
(14.4
|
)
|
Three Months Ended
|
||||||||
January 30,
2022
|
January 31,
2021
|
|||||||
Free Cash Flow
|
||||||||
Net cash provided by operating activities
|
$
|
59.1
|
$
|
26.3
|
||||
Purchases of property, plant and equipment
|
(19.2
|
)
|
(17.5
|
)
|
||||
Government incentives
|
-
|
0.4
|
||||||
Free Cash Flow
|
$
|
40.0
|
$
|
9.2
|
Q1 FY22
|
Q1 FY21
|
|||||||
LTM Free Cash Flow
|
||||||||
First three months of the respective fiscal year
|
$
|
40.0
|
$
|
9.2
|
||||
October fiscal year end
|
47.4
|
77.4
|
||||||
First three months of the prior year
|
(9.2
|
)
|
(19.4
|
)
|
||||
LTM
|
$
|
78.3
|
$
|
67.2
|
As of
|
||||||||
January 30,
2022
|
October 31,
2021
|
|||||||
Net Cash
|
||||||||
Cash and cash equivalents
|
$
|
314.2
|
$
|
276.7
|
||||
Current portion of Long-term debt
|
(18.3
|
)
|
(22.2
|
)
|
||||
Long-term debt
|
(78.5
|
)
|
(89.4
|
)
|
||||
Net Cash
|
$
|
217.3
|
$
|
165.0
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
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)
|
|||||||||||||
Period
|
||||||||||||||||
November 1, 2021 – November 28, 2021
|
0.1
|
$
|
13.45
|
0.1
|
$
|
32.9
|
||||||||||
November 29, 2021 – December 26, 2021
|
0.1
|
$
|
13.41
|
0.1
|
$
|
31.7
|
||||||||||
Total
|
0.2
|
0.2
|
Item 6. |
EXHIBITS
|
Incorporated by Reference
|
|||||||
Exhibit
Number
|
Description
|
Form
|
File
Number
|
Exhibit
|
Filing
Date
|
Filed or
Furnished
Herewith
|
|
Amendment No. 2 to the Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone, People’s Government of
Xiang’an Xiamen, Photronics Singapore Pte. Ltd., DNP Asia Pacific Pte and Xiamen American Japan Photronics Mask Co., Ltd.
|
X |
||||||
Amendment No. 3 to the Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone, People’s Government of
Xiang’an Xiamen, Photronics Singapore Pte. Ltd., DNP Asia Pacific Pte and Xiamen American Japan Photronics Mask Co., Ltd.
|
X |
||||||
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. |
X
|
||||||
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. |
X
|
||||||
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.
|
X
|
||||||
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.
|
X
|
||||||
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)
|
X
|
|||||
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
X
|
|||||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|||||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|||||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|||||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|||||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
X
|
Photronics, Inc.
|
|||||
(Registrant)
|
|
||||
|
|||||
By:
|
/s/ JOHN P. JORDAN
|
By:
|
/s/ ERIC RIVERA | ||
|
JOHN P. JORDAN
|
|
ERIC RIVERA | ||
|
Executive Vice President,
|
|
Vice President, | ||
|
Chief Financial Officer
|
|
Corporate Controller | ||
|
(Principal Financial Officer)
|
|
(Principal Accounting Officer) | ||
Date: | March 9, 2022 | Date: | March 9, 2022 |