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.)
|
|
|
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(Address of principal executive offices)
|
(Zip Code)
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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
|
||
10
|
||
11
|
||
Item 2.
|
28
|
|
Item 3.
|
34
|
|
Item 4.
|
35
|
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PART II.
|
OTHER INFORMATION
|
|
Item 1.
|
35
|
|
Item 1A.
|
35
|
|
Item 2.
|
36
|
|
Item 6.
|
37
|
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
|
Coronavirus 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
|
|
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)
|
|
Sputtering
|
The bombardment of a material with energetic particles, to cause microscopic particles of the material to eject from its surface.
|
|
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
|
May 1,
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 (loss) income
|
(
|
)
|
|
|||||
Total Photronics, Inc. shareholders’ equity
|
|
|
||||||
Noncontrolling interests
|
|
|
||||||
Total equity
|
|
|
||||||
Total liabilities and equity
|
$
|
|
$
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cost of goods sold
|
|
|
|
|
||||||||||||
Gross profit
|
|
|
|
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
|
|
|
|
||||||||||||
Research and development
|
|
|
|
|
||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Operating income
|
|
|
|
|
||||||||||||
Non-operating income (expense):
|
||||||||||||||||
Foreign currency transactions impact, net
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Interest expense, net of subsidies
|
|
|
(
|
)
|
|
|||||||||||
Interest income and other income and expense, 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
|
|
|
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive (loss) income, net of tax of $
|
||||||||||||||||
Foreign currency translation adjustments
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Other
|
|
|
|
|
||||||||||||
Net other comprehensive (loss) income
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Comprehensive (loss) income
|
(
|
|
|
|
||||||||||||
Less: comprehensive income attributable to noncontrolling interests
|
|
|
|
|
||||||||||||
Comprehensive (loss) income attributable to Photronics, Inc. shareholders
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Three
Months Ended May 1, 2022
|
||||||||||||||||||||||||||||||||
Photronics, Inc. Shareholders
|
||||||||||||||||||||||||||||||||
Additional
Paid-in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Non-
controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance at January 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Contribution from noncontrolling interest | - | |||||||||||||||||||||||||||||||
Balance at May 1, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
Three
Months Ended May 2, 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 January 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Purchase of treasury stock
|
|
|
|
( |
) | ( |
) | |||||||||||||||||||||||||
Balance at May 2, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Six
Months Ended May 1, 2022
|
||||||||||||||||||||||||||||||||
Photronics, Inc. Shareholders
|
||||||||||||||||||||||||||||||||
Additional
Paid-in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Non-
controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance at October 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Shares issued under equity plans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Contribution from noncontrolling interest
|
- | |||||||||||||||||||||||||||||||
Purchase of treasury stock
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
Retirement of treasury stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||
Balance at May 1, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
Six
Months Ended May 2, 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 May 2, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Six
Months Ended
|
||||||||
May 1,
2022
|
May 2,
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 share-based arrangements
|
|
|
||||||
Proceeds from long-term debt
|
||||||||
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 disclosures of non-cash information:
|
||||||||
Accruals for property, plant and equipment purchased during the period
|
$
|
|
$
|
|
May 1,
2022
|
October 31,
2021
|
|||||||
Raw materials
|
$
|
|
$
|
|
||||
Work in process
|
|
|
||||||
Finished goods
|
|
|
||||||
$
|
|
$
|
|
May 1,
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
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
|
May 1,
2022
|
October 31,
2021
|
||||||
Machinery and equipment
|
$
|
|
$
|
|
||||
Accumulated amortization
|
(
|
)
|
(
|
)
|
||||
|
$
|
|
$
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Depreciation and amortization expense | $ |
$ |
$ |
$ |
Three
Months Ended
|
Six Months Ended | |||||||||||||||
|
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
||||||||||||
Net income from PDMCX
|
$
|
|
$
|
|
$
|
|
$
|
|
May 1,
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 May 1,
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 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
|
|
|
|
(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) |
Classification
|
May 1,
2022
|
October 31,
2021
|
||||||
Contract assets
|
||||||||
Other current assets
|
$
|
|
$
|
|
||||
Contract liabilities
|
||||||||
Accrued liabilities
|
$
|
|
$
|
|
||||
Other liabilities
|
|
|
||||||
$
|
|
$
|
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Revenue recognized from beginning liability
|
$
|
|
$
|
|
$
|
|
$
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Revenue by Product Type
|
||||||||||||||||
IC
|
||||||||||||||||
High-end
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Mainstream
|
|
|
|
|
||||||||||||
Total IC
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
FPD
|
||||||||||||||||
High-end
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Mainstream
|
|
|
|
|
||||||||||||
Total FPD
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Revenue by Geographic Origin*
|
||||||||||||||||
Taiwan
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
China |
|
|
|
|
||||||||||||
Korea
|
|
|
|
|
||||||||||||
United States
|
|
|
|
|
||||||||||||
Europe
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Revenue by Timing of Recognition
|
||||||||||||||||
Over time
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
At a point in time
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
Classification
|
May 1,
2022
|
October 31,
2021
|
||||||
ROU Assets – Operating Leases
|
||||||||
$
|
|
$
|
|
|||||
ROU Assets – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
Lease Liabilities – Operating Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
|||||
Lease Liabilities – Finance Leases
|
||||||||
|
$
|
|
$
|
|
||||
|
|
|
||||||
$
|
|
$
|
|
Operating Leases
|
Finance Leases
|
|||||||
Remainder of fiscal year 2022
|
$
|
|
$
|
|
||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
Thereafter
|
|
|
||||||
Total lease payments
|
|
|
||||||
Imputed interest
|
(
|
)
|
(
|
)
|
||||
Lease liabilities
|
$
|
|
$
|
|
Three Months Ended |
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Operating lease costs
|
$ |
$ |
$
|
|
$
|
|
||||||||||
Short-term lease costs
|
$ |
$ |
$
|
|
$
|
|
||||||||||
Variable lease costs
|
$ |
$ |
$
|
|
$
|
|
||||||||||
Interest on finance lease liabilities
|
$ |
$ |
$
|
|
$
|
|
||||||||||
Amortization of ROU assets
|
$ |
$ |
$
|
|
$
|
|
|
May 1,
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 |
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
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 | Six Months Ended | |||||||||||||||
May 1,
2022 |
May 2,
2021 |
May 1,
2022
|
May 2,
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
|
$
|
|
$
|
|
$ | $ | ||||||||||
Share-based compensation cost capitalized
|
$
|
|
$
|
|
$ | $ |
Three Months Ended
|
Six Months Ended | |||||||||||||||
May 1,
2022 |
May 2,
2021
|
May 1,
2022
|
May 2,
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
|
Six Months Ended |
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
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 May 1, 2022
|
|
$
|
|
|
$
|
|
|||||
Exercisable at May 1, 2022
|
|
$
|
|
|
$
|
|
May 1,
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
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
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
|
Six
Months Ended
|
|||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Share-based payment awards
|
|
|
|
|
||||||||||||
Total potentially dilutive shares excluded
|
|
|
|
|
Three Months Ended May 1,
2022
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at January 30, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive (loss) income
|
(
|
)
|
|
(
|
)
|
|||||||
Less: other comprehensive (loss) income attributable to noncontrolling interests
|
(
|
)
|
|
(
|
)
|
|||||||
Balance at May 1, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended May 2,
2021
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at January 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive income
|
|
|
|
|||||||||
Less: other comprehensive income attributable to noncontrolling interests
|
|
|
|
|||||||||
Balance at May 2, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
Six
Months Ended May 1, 2022
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive (loss) income
|
(
|
)
|
|
(
|
)
|
|||||||
Less: other comprehensive (loss) income attributable to noncontrolling interests
|
(
|
)
|
|
(
|
)
|
|||||||
Balance at May 1, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Six
Months Ended May 2, 2021
|
||||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Other comprehensive income
|
|
|
|
|||||||||
Less: other comprehensive income attributable to noncontrolling interests
|
|
|
|
|||||||||
Balance at May 2, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
May 1,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
|||||||||||||
Number of shares repurchased
|
|
|
||||||||||||||
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
|
Six Months Ended
|
|||||||||||||||||||
May 1,
2022
|
January 30,
2022
|
May 2,
2021
|
May 1,
2022
|
May 2,
2021
|
||||||||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||
Cost of goods sold
|
65.7
|
68.5
|
75.4
|
67.0
|
77.6
|
|||||||||||||||
Gross profit
|
34.3 |
31.5
|
24.6
|
33.0
|
22.4
|
|||||||||||||||
Selling, general and administrative expenses
|
8.1
|
8.3
|
8.8
|
8.2
|
9.0
|
|||||||||||||||
Research and development expenses
|
2.1
|
3.1
|
2.7
|
2.6
|
2.9
|
|||||||||||||||
|
||||||||||||||||||||
Operating income
|
24.2 |
20.1
|
13.0
|
22.2
|
10.4
|
|||||||||||||||
Non-operating income (expense), net
|
3.9
|
2.5
|
(0.5
|
)
|
3.2
|
-
|
||||||||||||||
|
||||||||||||||||||||
Income before income tax provision
|
28.1
|
22.6
|
12.5
|
25.4
|
10.4
|
|||||||||||||||
Income tax provision
|
7.0
|
5.9
|
2.3
|
6.5
|
2.1
|
|||||||||||||||
|
||||||||||||||||||||
Net income
|
21.0
|
16.7
|
10.2
|
19.0
|
8.3
|
|||||||||||||||
Net income attributable to noncontrolling interests
|
7.6
|
4.6
|
3.6
|
6.2
|
2.3
|
|||||||||||||||
|
||||||||||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
13.4
|
%
|
12.2
|
%
|
6.6
|
%
|
12.8
|
%
|
6.0
|
%
|
||||||||||
Q2 FY22 from Q1 FY22
|
Q2 FY22 from Q2 FY21
|
YTD FY22 from YTD FY21
|
||||||||||||||||||||||||||||||
Revenue in Q2 FY22
|
Increase (Decrease)
|
Percent
Change
|
Increase (Decrease)
|
Percent
Change
|
Revenue in YTD FY22
|
Increase (Decrease)
|
Percent
Change
|
|||||||||||||||||||||||||
IC
|
||||||||||||||||||||||||||||||||
High-end *
|
$
|
51.4
|
$
|
4.8
|
10.4
|
%
|
$
|
10.1
|
24.5
|
%
|
$
|
97.9
|
$
|
19.9
|
25.4
|
%
|
||||||||||||||||
Mainstream
|
94.4
|
11.2
|
13.5
|
%
|
23.7
|
33.5
|
%
|
177.7
|
38.8
|
27.9
|
%
|
|||||||||||||||||||||
Total IC
|
$
|
145.8
|
$
|
16.0
|
12.4
|
%
|
$
|
33.8
|
30.2
|
%
|
$
|
275.6
|
$
|
58.6
|
27.0
|
%
|
||||||||||||||||
FPD
|
||||||||||||||||||||||||||||||||
High-end *
|
$
|
46.6
|
$
|
0.3
|
0.7
|
%
|
$
|
7.2
|
18.3
|
%
|
$
|
92.9
|
$
|
18.8
|
25.4
|
%
|
||||||||||||||||
Mainstream
|
12.1
|
(1.7
|
)
|
(12.3
|
)%
|
3.7
|
44.6
|
%
|
25.9
|
5.1
|
24.2
|
%
|
||||||||||||||||||||
Total FPD
|
$
|
58.7
|
$
|
(1.4
|
)
|
(2.3
|
)%
|
$
|
10.9
|
22.9
|
%
|
$
|
118.8
|
$
|
23.9
|
25.2
|
%
|
|||||||||||||||
Total Revenue
|
$
|
204.5
|
$
|
14.7
|
7.7
|
%
|
$
|
44.7
|
28.0
|
%
|
$
|
394.3
|
$
|
82.5
|
26.5
|
%
|
||||||||||||||||
|
Q2 FY22 from Q1 FY22
|
Q2 FY22 from Q2 FY21
|
YTD FY22 from YTD FY21
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Revenue in
Q2 FY22
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
Revenue in
YTD FY22
|
Increase
(Decrease)
|
Percent
Change
|
|||||||||||||||||||||||||
Taiwan
|
$
|
69.9
|
$
|
2.0
|
3.0
|
%
|
$
|
10.8
|
18.4
|
%
|
$
|
137.7
|
$
|
22.1
|
19.1
|
%
|
||||||||||||||||
China
|
53.7
|
7.7
|
16.8
|
%
|
30.0
|
126.3
|
%
|
99.6
|
54.9
|
122.8
|
%
|
|||||||||||||||||||||
Korea
|
40.8
|
1.3
|
3.2
|
%
|
0.5
|
1.3
|
%
|
80.3
|
1.3
|
1.6
|
%
|
|||||||||||||||||||||
United States
|
30.3
|
3.2
|
11.6
|
%
|
3.2
|
11.7
|
%
|
57.5
|
3.8
|
7.0
|
%
|
|||||||||||||||||||||
Europe
|
9.5
|
0.6
|
6.6
|
%
|
0.2
|
2.7
|
%
|
18.4
|
0.6
|
3.3
|
%
|
|||||||||||||||||||||
Other
|
0.4
|
(0.1
|
)
|
(16.7
|
)%
|
0.0
|
(7.7
|
)%
|
0.8
|
(0.1
|
)
|
(13.2
|
)%
|
|||||||||||||||||||
Total Revenue
|
$
|
204.5
|
$
|
14.7
|
7.7
|
%
|
$
|
44.7
|
28.0
|
%
|
$
|
394.3
|
$
|
82.5
|
26.5
|
%
|
||||||||||||||||
Q2 FY22
|
Q1 FY22
|
Percent
Change
|
Q2 FY21
|
Percent
Change
|
YTD FY22
|
YTD FY21
|
Percent
Change
|
|||||||||||||||||||||||||
Gross profit
|
$
|
70.2
|
$
|
59.9
|
17.3
|
%
|
$
|
39.2
|
78.9
|
%
|
$
|
130.1
|
$
|
69.8
|
86.4
|
%
|
||||||||||||||||
Gross margin
|
34.3
|
%
|
31.5
|
%
|
24.6
|
%
|
33.0
|
%
|
22.4
|
%
|
Q2 FY22
|
Q1 FY22
|
Q2 FY21
|
YTD FY22
|
YTD FY21
|
||||||||||||||||
Foreign currency transactions impact, net
|
$
|
7.8
|
$
|
5.3
|
$
|
(2.1
|
)
|
$
|
13.1
|
$
|
(0.7
|
)
|
||||||||
Interest expense, net
|
-
|
(0.9
|
)
|
1.2
|
(0.9
|
)
|
0.4
|
|||||||||||||
Interest income and other income (expense), net
|
0.2
|
0.3
|
-
|
0.5
|
0.2
|
|||||||||||||||
Non-operating income (expense), net
|
$
|
8.0
|
$
|
4.7
|
$
|
(0.8
|
)
|
$
|
12.7
|
$
|
(0.1
|
)
|
||||||||
Q2 FY22
|
Q1 FY22
|
Q2 FY21
|
YTD FY22
|
YTD FY21
|
||||||||||||||||
Income tax provision
|
$
|
14.4
|
$
|
11.2
|
$
|
3.7
|
$
|
25.6
|
$
|
6.7
|
||||||||||
Effective income tax rate
|
25.1
|
%
|
26.1
|
%
|
18.5
|
%
|
25.5
|
%
|
20.5
|
%
|
YTD FY22
|
YTD FY21
|
|||||||
Net cash provided by operating activities
|
$
|
103.3
|
$
|
58.2
|
||||
Net cash used in investing activities
|
$
|
(33.6
|
)
|
$
|
(67.9
|
)
|
||
Net cash used in financing activities
|
$
|
(2.2
|
)
|
$
|
(18.6
|
)
|
YTD FY22
|
YTD FY21
|
|||||||
Free Cash Flow
|
||||||||
Net cash provided by operating activities
|
$
|
103.3
|
$
|
58.2
|
||||
Purchases of property, plant and equipment
|
(34.8
|
)
|
(73.5
|
)
|
||||
Government incentives
|
1.4
|
5.8
|
||||||
Free cash flow
|
$
|
69.9
|
$
|
(9.5
|
)
|
Q2 FY22
|
Q2 FY21
|
|||||||
LTM Free Cash Flow
|
||||||||
First six months of the respective fiscal year
|
$
|
69.9
|
$
|
(9.5
|
)
|
|||
October fiscal year end
|
47.4
|
77.5
|
||||||
First six months of the prior year
|
9.5
|
(36.5
|
)
|
|||||
LTM free cash flow
|
$
|
126.8
|
$
|
31.5
|
As of
|
||||||||
May 1,
2022
|
October 31,
2021
|
|||||||
Net Cash
|
||||||||
Cash and cash equivalents
|
$
|
329.3
|
$
|
276.7
|
||||
Current portion of Long-term debt
|
(12.4
|
)
|
(22.2
|
)
|
||||
Long-term debt
|
(70.1
|
)
|
(89.4
|
)
|
||||
Net cash
|
$
|
246.7
|
$
|
165.0
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
PART II. |
OTHER INFORMATION
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
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
|
||||||||||||||||
January 31, 2022 – February 27, 2022
|
0.0
|
$
|
0.00
|
0.0
|
$
|
31.7
|
||||||||||
February 28, 2022 – March 27, 2022
|
0.0
|
$
|
0.00
|
0.0
|
$
|
31.7
|
||||||||||
March 28, 2022 – May 1, 2022
|
0.0
|
$
|
0.00
|
0.0
|
$
|
31.7
|
||||||||||
Total
|
0.0
|
0.0
|
Item 6. |
EXHIBITS
|
Incorporated by Reference
|
|||||||
Exhibit
Number
|
Description
|
Form
|
File Number
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
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:
|
June 15, 2022
|
Date:
|
June 15, 2022
|
1. |
I have reviewed this quarterly report on Form 10-Q 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 report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this 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/ Frank Lee
|
|
Frank Lee
Chief Executive Officer
June 15, 2022
|
1. |
I have reviewed this quarterly report on Form 10-Q 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 report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this 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
June 15, 2022
|
(1) |
The Quarterly Report on Form 10-Q of the Company for the quarter ended May 1, 2022 (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/ Frank Lee
|
|
Frank Lee
Chief Executive Officer
June 15, 2022
|
(1) |
The Quarterly Report on Form 10-Q of the Company for the quarter ended May 1, 2022 (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
June 15, 2022
|
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
Current assets: | ||
Accounts receivable, allowance | $ 1,107 | $ 1,218 |
Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000 | 2,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000 | 150,000 |
Common stock, shares issued (in shares) | 60,637 | 60,024 |
Common stock, shares outstanding (in shares) | 60,637 | 60,024 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|||
Condensed Consolidated Statements of Income [Abstract] | ||||||
Revenue | [1] | $ 204,509 | $ 159,763 | $ 394,336 | $ 311,830 | |
Cost of goods sold | 134,289 | 120,514 | 264,253 | 242,052 | ||
Gross profit | 70,220 | 39,249 | 130,083 | 69,778 | ||
Operating expenses: | ||||||
Selling, general and administrative | 16,613 | 14,067 | 32,340 | 28,120 | ||
Research and development | 4,206 | 4,375 | 10,145 | 9,085 | ||
Total operating expenses | 20,819 | 18,442 | 42,485 | 37,205 | ||
Operating income | 49,401 | 20,807 | 87,598 | 32,573 | ||
Non-operating income (expense): | ||||||
Foreign currency transactions impact, net | 7,844 | (2,055) | 13,112 | (674) | ||
Interest expense, net of subsidies | 15 | 1,246 | (880) | 423 | ||
Interest income and other income and expense, net | 162 | 37 | 496 | 159 | ||
Income before income tax provision | 57,422 | 20,035 | 100,326 | 32,481 | ||
Income tax provision | 14,393 | 3,714 | 25,571 | 6,651 | ||
Net income | 43,029 | 16,321 | 74,755 | 25,830 | ||
Net income attributable to noncontrolling interests | 15,597 | 5,795 | 24,259 | 7,268 | ||
Net income attributable to Photronics, Inc. shareholders | $ 27,432 | $ 10,526 | $ 50,496 | $ 18,562 | ||
Earnings per share: | ||||||
Basic (in dollars per share) | $ 0.45 | $ 0.17 | $ 0.84 | $ 0.30 | ||
Diluted (in dollars per share) | $ 0.45 | $ 0.17 | $ 0.83 | $ 0.30 | ||
Weighted-average number of common shares outstanding: | ||||||
Basic (in shares) | 60,606 | 62,054 | 60,382 | 62,265 | ||
Diluted (in shares) | 61,145 | 62,568 | 61,041 | 62,786 | ||
|
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 43,029 | $ 16,321 | $ 74,755 | $ 25,830 |
Other comprehensive (loss) income, net of tax of $0: | ||||
Foreign currency translation adjustments | (44,118) | 3,778 | (53,949) | 22,066 |
Other | 129 | 21 | 166 | 21 |
Net other comprehensive (loss) income | (43,989) | 3,799 | (53,783) | 22,087 |
Comprehensive (loss) income | (960) | 20,120 | 20,972 | 47,917 |
Less: comprehensive income attributable to noncontrolling interests | 5,092 | 6,431 | 13,966 | 12,121 |
Comprehensive (loss) income attributable to Photronics, Inc. shareholders | $ (6,052) | $ 13,689 | $ 7,006 | $ 35,796 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Other comprehensive income (loss), tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Income [Member] |
Non-Controlling Interests [Member] |
Total |
---|---|---|---|---|---|---|---|
Balance at Oct. 31, 2020 | $ 631 | $ 507,336 | $ 279,037 | $ 0 | $ 17,958 | $ 157,304 | $ 962,266 |
Balance (in shares) at Oct. 31, 2020 | 63,138 | ||||||
Net income | $ 0 | 0 | 18,562 | 0 | 0 | 7,268 | 25,830 |
Other comprehensive (loss) income | 0 | 0 | 0 | 0 | 17,234 | 4,853 | 22,087 |
Shares issued under equity plans | $ 5 | 1,156 | 0 | 0 | 0 | 0 | 1,161 |
Shares issued under equity plans (in shares) | 468 | ||||||
Share-based compensation expense | $ 0 | 2,723 | 0 | 0 | 0 | 0 | 2,723 |
Purchase of treasury stock | 0 | 0 | 0 | (23,250) | 0 | 0 | (23,250) |
Balance at May. 02, 2021 | $ 636 | 511,215 | 297,599 | (23,250) | 35,192 | 169,425 | 990,817 |
Balance (in shares) at May. 02, 2021 | 63,606 | ||||||
Balance at Jan. 31, 2021 | $ 635 | 508,974 | 287,073 | (13,209) | 32,029 | 162,994 | 978,496 |
Balance (in shares) at Jan. 31, 2021 | 63,506 | ||||||
Net income | $ 0 | 0 | 10,526 | 0 | 0 | 5,795 | 16,321 |
Other comprehensive (loss) income | 0 | 0 | 0 | 0 | 3,163 | 636 | 3,799 |
Shares issued under equity plans | $ 1 | 819 | 0 | 0 | 0 | 0 | 820 |
Shares issued under equity plans (in shares) | 100 | ||||||
Share-based compensation expense | $ 0 | 1,422 | 0 | 0 | 0 | 0 | 1,422 |
Purchase of treasury stock | $ 0 | 0 | 0 | (10,041) | 0 | 0 | (10,041) |
Purchase of treasury stock (in shares) | 0 | ||||||
Balance at May. 02, 2021 | $ 636 | 511,215 | 297,599 | (23,250) | 35,192 | 169,425 | 990,817 |
Balance (in shares) at May. 02, 2021 | 63,606 | ||||||
Balance at Oct. 31, 2021 | $ 600 | 484,672 | 317,849 | 0 | 20,571 | 176,870 | 1,000,562 |
Balance (in shares) at Oct. 31, 2021 | 60,024 | ||||||
Net income | $ 0 | 0 | 50,496 | 0 | 0 | 24,259 | 74,755 |
Other comprehensive (loss) income | 0 | 0 | 0 | 0 | (43,490) | (10,293) | (53,783) |
Shares issued under equity plans | $ 7 | 3,175 | 0 | 0 | 0 | 0 | 3,182 |
Shares issued under equity plans (in shares) | 801 | ||||||
Share-based compensation expense | $ 0 | 3,041 | 0 | 0 | 0 | 0 | 3,041 |
Contribution from noncontrolling interest | 0 | 0 | 0 | 0 | 0 | 24,995 | 24,995 |
Purchase of treasury stock | $ 0 | 0 | 0 | (2,522) | 0 | 0 | (2,522) |
Purchase of treasury stock (in shares) | 0 | ||||||
Retirement of treasury stock | $ (1) | (1,520) | (1,001) | 2,522 | 0 | 0 | 0 |
Retirement of treasury stock (in shares) | (188) | ||||||
Balance at May. 01, 2022 | $ 606 | 489,368 | 367,344 | 0 | (22,919) | 215,831 | 1,050,230 |
Balance (in shares) at May. 01, 2022 | 60,637 | ||||||
Balance at Jan. 30, 2022 | $ 606 | 487,342 | 339,912 | 0 | 10,565 | 200,741 | 1,039,166 |
Balance (in shares) at Jan. 30, 2022 | 60,564 | ||||||
Net income | $ 0 | 0 | 27,432 | 0 | 0 | 15,597 | 43,029 |
Other comprehensive (loss) income | 0 | 0 | 0 | 0 | (33,484) | (10,505) | (43,989) |
Shares issued under equity plans | $ 0 | 442 | 0 | 0 | 0 | 0 | 442 |
Shares issued under equity plans (in shares) | 73 | ||||||
Share-based compensation expense | $ 0 | 1,584 | 0 | 0 | 0 | 0 | 1,584 |
Contribution from noncontrolling interest | 0 | 0 | 0 | 0 | 0 | 9,998 | 9,998 |
Balance at May. 01, 2022 | $ 606 | $ 489,368 | $ 367,344 | $ 0 | $ (22,919) | $ 215,831 | $ 1,050,230 |
Balance (in shares) at May. 01, 2022 | 60,637 |
BASIS OF FINANCIAL STATEMENT PRESENTATION |
6 Months Ended |
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May 01, 2022 | |
BASIS OF FINANCIAL STATEMENT PRESENTATION [Abstract] | |
BASIS OF FINANCIAL STATEMENT PRESENTATION |
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
Photronics, Inc. (“Photronics”, “the Company”, “we”, “our”, or “us”) is one of the world’s leading manufacturers of photomasks,
which are high-precision photographic quartz or glass plates containing microscopic images of electronic circuits. Photomasks are a key element in the manufacture of semiconductors and flat-panel displays (“FPDs” or “displays”), and are used as
masters to transfer circuit patterns onto semiconductor wafers and FPD substrates during the fabrication of integrated circuits (“ICs” or “semiconductors”), a variety of FPDs and, to a lesser extent, other types of electrical and optical components.
We operate eleven manufacturing facilities, which are located in Taiwan (3),
, China (2), the United States (3), and Europe (2).The accompanying unaudited condensed consolidated financial statements (“the financial statements”) have been prepared in accordance
with U.S. GAAP for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In
the opinion of management, adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation have been included. The financial statements include the accounts of Photronics, its wholly owned subsidiaries, and
the majority-owned subsidiaries which it controls. All intercompany balances and transactions have been eliminated in consolidation. These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Form 10-K for
the fiscal year ended October 31, 2021, where we discuss and provide additional information about our accounting policies and the methods and assumptions used in our estimates.
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect
amounts reported in them. Our estimates, including those on the impact of COVID-19, are based on historical experience and on various assumptions that we believe to be reasonable under the circumstances. Our estimates are based on the facts and
circumstances available at the time they are made. Subsequent actual results may differ from such estimates. We review these estimates periodically and reflect any effects of revisions in the period in which they are determined.
Our business is typically impacted during the first quarter of our
fiscal year by the North American, European, and Asian holiday periods, as some customers reduce their development and buying activities during this period. Operating results for the interim periods are not necessarily indicative of the results
that may be expected for the fiscal year ending October 31, 2022.
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INVENTORIES |
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value. Presented below are the components of inventory at the balance sheet dates.
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PROPERTY, PLANT AND EQUIPMENT, NET |
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET |
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consists of the following:
ROU assets resulting from finance leases are included in the table above as follows:
The
following table presents depreciation expense (including the amortization of ROU assets) related to property, plant and equipment for the reporting periods.
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PDMCX JOINT VENTURE |
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PDMCX JOINT VENTURE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PDMCX JOINT VENTURE |
NOTE 4 - PDMCX JOINT VENTURE
In January 2018, Photronics, Inc. through its wholly owned Singapore subsidiary (hereinafter, within this Note “we”, “Photronics”,
“us”, or “our”), and DNP, through its wholly owned subsidiary “DNP Asia Pacific PTE, Ltd.” entered into a joint venture under which DNP obtained a 49.99%
interest in our IC business in Xiamen, China. The joint venture, which we refer to as “PDMCX”, was established to develop and manufacture photomasks for leading-edge and advanced-generation semiconductors. We entered into this joint venture to enable
us to compete more effectively for the merchant photomask business in China, and to benefit from the additional resources and investment that DNP provides to enable us to offer advanced-process technology to our customers. In 2020, in combination with local financing obtained by PDMCX, Photronics and DNP fulfilled their investment obligations under the PDMCX operating agreement (“the Agreement”). As discussed in Note 5, liens were granted to the local financing entity on property, plant and equipment with a May 1, 2022, and October 31, 2021, total
carrying value of $82.9 million and $90.1
million, respectively, as collateral for the loans.
Under the Agreement, DNP is afforded, under certain circumstances, the right to put its interest in PDMCX to Photronics. These
circumstances include disputes regarding the strategic direction of PDMCX that may arise after the initial two-year term of the Agreement
and cannot be resolved between the two parties. As of the date of issuance of these financial statements, DNP had not indicated its intention to exercise this right. In addition, both Photronics and DNP have the option to purchase, or put, their
interest from, or to, the other party, should their ownership interest fall below twenty percent for a period of more than
consecutive months. Under all such circumstances, the sales of ownership interests would be at the exiting party’s ownership percentage of the joint
venture’s net book value, with closing to take place within business days of obtaining required approvals and clearance.The following table presents net income we recorded from the operations of PDMCX during the reporting periods.
As required by the guidance in Topic 810 - “Consolidation” of the Accounting
Standards Codification (“ASC”), we evaluated our involvement in PDMCX for the purpose of determining whether we should consolidate its results in our financial
statements. The initial step of our evaluation was to determine whether PDMCX was a variable interest entity (“VIE”). Due to its lack of sufficient equity at risk to finance its activities without additional subordinated financial support, we
determined that it was a VIE. Having made this determination, we then assessed whether we were the primary beneficiary of the VIE, and concluded that we were the primary beneficiary during the current and prior year reporting periods; thus, as
required, the PDMCX financial results have been consolidated with Photronics. Our conclusion was based on the facts that we held a controlling financial interest in PDMCX (which resulted from our having the power to direct the activities that most
significantly impacted its economic performance) and had the obligation to absorb losses and the right to receive benefits that could potentially be significant to PDMCX. Our conclusions that we had the power to direct the activities that most
significantly affected the economic performance of PDMCX during the current and prior year reporting periods were based on our right to appoint the majority of its board of directors, which has, among others, the powers to manage the business
(through its rights to appoint and evaluate PDMCX’s management), incur indebtedness, enter into agreements and commitments, and acquire and dispose of PDMCX’s assets. In addition, as a result of the 50.01% variable interest we held during the current and prior-year periods, we had the
obligation to absorb losses, and the right to receive benefits, that could potentially be significant to PDMCX.
The following table presents the carrying amounts of PDMCX assets and liabilities included in our condensed consolidated balance
sheets. General creditors of PDMCX do not have recourse to the assets of Photronics (other than the net assets of PDMCX); therefore, our maximum exposure to loss from PDMCX is our interest in the carrying amount of the net assets of the joint
venture.
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DEBT |
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DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT |
NOTE 5 - DEBT
The tables below provide information on our long-term debt.
(1) First five loan repayments will each be
for 7.5 percent of the approved 200
million RMB loan principal; last five installments will each be for 12.5 percent of the approved loan principal.
(2) Semiannual repayments commenced in March
2022.
(3) See Note 7 for periodic payment amounts.
(4) Represents the carrying amount at the
balance sheet date of the related ROU assets, in which the lessors have secured interests.
(1) First five loan repayments will each be for 7.5 percent of the approved 200 million RMB loan principal; last five installments will each be for 12.5 percent of the approved loan principal.
(2) Semiannual repayments commenced in March 2022.
(3) See Note 7 for interest rates on lease liabilities, maturity dates, and periodic payment amounts. (4) Represents the carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests.
Xiamen Project Loans
In November 2018, PDMCX obtained approval to borrow 345.0 million RMB from the Industrial and Commercial Bank of China. From November 2018 through July 2020, PDMCX entered into separate loan agreements
(the “Project Loans”) for the entire approved amount and, as of May 1, 2022, 166.4 million RMB ($25.2 million) remained
outstanding. The Project Loans were used to finance certain capital expenditures at the PDMCX facility and are collateralized by liens granted on the land use right, building, and certain equipment located at the facility. The interest rates on the
Project Loans are variable (based on the RMB Loan Prime Rate of the National Interbank Funding Center), and interest incurred on the loans is eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development
Zone, which provide for such reimbursements up to a prescribed limit and duration. The Project Loans are subject to covenants and provisions, certain of which relate to the assets pledged as security for the loans, all of which we were in
compliance with at May 1, 2022.
Xiamen Working Capital Loans
In November 2018, PDMCX obtained approval for revolving, unsecured credit of the equivalent of $25.0 million, pursuant to which PDMCX may enter into separate loan agreements with varying terms to maturity. This facility is subject to annual reviews and extensions, with the
most recent extension set to expire in . The interest rates are variable, based on the RMB Loan Prime Rate of the National Interbank Funding Center. Interest incurred on the loans was eligible for
reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided for such reimbursements up to a prescribed limit and duration.
. As of May 1, 2022, PDMCX had 28.8 million RMB ($4.4 million) outstanding against the approvalHefei Equipment Loan
In October
2020, our Hefei, China, facility was approved to borrow 200 million RMB (approximately $30.3 million, at the balance sheet date) from the China Construction Bank Corporation. This credit facility is subject to annual reviews and extensions, with the most recent
extension set to expire in . The loan proceeds were used to fund the purchase of two lithography tools at the Hefei facility. As of May 1, 2022, we had borrowed 135.7
million RMB against this approval, of which 120.7 million RMB ($18.3 million) was then outstanding, and 64.3 million RMB ($9.7 million) remained available to borrow. The interest rate on the loan is variable and based on the RMB Loan Prime Rate of the National Interbank
Funding Center. The borrowings are secured by the Hefei facility, its related land use right, and certain manufacturing equipment. The Hefei Equipment Loan is subject to covenants and provisions, certain of which relate to the assets pledged as
security for the loan, including covenants for the ratio of total liabilities to total assets and the ratio of current assets to current liabilities, all of which we were in compliance with at May 1, 2022.
Finance Leases
In February
2021, we entered into a five-year $7.2
million finance lease for a high-end inspection tool and, in December 2020, we entered into a $35.5 million lease for a high-end
lithography tool. See Note 7 for additional information on these leases.
Corporate Credit Agreement
In September 2018, we entered into a five-year
amended and restated credit agreement (the “Credit Agreement”), which has a $50 million borrowing limit, with an expansion capacity to $100 million. The Credit Agreement is secured by substantially all of our assets located in the United States and common stock we own in certain
subsidiaries. The Credit Agreement includes covenants around minimum interest coverage ratio, total leverage ratio, and minimum unrestricted cash balance (all of which we were in compliance with at May 1, 2022), and limits the amount of cash
dividends, distributions, and redemptions we can pay on our common stock to an aggregate annual amount of $50 million. We had no outstanding borrowings against the Credit Agreement at May 1, 2022. The interest rate on the Credit Agreement (1.76% at May 1, 2022) is based on our total leverage ratio at one-month LIBOR plus a spread, as defined in the Credit Agreement.
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REVENUE |
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REVENUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
NOTE 6 - REVENUE
We recognize revenue when, or as, control of a good or service transfers to a customer, in an amount that reflects the consideration to which we expect
to be entitled in exchange for transferring those goods or services. We account for an arrangement as a revenue contract when each party has approved and is
committed to perform under the contract, the rights of the contracting parties regarding the goods or services to be transferred and the payment terms are identifiable, the arrangement has commercial substance, and collection of consideration is
probable. Substantially all of our revenue comes from the sales of photomasks. We typically contract with our customers to sell sets of photomasks, which are comprised of multiple layers, the predominance of which we invoice as they ship to
customers. As the photomasks are manufactured to customer specifications, they have no alternative use to us and, as our contracts generally provide us with the right to payment for work completed to date, we recognize revenue as we perform, or
“over time”, on most of our contracts. We measure our performance to date using an input method, which is based on our estimated costs to complete the various manufacturing phases of a photomask. At the end of a reporting period, there are a number
of uncompleted revenue contracts on which we have performed; for any such contracts under which we are entitled to be compensated for our costs incurred plus a reasonable profit, we recognize revenue and a corresponding contract asset for such
performance. We account for shipping and handling activities that we perform after a customer obtains control of a good as being activities to fulfill our promise to transfer the good to the customer, rather than as promised services, or
performance obligations, under the contract. We report our revenue net of any sales or similar taxes we collect on behalf of government entities.
As stated above, photomasks are manufactured to customer specifications in accordance with their proprietary designs; thus, they are
individually unique. Due to their uniqueness and other factors, their transaction prices are individually established through negotiations with customers; consequently, our photomasks do not have standard or “list” prices. The transaction prices of
the vast majority of our revenue contracts include only fixed amounts of consideration. In certain instances, such as when we offer a customer an early payment discount, an estimate of variable consideration would be included in the transaction
price, but only to the extent that a significant reversal of revenue would not occur when the uncertainty related to the variability was resolved.
Contract Assets, Contract Liabilities, and Accounts Receivable
We recognize a contract asset when our performance under a contract precedes our receipt of consideration from a customer, or before
payment is due, and our receipt of consideration is conditional upon factors other than the passage of time. Contract assets reflect our transfer of control of photomasks that are in process or completed but not yet shipped to customers. A receivable
is recognized when we have an unconditional right to payment for our performance, which generally occurs when we ship the photomasks. Our contract assets primarily consist of a significant amount of our in-process production orders and fully
manufactured photomasks which have not yet shipped, for which we have an enforceable right to collect consideration (including a reasonable profit) in the event the in-process orders are cancelled by customers. On an individual contract basis, we net
contract assets with contract liabilities (deferred revenue) for financial reporting purposes. We did not identify impairment
indicators for any outstanding contract assets during the three or six-month periods ended May 1, 2022, or May 2, 2021.
The following table provides information about our contract balances at the balance sheet dates.
The following table presents revenue recognized from contract liabilities that existed at the beginning of the reporting periods.
We generally record our accounts receivable at their billed amounts.
All outstanding past due customer invoices are reviewed for collectibility during, and at the end of, every reporting period. To the extent we believe a loss on the collection of a customer invoice is probable, we record the loss and credit an
allowance for credit losses. In the event that an amount is determined to be uncollectible, we charge the allowance for credit losses and derecognize the related receivable. We did not incur any credit losses on our accounts receivable during the
three or six-month periods ended May 1, 2022, or May 2, 2021.
Our invoice terms generally range from net
to ninety days, depending on both the geographic market in which the transaction occurs and our
payment agreements with specific customers. In the event that our evaluation of a customer’s business prospects and financial condition indicate that the customer presents a collectibility risk, we modify terms of sale, which may require payment in
advance of performance. At the time of adoption, we elected the practical expedient allowed under ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) that permits us not to adjust a contract’s promised amount of consideration to
reflect a financing component when the period between when we transfer control of goods or services to customers and when we are paid is one year or less.In instances when we are paid in advance of our performance, we record a contract liability and, as allowed under the practical
expedient in Topic 606, recognize interest expense only if the period between when we receive payment from the customer and the date when we expect to be entitled to the payment is greater than one year. Historically, advance payments we have
received from customers have generally not preceded the completion of our performance obligations by more than one year.
Disaggregation of Revenue
The following tables present our revenue for the three and six-month
periods ended May 1, 2022 and May 2, 2021, disaggregated by product type, geographic origin, and timing of recognition.
* This table disaggregates revenue by the location in which it was
earned.
Contract Costs
We pay commissions to third-party sales agents for certain sales they procure on our behalf. However, the bases of the commissions
are the transaction prices of the sales, which are completed in less than one year; thus, no relationship is established with a customer that will result in future business. Therefore, we do not recognize any portion of these sales commissions as
costs of obtaining a contract, nor do we currently foresee other circumstances under which we would recognize contract obtainment costs as assets.
Remaining Performance Obligations
As we are typically required to fulfill customer orders within a short period of time, our backlog of orders has historically been
to weeks for FPD photomasks and
to weeks for IC
photomasks. However, the demand for some IC photomasks has expanded beyond the industry’s capacity to supply them within the traditional time period, thus the backlog in some cases can expand to as long as to three months. As allowed under Topic 606, we have elected
not to disclose our remaining performance obligations, which represent the costs associated with the completion of the manufacturing process of in-process photomasks related to contracts that have an original duration of one year or less.Product Warranties
Our photomasks are sold under warranties that generally range from
to twenty-four months. We warrant that our photomasks conform
to customer specifications and will typically repair, replace, or issue a refund (at our option) for any photomasks that fail to do so. The warranties do not represent separate performance obligations in our revenue contracts. Historically, customer
claims under warranties have been immaterial. |
LEASES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 01, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
NOTE 7 - LEASES
Our involvement in lease arrangements has typically been as a lessee. We determine if an agreement is or contains a lease on the
earlier of the date of the agreement or the date on which we commit to entering the agreement. Our evaluation considers whether the agreement includes an identified asset and whether it affords us the right to control the asset. Our having the right
to control an identified asset is determined by whether we are entitled to substantially all of its economic benefits and can direct its use.
We recognize leases on our consolidated balance sheet when a lessor makes an asset underlying a lease having a term in excess of
twelve months available for our use. As allowed under ASC Topic 842 – “Leases” (“Topic 842”), we have elected not to apply the recognition requirements to leases that, at their commencement dates, have lease terms of twelve months or less and do not
include options to purchase their underlying assets that we are reasonably certain to exercise. The present value of lease payments over the term of the lease provides the basis for the initial measurement of ROU assets and their related lease
liabilities. We measure finance lease liabilities using the rates implicit in the leases; operating lease liabilities are measured using our incremental borrowing rates, for collateralized loans, at the commencement date. Variable lease payments,
other than those that are dependent on an index or on a rate, are not included in the measurement of ROU assets and their related lease liabilities. Lease terms include extension periods if the lease agreement includes an option to extend the lease
that we are reasonably certain to exercise. As allowed under Topic 842, we have elected, for all classes of assets, the practical expedient to not separate lease components of a contract from nonlease components of a contract.
In February 2021, we entered into a five-year $7.2 million finance lease for a high-end inspection tool. Monthly payments on the lease, which
commenced in February 2021, are $0.1 million
per month. Upon the payment of the fiftieth monthly payment and prior to payment of the fifty-first monthly payment, we may exercise an early buyout option to purchase the tool for $2.4 million. If we do not exercise the early buyout option, then at the end of the five-year
lease term, the lease shall continue to renew on a month-to-month basis at the same rental terms; at our option, after the original term or any renewal periods, we may return the tool, elect to extend the lease, or purchase the tool at its fair
market value. Since we are reasonably certain that we will exercise the early buyout option, our lease liability reflects such exercise and we have classified the lease as a finance lease. The interest rate implicit in the lease is 1.08%.
In December 2020, we entered into a five-year
$35.5 million finance lease for a high-end lithography tool. Monthly payments on the lease, which commenced in January 2021, increased from
$0.04 million during the first three months to $0.6 million for the following nine months followed by forty-eight monthly payments of $0.5
million. As of the due date of the forty-eighth monthly payment, we may exercise an early buyout option to purchase the tool for $14.1
million. If we do not exercise the early buyout option, then at the end of the five-year lease term, at our option, we may return the
tool, elect to extend the lease term for a period and a lease payment to be agreed with lessor at the time, or purchase the tool for its then-fair market value as determined by the lessor. Since we are reasonably certain that we will exercise the
early buyout option, our lease liability reflects such exercise and we have classified the lease as a finance lease. The interest rate implicit in the lease is 1.58%. The lease agreement incorporates the covenants included in our Corporate Credit Agreement, which are detailed in Note 5, and includes a cross-default provision for any agreement or
instrument with an outstanding, committed balance greater than $5.0 million in which we are the indebted party.
The following table provides information on operating and finance leases included in our consolidated balance sheets.
The following table presents future lease payments under
noncancelable operating and finance leases as of May 1, 2022. Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
The following table presents lease costs for the three and six-month
periods ended May 1, 2022, and May 2, 2021.
The following table presents statistical information related to our
operating and finance leases. The information presented is as of the balance sheet dates.
The following table presents the effects of leases on our condensed consolidated statements of cash flows, and provides leases-related non-cash information for the
periods presented.
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SHARE-BASED COMPENSATION |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SHARE-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION |
NOTE 8 - SHARE-BASED COMPENSATION
In March
2016, shareholders approved our current equity incentive compensation plan (the “Plan”), under which incentive stock options, non-qualified stock options, stock grants, stock-based awards, restricted stock, restricted stock units, stock
appreciation rights, performance units, performance stock, and other stock or cash awards may be granted. Shares to be issued under the Plan may be authorized and unissued shares, issued shares that have been reacquired by us (in the open market
or in private transactions), or a combination thereof. The maximum number of shares of common stock approved that may be issued under the Plan is four
million shares. Awards may be granted to officers, employees, directors, consultants, advisors, and independent contractors of Photronics or its subsidiaries. In the event of a change in control (as defined in the Plan), the vesting of awards may
be accelerated. The Plan, aspects of which are more fully described below, prohibits further awards from being issued under prior plans. The table below presents information on our share-based compensation expenses for the three and six-month periods
ended May 1, 2022, and May 2, 2021.
Restricted Stock Awards
We
periodically grant restricted stock awards, the restrictions on which typically lapse over a service period of to four years. The fair value of the awards is determined on the date of grant, based on the closing price of our common stock. The table below presents
information on our restricted stock awards for the three and six-months ended May 1, 2022, and May 2,
2021.
Stock Options
Option awards generally vest in to four years, and have a ten-year contractual term. All incentive
and non-qualified stock option grants must have an exercise price no less than the market value of the underlying common stock on the date of grant. The grant-date fair values of options are based on closing prices of our common stock on the dates
of grant and are calculated using the Black-Scholes option pricing model. Expected volatility is based on the historical volatility of our common stock. We use historical option exercise behavior and employee termination data to estimate expected
term, which represents the period of time that options are expected to remain outstanding. The risk-free rate of return for the estimated term of an option is based on the U.S. Treasury yield curve in effect at the date of grant. The table below presents
information on our stock options for the three and six-months ended May 1, 2022, and May 2, 2021.
Information on outstanding and exercisable option awards as of May 1, 2022, is presented below.
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INCOME TAXES |
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
NOTE 9 - INCOME TAXES
We calculate our provision for income taxes at the end of each interim reporting period on the basis of an estimated annual
effective tax rate adjusted for tax items that are discrete to each period.
The effective tax rate of 25.1% differs from the U.S. statutory rate of 21.0% in the three-month period ended May 1, 2022, primarily due to
the non-recognition of the tax benefit of losses that, in certain jurisdictions, have been offset by valuation allowances, non-U.S. pre-tax income being taxed at higher statutory rates in the non-U.S. jurisdictions, and the establishment of
uncertain tax positions in non-U.S. jurisdiction.
The effective tax rate of 18.5% in the three-month period end May 2, 2021, differs from the U.S. statutory rate of 21.0% primarily due to changes in forecasted jurisdictional earnings.
The effective tax rate of 25.5% in the six-month period ended May 1, 2022, differs from the U.S. statutory rate of 21.0% primarily due to the non-recognition of the tax benefit of losses that, in certain jurisdictions, have been offset by valuation allowances, non-U.S. pre-tax income being taxed at higher statutory rates in the
non-U.S. jurisdictions, and the establishment of uncertain tax positions in non-U.S. jurisdiction.
The effective tax rate of 20.5% differs
from the U.S. statutory rate of 21.0% in the six-month period ended May 2, 2021, primarily due to changes in forecasted jurisdictional
earnings, the benefits of investment credits in certain foreign jurisdictions, which were partially offset by the non-recognition of taxes or benefits that, in certain jurisdictions, have been offset by valuation allowances.
Although the timing of the expirations of statutes of limitations
may be uncertain, as they can be dependent upon the settlement of tax audits, we believe that the amount of uncertain tax positions (including interest and penalties, and net of tax benefits) that may be resolved over the next twelve months is
immaterial. Resolution of these uncertain tax positions may result from either or both the lapses of statutes of limitations and tax settlements. We are no longer subject to tax authority examinations in the U.S. and major foreign or state
jurisdictions for years prior to fiscal year The table below presents information on our unrecognized tax benefits as of the balance sheet dates. .
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EARNINGS PER SHARE |
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EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
NOTE 10 - EARNINGS PER SHARE
The calculations of basic and diluted earnings per share are presented below.
The table below illustrates the outstanding weighted-average share-based payment awards that were excluded from the calculation
of diluted earnings per share because their exercise price exceeded the average market value of the common shares for the period or, under application of the treasury stock method, they were otherwise determined to be antidilutive.
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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May 01, 2022 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
NOTE 11 - COMMITMENTS AND CONTINGENCIES
As of May 1, 2022, the Company had
commitments outstanding for capital expenditures of approximately $115.1 million, primarily for purchases of high-end equipment.
In May 2022, the Company was informed of a customs audit at one of its China operations. As of the date of this filing, the audit is ongoing. The Company estimated a contingency ranging from $2.2 million to $3.7 million which
includes unpaid additional customs duties and related interest and penalties for the previous three years (the period under audit). We
recorded a contingent loss of $2.2 million, as we believe this is the most likely outcome. The $2.2 million amount was recorded with a charge to Cost of goods sold in the condensed consolidated statements of income and Accrued liabilities in the condensed consolidated balance sheets.
We are subject to various other claims that
arise in the ordinary course of business. We believe that our potential liability under such claims, individually or in the aggregate, will not have a material effect on our consolidated financial statements.
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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT |
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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT |
NOTE 12 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
The
following tables set forth the changes in our accumulated other comprehensive income by component (net of tax of $0) for the three
and six-month periods ended May 1, 2022, and May 2, 2021.
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FAIR VALUE MEASUREMENTS |
6 Months Ended |
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May 01, 2022 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS |
NOTE 13 - FAIR VALUE MEASUREMENTS
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information
used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices
(unadjusted) in active markets for identical securities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly; and Level 3, defined as unobservable inputs that are not corroborated by market data.
The fair values of our cash and cash equivalents (Level 1 measurements), accounts receivable, accounts payable, and certain other
current assets and current liabilities (Level 2 measurements) approximate their carrying values due to their short-term maturities. The fair values of our variable rate debt instruments are a Level 2 measurement and approximate their carrying values
due to the variable nature of the underlying interest rates. We did not have any assets or liabilities measured at fair value, on a
recurring or a nonrecurring basis, at May 1, 2022, or October 31, 2021.
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SHARE REPURCHASE PROGRAMS |
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SHARE REPURCHASE PROGRAMS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE REPURCHASE PROGRAMS |
NOTE 14 - SHARE REPURCHASE PROGRAMS
In September 2020, the Company’s board of directors authorized the repurchase of up to $100 million of its common stock, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Act. We commenced repurchasing shares under this authorization on September 16, 2020. All of the shares repurchased under this authorization prior to January 30, 2022, were retired prior to that date. As of May 1,
2022, $31.7 million was available under this authorization for the purchase of additional shares. The table below presents information on this
repurchase program for the three and six-month periods ended May 1, 2022, and May 2, 2021.
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RECENT ACCOUNTING PRONOUNCEMENTS |
6 Months Ended |
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May 01, 2022 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS |
NOTE 15 - RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards
Updates Adopted
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, as part of its overall
simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The FASB’s amendments primarily impact ASC 740,
Income Taxes, and may impact both interim and annual reporting periods. We adopted ASU 2019-12 on November 1, 2021; the effect of the adoption was immaterial.
Accounting Standards
Updates to be Adopted
In April 2022, the FASB issued ASU 2022-2, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”,
which requires: 1) an entity to measure and record the lifetime expected credit losses of an asset that is within the scope of the Update upon origination or acquisition; as a result, credit losses from loans modified as troubled debt
restructurings are to be incorporated into the allowance for credit losses and, 2) public business entities to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope
of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost”. The guidance in this Update will be effective for Photronics in its first quarter of fiscal 2024. The amendments are to be applied prospectively, with the
exception of the transition method related to the recognition and measurement of troubled debt restructurings for which an entity has the option to apply a modified retrospective transition method. We are currently evaluating the effect the
adoption of this ASU may have on our disclosures.
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”, to
increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance, and the effect of the assistance on an entity’s financial
statements. The guidance in this Update will be effective for Photronics in its fiscal year 2023 Form 10-K, with early application of the amendments allowed. The amendments are to be applied prospectively to all transactions within the scope of
the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or, retrospectively to those transactions. We are currently evaluating
the effect the adoption of this ASU may have on our disclosures.
In March
2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional expedients and exceptions to applying the guidance on contract
modifications, hedge accounting, and other transactions, to simplify the accounting for transitioning from LIBOR, and other interbank offered rates expected to be discontinued, to alternative reference rates. The guidance in this Update was
effective upon its issuance; if elected, it is to be applied prospectively through December 31, 2022. We do not expect the impact of this ASU to be material to our consolidated financial statements.
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BASIS OF FINANCIAL STATEMENT PRESENTATION (Policies) |
6 Months Ended |
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May 01, 2022 | |
BASIS OF FINANCIAL STATEMENT PRESENTATION [Abstract] | |
Consolidation |
The accompanying unaudited condensed consolidated financial statements (“the financial statements”) have been prepared in accordance
with U.S. GAAP for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In
the opinion of management, adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation have been included. The financial statements include the accounts of Photronics, its wholly owned subsidiaries, and
the majority-owned subsidiaries which it controls. All intercompany balances and transactions have been eliminated in consolidation. These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Form 10-K for
the fiscal year ended October 31, 2021, where we discuss and provide additional information about our accounting policies and the methods and assumptions used in our estimates.
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Estimates and Assumptions |
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect
amounts reported in them. Our estimates, including those on the impact of COVID-19, are based on historical experience and on various assumptions that we believe to be reasonable under the circumstances. Our estimates are based on the facts and
circumstances available at the time they are made. Subsequent actual results may differ from such estimates. We review these estimates periodically and reflect any effects of revisions in the period in which they are determined.
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INVENTORIES (Policies) |
6 Months Ended |
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May 01, 2022 | |
INVENTORIES [Abstract] | |
Inventories | Inventories are stated at the lower of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value. |
PDMCX JOINT VENTURE (Policies) |
6 Months Ended |
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May 01, 2022 | |
PDMCX JOINT VENTURE [Abstract] | |
Variable Interest Entities |
As required by the guidance in Topic 810 - “Consolidation” of the Accounting
Standards Codification (“ASC”), we evaluated our involvement in PDMCX for the purpose of determining whether we should consolidate its results in our financial
statements. The initial step of our evaluation was to determine whether PDMCX was a variable interest entity (“VIE”). Due to its lack of sufficient equity at risk to finance its activities without additional subordinated financial support, we
determined that it was a VIE. Having made this determination, we then assessed whether we were the primary beneficiary of the VIE, and concluded that we were the primary beneficiary during the current and prior year reporting periods; thus, as
required, the PDMCX financial results have been consolidated with Photronics. Our conclusion was based on the facts that we held a controlling financial interest in PDMCX (which resulted from our having the power to direct the activities that most
significantly impacted its economic performance) and had the obligation to absorb losses and the right to receive benefits that could potentially be significant to PDMCX. Our conclusions that we had the power to direct the activities that most
significantly affected the economic performance of PDMCX during the current and prior year reporting periods were based on our right to appoint the majority of its board of directors, which has, among others, the powers to manage the business
(through its rights to appoint and evaluate PDMCX’s management), incur indebtedness, enter into agreements and commitments, and acquire and dispose of PDMCX’s assets. In addition, as a result of the 50.01% variable interest we held during the current and prior-year periods, we had the
obligation to absorb losses, and the right to receive benefits, that could potentially be significant to PDMCX.
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REVENUE (Policies) |
6 Months Ended |
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May 01, 2022 | |
REVENUE [Abstract] | |
Revenue |
We recognize revenue when, or as, control of a good or service transfers to a customer, in an amount that reflects the consideration to which we expect
to be entitled in exchange for transferring those goods or services. We account for an arrangement as a revenue contract when each party has approved and is
committed to perform under the contract, the rights of the contracting parties regarding the goods or services to be transferred and the payment terms are identifiable, the arrangement has commercial substance, and collection of consideration is
probable. Substantially all of our revenue comes from the sales of photomasks. We typically contract with our customers to sell sets of photomasks, which are comprised of multiple layers, the predominance of which we invoice as they ship to
customers. As the photomasks are manufactured to customer specifications, they have no alternative use to us and, as our contracts generally provide us with the right to payment for work completed to date, we recognize revenue as we perform, or
“over time”, on most of our contracts. We measure our performance to date using an input method, which is based on our estimated costs to complete the various manufacturing phases of a photomask. At the end of a reporting period, there are a number
of uncompleted revenue contracts on which we have performed; for any such contracts under which we are entitled to be compensated for our costs incurred plus a reasonable profit, we recognize revenue and a corresponding contract asset for such
performance. We account for shipping and handling activities that we perform after a customer obtains control of a good as being activities to fulfill our promise to transfer the good to the customer, rather than as promised services, or
performance obligations, under the contract. We report our revenue net of any sales or similar taxes we collect on behalf of government entities.
As stated above, photomasks are manufactured to customer specifications in accordance with their proprietary designs; thus, they are
individually unique. Due to their uniqueness and other factors, their transaction prices are individually established through negotiations with customers; consequently, our photomasks do not have standard or “list” prices. The transaction prices of
the vast majority of our revenue contracts include only fixed amounts of consideration. In certain instances, such as when we offer a customer an early payment discount, an estimate of variable consideration would be included in the transaction
price, but only to the extent that a significant reversal of revenue would not occur when the uncertainty related to the variability was resolved.
Contract Assets, Contract Liabilities, and Accounts Receivable
We recognize a contract asset when our performance under a contract precedes our receipt of consideration from a customer, or before
payment is due, and our receipt of consideration is conditional upon factors other than the passage of time. Contract assets reflect our transfer of control of photomasks that are in process or completed but not yet shipped to customers. A receivable
is recognized when we have an unconditional right to payment for our performance, which generally occurs when we ship the photomasks. Our contract assets primarily consist of a significant amount of our in-process production orders and fully
manufactured photomasks which have not yet shipped, for which we have an enforceable right to collect consideration (including a reasonable profit) in the event the in-process orders are cancelled by customers. On an individual contract basis, we net
contract assets with contract liabilities (deferred revenue) for financial reporting purposes. We did not identify impairment
indicators for any outstanding contract assets during the three or six-month periods ended May 1, 2022, or May 2, 2021.
We generally record our accounts receivable at their billed amounts.
All outstanding past due customer invoices are reviewed for collectibility during, and at the end of, every reporting period. To the extent we believe a loss on the collection of a customer invoice is probable, we record the loss and credit an
allowance for credit losses. In the event that an amount is determined to be uncollectible, we charge the allowance for credit losses and derecognize the related receivable. We did not incur any credit losses on our accounts receivable during the
three or six-month periods ended May 1, 2022, or May 2, 2021.
Our invoice terms generally range from net
to ninety days, depending on both the geographic market in which the transaction occurs and our
payment agreements with specific customers. In the event that our evaluation of a customer’s business prospects and financial condition indicate that the customer presents a collectibility risk, we modify terms of sale, which may require payment in
advance of performance. At the time of adoption, we elected the practical expedient allowed under ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) that permits us not to adjust a contract’s promised amount of consideration to
reflect a financing component when the period between when we transfer control of goods or services to customers and when we are paid is one year or less.In instances when we are paid in advance of our performance, we record a contract liability and, as allowed under the practical
expedient in Topic 606, recognize interest expense only if the period between when we receive payment from the customer and the date when we expect to be entitled to the payment is greater than one year. Historically, advance payments we have
received from customers have generally not preceded the completion of our performance obligations by more than one year.
Contract Costs
We pay commissions to third-party sales agents for certain sales they procure on our behalf. However, the bases of the commissions
are the transaction prices of the sales, which are completed in less than one year; thus, no relationship is established with a customer that will result in future business. Therefore, we do not recognize any portion of these sales commissions as
costs of obtaining a contract, nor do we currently foresee other circumstances under which we would recognize contract obtainment costs as assets.
Remaining Performance Obligations
As we are typically required to fulfill customer orders within a short period of time, our backlog of orders has historically been
to weeks for FPD photomasks and
to weeks for IC
photomasks. However, the demand for some IC photomasks has expanded beyond the industry’s capacity to supply them within the traditional time period, thus the backlog in some cases can expand to as long as to three months. As allowed under Topic 606, we have elected
not to disclose our remaining performance obligations, which represent the costs associated with the completion of the manufacturing process of in-process photomasks related to contracts that have an original duration of one year or less.Product Warranties
Our photomasks are sold under warranties that generally range from
to twenty-four months. We warrant that our photomasks conform
to customer specifications and will typically repair, replace, or issue a refund (at our option) for any photomasks that fail to do so. The warranties do not represent separate performance obligations in our revenue contracts. Historically, customer
claims under warranties have been immaterial. |
LEASES (Policies) |
6 Months Ended |
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May 01, 2022 | |
LEASES [Abstract] | |
Leases |
Our involvement in lease arrangements has typically been as a lessee. We determine if an agreement is or contains a lease on the
earlier of the date of the agreement or the date on which we commit to entering the agreement. Our evaluation considers whether the agreement includes an identified asset and whether it affords us the right to control the asset. Our having the right
to control an identified asset is determined by whether we are entitled to substantially all of its economic benefits and can direct its use.
We recognize leases on our consolidated balance sheet when a lessor makes an asset underlying a lease having a term in excess of
twelve months available for our use. As allowed under ASC Topic 842 – “Leases” (“Topic 842”), we have elected not to apply the recognition requirements to leases that, at their commencement dates, have lease terms of twelve months or less and do not
include options to purchase their underlying assets that we are reasonably certain to exercise. The present value of lease payments over the term of the lease provides the basis for the initial measurement of ROU assets and their related lease
liabilities. We measure finance lease liabilities using the rates implicit in the leases; operating lease liabilities are measured using our incremental borrowing rates, for collateralized loans, at the commencement date. Variable lease payments,
other than those that are dependent on an index or on a rate, are not included in the measurement of ROU assets and their related lease liabilities. Lease terms include extension periods if the lease agreement includes an option to extend the lease
that we are reasonably certain to exercise. As allowed under Topic 842, we have elected, for all classes of assets, the practical expedient to not separate lease components of a contract from nonlease components of a contract.
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SHARE-BASED COMPENSATION (Policies) |
6 Months Ended |
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May 01, 2022 | |
Restricted Stock [Member] | |
Stock Options [Abstract] | |
Share-Based Compensation | We periodically grant restricted stock awards, the restrictions on which typically lapse over a service period of to four years. The fair value of the awards is determined on the date of grant, based on the closing price of our common stock. |
Employee Stock Option [Member] | |
Stock Options [Abstract] | |
Share-Based Compensation |
Stock Options
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INCOME TAXES (Policies) |
6 Months Ended |
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May 01, 2022 | |
INCOME TAXES [Abstract] | |
Income Taxes |
We calculate our provision for income taxes at the end of each interim reporting period on the basis of an estimated annual
effective tax rate adjusted for tax items that are discrete to each period.
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FAIR VALUE MEASUREMENTS (Policies) |
6 Months Ended |
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May 01, 2022 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
Fair Value Financial Instruments |
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information
used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices
(unadjusted) in active markets for identical securities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly; and Level 3, defined as unobservable inputs that are not corroborated by market data.
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RECENT ACCOUNTING PRONOUNCEMENTS (Policies) |
6 Months Ended |
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May 01, 2022 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
Recent Accounting Pronouncements |
Accounting Standards
Updates Adopted
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, as part of its overall
simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The FASB’s amendments primarily impact ASC 740,
Income Taxes, and may impact both interim and annual reporting periods. We adopted ASU 2019-12 on November 1, 2021; the effect of the adoption was immaterial.
Accounting Standards
Updates to be Adopted
In April 2022, the FASB issued ASU 2022-2, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”,
which requires: 1) an entity to measure and record the lifetime expected credit losses of an asset that is within the scope of the Update upon origination or acquisition; as a result, credit losses from loans modified as troubled debt
restructurings are to be incorporated into the allowance for credit losses and, 2) public business entities to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope
of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost”. The guidance in this Update will be effective for Photronics in its first quarter of fiscal 2024. The amendments are to be applied prospectively, with the
exception of the transition method related to the recognition and measurement of troubled debt restructurings for which an entity has the option to apply a modified retrospective transition method. We are currently evaluating the effect the
adoption of this ASU may have on our disclosures.
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”, to
increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance, and the effect of the assistance on an entity’s financial
statements. The guidance in this Update will be effective for Photronics in its fiscal year 2023 Form 10-K, with early application of the amendments allowed. The amendments are to be applied prospectively to all transactions within the scope of
the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or, retrospectively to those transactions. We are currently evaluating
the effect the adoption of this ASU may have on our disclosures.
In March
2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional expedients and exceptions to applying the guidance on contract
modifications, hedge accounting, and other transactions, to simplify the accounting for transitioning from LIBOR, and other interbank offered rates expected to be discontinued, to alternative reference rates. The guidance in this Update was
effective upon its issuance; if elected, it is to be applied prospectively through December 31, 2022. We do not expect the impact of this ASU to be material to our consolidated financial statements.
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INVENTORIES (Tables) |
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Inventories are stated at the lower of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value. Presented below are the components of inventory at the balance sheet dates.
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PROPERTY, PLANT AND EQUIPMENT, NET (Tables) |
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PROPERTY, PLANT AND EQUIPMENT, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
Property, plant and equipment consists of the following:
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Finance Lease, ROU Assets |
ROU assets resulting from finance leases are included in the table above as follows:
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Depreciation and Amortization Expense |
The
following table presents depreciation expense (including the amortization of ROU assets) related to property, plant and equipment for the reporting periods.
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PDMCX JOINT VENTURE (Tables) |
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PDMCX JOINT VENTURE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Recorded from Operations |
The following table presents net income we recorded from the operations of PDMCX during the reporting periods.
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Carrying Amounts and Exposure to Loss Related to Assets and Liabilities |
The following table presents the carrying amounts of PDMCX assets and liabilities included in our condensed consolidated balance
sheets. General creditors of PDMCX do not have recourse to the assets of Photronics (other than the net assets of PDMCX); therefore, our maximum exposure to loss from PDMCX is our interest in the carrying amount of the net assets of the joint
venture.
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DEBT (Tables) |
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DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt |
The tables below provide information on our long-term debt.
(1) First five loan repayments will each be
for 7.5 percent of the approved 200
million RMB loan principal; last five installments will each be for 12.5 percent of the approved loan principal.
(2) Semiannual repayments commenced in March
2022.
(3) See Note 7 for periodic payment amounts.
(4) Represents the carrying amount at the
balance sheet date of the related ROU assets, in which the lessors have secured interests.
(1) First five loan repayments will each be for 7.5 percent of the approved 200 million RMB loan principal; last five installments will each be for 12.5 percent of the approved loan principal.
(2) Semiannual repayments commenced in March 2022.
(3) See Note 7 for interest rates on lease liabilities, maturity dates, and periodic payment amounts. (4) Represents the carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests.
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REVENUE (Tables) |
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May 01, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Balances |
The following table provides information about our contract balances at the balance sheet dates.
The following table presents revenue recognized from contract liabilities that existed at the beginning of the reporting periods.
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Disaggregation of Revenue |
The following tables present our revenue for the three and six-month
periods ended May 1, 2022 and May 2, 2021, disaggregated by product type, geographic origin, and timing of recognition.
* This table disaggregates revenue by the location in which it was
earned.
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LEASES (Tables) |
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LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information on Operating and Finance Leases Included in Consolidated Balance Sheets |
The following table provides information on operating and finance leases included in our consolidated balance sheets.
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Future Lease Payments under Noncancelable Operating and Finance Leases |
The following table presents future lease payments under
noncancelable operating and finance leases as of May 1, 2022. Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
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Lease Costs |
The following table presents lease costs for the three and six-month
periods ended May 1, 2022, and May 2, 2021.
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Weighted-Average Lease Terms and Weighted-Average Discount Rates |
The following table presents statistical information related to our
operating and finance leases. The information presented is as of the balance sheet dates.
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Supplemental Cash Flow Information Related to Leases |
The following table presents the effects of leases on our condensed consolidated statements of cash flows, and provides leases-related non-cash information for the
periods presented.
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SHARE-BASED COMPENSATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Expenses | The table below presents information on our share-based compensation expenses for the three and six-month periods
ended May 1, 2022, and May 2, 2021.
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Restricted Stock Awards Activity | The table below presents
information on our restricted stock awards for the three and six-months ended May 1, 2022, and May 2,
2021.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Activity | The table below presents
information on our stock options for the three and six-months ended May 1, 2022, and May 2, 2021.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information on Outstanding and Exercisable Option |
Information on outstanding and exercisable option awards as of May 1, 2022, is presented below.
|
INCOME TAXES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Unrecognized Tax Benefits | The table below presents information on our unrecognized tax benefits as of the balance sheet dates.
|
EARNINGS PER SHARE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 01, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share |
The calculations of basic and diluted earnings per share are presented below.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Securities Excluded from Calculation of Diluted Earnings or Loss Per Share |
The table below illustrates the outstanding weighted-average share-based payment awards that were excluded from the calculation
of diluted earnings per share because their exercise price exceeded the average market value of the common shares for the period or, under application of the treasury stock method, they were otherwise determined to be antidilutive.
|
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 01, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income by Component |
The
following tables set forth the changes in our accumulated other comprehensive income by component (net of tax of $0) for the three
and six-month periods ended May 1, 2022, and May 2, 2021.
|
SHARE REPURCHASE PROGRAMS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 01, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE REPURCHASE PROGRAMS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares Repurchase Programs | The table below presents information on this
repurchase program for the three and six-month periods ended May 1, 2022, and May 2, 2021.
|
INVENTORIES (Details) - USD ($) $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
INVENTORIES [Abstract] | ||
Raw materials | $ 54,501 | $ 54,019 |
Work in process | 3,398 | 1,121 |
Finished goods | 41 | 109 |
Inventories | $ 57,940 | $ 55,249 |
PDMCX JOINT VENTURE, VIE (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Jan. 31, 2018 |
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
Oct. 31, 2021 |
|
Photronics and DNP [Member] | ||||||
Variable Interest Entity [Abstract] | ||||||
Term from inception after which interest holder may put their interest in the VIE | 2 years | |||||
Period before put or purchase option can be exercised | 6 months | |||||
Number of business days for obtaining required approvals and clearance for exiting party | 3 days | |||||
Net Income from Operations [Abstract] | ||||||
Net income from PDMCX | $ 4,895 | $ 2,256 | $ 6,772 | $ 2,194 | ||
Photronics and DNP [Member] | Minimum [Member] | ||||||
Variable Interest Entity [Abstract] | ||||||
Ownership percentage | 20.00% | |||||
PDMCX [Member] | ||||||
Variable Interest Entity [Abstract] | ||||||
Collateral amount | $ 82,900 | $ 82,900 | $ 90,100 | |||
Photronics Interest [Member] | ||||||
Variable Interest Entity [Abstract] | ||||||
Ownership percentage | 50.01% | |||||
DNP [Member] | ||||||
Variable Interest Entity [Abstract] | ||||||
Ownership percentage | 49.99% |
PDMCX JOINT VENTURE, Carrying Amounts of Assets and Liabilities (Details) - USD ($) $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
Carrying amounts of assets and liabilities [Abstract] | ||
Current assets | $ 630,345 | $ 550,616 |
Total assets | 1,331,887 | 1,294,202 |
Current liabilities | 186,471 | 176,148 |
Total liabilities | 281,657 | 293,640 |
Carrying Amount [Member] | ||
Carrying amounts of assets and liabilities [Abstract] | ||
Current assets | 117,292 | 59,745 |
Noncurrent assets | 134,914 | 137,799 |
Total assets | 252,206 | 197,544 |
Current liabilities | 37,439 | 26,559 |
Noncurrent liabilities | 29,613 | 42,917 |
Total liabilities | 67,052 | 69,476 |
Net assets | 185,154 | 128,068 |
Photronics Interest [Member] | ||
Carrying amounts of assets and liabilities [Abstract] | ||
Current assets | 58,658 | 29,879 |
Noncurrent assets | 67,469 | 68,913 |
Total assets | 126,127 | 98,792 |
Current liabilities | 18,723 | 13,282 |
Noncurrent liabilities | 14,809 | 21,463 |
Total liabilities | 33,532 | 34,745 |
Net assets | $ 92,595 | $ 64,047 |
REVENUE, Contract Assets, Liabilities and Accounts Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
Oct. 31, 2021 |
|
Contract with Customer, Asset and Liability [Abstract] | |||||
Credit losses on accounts receivable | $ 0 | $ 0 | $ 0 | $ 0 | |
Contract liabilities | 30,817 | 30,817 | $ 19,914 | ||
Change in Contract with Customer, Liability [Abstract] | |||||
Revenue recognized from beginning liability | 11,460 | $ 1,333 | 7,278 | $ 3,829 | |
Other Current Assets [Member] | |||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Contract assets | 13,815 | 13,815 | 9,859 | ||
Accrued Liabilities [Member] | |||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Contract liabilities | 25,613 | 25,613 | 14,717 | ||
Other Liabilities [Member] | |||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Contract liabilities | $ 5,204 | $ 5,204 | $ 5,197 | ||
Minimum [Member] | |||||
Revenue, Performance Obligation [Abstract] | |||||
Product invoice term | 30 days | ||||
Product warranty period | 1 month | ||||
Maximum [Member] | |||||
Revenue, Performance Obligation [Abstract] | |||||
Product invoice term | 90 days | ||||
Product warranty period | 24 months | ||||
IC [Member] | Minimum [Member] | |||||
Backlog of Orders [Abstract] | |||||
Customer order, expected satisfaction period | 7 days | ||||
Customer order, extended satisfaction period | 2 months | ||||
IC [Member] | Maximum [Member] | |||||
Backlog of Orders [Abstract] | |||||
Customer order, expected satisfaction period | 14 days | ||||
Customer order, extended satisfaction period | 3 months | ||||
FPD [Member] | Minimum [Member] | |||||
Backlog of Orders [Abstract] | |||||
Customer order, expected satisfaction period | 14 days | ||||
FPD [Member] | Maximum [Member] | |||||
Backlog of Orders [Abstract] | |||||
Customer order, expected satisfaction period | 21 days |
REVENUE, Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | $ 204,509 | $ 159,763 | $ 394,336 | $ 311,830 | |
IC [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 145,799 | 111,991 | 275,560 | 216,947 | ||
High-end [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 51,362 | 41,259 | 97,896 | 78,039 | ||
Mainstream [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 94,437 | 70,732 | 177,664 | 138,908 | ||
FPD [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 58,710 | 47,772 | 118,776 | 94,883 | ||
High-end [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 46,610 | 39,401 | 92,886 | 74,046 | ||
Mainstream [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 12,100 | 8,371 | 25,890 | 20,837 | ||
Taiwan [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 69,852 | 59,002 | 137,693 | 115,592 | |
China [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 53,691 | 23,730 | 99,645 | 44,727 | |
Korea [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 40,769 | 40,239 | 80,283 | 79,022 | |
United States [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 30,335 | 27,150 | 57,511 | 53,754 | |
Europe [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 9,506 | 9,256 | 18,420 | 17,832 | |
Other [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | [1] | 356 | 386 | 784 | 903 | |
Over Time [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | 192,770 | 144,697 | 363,034 | 285,982 | ||
At a Point in Time [Member] | ||||||
Disaggregation of Revenue [Abstract] | ||||||
Revenue | $ 11,739 | $ 15,066 | $ 31,302 | $ 25,848 | ||
|
LEASES, Summary (Details) - USD ($) $ in Thousands |
1 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2021 |
Jan. 31, 2021 |
May 01, 2022 |
Oct. 31, 2021 |
|
Finance Leases [Abstract] | ||||
Finance lease amount | $ 34,740 | $ 38,372 | ||
$7.2 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease contract term | 5 years | |||
Finance lease amount | $ 7,200 | |||
Early buyout option to purchase tool | $ 2,400 | |||
Finance lease interest implicit rate | 1.08% | |||
$35.5 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease contract term | 5 years | |||
Finance lease amount | $ 35,500 | |||
Early buyout option to purchase tool | $ 14,100 | |||
Finance lease interest implicit rate | 1.58% | |||
$35.5 Million Finance Lease [Member] | Minimum [Member] | ||||
Finance Leases [Abstract] | ||||
Outstanding committed balance for cross default provision | $ 5,000 | |||
Monthly [Member] | $7.2 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease monthly payments | $ 100 | |||
First Three Months [Member] | $35.5 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease monthly payments | 40 | |||
Following Nine Months [Member] | $35.5 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease monthly payments | 600 | |||
Forty Eight Months [Member] | $35.5 Million Finance Lease [Member] | ||||
Finance Leases [Abstract] | ||||
Finance lease monthly payments | $ 500 |
LEASES, Information on Operating and Finance Leases included on Balance Sheet (Details) - USD ($) $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
Operating and Finance Leases included in Consolidated Balance Sheets [Abstract] | ||
ROU Assets - Operating Leases | $ 4,191 | $ 5,581 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent |
ROU Assets - Finance Leases | $ 39,405 | $ 40,827 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Operating Lease Liability [Abstract] | ||
Operating Lease Liability - Current | $ 1,850 | $ 2,273 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Operating Lease Liability, Noncurrent | $ 2,280 | $ 3,246 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Lease Liabilities - Operating Leases | $ 4,130 | $ 5,519 |
Finance Lease Liability [Abstract] | ||
Finance Lease Liability, Current | $ 6,901 | $ 7,289 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Long-term Debt, Current Maturities | Long-term Debt, Current Maturities |
Finance Lease Liability, Noncurrent | $ 27,839 | $ 31,083 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term Debt, Excluding Current Maturities | Long-term Debt, Excluding Current Maturities |
Lease Liabilities - Finance Leases | $ 34,740 | $ 38,372 |
LEASES, Future Lease Payments Under Noncancelable Operating and Finance Leases (Details) - USD ($) $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
Future Lease Payments Under Noncancelable Operating Leases [Abstract] | ||
Remainder of fiscal year 2022 | $ 1,092 | |
2023 | 1,297 | |
2024 | 773 | |
2025 | 608 | |
2026 | 373 | |
Thereafter | 144 | |
Total Lease Payments | 4,287 | |
Imputed interest | (157) | |
Operating lease liabilities | 4,130 | $ 5,519 |
Future Lease Payments Under Noncancelable Finance Leases [Abstract] | ||
Remainder of fiscal year 2022 | 3,947 | |
2023 | 6,938 | |
2024 | 6,938 | |
2025 | 18,013 | |
2026 | 0 | |
Thereafter | 0 | |
Total lease payments | 35,836 | |
Imputed interest | (1,096) | |
Finance lease liabilities | $ 34,740 | $ 38,372 |
LEASES, Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
Lease, Cost [Abstract] | ||||
Operating lease costs | $ 569 | $ 724 | $ 1,158 | $ 1,389 |
Short-term lease costs | 142 | 39 | 263 | 86 |
Variable lease costs | 153 | 157 | 276 | 301 |
Interest on finance lease liabilities | 92 | 166 | 230 | 201 |
Amortization of ROU assets | $ 711 | $ 455 | $ 1,421 | $ 455 |
LEASES, Operating and Finance Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
Oct. 31, 2021 |
|
Supplemental Cash Flows Information: [Abstract] | |||||
Operating cash flows used for operating leases | $ 589 | $ 627 | $ 1,150 | $ 1,229 | |
Operating cash flows used for finance leases | 134 | 166 | 277 | 201 | |
Financing cash flows used for finance leases | 1,601 | 864 | 3,632 | 864 | |
ROU assets obtained in exchange for operating lease obligations | 1 | 99 | 32 | 367 | |
ROU assets obtained in exchange for finance lease obligations | $ 0 | $ 7,200 | $ 0 | $ 42,672 | |
Weighted Average Lease Terms, Discount Rates [Abstract] | |||||
Operating leases, Weighted-average remaining lease term | 3 years 3 months 18 days | 3 years 3 months 18 days | 3 years 6 months | ||
Operating leases, Weighted-average discount rate | 2.40% | 2.40% | 2.40% | ||
Finance leases, Weighted-average remaining lease term | 2 years 8 months 12 days | 2 years 8 months 12 days | 3 years 3 months 18 days | ||
Finance leases, Weighted-average discount rate | 1.50% | 1.50% | 1.50% |
SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
Share-based Compensation [Abstract] | ||||
Maximum number of shares of common stock that may be issued (in shares) | 4,000,000 | 4,000,000 | ||
Expense incurred | $ 1,584 | $ 1,422 | $ 3,041 | $ 2,723 |
Income tax benefits of share-based compensation | 104 | 62 | 188 | 108 |
Share-based compensation cost capitalized | 0 | 0 | 0 | 0 |
Cost of Goods Sold [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | 182 | 97 | 324 | 208 |
Selling, General and Administrative [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | 1,243 | 1,207 | 2,424 | 2,304 |
Research and Development [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | 159 | 118 | 293 | 211 |
Restricted Stock [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | $ 1,316 | $ 1,313 | $ 2,683 | $ 2,484 |
Restricted Stock [Abstract] | ||||
Number of shares granted in period (in shares) | 0 | 15,000 | 535,400 | 556,200 |
Weighted-average grant-date fair value of awards (in dollars per share) | $ 0 | $ 12.65 | $ 19.28 | $ 11.17 |
Shares outstanding at balance sheet date (in shares) | 891,429 | 1,022,327 | 891,429 | 1,022,327 |
Estimated Expenses Not Yet Incurred [Abstract] | ||||
Compensation cost not yet recognized | $ 10,779 | $ 9,762 | $ 10,779 | $ 9,762 |
Weighted-average amortization period for cost not yet recognized (in years) | 2 years 9 months 18 days | 2 years 10 months 24 days | 2 years 9 months 18 days | 2 years 10 months 24 days |
Restricted Stock [Member] | Minimum [Member] | ||||
Share-based Compensation [Abstract] | ||||
Award vesting period | 1 year | |||
Restricted Stock [Member] | Maximum [Member] | ||||
Share-based Compensation [Abstract] | ||||
Award vesting period | 4 years | |||
Stock Options [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | $ 221 | $ 54 | $ 259 | $ 138 |
Stock options activity [Abstract] | ||||
Contractual term | 10 years | |||
Number of options granted in period (in shares) | 0 | 0 | 0 | |
Cash received from option exercised | $ 438 | 309 | $ 4,149 | $ 967 |
Estimated Expenses Not Yet Incurred [Abstract] | ||||
Compensation cost not yet recognized | $ 52 | $ 232 | $ 52 | $ 232 |
Weighted-average amortization period for cost not yet recognized (in years) | 8 months 12 days | 1 year 4 months 24 days | 8 months 12 days | 1 year 4 months 24 days |
Outstanding and exercisable option awards [Roll Forward] | ||||
Outstanding at end of period (in shares) | 718,213 | 718,213 | ||
Exercisable at end of period (in shares) | 693,987 | 693,987 | ||
Weighted-Average Exercise Price [Abstract] | ||||
Outstanding at end of period (in dollars per share) | $ 9.90 | $ 9.90 | ||
Exercisable at end of period (in dollars per share) | $ 9.90 | $ 9.90 | ||
Weighted-Average Remaining Contractual Life (in years) [Abstract] | ||||
Outstanding at end of period | 3 years 6 months | |||
Exercisable at end of period | 3 years 4 months 24 days | |||
Aggregate Intrinsic Value [Abstract] | ||||
Outstanding at end of period | $ 3,657 | $ 3,657 | ||
Exercisable at end of period | 3,531 | $ 3,531 | ||
Stock Options [Member] | Minimum [Member] | ||||
Share-based Compensation [Abstract] | ||||
Award vesting period | 1 year | |||
Stock Options [Member] | Maximum [Member] | ||||
Share-based Compensation [Abstract] | ||||
Award vesting period | 4 years | |||
ESPP [Member] | ||||
Share-based Compensation [Abstract] | ||||
Expense incurred | $ 47 | $ 55 | $ 99 | $ 101 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
Oct. 31, 2021 |
|
Effective Income and Statutory Tax Rate [Abstract] | |||||
Effective tax rate | 25.10% | 18.50% | 25.50% | 20.50% | |
U.S. statutory rate | 21.00% | 21.00% | 21.00% | 21.00% | |
Income Tax Examination [Abstract] | |||||
Earliest open tax year | 2016 | ||||
Unrecognized Tax Benefits [Abstract] | |||||
Unrecognized tax benefits related to uncertain tax positions | $ 4,629 | $ 4,629 | $ 3,757 | ||
Unrecognized tax benefits that, if recognized, would impact the effective tax rate | 4,629 | 4,629 | 3,757 | ||
Accrued interest and penalties related to uncertain tax positions | $ 357 | $ 357 | $ 223 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
Calculation of Basic and Diluted Earnings Per Share [Abstract] | ||||
Net income attributable to Photronics, Inc. shareholders | $ 27,432 | $ 10,526 | $ 50,496 | $ 18,562 |
Effect of dilutive securities | 0 | 0 | 0 | 0 |
Earnings used for diluted earnings per share | $ 27,432 | $ 10,526 | $ 50,496 | $ 18,562 |
Weighted-average Common Shares Computations [Abstract] | ||||
Weighted-average common shares used for basic earnings per share (in shares) | 60,606 | 62,054 | 60,382 | 62,265 |
Effect of Dilutive Securities [Abstract] | ||||
Share-based payment awards (in shares) | 539 | 514 | 659 | 521 |
Potentially dilutive common shares (in shares) | 539 | 514 | 659 | 521 |
Weighted-average common shares used for diluted earnings per share (in shares) | 61,145 | 62,568 | 61,041 | 62,786 |
Basic earnings per share (in dollars per share) | $ 0.45 | $ 0.17 | $ 0.84 | $ 0.30 |
Diluted earnings per share (in dollars per share) | $ 0.45 | $ 0.17 | $ 0.83 | $ 0.30 |
Antidilutive Securities [Abstract] | ||||
Total potentially dilutive shares excluded (in shares) | 427 | 293 | 626 | 559 |
Share-based Payment Awards [Member] | ||||
Antidilutive Securities [Abstract] | ||||
Total potentially dilutive shares excluded (in shares) | 427 | 293 | 626 | 559 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
1 Months Ended | |
---|---|---|
May 29, 2022
USD ($)
Operation
|
May 01, 2022
USD ($)
|
|
Commitment and Contingencies [Abstract] | ||
Outstanding commitments for capital expenditure | $ 115.1 | |
Subsequent Event [Member] | ||
Commitment and Contingencies [Abstract] | ||
Period of audit | 3 years | |
Contingency loss recorded | $ 2.2 | |
Minimum [Member] | Subsequent Event [Member] | ||
Commitment and Contingencies [Abstract] | ||
Range of estimated contingency loss | 2.2 | |
Maximum [Member] | Subsequent Event [Member] | ||
Commitment and Contingencies [Abstract] | ||
Range of estimated contingency loss | $ 3.7 | |
China [Member] | Subsequent Event [Member] | ||
Commitment and Contingencies [Abstract] | ||
Number of operations | Operation | 1 |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
|
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT [Abstract] | ||||
Other comprehensive income, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning Balance | 823,692 | |||
Ending Balance | 834,399 | 834,399 | ||
Accumulated Other Comprehensive Income [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning Balance | 10,565 | 32,029 | 20,571 | 17,958 |
Ending Balance | (22,919) | 35,192 | (22,919) | 35,192 |
Foreign Currency Translation Adjustments [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning Balance | 11,451 | 32,900 | 21,476 | 18,828 |
Ending Balance | (22,097) | 36,052 | (22,097) | 36,052 |
Other [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning Balance | (886) | (871) | (905) | (870) |
Ending Balance | (822) | (860) | (822) | (860) |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive (loss) income | (43,989) | 3,799 | (53,783) | 22,087 |
Foreign Currency Translation Adjustments [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive (loss) income | (44,118) | 3,778 | (53,949) | 22,066 |
Other [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive (loss) income | 129 | 21 | 166 | 21 |
AOCI Attributable to Noncontrolling Interest [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Less: other comprehensive (loss) income attributable to noncontrolling interests | (10,505) | 636 | (10,293) | 4,853 |
Foreign Currency Translation Adjustments [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Less: other comprehensive (loss) income attributable to noncontrolling interests | (10,570) | 626 | (10,376) | 4,842 |
Other [Member] | ||||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||||
Less: other comprehensive (loss) income attributable to noncontrolling interests | $ 65 | $ 10 | $ 83 | $ 11 |
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands |
May 01, 2022 |
Oct. 31, 2021 |
---|---|---|
Fair Value, Assets and Liability [Abstract] | ||
Total assets | $ 0 | $ 0 |
Total liabilities | $ 0 | $ 0 |
SHARE REPURCHASE PROGRAMS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 01, 2022 |
May 02, 2021 |
May 01, 2022 |
May 02, 2021 |
Sep. 30, 2020 |
|
Shares Repurchase Programs and Preferred Stock Purchase Rights [Abstract] | |||||
Amount remaining under authorization for purchase of additional shares | $ 31,700 | $ 31,700 | |||
Cost of shares repurchased | $ 10,041 | $ 2,522 | $ 23,250 | ||
September 2020 Announced Program [Member] | |||||
Shares Repurchase Programs and Preferred Stock Purchase Rights [Abstract] | |||||
Stock repurchased authorized amount | $ 100,000 | ||||
Stock repurchase program - commencement date | Sep. 16, 2020 | ||||
Number of shares repurchased (in shares) | 0 | 797 | 188 | 2,019 | |
Cost of shares repurchased | $ 0 | $ 10,041 | $ 2,522 | $ 23,250 | |
Average price paid per share (in dollars per share) | $ 0 | $ 12.59 | $ 13.43 | $ 11.51 |
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