8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934

Date of report (Date of earliest event reported) December 5, 2006

PHOTRONICS, INC.

(Exact name of registrant as specified in its charter)

Connecticut	0-15451	06-0854886
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

15 Secor Road, Brookfield, CT	06804
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, including area code (203) 775-9000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.	Results of Operations and Financial Condition
	On December 5, 2006, the Company issued a press release reporting fiscal fourth quarter 2006 and fiscal year results for the period ended October 29, 2006. A copy of the press release is attached to this 8-K.
Item 9.01.	Financial Statements and Exhibits
(d) Exhibits
99.1	Press Release dated December 5, 2006.
99.2	Slides #1 and #2 provided for conference call.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PHOTRONICS, INC.

(Registrant)

DATE December 6, 2005	BY	/s/ Sean T. Smith
		Sean T. Smith
		Senior Vice President and Chief Financial Officer

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

	Three Months Ended						Year Ended
	October 29 2006			October 30 2005			October 29 2006			October 30 2005
Net sales	$	115,297		$	111,793		$	454,875		$	440,770
Costs and expenses:
Cost of sales		79,166			76,660			307,851			295,649
Selling, general and administrative		15,777			14,293			62,215			54,295
Research and development		4,353			8,350			27,337			32,152
Consolidation, restructuring and related charges		2,423			—			15,639			—
Operating income		13,578			12,490			41,833			58,674
Other income (expense), net		(739	)		(200	)		3,553			(3,329	)
Income before income taxes and minority interest		12,839			12,290			45,386			55,345
Income tax provision		1,139			2,010			10,462			10,058
Income before minority interest		11,700			10,280			34,924			45,287
Minority interest		(1,881	)		(1,541	)		(5,592	)		(6,634	)
Net income	$	9,819		$	8,739		$	29,332		$	38,653
Earnings per share:
Basic	$	0.24		$	0.21		$	0.71		$	1.09
Diluted	$	0.21		$	0.19		$	0.66		$	0.95
Weighted average number of common shares outstanding:
Basic		41,442			41,263			41,369			35,519
Diluted		51,179			51,066			51,072			45,256

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

	October 29 2006		October 30 2005
Assets
Current assets:
Cash, cash equivalents and short-term investments of $69,899 in 2006 and $90,600 in 2005	$	199,324	$	286,649
Accounts receivable		84,299		70,006
Inventories		19,209		20,536
Other current assets		16,055		7,144
Total current assets		318,887		384,335
Property, plant and equipment, net		443,637		412,429
Goodwill		138,534		136,334
Investment in joint venture		64,365		—
Other intangibles, net		70,939		—
Other assets		9,321		12,631
	$	1,045,683	$	945,729
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	86,903	$	4,813
Accounts payable		53,907		42,923
Other accrued liabilities		50,386		36,042
Total current liabilities		191,196		83,778
Long-term debt		170,288		238,949
Deferred income taxes and other liabilities		23,920		15,310
Minority interest		45,997		45,817
Shareholders’ equity		614,282		561,875
	$	1,045,683	$	945,729

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Year Ended
	October 29 2006			October 30 2005
Cash flows from operating activities:
Net income	$	29,332		$	38,653
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		89,090			86,022
Restructuring and related charges		15,639			—
Changes in assets and liabilities and other		(17,862	)		17,892
Net cash provided by operating activities		116,199			142,567
Cash flows from investing activities:
Purchases of property, plant and equipment		(94,646	)		(121,354	)
Purchases of short-term investments		(82,582	)		(94,550	)
Proceeds from sales of short-term investments and other		104,962			88,629
Investment in joint venture, technology and supply agreements		(120,505	)		—
Acquisition of additional interest in PK Ltd.		(8,432	)		(58,248	)
Net cash used in investing activities		(201,203	)		(185,523	)
Cash flows from financing activities:
Proceeds from (repayment of) long-term debt		11,737			(72,117	)
Proceeds from issuance of common stock		1,809			170,667
Net cash provided by financing activities		13,546			98,550
Effect of exchange rate changes on cash flows		4,834			(1,845	)
Net increase (decrease) in cash and cash equivalents		(66,624	)		53,749
Cash and cash equivalents, beginning of period		196,049			142,300
Cash and cash equivalents, end of period	$	129,425		$	196,049
Supplemental disclosure of cash flow information:
Change in accrual for purchases of property, plant and equipment	$	18,692		$	(19,834	)

PHOTRONICS, INC.

EXHIBIT INDEX

Exhibit No.	Subject Matter
99.1	Press Release dated December 5, 2006.
99.2	Slides #1 and #2 provided for conference call.

EX-99.1

Exhibit 99.1

  Press Release FOR FURTHER INFORMATION: Michael W. McCarthy Vice President – Corporate Communications Photronics, Inc. (203)775-9000 mmccarthy@brk.photronics.com  

FOR IMMEDIATE RELEASE

Tuesday, December 5, 2006

PHOTRONICS ANNOUNCES RECORD FISCAL YEAR REVENUES

Fourth Quarter Results Exceed Revenue and Earnings Guidance

Fiscal Year 2006 Highlights

• Record Revenues of $455 Million

• Free Cash Flow of $22 million

BROOKFIELD, Connecticut December 5, 2006 — Photronics, Inc. (Nasdaq:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported fiscal 2006 fourth quarter and fiscal year results for the period ended October 29, 2006.

Sales for the quarter were $115.3 million, up 3.1%, compared to $111.8 million for the fourth quarter of 2005. Semiconductor photomasks accounted for $90.5 million or 78.5% of revenues during the fourth quarter of fiscal 2006, while sales for flat panel display (FPD) photomasks accounted for $24.8 million or 21.5% of revenues. Net income for the fourth quarter of fiscal 2006 amounted to $9.8 million, or $0.21 per diluted share, compared to the prior year’s fourth quarter net income of $8.7 million, or $0.19 per diluted share. Net income for the fourth quarter of 2006 included a charge of $2.4 million after tax, or $0.05 per diluted share in connection with the Company’s previously disclosed restructuring of its operations in North America.

Sales for the 2006 fiscal year were $454.9 million, up 3.2% from the $440.8 million reported in fiscal 2005. Semiconductor photomasks accounted for $355.1 million or 78.1% of revenues during fiscal 2006, while sales for FPD photomasks accounted for $99.8 million or 21.9%. Year-over-year, semiconductor photomask revenues decreased 1.8%, while FPD photomask revenues increased 25.9%. Net income for fiscal 2006 amounted to $29.3 million, or $0.66 per diluted share, compared to the prior fiscal year’s net income of $38.7 million, or $0.95 per diluted share. Net income for the 2006 fiscal year included a charge of $15.6 million after tax, or $0.31 per diluted share in connection with the Company’s previously disclosed restructuring of its operations in North America.

Michael J. Luttati, Chief Executive Officer shared his views of the Company’s reported results. “We are very pleased to have finished our fiscal year on a high note with solid performance in our fourth quarter. The entire Photronics team executed with clarity and purpose throughout fiscal 2006 to deliver positive results while undertaking a significant transformation of the Company. As we take measure of our many achievements, which include a third consecutive year of record revenues; sustained profitability; and a self funded capital investment

— more —

Photronics, Inc. 15 Secor Road • Brookfield, Connecticut 06804 • (203)775-9000 • www.photronics.com

PHOTRONICS ANNOUNCES RECORD FISCAL YEAR REVENUES PAGE TWO

program, it is important to frame them around three major initiatives. First, our presence in the FPD mask market was meaningfully expanded as we capitalized on investments in our existing Korean fab and brought on-line our new fab in Taichung, Taiwan. Second, we reshaped the profile of our global manufacturing network as part of our strategy to shift capacity into the Asian and European markets where we could improve asset utilization. Finally, there is the joint venture with Micron Technology to form the MP Mask Technology Center, LLC. This joint venture represents a unique customer-supplier partnership, which will have a profound effect on Photronics’ global business model in terms of accelerating our penetration into the market for sub-65 nanometer designs.”

A conference call with investors and the media to discuss these results can be accessed by logging onto Photronics’ web site at www.photronics.com, then clicking on the “Conference Calls” button in the top right corner of the home page. The call is scheduled for 8:30 a.m. Eastern Time on Wednesday, December 6^th and will be archived for instant replay access until the Company reports its fiscal first quarter results after the market closes on Tuesday, February 13, 2007. The live call dial-in number is (212)676-5290.

# # #

Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this release are considered “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All forward looking statements involve risks and uncertainties. In particular, any statement contained in this release regarding the consummation and benefits of future acquisitions, expectations with respect to the joint venture, the planned fabrication facility, future sales, financial performance, operating efficiencies and product expansion, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company. These factors may cause actual results, performance or achievements to differ materially from anticipated results, performances or achievements. Factors that might affect such forward looking statements include, but are not limited to, overall economic and business conditions; the demand and receipt of orders for the Company’s products; competitive factors in the industries and geographic markets in which the Company competes; changes in federal, state and foreign tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); the Company’s ability to place new equipment in service on a timely basis; interest rate fluctuations and other capital market conditions, including foreign currency rate fluctuations; economic and political conditions in international markets; the ability to obtain a new bank facility or other financings; the ability to achieve anticipated synergies and other cost savings in connection with acquisitions and productivity programs; uncertainties with respect to the integration and management of a new joint venture, delays in the construction and equipping of the planned fabrication facility, the ability to transfer licensed applications to other applications, the timing, impact and other uncertainties of future acquisitions and investments; the seasonal and cyclical nature of the semiconductor industry; the availability of capital; management changes; damage or destruction to our facilities by natural disasters, labor strikes, political unrest or terrorist activity; the ability to fully utilize its tools; the ability of the Company to receive desired yields, pricing, product mix, and market acceptance of its products; changes in technology; and other risks and uncertainties set forth in the Company’s SEC filings from time to time. Any forward-looking statements should be considered in light of these factors. The Company assumes no obligation to update the information in this release.

06-31

Photronics, Inc. 15 Secor Road • Brookfield, Connecticut 06804 • (203)775-9000 • www.photronics.com

EX-99.2

Photronics Confidential

$108

21

$ 87

Actual

Q3-FY06

Q2-FY06

Q4-FY06

Q1-FY06

Actual

Actual

Actual

$ 115

$119

$112

Grand Total

25

28

26

FPD Revenue

$ 90

$ 91

$ 86

IC Revenue

Semiconductor & Flat Panel Display Revenue

($ in millions)

Slide #1

Exhibit 99.2

Photronics Confidential

Semiconductor & Flat Panel Display Revenue

($ in millions)

Fiscal Year

2006 

2005

2004

$455

$441

$396

Grand Total

100

79

36

FPD Revenue

$355

$362

$360

IC Revenue

Slide #2