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) |
August 19, 2014 |
PHOTRONICS,
INC. |
(Exact name of registrant as specified in
its charter) |
Connecticut |
|
0-15451 |
|
06-0854886 |
(State or other jurisdiction |
|
(Commission |
|
(IRS Employer |
of incorporation) |
|
File Number) |
|
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 August 19, 2014, the Company issued
a press release reporting third quarter fiscal 2014 results. A copy of
the press release is attached to this 8-K.
A copy of the press release is
furnished as Exhibit 99.1 to this report. The information contained in
this Item 2.02 and the attached Exhibits 99.1, 99.2, 99.3, 99.4, 99.5,
99.6 and 99.7 shall not be deemed filed for purposes of Section 18 of
the Securities Exchange Act of 1934 and shall not be incorporated by
reference in any filing under the Securities Act of 1933 except as shall
be expressly set forth by specific reference in such filing.
On August 20, 2014, the Company will
conduct a conference call during which certain unaudited, non-GAAP
financial information related to the Companys operations for the three
months ended August 3, 2014 will be disclosed. This information is set forth
in Exhibit 99.6 and 99.7.
EBITDA is a non-GAAP financial
measure that the Company defines pursuant to its credit agreement. The
Company believes that EBITDA is generally accepted as providing useful
information regarding the operational strength and performance of its
business, including the ability of the Company to pay interest, service
debt and fund capital expenditures. The Companys method for calculating
EBITDA may not be comparable to methods used by other companies but is the
same method the Company uses for calculating EBITDA under its credit
facility. |
Item 9.01. Financial Statements
and Exhibits
(d) Exhibits
|
99.1 |
|
Press Release dated
August 19, 2014 |
|
99.2 |
|
Condensed Consolidated
Statements of Income |
|
99.3 |
|
Condensed Consolidated
Balance Sheets |
|
99.4 |
|
Condensed Consolidated
Statements of Cash Flows |
|
99.5 |
|
Reconciliation of
GAAP to Non-GAAP Financial Information |
|
99.6 |
|
Reconciliation of
GAAP Net Income to EBITDA |
|
99.7 |
|
Reconciliation of
GAAP Operating Income to Non-GAAP Operating
Income. |
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: August 20, 2014 |
BY |
/s/ Richelle E. Burr |
|
|
Richelle E.
Burr |
|
|
Vice President,
General Counsel |
|
|
|
PHOTRONICS, INC.
|
|
|
FOR FURTHER INFORMATION: Pete Broadbent Vice President, Investor
Relations & Marketing (203)
775-9000 pbroadbent@photronics.com |
Press
Release |
|
PHOTRONICS REPORTS THIRD
QUARTER FISCAL 2014
RESULTS
- Quarterly sales of $124.9 million; at
high-end of guidance of $120 - $125 million
- GAAP and non-GAAP diluted EPS of
$0.07; at high-end of guidance of $0.02 - $0.07 N
- High end IC sales of $36.6 million, a
new quarterly high
- Gross margin increases 170 bps
sequentially
- Operating margin improves sequentially
to 8.9%
- EBITDA of $34 million, up $9 million
sequentially
BROOKFIELD, Conn. August
19, 2014 Photronics,
Inc. (NASDAQ:PLAB), a worldwide
leader in supplying innovative imaging technology solutions for the global
electronics industry, today reported financial results for the fiscal 2014 third
quarter ended August 3, 2014.
Constantine ("Deno")
Macricostas, Photronics' chairman and chief executive officer, commented: "This
quarter represents the first full quarter including our PDMC joint venture and
the results reflect the strength in that business. In addition, during the
quarter we completed our 14nm qualification with a key foundry customer in Asia
and are now benefitting from high-end business ramps across our leading edge
customer base. High-end semiconductor revenues of $36.6 million set a new record
for the company and we expect continued growth as our customers begin to ramp
new designs. Higher sales volumes led to solid bottom line returns with
operating margin improving to 8.9% and non-GAAP earnings per share of $0.07 at
the high end of our guidance. Overall, our business is strong and we are
optimistic about the balance of the fiscal year as our investments in high-end
capability are being utilized more robustly by our customers.
Sales for the third quarter
of fiscal 2014 were $124.9 million, an increase of 13.9% compared with $109.7
million for the third quarter of fiscal 2013. Sales of semiconductor photomasks
were $100.6 million, or 81% of revenues, during the third quarter of fiscal
2014, and sales of flat panel display photomasks were $24.3 million, or 19% of
revenues. GAAP net income attributable to Photronics, Inc. shareholders for the
third quarter of fiscal 2014 was $4.2 million, or $0.07 per diluted share,
compared with $5.9 million, or $0.10 per diluted share in the third quarter of
fiscal 2013.
1
Sales for the first nine
months of fiscal 2014 increased 4.8% to $331.3 million, compared with $316.2
million for the first nine months of fiscal 2013. For the first nine months of
fiscal 2014, sales of semiconductor photomasks were $253.4 million, or 76% of
revenues, and sales of FPD photomasks were $77.9 million, or 24% of revenues.
GAAP net income attributable to Photronics, Inc. shareholders for the first nine
months of fiscal 2014 was $21.7 million, or $0.34 per diluted share, and
non-GAAP net income attributable to Photronics, Inc. shareholders for the first
nine months of fiscal 2014 was $7.8 million, or $0.13 per diluted share,
compared with the first nine months of fiscal 2013 GAAP and non-GAAP net income
attributable to Photronics, Inc. shareholders of $13.1 million, or $0.21 per
diluted share. Non-GAAP net income attributable to Photronics, Inc. shareholders
for the first nine months of fiscal 2014 excludes the acquisition gain and
expenses related to the joint venture.
The section below entitled
"Non-GAAP Financial Measures" provides a definition and information about the
use of non-GAAP financial measures in this press release, and the attached
financial supplement reconciles non-GAAP financial information with Photronics,
Inc.'s financial results under GAAP.
Non-GAAP Financial
Measures
Non-GAAP net income
attributable to Photronics, Inc.
shareholders and non-GAAP earnings
per share are "non-GAAP financial measures," as such term is defined by the
Securities and Exchange Commission, and may differ from non-GAAP financial
measures used by other companies. Photronics, Inc. believes that non-GAAP net
income attributable to Photronics, Inc. shareholders and non-GAAP earnings per
share that exclude certain non-cash or non-recurring income or expense items are
useful for analysts and investors to evaluate Photronics, Inc.'s future on-going
performance because they enable a more meaningful comparison of Photronics,
Inc.'s projected earnings and performance with its historical results of prior
periods. These non-GAAP metrics, in particular non-GAAP net income attributable
to Photronics, Inc. shareholders and non-GAAP earnings per share are not
intended to represent funds available for Photronics, Inc.'s discretionary use
and are not intended to represent, or be used as a substitute for, operating
income, net income or cash flows from operations data as measured under GAAP.
The items excluded from these non-GAAP metrics, but included in the calculation
of their closest GAAP equivalent, are significant components of the consolidated
statements of operations and must be considered in performing a comprehensive
assessment of overall financial performance. Non-GAAP financial information is
adjusted for the following items:
-
Non-cash acquisition gain and
transaction expenses related to the joint venture, PDMC, in Taiwan are excluded
because they are not part of ongoing operations.
The presentation of this
financial information should not be considered in isolation or as a substitute
for the financial information prepared and presented in accordance with
accounting principles generally accepted in the United States. The attached
financial supplement reconciles non-GAAP financial information with Photronics,
Inc.'s financial results under GAAP.
2
A conference call with
investors and the media to discuss these results is scheduled for 8:30 a.m.
Eastern time on Wednesday, August 20, 2014. The live dial-in number is (408)
774-4601. The call can also be accessed by logging onto Photronics' web site at
www.photronics.com. The call will be archived for instant replay
access until the Company reports its fiscal 2014 fourth quarter results.
About Photronics
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
The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements made by or on behalf of Photronics, Inc. and its subsidiaries (the
Company). The forward-looking statements contained in this press release and
other parts of Photronics web site involve risks and uncertainties that may
affect the Companys operations, markets, products, services, prices, and other
factors. These risks and uncertainties include, but are not limited to,
economic, competitive, legal, governmental, and technological factors as well as
decisions we may make in the future regarding our business, capital structure
and other matters. These forward-looking statements generally can be identified
by phrases such as believes, expects, anticipates, plans, projects,
could, estimate, intend, may, will and similar expressions.
Accordingly, there is no assurance that the Companys expectations will be
realized. For a fuller discussion of the factors that may affect the Company's
operations, see "Forward Looking Statements" in the Company's Quarterly and
Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K.
The Company assumes no obligation to provide revisions to any forward-looking
statements.
09-2014
3
PHOTRONICS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of
Income
(in thousands,
except per share amounts)
(Unaudited)
|
Three Months
Ended |
|
Nine Months
Ended |
|
August 3, |
|
July 28, |
|
August 3, |
|
July 28, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Net
sales |
$ |
124,852 |
|
|
$ |
109,652 |
|
|
$ |
331,276 |
|
|
$
|
316,171 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(96,202 |
) |
|
|
(82,574 |
) |
|
|
(257,554 |
) |
|
|
(243,206 |
) |
Selling, general and
administrative |
|
(12,394 |
) |
|
|
(12,068 |
) |
|
|
(38,092 |
) |
|
|
(35,286 |
) |
Research and
development |
|
(5,199 |
) |
|
|
(4,985 |
) |
|
|
(16,111 |
) |
|
|
(14,380 |
) |
Operating income |
|
11,057 |
|
|
|
10,025 |
|
|
|
19,519 |
|
|
|
23,299 |
|
Gain
on acquisition |
|
- |
|
|
|
- |
|
|
|
16,372 |
|
|
|
- |
|
Other expense, net |
|
(1,168 |
) |
|
|
(972 |
) |
|
|
(3,264 |
) |
|
|
(2,479 |
) |
Income before income
taxes |
|
9,889 |
|
|
|
9,053 |
|
|
|
32,627 |
|
|
|
20,820 |
|
Income tax provision |
|
(2,545 |
) |
|
|
(2,689 |
) |
|
|
(7,291 |
) |
|
|
(6,155 |
) |
Net income |
|
7,344 |
|
|
|
6,364 |
|
|
|
25,336 |
|
|
|
14,665 |
|
Net
income attributable to noncontrolling interests |
|
(3,158 |
) |
|
|
(424 |
) |
|
|
(3,617 |
) |
|
|
(1,539 |
) |
Net
income attributable to Photronics, Inc. shareholders |
$ |
4,186 |
|
|
$ |
5,940 |
|
|
$ |
21,719 |
|
|
$ |
13,126 |
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.35 |
|
|
$ |
0.22 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.34 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
61,436 |
|
|
|
60,746 |
|
|
|
61,336 |
|
|
|
60,505 |
|
Diluted |
|
62,432 |
|
|
|
66,177 |
|
|
|
77,706 |
|
|
|
61,478 |
|
PHOTRONICS, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
|
August 3, |
|
November 3, |
|
2014 |
|
2013 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
$ |
196,338 |
|
$ |
215,615 |
Accounts
receivable |
|
102,899 |
|
|
73,357 |
Inventories |
|
23,661 |
|
|
18,849 |
Other current
assets |
|
30,939 |
|
|
10,645 |
|
Total current assets |
|
353,837 |
|
|
318,466 |
|
Property, plant and equipment, net |
|
547,377 |
|
|
422,740 |
Investment in joint venture |
|
93,141 |
|
|
93,124 |
Intangible assets, net |
|
31,277 |
|
|
34,080 |
Other assets |
|
19,794 |
|
|
17,519 |
|
|
$ |
1,045,426 |
|
$ |
885,929 |
|
Liabilities and Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current portion of
long-term borrowings |
$ |
10,306 |
|
$ |
11,818 |
Accounts payable and
accrued liabilities |
|
138,695 |
|
|
92,769 |
|
Total current liabilities |
|
149,001 |
|
|
104,587 |
|
Long-term borrowings |
|
156,283 |
|
|
182,203 |
Other liabilities |
|
19,881 |
|
|
11,308 |
|
Photronics, Inc. shareholders' equity |
|
609,938 |
|
|
585,314 |
Noncontrolling interests |
|
110,323 |
|
|
2,517 |
Total equity |
|
720,261 |
|
|
587,831 |
|
|
$ |
1,045,426 |
|
$ |
885,929 |
PHOTRONICS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash
Flows
(in
thousands)
(Unaudited)
|
Nine Months
Ended |
|
August 3, |
|
July 28, |
|
2014 |
|
2013 |
Cash
flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
25,336 |
|
|
$ |
14,665 |
|
Adjustments to reconcile
net income to net cash |
|
|
|
|
|
|
|
provided by operating
activities: |
|
|
|
|
|
|
|
Gain on acquisition |
|
(16,372 |
) |
|
|
- |
|
Depreciation and amortization |
|
58,412 |
|
|
|
55,081 |
|
Changes in assets and liabilities and other |
|
(5,538 |
) |
|
|
(2,192 |
) |
|
Net
cash provided by operating activities |
|
61,838 |
|
|
|
67,554 |
|
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
Purchases of property,
plant and equipment |
|
(58,278 |
) |
|
|
(47,281 |
) |
Cash from
acquisition |
|
4,508 |
|
|
|
- |
|
Other |
|
(759 |
) |
|
|
(2,630 |
) |
|
Net
cash used in investing activities |
|
(54,529 |
) |
|
|
(49,911 |
) |
|
Cash
flows from financing activities: |
|
|
|
|
|
|
|
Repayments of long-term
borrowings |
|
(27,432 |
) |
|
|
(4,990 |
) |
Payment of deferred
financing fees |
|
(336 |
) |
|
|
(40 |
) |
Purchase of common stock
of subsidiary |
|
- |
|
|
|
(31,627 |
) |
Proceeds from
share-based arrangements |
|
1,043 |
|
|
|
715 |
|
Other |
|
(597 |
) |
|
|
- |
|
|
Net
cash used in financing activities |
|
(27,322 |
) |
|
|
(35,942 |
) |
|
Effect of exchange rate changes on cash |
|
736 |
|
|
|
(2,473 |
) |
|
Net
decrease in cash and cash equivalents |
|
(19,277 |
) |
|
|
(20,772 |
) |
Cash
and cash equivalents, beginning of period |
|
215,615 |
|
|
|
218,043 |
|
|
Cash
and cash equivalents, end of period |
$ |
196,338 |
|
|
$ |
197,271 |
|
|
Noncash net assets from acquisition |
$ |
110,211 |
|
|
$ |
- |
|
PHOTRONICS, INC. AND
SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial
Information
(in thousands,
except per share data)
(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
August
3, |
|
July 28, |
|
August
3, |
|
|
July
28, |
|
|
2014 |
|
2013 |
|
2014 |
|
|
2013 |
Reconciliation of GAAP to
Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to Photronics, Inc. Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
net income attributable to Photronics, Inc. shareholders |
|
$ |
4,186 |
|
$ |
5,940 |
|
$ |
21,719 |
|
|
$ |
13,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Gain on acquisition, net of tax |
|
|
- |
|
|
- |
|
|
(16,372 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
Acquisition transaction expenses, net of
tax |
|
|
- |
|
|
- |
|
|
2,455 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to Photronics,
Inc. shareholders |
|
$ |
4,186 |
|
$ |
5,940 |
|
$ |
7,802 |
|
|
$ |
13,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Applicable
to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
|
62,432 |
|
66,177 |
|
|
77,706 |
|
|
|
61,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
|
62,432 |
|
|
66,177 |
|
|
62,283 |
|
|
|
61,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per diluted share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.34 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.13 |
|
|
$ |
0.21 |
(a) |
|
Represents gain on
acquisition of DNP Photomask Technology Taiwan Co., Ltd (DPTT), a
wholly-owned subsidiary of Dai Nippon Printing Co., Ltd. |
|
(b) |
|
Represents
transaction expenses in connection with the acquisition of
DPTT |
PHOTRONICS, INC. AND
SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Net Income
to EBITDA
(in
thousands)
(Unaudited)
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
August 3, |
|
July 28, |
|
August 3, |
|
July
28, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
GAAP Net Income
(a) |
|
$ |
7,344 |
|
$ |
6,364 |
|
$ |
25,336 |
|
|
$ |
14,665 |
|
Add:
interest expense |
|
|
1,809 |
|
|
1,909 |
|
|
5,609 |
|
|
|
5,707 |
Add:
income tax expense |
|
|
2,545 |
|
|
2,689 |
|
|
7,291 |
|
|
|
6,155 |
Add:
depreciation and amortization |
|
|
21,292 |
|
|
17,212 |
|
|
57,264 |
|
|
|
53,954 |
Add
(less): special items (b) |
|
|
981 |
|
|
993 |
|
|
(10,787 |
) |
|
|
2,818 |
|
|
$ |
33,791 |
|
$ |
29,167 |
|
$ |
84,713 |
|
|
$ |
83,299 |
(a) |
|
Includes net income attributable to
noncontrolling interests. |
|
(b) |
|
Special items consist of stock compensation
expense, and in 2014 noncash gain on acquisition of DNP Photomask
Technology Taiwan, Co., Ltd., a wholly-owned subsidiary of Dai Nippon
Printing Co., Ltd., and related acquisition transaction
expenses. |
PHOTRONICS, INC. AND
SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Operating Income to
Non-GAAP Operating Income
(in thousands)
(Unaudited)
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
August
3, |
|
July
28, |
|
August
3, |
|
July
28, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
GAAP Operating Income |
|
$ |
11,057 |
|
8.9 |
% |
|
$ |
10,025 |
|
9.1 |
% |
|
$ |
19,519 |
|
5.9 |
% |
|
$ |
23,299 |
|
7.4 |
% |
(a) Acquisition
transaction expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,455 |
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income |
|
$ |
11,057 |
|
8.9 |
% |
|
$ |
10,025 |
|
9.1 |
% |
|
$ |
21,974 |
|
6.6 |
% |
|
$ |
23,299 |
|
7.4 |
% |
(a) |
Represents
transaction expenses in connection with the acquisition of DNP Photomask
Technology Taiwan Co., Ltd., a wholly-owned subsidiary of Dai Nippon
Printing Co., Ltd. |
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