Photronics Reports Fourth Quarter and Fiscal 2013 Results

  Photronics Reports Fourth Quarter and Fiscal 2013 Results

  *Quarterly sales of $106 million; within revised guidance of $105 - $106
    million
  *Quarterly Non-GAAP diluted EPS of $0.09; exceeds revised guidance of $0.06
    - $0.07
  *Quarterly Non-GAAP EBITDA of $27 million
  *Quarterly high-end FPD sales increase 11% sequentially to $18 million
  *Working capital increases $22 million sequentially to $214 million
  *Net cash of $22 million up $18 million sequentially

Business Wire

BROOKFIELD, Conn. -- December 10, 2013

Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative
imaging technology solutions for the global electronics industry, today
reported financial results for the fourth quarter and fiscal year ended
November 3, 2013.

Constantine ("Deno") Macricostas, Photronics’ chairman and chief executive
officer, commented: “Photronics’ fourth-quarter revenues reflect reduced
high-end IC photomask sales, which were affected by decreased demand in memory
photomasks due to customer delays in transitioning to new nodes and a delay in
fully completing the qualification process with a key Asian foundry customer.
Even with softer revenues, we delivered on the bottom line and achieved
non-GAAP net income of $0.09 per diluted share, which exceeded our revised
guidance range. Our business model is strong and when we complete our current
qualifications and our customers transition to new nodes we expect robust top-
and bottom-line growth.”

“Following the fourth quarter we entered into an agreement with Dai Nippon
Printing Co. Ltd. (DNP) to form a joint venture in Taiwan, adding significant
high-end IC growth opportunities and increased capital efficiency. This
transaction accelerates our strategy and our progress towards establishing a
strong industry leadership position,” concluded Macricostas.

Sales for the fourth quarter of fiscal 2013 were $106 million, compared with
$104.2 million for the fourth quarter of fiscal year 2012. Sales of
semiconductor photomasks were $79.8 million, or 75% of revenues, during the
fourth quarter of fiscal 2013, and sales of flat panel display (FPD)
photomasks were $26.2 million, or 25% of revenues. For the fourth quarter of
fiscal 2013, GAAP net income attributable to Photronics, Inc. shareholders was
$4.8 million, or $0.08 per diluted share, compared with $3.8 million, or $0.06
per diluted share, for the fourth quarter of fiscal 2012. Non-GAAP net income
attributable to Photronics, Inc. shareholders for the fourth quarter of 2013,
excluding joint venture transaction expenses of $0.8 million, was $5.6
million, or $0.09 per diluted share. Non-GAAP net income attributable to
Photronics, Inc. shareholders for the fourth quarter of 2012, excluding $0.2
million in consolidation and restructuring charges, was $4.1 million, or $0.07
per diluted share.

Sales for the 2013 fiscal year were $422.2 million, compared with $450.4
million for the 2012 fiscal year. For the 2013 fiscal year, sales of
semiconductor photomasks were $320.6 million, or 76% of revenues, and sales of
FPD photomasks were $101.6 million, or 24% of revenues. GAAP net income
attributable to Photronics, Inc. shareholders for the 2013 fiscal year was
$18.0 million, or $0.29 per diluted share, compared with GAAP net income of
$27.9 million, or $0.44 per diluted share, for the 2012 fiscal year. Non-GAAP
net income attributable to Photronics, Inc. shareholders for the 2013 fiscal
year, excluding joint venture transaction expenses of $0.8 million, was $18.7
million, or $0.30 per diluted share. Non-GAAP net income attributable to
Photronics, Inc. shareholders for the 2012 fiscal year, excluding $1.4 million
in consolidation and restructuring charges and a $0.1 million gain relating to
warrants, was $29.2 million, or $0.46 per diluted share.

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:

  *Transaction expenses related to the joint venture in the fourth quarter of
    fiscal 2013 are excluded because they are not a part of ongoing
    operations.
  *Consolidation and restructuring charges in fiscal 2012 are excluded
    because they are not a part of ongoing operations.
  *Impact related to warrants in fiscal 2012 is excluded because it does not
    affect cash earnings.

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.

A conference call with investors and the media to discuss these results is
scheduled for 8:30 a.m. Eastern time on Wednesday, December 11, 2013. 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 first quarter
results.

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 Company’s 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. Accordingly, there is no
assurance that the Company’s 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.

18-2013

PLAB – E


PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)

                    Three Months Ended            Year Ended
                       November 3,   October 28,     November 3,    October 28,
                       2013            2012            2013             2012
                                                                        
Net sales              $ 106,009       $ 104,219       $ 422,180        $ 450,439
                                                                        
Costs and
expenses:
                                                                        
Cost of sales            (79,334 )       (79,922 )       (322,540 )       (338,519 )
                                                                        
Selling, general
and                      (12,928 )       (11,396 )       (48,213  )       (46,706  )
administrative
                                                                        
Research and             (6,378  )       (5,264  )       (20,758  )       (19,371  )
development
                                                                        
Consolidation,
restructuring           -             (246    )      -              (1,428   )
and related
charges
                                                                        
Operating income         7,369           7,391           30,669           44,415
                                                                        
Other expense,          (1,384  )      (1,623  )      (3,864   )      (3,767   )
net
                                                                        
Income before            5,985           5,768           26,805           40,648
income taxes
                                                                        
Income tax              (1,072  )      (1,551  )      (7,229   )      (10,793  )
provision
                                                                        
Net income               4,913           4,217           19,576           29,855
                                                                        
Net income
attributable to         (73     )      (384    )      (1,610   )      (1,987   )
noncontrolling
interests
                                                                        
Net income
attributable to        $ 4,840        $ 3,833        $ 17,966        $ 27,868   
Photronics, Inc.
shareholders
                                                                        
Earnings per
share:
Basic                  $ 0.08         $ 0.06         $ 0.30          $ 0.46     
                                                                        
Diluted                $ 0.08         $ 0.06         $ 0.29          $ 0.44     
                                                                        
Weighted-average
number of common
shares
outstanding:
Basic                   61,058        60,196        60,644         60,055   
                                                                        
Diluted                 61,962        61,052        61,599         76,464   



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)

                                            November 3,   October 28,
                                               2013            2012
                                                               
Assets
                                                               
Current assets:
Cash and cash equivalents                      $  215,615      $  218,043
Accounts receivable                               73,357          75,685
Inventories                                       18,849          17,702
Other current assets                             10,645         8,364
                                                               
Total current assets                              318,466         319,794
                                                               
Property, plant and equipment, net                422,740         380,808
Investment in joint venture                       93,124          93,252
Intangible assets, net                            34,080          37,384
Other assets                                     17,519         17,996
                                                               
                                               $  885,929      $  849,234
                                                               
                                                               
                                                               
Liabilities and Equity
                                                               
Current liabilities:
Current portion of long-term borrowings        $  11,818       $  7,781
Accounts payable and accrued liabilities         92,769         77,732
                                                               
Total current liabilities                         104,587         85,513
                                                               
Long-term borrowings                              182,203         168,956
Other liabilities                                 11,308          8,764
                                                               
Equity                                           587,831        586,001
                                                               
                                               $  885,929      $  849,234



PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
                                              
                                                  Year Ended
                                                  November 3,   October 28,
                                                  2013            2012
                                                                  
Cash flows from operating activities:
Net income                                        $ 19,576        $ 29,855
Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation and amortization                       72,942          85,209
Consolidation, restructuring and related            -               262
charges
Changes in assets and liabilities and other        6,883         17,223   
                                                                  
Net cash provided by operating activities          99,401        132,549  
                                                                  
Cash flows from investing activities:
Purchases of property, plant and equipment          (63,792 )       (96,978  )
Investment in joint venture                         -               (13,397  )
Other                                              (2,445  )      (1,568   )
                                                                  
Net cash used in investing activities              (66,237 )      (111,943 )
                                                                  
Cash flows from financing activities:
Proceeds from long-term borrowings                  -               25,000
Repayments of long-term borrowings                  (8,314  )       (5,293   )
Repurchase of common stock of subsidiary            (32,374 )       (15,598  )
Payments of deferred financing fees                 (40     )       (198     )
Proceeds from exercise of share-based              884           653      
arrangements
                                                                  
Net cash (used in) provided by financing           (39,844 )      4,564    
activities
                                                                  
Effect of exchange rate changes on cash            4,252         2,945    
                                                                  
Net increase (decrease) in cash and cash            (2,428  )       28,115
equivalents
Cash and cash equivalents, beginning of            218,043       189,928  
year
                                                                  
Cash and cash equivalents, end of year            $ 215,615      $ 218,043  



PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)

                   Three Months Ended           Year Ended
                      November 3,   October        November     October
                                      28,            3,             28,
                      2013            2012           2013           2012
                                                                    
Reconciliation
of GAAP to
Non-GAAP Net
Income
Attributable to
Photronics,
Inc.
Shareholders
                                                                    
GAAP net income
attributable to
Photronics,           $  4,840        $  3,833       $  17,966      $ 27,868
Inc.
shareholders
                                                                    
(a) Joint
venture
transaction              773             -              773           -
expenses, net
of tax
                                                                    
(b)
Consolidation
and                      -               246            -             1,428
restructuring
charges, net of
tax
                                                                    
(c) Impact of
warrants, net            -               -              -             (94    )
of tax
                                                                 
                                                                    
Non-GAAP net
income
attributable to       $  5,613        $  4,079       $  18,739      $ 29,202 
Photronics,
Inc.
shareholders
                                                                    
Reconciliation
of GAAP to
Non-GAAP Net
Income
Applicable to
Common
Shareholders
                                                                    
Weighted
average number
of diluted
shares
outstanding
                                                                    
GAAP                    61,962         61,052        61,599       76,464 
                                                                    
Non-GAAP                61,962         61,052        61,599       76,445 
                                                                    
Net income per
diluted share
                                                                    
GAAP                  $  0.08         $  0.06        $  0.29        $ 0.44   
                                                                    
Non-GAAP              $  0.09         $  0.07        $  0.30        $ 0.46   


(a) Represents transaction expenses in connection with the joint venture with
DNP Photomask Technology Taiwan Co., Ltd., a wholly-owned subsidiary of Dai
Nippon Printing Co., Ltd.

(b) Represents consolidation and restructuring charges primarily related to
restructuring in Singapore.

(c) Represents impact related to warrants, which is recorded in other expense,
net.


Contact:

Photronics, Inc.
Pete Broadbent, 203-775-9000
Vice President, Investor Relations & Marketing
pbroadbent@photronics.com
 
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