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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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