Photronics Reports First Quarter Fiscal 2014 Results

  Photronics Reports First Quarter Fiscal 2014 Results

  *Quarterly sales of $101.5 million; meets revised guidance of $101.5
    million
  *Non-GAAP net income of $2.4 million
  *Non-GAAP EPS of $0.04; within revised guidance of $0.03 - $0.04
  *Quarterly high-end IC sales increase 7% sequentially to $16.6 million
  *EBITDA of $25.7 million
  *Net Cash of $18.8 million

Business Wire

BROOKFIELD, Conn. -- February 18, 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 first quarter ended February 2,
2014.

Constantine (“Deno”) Macricostas, Photronics' chairman and chief executive
officer commented, “We met our revised guidance for the first quarter,
reporting $101.5 million in sales and $0.04 in non-GAAP EPS. As we discussed
previously, first-quarter semiconductor revenue, which is traditionally soft
due to customer seasonal shutdowns, was affected by a slower-than-expected
post-holiday recovery at our mainstream business in the U.S. and Europe, the
absence of an expected pre-Lunar New Year pull-in in Taiwan, and a delayed
ramp in our high-end memory. Flat panel display (FPD) photomask sales in the
first quarter were stable and had volume similar to last year. Our Korean IC
business rebounded positively both sequentially and compared with a year ago.”

“We are well positioned to capitalize on high-end opportunities and deliver
increased revenue and profitability as the market turns in our favor. We have
a significant technology advantage, our financial position is solid and we are
strengthening our strategic customer relationships,” concluded Macricostas.

Sales for the first quarter of fiscal 2014 were $101.5 million, an increase of
2% compared with $99.8 million for the first quarter of fiscal 2013. Sales of
semiconductor photomasks were $76.2 million, or 75% of revenues, during the
first quarter of fiscal 2014, and sales of flat panel display (FPD) photomasks
were $25.3 million, or 25% of revenues.

GAAP net income attributable to Photronics, Inc. for the first quarter of
fiscal 2014 was $2.0 million, or $0.03 per diluted share, compared with GAAP
net income attributable to Photronics, Inc. of $2.3 million, or $0.04 per
diluted share, for the first quarter of fiscal 2013. Non-GAAP net income
attributable to Photronics, Inc. shareholders for the first quarter of fiscal
2014, which excludes pending joint venture transaction expenses of $0.4
million, was $2.4 million, or $0.04 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
item:

  *Transaction expenses in the first quarter of fiscal 2014 related to the
    pending joint venture are excluded because they are not a 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.

A conference call with investors and the media to discuss these results is
scheduled for 8:30 a.m. Eastern time on Wednesday, February 19, 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 second 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.

04-2013

PLAB – E


PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
                                                                
                                                     Three Months Ended
                                                     February 2,   January 27,
                                                     2014          2013
                                                                   
Net sales                                            $ 101,542     $ 99,839
                                                                   
Costs and expenses:
                                                                   
Cost of sales                                          (78,660 )     (78,741 )
                                                                   
Selling, general and administrative                    (12,278 )     (11,067 )
                                                                   
Research and development                              (4,974  )    (4,839  )
                                                                   
Operating income                                       5,630         5,192
                                                                   
Other expense, net                                    (873    )    (591    )
                                                                   
Income before income taxes                             4,757         4,601
                                                                   
Income tax provision                                  (2,716  )    (1,742  )
                                                                   
Net income                                             2,041         2,859
                                                                   
Net income attributable to noncontrolling             (48     )    (536    )
interests
                                                                   
Net income attributable to Photronics, Inc.          $ 1,993      $ 2,323   
shareholders
                                                                   
Earnings per share:
Basic                                                $ 0.03       $ 0.04    
                                                                   
Diluted                                              $ 0.03       $ 0.04    
                                                                   
Weighted-average number of common shares
outstanding:
Basic                                                 61,200      60,277  
                                                                   
Diluted                                               62,136      61,095  
                                                                   


PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
                                                      
                                           February 2,   November 3,
                                           2014          2013
                                                         
Assets
                                                         
Current assets:
Cash and cash equivalents                  $  189,228    $  215,615
Accounts receivable                           72,046        73,357
Inventories                                   19,566        18,849
Other current assets                         11,273       10,645
                                                         
Total current assets                          292,113       318,466
                                                         
Property, plant and equipment, net            434,201       422,740
Investment in joint venture                   93,104        93,124
Intangible assets, net                        32,634        34,080
Other assets                                 18,716       17,519
                                                         
                                           $  870,768    $  885,929
                                                         
                                                         

Liabilities and Equity
                                                         
Current liabilities:
Current portion of long-term borrowings    $  9,387      $  11,818
Accounts payable and accrued liabilities     105,856      92,769
                                                         
Total current liabilities                     115,243       104,587
                                                         
Long-term borrowings                          161,080       182,203
Other liabilities                             13,241        11,308
                                                         
Equity                                       581,204      587,831
                                                         
                                           $  870,768    $  885,929
                                                         


PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                                                             
                                                  Three Months Ended
                                                  February 2,   January 27,
                                                  2014          2013
                                                                
Cash flows from operating activities:
Net income                                        $ 2,041       $ 2,859
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                       17,899        19,157
Changes in assets and liabilities and other        (5,743  )    (3,351  )
                                                                
Net cash provided by operating activities          14,197      18,665  
                                                                
Cash flows from investing activities:
Purchases of property, plant and equipment          (12,184 )     (15,539 )
Increase in restricted cash                         (1,698  )     -
Other                                              67          (1,043  )
                                                                
Net cash used in investing activities              (13,815 )    (16,582 )
                                                                
Cash flows from financing activities:
Repayments of long-term borrowings                  (23,554 )     (1,655  )
Purchase of common stock of subsidiary              -             (4,190  )
Payment of deferred financing fees                  (310    )     -
Proceeds from share-based arrangements             518         203     
                                                                
Net cash used in financing activities              (23,346 )    (5,642  )
                                                                
Effect of exchange rate changes on cash            (3,423  )    3,287   
                                                                
Net decrease in cash and cash equivalents           (26,387 )     (272    )
Cash and cash equivalents, beginning of period     215,615     218,043 
                                                                
Cash and cash equivalents, end of period          $ 189,228    $ 217,771 
                                                                


PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
                                                                
                                                     Three Months Ended
                                                     February 2,   January 27,
                                                     2014          2013
                                                                   
Reconciliation of GAAP to Non-GAAP Net Income
Attributable to Photronics, Inc. Shareholders
                                                                   
GAAP net income attributable to Photronics, Inc.     $   1,993     $   2,323
shareholders

(a) Joint venture transaction expenses, net of tax       437           -
                                                                  
                                                                   
Non-GAAP net income attributable to Photronics,      $   2,430     $   2,323
Inc. shareholders
                                                                   
Reconciliation of GAAP to Non-GAAP Net Income
Applicable to Common Shareholders
                                                                   
Weighted average number of diluted shares
outstanding
                                                                   
GAAP                                                    62,136       61,095
                                                                   
Non-GAAP                                                62,136       61,095
                                                                   
Net income per diluted share
                                                                   
GAAP                                                 $   0.03      $   0.04
                                                                   
Non-GAAP                                             $   0.04      $   0.04
                                                                   

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

Contact:

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