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Photronics Reports First Quarter Fiscal 2014 Results

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 interests   (48 )   (536 )
 
Net income attributable to Photronics, Inc. shareholders $ 1,993   $ 2,323  
 
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. shareholders $ 1,993 $ 2,323

 

(a) Joint venture transaction expenses, net of tax 437 -
   
 
Non-GAAP net income attributable to Photronics, Inc. shareholders $ 2,430 $ 2,323
 

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
 

(a)

 

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

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