Photronics Reports Strong Second Quarter Fiscal 2012 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 second quarter ended April 29, 2012.

Constantine (“Deno”) Macricostas, Photronics' chairman and chief executive officer commented, “Our strong performance in the second quarter once again reflects the success of our high-end strategy and diligent focus on cost controls. We reported robust growth in both advanced IC and FPD product revenues. We leveraged this growth with our lean operating model to achieve higher-than-expected earnings for the quarter. We believe the results from our technology investments continue to produce meaningful market share gains and strengthen our customer relationships.”

Sales for the second quarter of fiscal 2012 were $117.5 million, up 5% compared with $112.2 million in revenue reported for the first quarter of fiscal 2012. Sales for the second quarter of fiscal 2011 were $133.1 million. Sales of semiconductor photomasks were $89.1 million, or 76% of revenues, during the second quarter of fiscal 2012, and sales of flat panel display (FPD) photomasks were $28.4 million, or 24% of revenues. GAAP net income attributable to Photronics, Inc. for the second quarter of fiscal 2012 was $8.8 million, or $0.14 per diluted share, compared with GAAP net loss attributable to Photronics, Inc. of $16.4 million, or $(0.30) per diluted share, for the second quarter of fiscal 2011.

Non-GAAP net income attributable to Photronics, Inc. for the second quarter of 2012, excluding restructuring charges of $0.1 million, was $8.9 million, or $0.14 earnings per diluted share. Non-GAAP net income attributable to Photronics, Inc. for the second quarter of 2011, excluding debt extinguishment losses of $30.5 million, was $14.8 million, or $0.24 earnings 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.

Sales for the first six months of 2012 decreased 10% to $229.6 million from $253.9 million for the first six months of fiscal 2011. Sales of semiconductor photomasks were $175.9 million, or 77% of revenues for the first six months of 2012, and sales of FPD photomasks were $53.7 million, or 23% of revenues. GAAP net income attributable to Photronics, Inc. for the first six months of fiscal 2012 was $13.1 million, or $0.21 per diluted share, compared with net loss of $4.3 million, or $(0.08) per share in the first six months of the prior year. Non-GAAP net income attributable to Photronics, Inc. for the first six months of fiscal 2012, which excludes $1.2 million of restructuring charges and a $0.1 million gain relating to warrants, was $14.2 million, or $0.23 per diluted share. Non-GAAP net income attributable to Photronics, Inc. for the first six months of fiscal 2011, which excludes $30.5 million of debt extinguishment losses, was $27.0 million, or $0.44 per diluted share.

Non-GAAP Financial Measures

Non-GAAP net income (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) 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 (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) 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 (loss) attributable to Photronics, Inc. and non-GAAP earnings (loss) 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 (loss), net income (loss) 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:
  • Consolidation and restructuring charges in fiscal 2012 are excluded because they are not a part of ongoing operations.
  • Impact of financing expenses related to warrants is excluded because it does not affect cash earnings.
  • Loss on extinguishment of debt is excluded in fiscal 2011 because it is not a part of ongoing operations and was not anticipated when establishing forecast guidance for the second quarter of fiscal 2011.

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 Tuesday, May 15, 2012. The call can be accessed by logging onto Photronics' web site at www.photronics.com. The live dial-in number is 408-774-4601. The call will be archived for instant replay access until the Company reports its fiscal 2012 third 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. 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.

09-2012

PLAB – E

PHOTRONICS, INC. AND SUBSIDIARIES

Reconciliation of GAAP to non-GAAP Financial Information
(in thousands)
(Unaudited)
 
  Three Months Ended   Six Months Ended
April 29,   May 1, April 29,   May 1,
2012 2011 2012 2011
 

Reconciliation of GAAP to Non-GAAP Net Income (Loss) Attributable to Photronics, Inc.
 
GAAP net income (loss) attributable to Photronics, Inc. $ 8,818 $ (16,438 ) $ 13,086 $ (4,327 )
 

(a)

Debt extinguishment loss and net interest impact, net of tax
- 30,513 - 30,513
 

(b)

Consolidation and restructuring charges, net of tax
58 - 1,176 -
 

(c)

Impact of warrants, net of tax
  -     745     (94 )   820  
 
Non-GAAP net income attributable to Photronics, Inc. $ 8,876   $ 14,820   $ 14,168   $ 27,006  
 

 

Reconciliation of GAAP to Non-GAAP Net Income (Loss) Applicable to Common Shareholders
 
Weighted average number of diluted shares outstanding
 
GAAP   76,590     55,685     76,472     54,751  
 

(d)

Non-GAAP
  76,590     67,047     76,435     66,634  
 
Net income (loss) per diluted share
 
GAAP $ 0.14   $ (0.30 ) $ 0.21   $ (0.08 )
 
Non-GAAP $ 0.14   $ 0.24   $ 0.23   $ 0.44  
 

(a)

Represents 2011 extinguishment charge related to the repurchase of $30.4 million of our 5.50% convertible senior notes due in October 2014, and net interest impact on convertible transactions.
 

(b)

Represents consolidation and restructuring charges primarily related to restructuring in Singapore.
 

(c)

Represents financing expenses related to warrants, which are recorded in other income (expense).
 

(d)

Excludes the 2011 impact of shares issued on March 29, 2011 (1.7 million shares during the three months ended May 1, 2011 and 0.8 million shares during the six months ended May 1, 2011), primarily related to the issuance of common stock in exchange for $30.4 million of our 5.5% convertible senior notes due in October 2014.

 

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended   Six Months Ended
April 29,   May 1, April 29,   May 1,
2012 2011

2012
2011
 
Net sales $ 117,451 $ 133,103 $ 229,605 $ 253,926
 
Costs and expenses:
 
Cost of sales (87,590 ) (96,617 ) (174,286 ) (186,845 )
 
Selling, general and administrative (12,201 ) (11,448 ) (23,526 ) (22,162 )
 
Research and development (4,441 ) (3,940 ) (8,885 ) (7,711 )
 
Consolidation, restructuring and related charges   (58 )   -     (1,176 )   -  
 
Operating income 13,161 21,098 21,732 37,208
 
Debt extinguishment loss - (30,286 ) - (30,286 )
 
Other expense, net   (968 )   (2,585 )   (1,377 )   (1,629 )
 
Income (loss) before income taxes 12,193 (11,773 ) 20,355 5,293
 
Income tax provision   (2,663 )   (3,260 )   (5,984 )   (6,742 )
 
Net income (loss) 9,530 (15,033 ) 14,371 (1,449 )
 
Net income attributable to noncontrolling interests   (712 )   (1,405 )   (1,285 )   (2,878 )
 
Net income (loss) attributable to Photronics, Inc. $ 8,818   $ (16,438 ) $ 13,086   $ (4,327 )
 
Earnings (loss) per share:
Basic $ 0.15   $ (0.30 ) $ 0.22   $ (0.08 )
 
Diluted $ 0.14   $ (0.30 ) $ 0.21   $ (0.08 )
 

Weighted average number of common shares outstanding:
Basic   60,086     55,685     59,952     54,751  
 
Diluted   76,590     55,685     76,472     54,751  
 

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
  April 29,   October 30,
2012 2011
 

Assets
 
Current assets:
Cash and cash equivalents $ 191,960 $ 189,928
Accounts receivable 89,123 85,540
Inventories 20,453 22,100
Other current assets   8,359     7,639  
 
Total current assets 309,895 305,207
 
Property, plant and equipment, net 382,800 368,680
Investment in joint venture 85,831 79,984
Intangible assets, net 39,918 42,462
Other assets   20,803     21,521  
 
$ 839,247   $ 817,854  
 
 

 

Liabilities and Equity
 
Current liabilities:
Current portion of long-term borrowings $ 7,874 $ 5,583
Accounts payable and accrued liabilities   81,394     90,318  
 
Total current liabilities 89,268 95,901
 
Long-term borrowings 172,312 152,577
Other liabilities 8,789 9,620
 
Equity   568,878     559,756  
 
$ 839,247   $ 817,854  
 

PHOTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
  Six Months Ended
April 29,   May 1,
2012 2011
 
 
Cash flows from operating activities:
Net income (loss) $ 14,371 $ (1,449 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 44,135 46,467
Consolidation, restructuring, and related charges 262 -
Debt extinguishment loss - 23,504
Changes in assets and liabilities and other   3,631     (4,532 )
 
Net cash provided by operating activities   62,399     63,990  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (67,626 ) (39,254 )
Investment in joint venture (5,899 ) (8,498 )
Other   (1,600 )   (250 )
 
Net cash used in investing activities   (75,125 )   (48,002 )
 
Cash flows from financing activities:
Proceeds from long-term borrowings 25,000 17,000
Proceeds from issuance of convertible debt - 115,000
Repayments of long-term borrowings (2,343 ) (60,303 )
Payments of deferred financing fees (198 ) (4,145 )
Repurchase of common stock by subsidiary (7,577 ) (3,294 )
Proceeds from exercise of share-based arrangements   431     356  
 
Net cash provided by financing activities   15,313     64,614  
 
Effect of exchange rate changes on cash   (555 )   6,565  
 
Net increase in cash and cash equivalents 2,032 87,167
Cash and cash equivalents, beginning of period   189,928     98,945  
 
 
Cash and cash equivalents, end of period

$

191,960
 

$

186,112
 

Copyright Business Wire 2010

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