Photronics Reports Third Quarter Results



    BROOKFIELD, CONN., August 15 /CNW/ - Photronics, Inc. (Nasdaq:  PLAB), a
worldwide leader in supplying innovative imaging technology solutions for the
global electronics industry, today reported fiscal 2007 third quarter results
for the period ended July 29, 2007.

    Sales for the quarter were $104.3 million compared to $108.2 million for
the third quarter of fiscal year 2006. Semiconductor photomasks accounted for
$85.3 million, or 81.8% of revenues during the third quarter of fiscal 2007,
while flat panel display (FPD) photomasks accounted for $19.0 million, or
18.2% of revenues. During the third quarter of fiscal 2006, semiconductor
photomasks accounted for 80.6% of revenues and FPD photomasks accounted for
19.4% of revenues.

    Net income for the third quarter of fiscal year 2007 amounted to $2.2
million, or $0.05 per diluted share compared to net income of $4.6 million, or
$0.11 per diluted share for the third quarter of fiscal 2006.

    Sales for the first nine months of 2007 were $319.9 million compared to
$339.6 million for the first nine months of fiscal 2006. Semiconductor
photomasks accounted for $259.2 million, or 81.0% of revenues during the first
nine months of fiscal 2007, while FPD photomasks accounted for $60.7 million,
or 19.0% of revenues. Year-over-year, semiconductor photomask revenues
decreased 1.9%, while FPD photomask revenues decreased 19.4%.

    Net income for the first nine months of fiscal 2007 amounted to $24.2
million, or $0.53 per diluted share, compared to the prior year's first nine
months net income of $19.5 million, or $0.45 per diluted share. Net income for
the first nine months of 2007 includes a net benefit of $7.9 million, or $0.16
per share, relating to the resolution and settlement of United States and
foreign tax liabilities associated with uncertain tax positions in prior
years. Net income for the second quarter of 2006 included a charge of $11.4
million after tax, or $0.22 per diluted share, in connection with the
Company's previously disclosed restructuring of its operations in North
America.

    Michael J. Luttati, Chief Executive Officer commented, "During the
quarter, revenues were impacted by continued softness in the demand for flat
panel display masks and a shortfall in expected design releases from European
semiconductor photomask customers. We believe that the conditions affecting
design release patterns for both these markets will improve before the end of
calendar 2007." He concluded, "As we turn our attention toward future
opportunities, we are confident that the strategic initiatives we have been
implementing all throughout fiscal 2007, together with increasingly favorable
market dynamics, will begin having a positive and long reaching impact upon
our performance throughout fiscal 2008."

    A conference call with investors and the media to discuss these results
can be accessed by logging onto Photronics' web site at www.photronics.com,
then clicking on the "Conference Calls" button in the top right corner of the
home page. The call is scheduled for 8:30 a.m. Eastern Time on Thursday,
August 16th, and will be archived for instant replay access until the Company
reports its fiscal fourth quarter results after the market closes on Tuesday,
December 4, 2007. The live call dial-in number is 212-748-2807.

    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.

    "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Certain statements in this release are considered "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All forward looking statements involve risks and
uncertainties. In particular, any statement contained in this release
regarding the consummation and benefits of future acquisitions, expectations
with respect to the joint venture, the planned fabrication facility, future
sales, financial performance, operating efficiencies and product expansion,
are subject to known and unknown risks, uncertainties and contingencies, many
of which are beyond the control of the Company. These factors may cause actual
results, performance or achievements to differ materially from anticipated
results, performances or achievements. Factors that might affect such forward
looking statements include, but are not limited to, overall economic and
business conditions; the demand and receipt of orders for the Company's
products; competitive factors in the industries and geographic markets in
which the Company competes; changes in federal, state and foreign tax
requirements (including tax rate changes, new tax laws and revised tax law
interpretations); the Company's ability to place new equipment in service on a
timely basis; interest rate fluctuations and other capital market conditions,
including foreign currency rate fluctuations; economic and political
conditions in international markets; the ability to maintain a bank facility
or secure other financings; the ability to achieve anticipated synergies and
other cost savings in connection with acquisitions and productivity programs;
uncertainties with respect to the integration and management of a new joint
venture, delays in the construction and equipping of the planned fabrication
facility, the ability to transfer licensed applications to other applications,
the timing, impact and other uncertainties of future acquisitions and
investments; the seasonal and cyclical nature of the semiconductor industry;
the availability of capital; management changes; damage or destruction to our
facilities by natural disasters, labor strikes, political unrest or terrorist
activity; the ability to fully utilize its tools; the ability of the Company
to receive desired yields, pricing, product mix, and market acceptance of its
products; changes in technology; and other risks and uncertainties set forth
in the Company's SEC filings from time to time. Any forward-looking statements
should be considered in light of these factors. The Company assumes no
obligation to update the information in this release.

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



                                   Three Months Ended   Nine Months Ended
                                   ------------------- -------------------
                                    July 29   July 30   July 29   July 30
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------

    Net sales                      $104,301  $108,160  $319,908  $339,579

    Costs and expenses:

       Cost of sales                 80,595    75,256   240,344   228,685

       Selling, general and
        administrative               16,039    15,524    46,922    46,438

       Research and development       4,241     6,741    13,285    22,985
                                   --------- --------- --------- ---------
                                      3,426    10,639    19,357    41,471

    Consolidation, restructure,
     and related charges                  -    (1,790)        -   (13,216)

    Gain on sale of facility              -         -     2,254         -
                                   --------- --------- --------- ---------

          Operating income            3,426     8,849    21,611    28,255

    Other income (expense), net         867    (1,274)    1,012     4,292
                                   --------- --------- --------- ---------

          Income before income
           taxes and minority
           interest                   4,293     7,575    22,623    32,547

    Income tax benefit
     (provision)                     (1,126)   (1,692)    3,962    (9,324)
                                   --------- --------- --------- ---------

          Income before minority
           interest                   3,167     5,883    26,585    23,223

    Minority interest                  (929)   (1,328)   (2,424)   (3,710)
                                   --------- --------- --------- ---------

          Net income               $  2,238  $  4,555  $ 24,161  $ 19,513
                                   --------- --------- --------- ---------

    Earnings per share:
           Basic                   $   0.05  $   0.11  $   0.58  $   0.47
                                   --------- --------- --------- ---------

           Diluted                 $   0.05  $   0.11  $   0.53  $   0.45
                                   --------- --------- --------- ---------

    Weighted average number of
     common shares
      outstanding:
           Basic                     41,558    41,383    41,515    41,344
                                   --------- --------- --------- ---------

           Diluted                   41,864    41,735    51,355    51,036
                                   --------- --------- --------- ---------
    

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



                                                       July 29  October 29
                                                         2007      2006
                                                       -------- ----------

                        Assets
    -----------------------------------------------

    Current assets:
       Cash, cash equivalents and short-term
          investments of $25,182 in 2007 and $69,899
           in 2006                                     $145,238 $  199,324
       Accounts receivable                               72,527     84,299
       Inventories                                       16,630     19,209
       Other current assets                              11,790     16,055
                                                       -------- ----------

          Total current assets                          246,185    318,887

    Property, plant and equipment, net                  460,116    443,637
    Goodwill                                            138,534    138,534
    Investment in joint venture                          65,646     64,365
    Other intangibles, net                               70,004     71,763
    Other assets                                          6,857      8,497
                                                       -------- ----------

                                                       $987,342 $1,045,683
                                                       -------- ----------



    Liabilities and Shareholders' Equity
    ------------------------------------------------

    Current liabilities:
       Current portion of long-term debt               $ 25,000 $   86,903
       Accounts payable                                  65,962     53,907
       Other accrued liabilities                         31,123     50,386
                                                       -------- ----------

          Total current liabilities                     122,085    191,196

    Long-term debt                                      149,608    170,288
    Deferred income taxes and other liabilities          16,509     23,920
    Minority interest                                    48,914     45,997

    Shareholders' equity                                650,226    614,282
                                                       -------- ----------

                                                       $987,342 $1,045,683
                                                       -------- ----------
    

    
                      PHOTRONICS, INC. AND SUBSIDIARIES
    ----------------------------------------------------------------------
               Condensed Consolidated Statements of Cash Flows
    ----------------------------------------------------------------------
                                (in thousands)


                                                       Nine Months Ended
                                                      --------------------
                                                       July 29   July 30
                                                        2007       2006
                                                      --------- ----------


    Cash flows from operating activities:
         Net income                                   $ 24,161  $  19,513
         Adjustments to reconcile net income to net
          cash
          provided by operating activities:
             Depreciation and amortization              72,234     67,594
             Gain on sale of facility and other         (3,027)         -
             Gain on sale of investments                  (257)         -
             Minority interest in income of
              consolidated subsidiaries                  2,424      3,710
             Consolidation, restructuring and related
              charges                                        -     13,216
             Changes in assets and liabilities and
              other                                     (1,461)   (24,135)
                                                      --------- ----------

    Net cash provided by operating activities           94,074     79,898
                                                      --------- ----------

    Cash flows from investing activities:
           Purchases of property, plant and
            equipment                                  (56,951)   (83,441)
           Purchases of short-term investments and
            other                                       (5,465)   (64,983)
           Proceeds from sales of investments and
            other                                       48,253     78,697
           Proceeds from sale of facility                5,783          -
           Investment in joint venture, technology
            and supply agreements                       (1,000)  (120,505)
           Acquisition of additional interest in PK
            Ltd.                                             -     (8,432)
                                                      --------- ----------

    Net cash used in investing activities               (9,380)  (198,664)
                                                      --------- ----------

    Cash flows from financing activities:
           Repayments of long-term debt and other      (94,587)    (4,725)
           Proceeds from long-term debt                  3,369     12,218
           Proceeds from issuance of common stock          631      1,172
           Other                                        (1,485)         -
                                                      --------- ----------

    Net cash (used in) provided by financing
     activities                                        (92,072)     8,665
                                                      --------- ----------

    Effect of exchange rate changes on cash             (1,991)      (709)
                                                      --------- ----------

    Net decrease in cash and cash equivalents           (9,369)  (110,810)
    Cash and cash equivalents, beginning of period     129,425    196,049
                                                      --------- ----------


    Cash and cash equivalents, end of period          $120,056  $  85,239
                                                      --------- ----------

    Supplemental disclosure of cash flow information:
      Change in accrual for purchases of property,
       plant and equipment                              16,480     12,585
    




For further information:

For further information: Photronics, Inc. Michael W. McCarthy,
207-775-9000 Vice President - Corporate Communications
mmccarthy@brk.photronics.com

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PHOTRONICS, INC.

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