Company Quick10K Filing
Quick10K
Photronics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$10.29 67 $690
10-Q 2019-07-28 Quarter: 2019-07-28
10-Q 2019-04-28 Quarter: 2019-04-28
10-Q 2019-01-27 Quarter: 2019-01-27
10-K 2018-10-31 Annual: 2018-10-31
10-Q 2018-07-29 Quarter: 2018-07-29
10-Q 2018-04-29 Quarter: 2018-04-29
10-Q 2018-01-28 Quarter: 2018-01-28
10-K 2017-10-29 Annual: 2017-10-29
10-Q 2017-07-30 Quarter: 2017-07-30
10-Q 2017-04-30 Quarter: 2017-04-30
10-Q 2017-01-29 Quarter: 2017-01-29
10-K 2016-10-30 Annual: 2016-10-30
10-Q 2016-07-31 Quarter: 2016-07-31
10-Q 2016-05-01 Quarter: 2016-05-01
10-Q 2016-01-31 Quarter: 2016-01-31
10-K 2015-11-01 Annual: 2015-11-01
10-Q 2015-08-02 Quarter: 2015-08-02
10-Q 2015-05-03 Quarter: 2015-05-03
10-Q 2015-02-01 Quarter: 2015-02-01
10-K 2014-11-02 Annual: 2014-11-02
10-Q 2014-08-03 Quarter: 2014-08-03
10-Q 2014-05-04 Quarter: 2014-05-04
10-Q 2014-02-02 Quarter: 2014-02-02
10-K 2013-11-03 Annual: 2013-11-03
8-K 2019-10-10 Regulation FD
8-K 2019-09-26 Officers, Exhibits
8-K 2019-09-23 Enter Agreement, Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2019-08-28 Other Events, Exhibits
8-K 2019-08-20 Earnings, Exhibits
8-K 2019-05-22 Earnings, Exhibits
8-K 2019-04-04 Regulation FD, Exhibits
8-K 2019-03-25
8-K 2019-02-21 Earnings, Exhibits
8-K 2019-01-16 Regulation FD, Exhibits
8-K 2018-12-12 Earnings, Regulation FD, Exhibits
8-K 2018-12-10 Enter Agreement, Off-BS Arrangement
8-K 2018-11-28 Enter Agreement
8-K 2018-10-12 Other Events, Exhibits
8-K 2018-10-03 Enter Agreement, Amend Bylaw
8-K 2018-08-23 Enter Agreement
8-K 2018-08-22 Earnings, Exhibits
8-K 2018-07-06 Other Events, Exhibits
8-K 2018-05-23 Regulation FD, Exhibits
8-K 2018-05-22 Earnings, Exhibits
8-K 2018-03-22
8-K 2018-02-14 Earnings, Exhibits
8-K 2018-01-22 Officers
8-K 2018-01-18 Officers
8-K 2018-01-17 Regulation FD, Exhibits
8-K 2018-01-05 Other Events, Exhibits
ADI Analog Devices 39,945
AUO AU Optronics 22,713
DQ Daqo New Energy 17,109
MLNX Mellanox Technologies 5,865
IDTI Integrated Device Technology 4,322
VIAV Viavi Solutions 3,119
TSEM Tower Semiconductor 1,952
FORM Formfactor 1,253
SOL Renesola 358
LPTH Lightpath Technologies 18
PLAB 2019-07-28
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1 - Basis of Financial Statement Presentation
Note 2 - Inventories
Note 3 - Property, Plant and Equipment
Note 4 - Pdmcx Joint Venture
Note 5 - Debt
Note 6 - Revenue
Note 7 - Share-Based Compensation
Note 8 - Income Taxes
Note 9 - Earnings per Share
Note 10 - Changes in Accumulated Other Comprehensive Income By Component
Note 11 - Fair Value Measurements
Note 12 - Share Repurchase Program
Note 13 - Commitments and Contingencies
Note 14 - Recent Accounting Pronouncements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-10.28 ex10_28.htm
EX-31.1 ex31_1.htm
EX-31.2 ex31_2.htm
EX-32.1 ex32_1.htm
EX-32.2 ex32_2.htm

Photronics Earnings 2019-07-28

PLAB 10Q Quarterly Report

Balance SheetIncome StatementCash Flow



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 28, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 0-15451

graphic

PHOTRONICS, INC.
(Exact name of registrant as specified in its charter)

Connecticut
 
06-0854886
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

15 Secor Road, Brookfield, Connecticut
 
06804
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code
 
(203) 775-9000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
COMMON
PLAB
NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Smaller Reporting Company
Emerging growth company
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   No

The registrant had 67,196,843 shares of common stock outstanding as of August 30, 2019.




Index

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of Photronics, Inc. (“Photronics”, the “Company”, “we”, “our”, or “us”). These statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Forward-looking statements may be identified by words like “expect,” “anticipate,” “believe,” “plan,” “project,” “could,” “estimate,” “intend,” “may,” “will” and similar expressions, or the negative of such terms, or other comparable terminology. All forward-looking statements involve risks and uncertainties that are difficult to predict. In particular, any statement contained in this quarterly report on Form 10-Q or in other documents filed with the Securities and Exchange Commission in press releases or in the Company’s communications and discussions with investors and analysts in the normal course of business through meetings, phone calls, or conference calls regarding, among other things, the consummation and benefits of transactions, joint ventures, business combinations, divestitures and acquisitions, expectations with respect to future sales, financial performance, operating efficiencies, or product expansion, are subject to known and unknown risks, uncertainties, and contingencies, many of which are beyond the control of the Company. Various factors may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements expressed or implied by forward-looking statements. Factors that might affect forward-looking statements include, but are not limited to, overall economic, business, and political conditions in both domestic as well as international markets; the demand for the Company’s products; competitive factors in the industries and geographic markets in which the Company competes; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in accounting standards; federal, state and international tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); changes in the jurisdictional mix of our earnings and changes in tax laws and rates; interest rate and other capital market conditions, including changes in the market price of the Company’s securities; foreign currency exchange rate fluctuations; changes in technology; technology or intellectual property infringement, including cybersecurity breaches, and other innovation risks; unsuccessful or unproductive research and development or capital expenditures; the timing, impact, and other uncertainties related to transactions and acquisitions, divestitures, business combinations, and joint ventures as well as decisions the Company may make in the future regarding the Company’s business, capital and organizational structures and other matters; the seasonal and cyclical nature of the semiconductor and flat panel display industries; management changes; changes in laws and government regulation impacting our operations or our products, including laws relating to export controls and import laws, rules and tariffs; the occurrence of regulatory proceedings, claims or litigation; damage or destruction to the Company’s facilities, or the facilities of its customers or suppliers, by natural disasters, labor strikes, political unrest, or terrorist activity; construction of new facilities and assembly of new equipment; dilutive issuances of the Company’s stock; the ability of the Company to (i) place new equipment in service on a timely basis; (ii) obtain additional financing; (iii) achieve anticipated synergies and cost savings; (iv) fully utilize its tools; (v) achieve desired yields, pricing, product mix, and market acceptance of its products and (vi) obtain necessary import and export licenses. Any forward-looking statements should be considered in light of these factors. Accordingly, there is no assurance that the Company’s expectations will be realized. The Company does not assume responsibility for the accuracy and completeness of the forward-looking statements and does not assume an obligation to provide revisions to any forward-looking statements, except as otherwise required by securities and other applicable laws.

2

Index

PHOTRONICS, INC.

INDEX

PART I.
FINANCIAL INFORMATION
 
 
 
 
Item 1.
4
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
 
9
 
 
 
 
10
 
 
 
Item 2.
25
 
 
 
Item 3.
32
 
 
 
Item 4.
32
 
 
 
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Item 1A.
33
 
 
 
Item 2.
33
     
Item 5.
33
 
 
 
Item 6.
34


3

Index

PART I.          FINANCIAL INFORMATION

Item 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)

 
July 28,
2019
   
October 31,
2018
 
             
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
197,243
   
$
329,277
 
Accounts receivable, net of allowance of $1,382 in 2019 and $1,526 in 2018
   
134,369
     
120,515
 
Inventories
   
39,982
     
29,180
 
Prepaid expenses
   
10,439
     
6,901
 
Other current assets
   
38,434
     
16,858
 
                 
Total current assets
   
420,467
     
502,731
 
                 
Property, plant and equipment, net
   
636,743
     
571,781
 
Intangible assets, net
   
9,013
     
12,368
 
Deferred income taxes
   
17,498
     
18,109
 
Other assets
   
30,474
     
5,020
 
                 
Total assets
 
$
1,114,195
   
$
1,110,009
 
                 
LIABILITIES AND EQUITY
               
Current liabilities:
               
Short-term debt
 
$
3,900
   
$
-
 
Current portion of long-term debt
   
2,200
     
57,453
 
Accounts payable
   
87,938
     
89,149
 
Accrued liabilities
   
65,236
     
44,474
 
                 
Total current liabilities
   
159,274
     
191,076
 
                 
Long-term debt
   
43,015
     
-
 
Deferred income taxes
   
518
     
643
 
Other liabilities
   
11,050
     
13,721
 
                 
Total liabilities
   
213,857
     
205,440
 
                 
Commitments and contingencies
               
                 
Equity:
               
Preferred stock, $0.01 par value, 2,000 shares authorized, none issued and outstanding
   
-
     
-
 
Common stock, $0.01 par value, 150,000 shares authorized, 70,044 shares issued and 66,349 outstanding at July 28, 2019 and 69,700 shares issued and 67,142 outstanding at October 31, 2018
   
700
     
697
 
Additional paid-in capital
   
559,437
     
555,606
 
Retained earnings
   
251,491
     
231,445
 
Treasury stock, 3,695 shares at July 28, 2019 and 2,558 shares at October 31, 2018
   
(33,807
)
   
(23,111
)
Accumulated other comprehensive loss
   
(14,427
)
   
(4,966
)
                 
Total Photronics, Inc. shareholders’ equity
   
763,394
     
759,671
 
Noncontrolling interests
   
136,944
     
144,898
 
                 
Total equity
   
900,338
     
904,569
 
                 
Total liabilities and equity
 
$
1,114,195
   
$
1,110,009
 

See accompanying notes to condensed consolidated financial statements.

4

Index

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

 
Three Months Ended
   
Nine Months Ended
 
   
July 28,
2019
   
July 29,
2018
   
July 28,
2019
   
July 29,
2018
 
                         
Revenue
 
$
138,112
   
$
136,391
   
$
394,404
   
$
390,616
 
                                 
Cost of goods sold
   
107,542
     
100,794
     
311,721
     
294,538
 
                                 
Gross profit
   
30,570
     
35,597
     
82,683
     
96,078
 
                                 
Operating expenses:
                               
                                 
Selling, general and administrative
   
13,124
     
12,504
     
40,186
     
37,891
 
                                 
Research and development
   
4,046
     
2,653
     
11,852
     
10,574
 
                                 
Total operating expenses
   
17,170
     
15,157
     
52,038
     
48,465
 
                                 
Operating income
   
13,400
     
20,440
     
30,645
     
47,613
 
                                 
Other income (expense):
                               
Interest income and other income (expense), net
   
29
     
1,968
     
5,955
     
2,319
 
Interest expense
   
(377
)
   
(557
)
   
(1,263
)
   
(1,682
)
                                 
Income before income taxes
   
13,052
     
21,851
     
35,337
     
48,250
 
                                 
Income tax provision
   
3,218
     
2,054
     
7,883
     
3,783
 
                                 
Net income
   
9,834
     
19,797
     
27,454
     
44,467
 
                                 
Net income attributable to noncontrolling interests
   
3,487
     
6,792
     
7,361
     
14,899
 
                                 
Net income attributable to Photronics, Inc. shareholders
 
$
6,347
   
$
13,005
   
$
20,093
   
$
29,568
 
                                 
Earnings per share:
                               
                                 
Basic
 
$
0.10
   
$
0.19
   
$
0.30
   
$
0.43
 
                                 
Diluted
 
$
0.10
   
$
0.18
   
$
0.30
   
$
0.41
 
                                 
Weighted-average number of common shares outstanding:
                               
                                 
Basic
   
66,313
     
69,374
     
66,386
     
69,141
 
                                 
Diluted
   
66,570
     
75,258
     
69,919
     
75,121
 

See accompanying notes to condensed consolidated financial statements.

5

Index

PHOTRONICS, INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)

 
Three Months Ended
   
Nine Months Ended
 
   
July 28,
2019
   
July 29,
2018
   
July 28,
2019
   
July 29,
2018
 
                         
Net income
 
$
9,834
   
$
19,797
   
$
27,454
   
$
44,467
 
                                 
Other comprehensive (loss) income, net of tax of $0:
                               
                                 
Foreign currency translation adjustments
   
(8,882
)
   
(24,572
)
   
(9,364
)
   
(5,583
)
                                 
Amortization of cash flow hedge
   
-
     
-
     
-
     
48
 
Other
   
28
     
65
     
72
     
86
 
                                 
Net other comprehensive loss
   
(8,854
)
   
(24,507
)
   
(9,292
)
   
(5,449
)
                                 
Comprehensive income (loss)
   
980
     
(4,710
)
   
18,162
     
39,018
 
                                 
Less: comprehensive income attributable to noncontrolling interests
   
2,232
     
2,019
     
7,530
     
12,319
 
                                 
Comprehensive (loss) income attributable to Photronics, Inc. shareholders
 
$
(1,252
)
 
$
(6,729
)
 
$
10,632
   
$
26,699
 

See accompanying notes to condensed consolidated financial statements.

6

Index

PHOTRONICS, INC.
Condensed Consolidated Statements of Equity
(in thousands)
(unaudited)

 
Three Months Ended July 28, 2019
 
   
Photronics, Inc. Shareholders
             
   
Common Stock
   
Additional
Paid-in
   
Retained
   
Treasury
   
Accumulated
Other
Comprehensive
   
Non-
controlling
   
Total
 
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Stock
   
Loss
   
Interests
   
Equity
 
                                                 
Balance at April 29, 2019
   
69,984
   
$
700
   
$
558,359
   
$
245,144
   
$
(33,807
)
 
$
(6,828
)
 
$
134,760
   
$
898,328
 
                                                                 
Net income
   
-
     
-
     
-
     
6,347
     
-
     
-
     
3,487
     
9,834
 
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
(7,599
)
   
(1,255
)
   
(8,854
)
Sale of common stock through employee   stock option and purchase plans
   
38
     
-
     
169
     
-
     
-
     
-
     
-
     
169
 
Restricted stock awards vesting and expense
   
22
     
-
     
636
     
-
     
-
     
-
     
-
     
636
 
Share-based compensation expense
   
-
     
-
     
273
     
-
     
-
     
-
     
-
     
273
 
Repurchase of common stock of subsidiary
   
-
     
-
     
-
     
-
     
-
     
-
     
(48
)
   
(48
)
                                                                 
Balance at July 28, 2019
   
70,044
   
$
700
   
$
559,437
   
$
251,491
   
$
(33,807
)
 
$
(14,427
)
 
$
136,944
   
$
900,338
 

       
Three Months Ended July 29, 2018
 
         
Photronics, Inc. Shareholders
             
   
Common Stock
   
Additional
Paid-in
   
Retained
   
Treasury
   
Accumulated
Other
Comprehensive
   
Non-
controlling
   
Total
 
  
   
Shares
   
Amount
   
Capital
   
Earnings
   
Stock
   
Income
   
Interests
   
Equity
 
                                                 
Balance at April 30, 2018
   
69,443
   
$
694
   
$
552,977
   
$
205,953
   
$
-
   
$
23,756
   
$
134,686
   
$
918,066
 
                                                                 
Net income
   
-
     
-
     
-
     
13,005
     
-
     
-
     
6,792
     
19,797
 
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
(19,734
)
   
(4,773
)
   
(24,507
)
Sale of common stock through employee stock option and purchase plans
   
39
     
1
     
162
     
-
     
-
     
-
     
-
     
163
 
Restricted stock awards vesting and expense
   
23
     
-
     
449
     
-
     
-
     
-
     
-
     
449
 
Share-based compensation expense
   
-
     
-
     
334
     
-
     
-
     
-
     
-
     
334
 
Contribution from noncontrolling interest
 
   
-
     
-
     
-
     
-
     
-
     
-
     
5,998
     
5,998
 
Purchase of treasury stock
   
-
     
-
     
-
     
-
     
(6,787
)
   
-
     
-
     
(6,787
)
                                                                 
Balance at July 29, 2018
   
69,505
   
$
695
   
$
553,922
   
$
218,958
   
$
(6,787
)
 
$
4,022
   
$
142,703
   
$
913,513
 

See accompanying notes to condensed consolidated financial statements.

7

Index

PHOTRONICS, INC.
Condensed Consolidated Statements of Equity (continued)
(in thousands)
(unaudited)

 
Nine Months Ended July 28, 2019
 
   
Photronics, Inc. Shareholders
             
   
Common Stock
   
Additional
Paid-in
   
Retained
   
Treasury
   
Accumulated
Other
Comprehensive
   
Non-
controlling
   
Total
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Stock
   
Loss
   
Interests
   
Equity
 
                                                 
Balance at November 1, 2018
   
69,700
   
$
697
   
$
555,606
   
$
231,445
   
$
(23,111
)
 
$
(4,966
)
 
$
144,898
   
$
904,569
 
                                                                 
Adoption of ASU 2014-09
   
-
     
-
     
-
     
1,083
     
-
     
-
     
121
     
1,204
 
Adoption of ASU 2016-16
   
-
     
-
     
-
     
(1,130
)
   
-
     
-
     
(3
)
   
(1,133
)
Net income
   
-
     
-
     
-
     
20,093
     
-
     
-
     
7,361
     
27,454
 
Other comprehensive (loss) income
   
-
     
-
     
-
     
-
     
-
     
(9,461
)
   
169
     
(9,292
)
Sale of common stock through employee stock option and purchase plans
   
174
     
2
     
961
     
-
     
-
     
-
     
-
     
963
 
Restricted stock awards vesting and expense
   
170
     
1
     
1,853
     
-
     
-
     
-
     
-
     
1,854
 
Share-based compensation expense
   
-
     
-
     
1,017
     
-
     
-
     
-
     
-
     
1,017
 
Contribution from noncontrolling interest
   
-
     
-
     
-
     
-
     
-
     
-
     
29,394
     
29,394
 
Dividends to noncontrolling interest
   
-
     
-
     
-
     
-
     
-
     
-
     
(44,939
)
   
(44,939
)
Repurchase of common stock of subsidiary
   
-
     
-
     
-
     
-
     
-
     
-
     
(57
)
   
(57
)
Purchase of treasury stock
   
-
     
-
     
-
     
-
     
(10,696
)
   
-
     
-
     
(10,696
)
                                                                 
Balance at July 28, 2019
   
70,044
   
$
700
   
$
559,437
   
$
251,491
   
$
(33,807
)
 
$
(14,427
)
 
$
136,944
   
$
900,338
 

       
Nine Months Ended July 29, 2018
 
         
Photronics, Inc. Shareholders
             
   
Common Stock
   
Additional
Paid-in
   
Retained
   
Treasury
   
Accumulated
Other
Comprehensive
   
Non-
controlling
   
Total
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Stock
   
Income
   
Interests
   
Equity
 
                                                 
Balance at October 30, 2017
   
68,666
   
$
687
   
$
547,596
   
$
189,390
   
$
-
   
$
6,891
   
$
120,731
   
$
865,295
 
                                                                 
Net income
   
-
     
-
     
-
     
29,568
     
-
     
-
     
14,899
     
44,467
 
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
(2,869
)
   
(2,580
)
   
(5,449
)
Sale of common stock through employee stock option and purchase plans
   
702
     
7
     
3,755
     
-
     
-
     
-
     
-
     
3,762
 
Restricted stock awards vesting and expense
   
137
     
1
     
1,291
     
-
     
-
     
-
     
-
     
1,292
 
Share-based compensation expense
   
-
     
-
     
1,132
     
-
     
-
     
-
     
-
     
1,132
 
Contribution from noncontrolling interest
   
-
     
-
     
148
     
-
     
-
     
-
     
17,849
     
17,997
 
Dividends to noncontrolling interest
   
-
     
-
     
-
     
-
     
-
     
-
     
(8,196
)
   
(8,196
)
Purchase of treasury stock
   
-
     
-
     
-
     
-
     
(6,787
)
   
-
     
-
     
(6,787
)
                                                                 
Balance at July 29, 2018
   
69,505
   
$
695
   
$
553,922
   
$
218,958
   
$
(6,787
)
 
$
4,022
   
$
142,703
   
$
913,513
 

See accompanying notes to condensed consolidated financial statements.

8

Index

PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 
Nine Months Ended
 
   
July 28,
2019
   
July 29,
2018
 
             
Cash flows from operating activities:
           
Net income
 
$
27,454
   
$
44,467
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
60,387
     
64,485
 
Changes in assets and liabilities:
               
Accounts receivable
   
(14,185
)
   
(15,097
)
Inventories
   
(15,083
)
   
(8,386
)
Other current assets
   
(9,406
)
   
(9,330
)
Accounts payable, accrued liabilities, and other
   
(25,663
)
   
10,818
 
                 
Net cash provided by operating activities
   
23,504
     
86,957
 
                 
Cash flows from investing activities:
               
Purchases of property, plant and equipment
   
(160,149
)
   
(64,372
)
Government incentives
   
17,694
     
-
 
Other
   
(24
)
   
313
*
                 
Net cash used in investing activities
   
(142,479
)
   
(64,059
)*
                 
Cash flows from financing activities:
               
Proceeds from debt
   
53,227
     
-
 
Contribution from noncontrolling interest
   
29,394
     
17,997
 
Repayments of debt
   
(61,319
)
   
(4,170
)
Dividends paid to noncontrolling interest
   
(26,102
)
   
(8,166
)
Purchase of treasury stock
   
(10,696
)
   
(6,787
)
Proceeds from share-based arrangements
   
1,314
     
4,028
 
Other
   
(92
)
   
(274
)
                 
Net cash (used in) provided by financing activities
   
(14,274
)
   
2,628
 
                 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
   
1,206
     
(975
)*
                 
Net (decrease) increase in cash, cash equivalents, and restricted cash
   
(132,043
)
   
24,551
*
Cash, cash equivalents, and restricted cash at beginning of period
   
331,989
*
   
310,936
*
                 
Cash, cash equivalents, and restricted cash at end of period
 
$
199,946
   
$
335,487
*
                 
Supplemental disclosure information:
               
                 
Accrual for property, plant and equipment purchased during the period
 
$
20,015
   
$
6,958
 
Accrual for property, plant and equipment purchased with funds receivable from government incentives
 
$
11,686
   
$
-
 
Subsidiary dividend payable
 
$
18,760
   
$
-
 

* Amount has been modified to reflect the adoption of ASU 2016-18 (see Note 14).

See accompanying notes to condensed consolidated financial statements.

9

Index

PHOTRONICS, INC.
Notes to Condensed Consolidated Financial Statements
Three Months and Nine Months Ended July 28, 2019 and July 29, 2018
(unaudited)
(in thousands, except share amounts and per share data)

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION


Photronics, Inc. ("Photronics", "the Company", "we", “our”, or "us") is one of the world's leading manufacturers of photomasks, which are high-precision photographic quartz or glass plates containing microscopic images of electronic circuits. Photomasks are a key element in the manufacture of semiconductors and flat-panel displays ("FPDs"), and are used as masters to transfer circuit patterns onto semiconductor wafers and FPD substrates during the fabrication of integrated circuits ("ICs" or “semiconductors”) and a variety of FPDs and, to a lesser extent, other types of electrical and optical components. We currently have eleven manufacturing facilities, which are located in Taiwan (3), Korea, the United States (3), Europe (2), and two recently constructed facilities in China. Our FPD Facility in Hefei, China, commenced production in the second quarter of our fiscal 2019; our IC facility in Xiamen, China, commenced production in the third quarter of our fiscal 2019.


The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation have been included. Our business is typically impacted during the first, and sometimes the second, quarter of our fiscal year by the North American, European, and Asian holiday periods, as some customers reduce their development and buying activities during those periods. Operating results for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended October 31, 2018.

NOTE 2 - INVENTORIES


Inventories are stated at the lower of cost, determined under the first-in, first-out ("FIFO") method, or net realizable value. Presented below are the components of inventory at the balance sheet dates:


 
July 28,
2019
   
October 31,
2018
 
             
Raw materials
 
$
38,500
   
$
25,110
 
Work in process
   
1,343
     
3,402
 
Finished goods
   
139
     
668
 
                 
   
$
39,982