☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Connecticut
|
06-0854886
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, $.01 par value
|
NASDAQ Global Select Market
|
Large Accelerated Filer ☒
|
Accelerated Filer
☐
|
Non-Accelerated Filer
☐
|
Smaller Reporting Company
☐
|
Emerging growth company
☐
|
Proxy Statement for the 2018
|
|
Annual Meeting of Shareholders
|
Incorporated into Part III
|
to be held in March 22, 2018
|
of this Form 10-K
|
ITEM 1. |
BUSINESS
|
ITEM 1A. |
RISK FACTORS
|
· |
we will be able to adequately protect our technology;
|
· |
competitors will not independently develop similar technology; or
|
· |
international intellectual property laws will adequately protect our intellectual property rights.
|
· |
loss of any of our key customers or suppliers;
|
· |
additions or departures of key personnel;
|
· |
sales of common stock;
|
· |
our ability to execute our business plan
, including but not limited to, our plans to expand into China
;
|
· |
announcements and consummations of business acquisitions;
|
· |
operating results that fall below expectations;
|
· |
additional issuances of common stock;
|
· |
intellectual property disputes;
|
· |
industry developments;
|
· |
news or disclosures by competitors;
|
· |
business combinations, divestitures or bankruptcies by customers, suppliers or competitors;
|
· |
economic and other external factors; and
|
· |
period-to-period fluctuations in our financial results.
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
Location
|
Type of
Interest
|
||
Allen, Texas
|
Owned
|
||
Boise, Idaho
|
Owned
|
||
Brookfield, Connecticut
|
Owned
|
||
Bridgend, Wales
|
Leased
|
||
Cheonan, Korea
|
Owned
|
||
Dresden, Germany
|
Leased
|
||
Hsinchu, Taiwan
|
Owned
|
(1)
|
|
Hsinchu, Taiwan
|
Leased
|
||
Taichung, Taiwan
|
Owned
|
(1)
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
|
High
|
Low
|
|||||||
Fiscal Year Ended October 29, 2017:
|
||||||||
Quarter Ended January 29, 2017
|
$
|
12.10
|
$
|
8.20
|
||||
Quarter Ended April 30, 2017
|
11.80
|
10.30
|
||||||
Quarter Ended July 30, 2017
|
11.63
|
8.80
|
||||||
Quarter Ended October 29, 2017
|
10.10
|
7.55
|
||||||
Fiscal Year Ended October 30, 2016:
|
||||||||
Quarter Ended January 31, 2016
|
$
|
13.05
|
$
|
9.57
|
||||
Quarter Ended May 1, 2016
|
12.39
|
9.30
|
||||||
Quarter Ended July 31, 2016
|
10.69
|
8.56
|
||||||
Quarter Ended October 30, 2016
|
10.90
|
8.81
|
ITEM 6. |
SELECTED FINANCIAL DATA
|
Year Ended
|
||||||||||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
November 2,
2014
|
November 3,
2013
|
||||||||||||||||
OPERATING DATA:
|
||||||||||||||||||||
Revenue
|
$
|
450,678
|
$
|
483,456
|
$
|
524,206
|
$
|
455,527
|
$
|
422,180
|
||||||||||
Cost of goods sold
|
(359,363
|
)
|
(364,750
|
)
|
(381,070
|
)
|
(355,181
|
)
|
(322,540
|
)
|
||||||||||
Gross profit
|
91,315
|
118,706
|
143,136
|
100,346
|
99,640
|
|||||||||||||||
Selling, general and administrative
|
(43,585
|
)
|
(44,577
|
)
|
(48,983
|
)
|
(49,638
|
)(d)
|
(48,213
|
)(f)
|
||||||||||
Research and development
|
(15,862
|
)
|
(21,654
|
)
|
(21,920
|
)
|
(21,913
|
)
|
(20,758
|
)
|
||||||||||
Operating income
|
31,868
|
52,475
|
72,233
|
28,795
|
30,669
|
|||||||||||||||
Other income (expense):
|
||||||||||||||||||||
Interest and other income (expense), net
|
(3,068
|
)
|
2,424
|
2,797
|
(c)
|
3,410
|
3,892
|
|||||||||||||
Interest expense
|
(2,235
|
)
|
(3,365
|
)
|
(4,990
|
)
|
(7,247
|
)
|
(7,756
|
)
|
||||||||||
Gains on sales of investments
|
-
|
8,940
|
(a)
|
-
|
-
|
-
|
||||||||||||||
Gain on acquisition
|
-
|
-
|
-
|
16,372
|
(e)
|
-
|
||||||||||||||
Income before income tax provision
|
26,565
|
60,474
|
|
70,040
|
41,330
|
26,805
|
||||||||||||||
Income tax provision
|
(5,276
|
)
|
(4,798
|
)(b)
|
(13,181
|
)
|
(9,295
|
)
|
(7,229
|
)
|
||||||||||
Net income
|
21,289
|
55,676
|
56,859
|
(c)
|
32,035
|
(d)(e)
|
19,576
|
(f)
|
||||||||||||
Net income attributable to noncontrolling interests
|
(8,159
|
)
|
(9,476
|
)
|
(12,234
|
)
|
(6,039
|
)
|
(1,610
|
)
|
||||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
13,130
|
$
|
46,200
|
(a)(b)
|
$
|
44,625
|
(c)
|
$
|
25,996
|
(d)(e)
|
$
|
17,966
|
(f)
|
||||||
Earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
0.19
|
$
|
0.68
|
(a)(b)
|
$
|
0.67
|
(c)
|
$
|
0.42
|
(d)(e)
|
$
|
0.30
|
(f)
|
||||||
Diluted
|
$
|
0.19
|
$
|
0.64
|
(a)(b)
|
$
|
0.63
|
(c)
|
$
|
0.41
|
(d)(e)
|
$
|
0.29
|
(f)
|
||||||
Weighted-average number of common shares outstanding:
|
||||||||||||||||||||
Basic
|
68,436
|
67,539
|
66,331
|
61,779
|
60,644
|
|||||||||||||||
Diluted
|
69,288
|
76,354
|
78,383
|
66,679
|
61,599
|
As of
|
||||||||||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
November 2,
2014
|
November 3,
2013
|
||||||||||||||||
Working capital
|
$
|
367,348
|
$
|
360,269
|
$
|
168,237
|
$
|
190,152
|
$
|
212,837
|
||||||||||
Property, plant and equipment, net
|
535,197
|
506,434
|
547,284
|
550,069
|
422,740
|
|||||||||||||||
Total assets
|
1,020,794
|
987,988
|
1,042,811
|
1,025,564
|
883,040
|
|||||||||||||||
Total borrowings
|
61,976
|
67,288
|
132,219
|
141,011
|
191,596
|
|||||||||||||||
Total Photronics, Inc. shareholders’ equity
|
744,564
|
710,363
|
646,555
|
628,050
|
585,314
|
FY 2016
|
FY 2015
|
FY 2014
|
FY 2013
|
|||||||||||||
Working Capital (g):
|
||||||||||||||||
Previously reported
|
$
|
360,269
|
$
|
168,068
|
$
|
190,152
|
$
|
212,797
|
||||||||
ASU 2015-03 adjustment
|
-
|
169
|
-
|
40
|
||||||||||||
Retrospectively adjusted
|
$
|
360,269
|
$
|
168,237
|
$
|
190,152
|
$
|
212,837
|
||||||||
Total Assets (g):
|
||||||||||||||||
Previously reported
|
$
|
988,267
|
$
|
1,043,376
|
$
|
1,026,739
|
$
|
885,505
|
||||||||
ASU 2015-03 adjustment
|
(279
|
)
|
(565
|
)
|
(1,175
|
)
|
(2,465
|
)
|
||||||||
Retrospectively adjusted
|
$
|
987,988
|
$
|
1,042,811
|
$
|
1,025,564
|
$
|
883,040
|
||||||||
Total borrowings (g):
|
||||||||||||||||
Previously reported
|
$
|
67,567
|
$
|
132,615
|
$
|
142,186
|
$
|
194,021
|
||||||||
ASU 2015-03 adjustment
|
(279
|
)
|
(396
|
)
|
(1,175
|
)
|
(2,425
|
)
|
||||||||
Retrospectively adjusted
|
$
|
67,288
|
$
|
132,219
|
$
|
141,011
|
$
|
191,596
|
(a)
|
Includes $8.8 million gain on sale of investment in a foreign entity and $0.2 million gain on the sale of the Company’s 49.99% interest in the MP Mask joint venture
|
(b)
|
Includes tax benefits in Taiwan of $4.8 million primarily related to the recognition of prior period tax benefits and other tax positions no longer deemed necessary.
|
(c)
|
Includes $0.9 million of financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes.
|
(d)
|
Includes $2.5 million, net of tax, of expenses related to the acquisition of DPTT.
|
(e)
|
Includes non-cash gain of $16.4 million, net of tax, on acquisition of DPTT.
|
(f)
|
Includes $0.8 million, net of tax, of expenses related to the acquisition of DPTT.
|
(g)
|
Balances reflect the impact of the adoption of a new accounting standard in fiscal year 2016 (ASU 2015-03) related to the balance sheet classification of debt issuance costs. See Note 6 to the consolidated financial statements for additional information.
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
(79.7
|
)
|
(75.4
|
)
|
(72.7
|
)
|
||||||
Gross profit
|
20.3
|
24.6
|
27.3
|
|||||||||
Selling, general and administrative expenses
|
(9.7
|
)
|
(9.2
|
)
|
(9.3
|
)
|
||||||
Research and development expenses
|
(3.5
|
)
|
(4.5
|
)
|
(4.2
|
)
|
||||||
Operating income
|
7.1
|
10.9
|
13.8
|
|||||||||
Interest income and other income (expense)
|
(0.7
|
)
|
0.5
|
0.5
|
||||||||
Interest expense
|
(0.5
|
)
|
(0.7
|
)
|
(1.0
|
)
|
||||||
Gains on sales of investments
|
-
|
1.8
|
-
|
|||||||||
Income before income tax provision
|
5.9
|
12.5
|
13.3
|
|||||||||
Income tax provision
|
(1.2
|
)
|
(1.0
|
)
|
(2.5
|
)
|
||||||
Net income
|
4.7
|
11.5
|
10.8
|
|||||||||
Net income attributable to noncontrolling interests
|
(1.8
|
)
|
(1.9
|
)
|
(2.3
|
)
|
||||||
Net income attributable to Photronics, Inc. shareholders
|
2.9
|
%
|
9.6
|
%
|
8.5
|
%
|
Percent Change
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2016 to
2017
|
2015 to
2016
|
||||||||||||||||
IC
|
$
|
350.3
|
$
|
364.6
|
$
|
420.8
|
(3.9
|
)%
|
(13.4
|
)%
|
||||||||||
FPD
|
100.4
|
118.9
|
103.4
|
(15.6
|
)%
|
15.0
|
||||||||||||||
Total revenue
|
$
|
450.7
|
$
|
483.5
|
$
|
524.2
|
(6.8
|
)%
|
(7.8
|
)%
|
2016 to 2017
|
2015 to 2016
|
|||||||||||||||||||||||
Revenue in
2017
|
Increase
(Decrease)
|
Percent
Change
|
Revenue in
2016
|
Increase
(Decrease)
|
Percent
Change
|
|||||||||||||||||||
Taiwan
|
$
|
187.8
|
$
|
(5.4
|
)
|
(2.8
|
)%
|
$
|
193.2
|
$
|
(11.9
|
)
|
(5.8
|
)%
|
||||||||||
Korea
|
122.2
|
(18.8
|
)
|
(13.4
|
)%
|
141.0
|
(6.9
|
)
|
(4.7
|
)%
|
||||||||||||||
United States
|
102.0
|
(11.7
|
)
|
(10.2
|
)%
|
113.7
|
(19.1
|
)
|
(14.4
|
)%
|
||||||||||||||
Europe
|
36.1
|
2.7
|
8.1
|
%
|
33.4
|
(2.4
|
)
|
(6.7
|
)%
|
|||||||||||||||
All other Asia
|
2.6
|
0.4
|
18.7
|
%
|
2.2
|
(0.4
|
)
|
15.3
|
%
|
|||||||||||||||
$
|
450.7
|
$
|
(32.8
|
)
|
(6.8
|
)%
|
$
|
483.5
|
$
|
(40.7
|
)
|
(7.8
|
)%
|
Percent Change
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2016 to
2017
|
2015 to
2016
|
||||||||||||||||
Gross profit
|
$
|
91.3
|
$
|
118.7
|
$
|
143.1
|
(23.1
|
)%
|
(17.1
|
)%
|
||||||||||
Gross margin
|
20.3
|
%
|
24.6
|
%
|
27.3
|
%
|
Percent Change
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2016 to
2017
|
2015 to
2016
|
||||||||||||||||
Selling, general and administrative expenses
|
$
|
43.6
|
$
|
44.6
|
$
|
49.0
|
(2.2
|
)%
|
(9.0
|
)%
|
||||||||||
Percentage of net sales
|
9.7
|
%
|
9.2
|
%
|
9.3
|
%
|
Percent Change
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2016 to
2017
|
2015 to
2016
|
||||||||||||||||
Research & Development expense
|
$
|
15.9
|
$
|
21.7
|
$
|
21.9
|
(26.7
|
)%
|
(1.2
|
)%
|
||||||||||
Percentage of net sales
|
3.5
|
%
|
4.5
|
%
|
4.2
|
%
|
2017
|
2016
|
2015
|
||||||||||
Interest income and other income (expense)
|
$
|
(3.1
|
)
|
$
|
2.4
|
$
|
2.8
|
|||||
Interest expense
|
(2.2
|
)
|
(3.3
|
)
|
(5.0
|
)
|
||||||
Gains on sales of investments
|
-
|
8.9
|
-
|
|||||||||
Total other income (expense), net
|
$
|
(5.3
|
)
|
$
|
8.0
|
$
|
(2.2
|
)
|
2017
|
2016
|
2015
|
||||||||||
Income tax provision
|
$
|
5.3
|
$
|
4.8
|
$
|
13.2
|
||||||
Effective income tax rate
|
19.9
|
%
|
7.9
|
%
|
18.8
|
%
|
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
(in $ millions)
|
(in $ millions)
|
(in $ millions)
|
||||||||||
Cash and cash equivalents
|
|
308.0
|
|
314.1
|
|
205.9
|
||||||
Net cash provided by operating activities
|
|
96.8
|
|
122.1
|
|
133.2
|
||||||
Net cash (used in) provided by investing activities
|
|
(98.1
|
)
|
|
52.3
|
|
(104.3
|
)
|
||||
Net cash used in financing activities
|
|
(10.9
|
)
|
|
(67.0
|
)
|
|
(7.1
|
)
|
Payment due by period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less
Than
1 Year
|
1 - 3
Years
|
3 - 5
Years
|
More
Than
5 Years
|
|||||||||||||||
|
|
|||||||||||||||||||
Long-term borrowings
|
$
|
57,500
|
$
|
-
|
$
|
57,500
|
$
|
-
|
$
|
-
|
||||||||||
Operating leases
|
4,012
|
1,138
|
1,123
|
751
|
1,000
|
|||||||||||||||
Capital leases
|
4,639
|
4,639
|
-
|
-
|
-
|
|||||||||||||||
Purchase obligations
|
168,219
|
160,534
|
7,685
|
-
|
-
|
|||||||||||||||
Interest
|
2,987
|
2,053
|
934
|
-
|
-
|
|||||||||||||||
Other noncurrent liabilities
|
10,897
|
-
|
2,164
|
1,733
|
7,000
|
|||||||||||||||
Total
|
$
|
248,254
|
$
|
168,364
|
$
|
69,406
|
$
|
2,484
|
$
|
8,000
|
· |
the determination of the useful lives of our property, plant, and equipment and the timing of when depreciation should begin on such assets, as these determinations can significantly impact our gross margin and research and development expenses;
|
· |
the evaluation of the recoverability of our long-lived and definite-lived intangible assets, which requires us to forecast the future cash flows related to these assets, and impacts our gross margin and operating expenses;
|
· |
the estimation of the collectability of our accounts receivables, which impacts our gross margin and operating expenses;
|
· |
the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, which impact our provision for income taxes and our tax-related asset and liability balances.
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Page
|
|
29
|
|
30
|
|
31
|
|
32
|
|
33
|
|
34
|
|
35
|
October 29,
2017
|
October 30,
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
308,021
|
$
|
314,074
|
||||
Accounts receivable, net of allowance of $2,319 in 2017 and $3,901 in 2016
|
105,320
|
92,636
|
||||||
Inventories
|
23,703
|
22,081
|
||||||
Other current assets
|
12,080
|
12,795
|
||||||
Total current assets
|
449,124
|
441,586
|
||||||
Property, plant and equipment, net
|
535,197
|
506,434
|
||||||
Intangible assets, net
|
17,122
|
19,854
|
||||||
Deferred income taxes
|
15,481
|
16,322
|
||||||
Other assets
|
3,870
|
3,792
|
||||||
Total assets
|
$
|
1,020,794
|
$
|
987,988
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term borrowings
|
$
|
4,639
|
$
|
5,428
|
||||
Accounts payable
|
50,834
|
48,906
|
||||||
Payables – related parties
|
-
|
2,743
|
||||||
Accrued liabilities
|
26,303
|
24,240
|
||||||
Total current liabilities
|
81,776
|
81,317
|
||||||
Long-term borrowings
|
57,337
|
61,860
|
||||||
Deferred income taxes
|
2,049
|
1,491
|
||||||
Other liabilities
|
14,337
|
17,846
|
||||||
Total liabilities
|
155,499
|
162,514
|
||||||
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, 68,666 shares issued and outstanding at October 29, 2017, 68,080 shares issued and outstanding at October 30, 2016
|
687
|
681
|
||||||
Additional paid-in capital
|
547,596
|
541,093
|
||||||
Retained earnings
|
189,390
|
176,260
|
||||||
Accumulated other comprehensive income (loss)
|
6,891
|
(7,671
|
)
|
|||||
Total Photronics, Inc. shareholders’ equity
|
744,564
|
710,363
|
||||||
Noncontrolling interests
|
120,731
|
115,111
|
||||||
Total equity
|
865,295
|
825,474
|
||||||
Total liabilities and equity
|
$
|
1,020,794
|
$
|
987,988
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Revenue
|
$
|
450,678
|
$
|
483,456
|
$
|
524,206
|
||||||
Cost of goods sold
|
(359,363
|
)
|
(364,750
|
)
|
(381,070
|
)
|
||||||
Gross profit
|
91,315
|
118,706
|
143,136
|
|||||||||
Operating expenses:
|
||||||||||||
Selling, general and administrative
|
(43,585
|
)
|
(44,577
|
)
|
(48,983
|
)
|
||||||
Research and development
|
(15,862
|
)
|
(21,654
|
)
|
(21,920
|
)
|
||||||
Total operating expenses
|
(59,447
|
)
|
(66,231
|
)
|
(70,903
|
)
|
||||||
Operating income
|
31,868
|
52,475
|
72,233
|
|||||||||
Other income (expense):
|
||||||||||||
Interest income and other income (expense)
|
(3,068
|
)
|
2,424
|
2,797
|
||||||||
Interest expense
|
(2,235
|
)
|
(3,365
|
)
|
(4,990
|
)
|
||||||
Gains on sales of investments
|
-
|
8,940
|
-
|
|||||||||
Income before income tax provision
|
26,565
|
60,474
|
70,040
|
|||||||||
Income tax provision
|
(5,276
|
)
|
(4,798
|
)
|
(13,181
|
)
|
||||||
Net income
|
21,289
|
55,676
|
56,859
|
|||||||||
Net income attributable to noncontrolling interests
|
(8,159
|
)
|
(9,476
|
)
|
(12,234
|
)
|
||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
13,130
|
$
|
46,200
|
$
|
44,625
|
||||||
Earnings per share:
|
||||||||||||
Basic
|
$
|
0.19
|
$
|
0.68
|
$
|
0.67
|
||||||
Diluted
|
$
|
0.19
|
$
|
0.64
|
$
|
0.63
|
||||||
Weighted-average number of common shares outstanding:
|
||||||||||||
Basic
|
68,436
|
67,539
|
66,331
|
|||||||||
Diluted
|
69,288
|
76,354
|
78,383
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Net income
|
$
|
21,289
|
$
|
55,676
|
$
|
56,859
|
||||||
Other comprehensive income (loss), net of tax: | ||||||||||||
Foreign currency translation adjustments
|
19,799
|
6,334
|
(40,154
|
)
|
||||||||
Amortization of cash flow hedge
|
129
|
129
|
128
|
|||||||||
Other
|
478
|
(589
|
)
|
(381
|
)
|
|||||||
Net other comprehensive income (loss)
|
20,406
|
5,874
|
(40,407
|
)
|
||||||||
Comprehensive income
|
41,695
|
61,550
|
16,452
|
|||||||||
Less: comprehensive income attributable to noncontrolling interests
|
14,003
|
12,448
|
4,174
|
|||||||||
Comprehensive income attributable to Photronics, Inc. shareholders
|
$
|
27,692
|
$
|
49,102
|
$
|
12,278
|
Common Stock
|
Additional
Paid-In
|
Retained
|
Accumulated
Other
|
Non-
Controlling
|
Total
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income (Loss)
|
Interests
|
Equity
|
||||||||||||||||||||||
Balance at November 2, 2014
|
65,930
|
$
|
659
|
$
|
520,182
|
$
|
85,435
|
$
|
21,774
|
$
|
111,444
|
$
|
739,494
|
|||||||||||||||
Net income
|
-
|
-
|
-
|
44,625
|
-
|
12,234
|
56,859
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(32,347
|
)
|
(8,060
|
)
|
(40,407
|
)
|
||||||||||||||||||
Sales of common stock through employee stock option and purchase plan
|
513
|
5
|
2,505
|
-
|
-
|
-
|
2,510
|
|||||||||||||||||||||
Restricted stock awards vesting and expense
|
159
|
2
|
1,064
|
-
|
-
|
-
|
1,066
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
2,623
|
-
|
-
|
-
|
2,623
|
|||||||||||||||||||||
Repurchase of common stock by subsidiary
|
-
|
-
|
28
|
-
|
-
|
(107
|
)
|
(79
|
)
|
|||||||||||||||||||
Balance at November 1, 2015
|
66,602
|
666
|
526,402
|
130,060
|
(10,573
|
)
|
115,511
|
762,066
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
46,200
|
-
|
9,476
|
55,676
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
2,902
|
2,972
|
5,874
|
|||||||||||||||||||||
Sales of common stock through employee stock option and purchase plan
|
618
|
6
|
3,441
|
-
|
-
|
-
|
3,447
|
|||||||||||||||||||||
Restricted stock awards vesting and expense
|
143
|
2
|
1,190
|
-
|
-
|
-
|
1,192
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
2,637
|
-
|
-
|
-
|
2,637
|
|||||||||||||||||||||
Conversion of debt to common stock
|
717
|
7
|
7,431
|
-
|
-
|
-
|
7,438
|
|||||||||||||||||||||
Dividends to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
(11,901
|
)
|
(11,901
|
)
|
|||||||||||||||||||
Return of capital to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
(955
|
)
|
(955
|
)
|
|||||||||||||||||||
Repurchase of common stock by subsidiary
|
-
|
-
|
(8
|
)
|
-
|
-
|
8
|
-
|
||||||||||||||||||||
Balance at October 30, 2016
|
68,080
|
681
|
541,093
|
176,260
|
(7,671
|
)
|
115,111
|
825,474
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
13,130
|
-
|
8,159
|
21,289
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
14,562
|
5,844
|
20,406
|
|||||||||||||||||||||
Sales of common stock through employee stock option and purchase plan
|
459
|
5
|
2,877
|
-
|
-
|
-
|
2,882
|
|||||||||||||||||||||
Restricted stock awards vesting and expense
|
127
|
1
|
1,508
|
-
|
-
|
-
|
1,509
|
|||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
2,118
|
-
|
-
|
-
|
2,118
|
|||||||||||||||||||||
Dividends to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
(8,383
|
)
|
(8,383
|
)
|
|||||||||||||||||||
Balance at October 29, 2017
|
68,666
|
$
|
687
|
$
|
547,596
|
$
|
189,390
|
$
|
6,891
|
$
|
120,731
|
$
|
865,295
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Cash flows from operating activities: | ||||||||||||
Net income
|
$
|
21,289
|
$
|
55,676
|
$
|
56,859
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization of property, plant and equipment
|
81,699
|
77,613
|
75,684
|
|||||||||
Amortization of intangible assets
|
4,874
|
5,228
|
6,729
|
|||||||||
Gains on sales of investments
|
-
|
(8,940
|
)
|
-
|
||||||||
Share-based compensation
|
3,627
|
3,827
|
3,689
|
|||||||||
Deferred income taxes
|
1,633
|
(3,816
|
)
|
3,401
|
||||||||
Changes in assets, liabilities, and other:
|
||||||||||||
Accounts receivable
|
(9,625
|
)
|
18,807
|
(21,815
|
)
|
|||||||
Inventories
|
(602
|
)
|
2,268
|
(2,893
|
)
|
|||||||
Other current assets
|
1,127
|
7,936
|
(2,557
|
)
|
||||||||
Accounts payable, accrued liabilities and other
|
(7,189
|
)
|
(36,462
|
)
|
14,098
|
|||||||
Net cash provided by operating activities
|
96,833
|
122,137
|
133,195
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property, plant and equipment
|
(91,965
|
)
|
(50,147
|
)
|
(104,033
|
)
|
||||||
Acquisition of business
|
(5,400
|
)
|
-
|
-
|
||||||||
Proceeds from sales of investments
|
167
|
101,853
|
-
|
|||||||||
Purchases of intangible assets
|
(834
|
)
|
(13
|
)
|
(771
|
)
|
||||||
Other
|
(34
|
)
|
597
|
499
|
||||||||
Net cash (used in) provided by investing activities
|
(98,066
|
)
|
52,290
|
(104,305
|
)
|
|||||||
Cash flows from financing activities:
|
||||||||||||
Repayments of long-term borrowings
|
(5,428
|
)
|
(57,609
|
)
|
(9,571
|
)
|
||||||
Dividends paid to noncontrolling interests
|
(8,298
|
)
|
(11,890
|
)
|
-
|
|||||||
Proceeds from share-based arrangements
|
2,830
|
3,463
|
2,651
|
|||||||||
Return of capital to noncontrolling interests
|
-
|
(966
|
)
|
-
|
||||||||
Other
|
(32
|
)
|
(20
|
)
|
(179
|
)
|
||||||
Net cash used in financing activities
|
(10,928
|
)
|
(67,022
|
)
|
(7,099
|
)
|
||||||
Effects of exchange rate changes on cash and cash equivalents
|
6,108
|
802
|
(8,853
|
)
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
(6,053
|
)
|
108,207
|
12,938
|
||||||||
Cash and cash equivalents at beginning of year
|
314,074
|
205,867
|
192,929
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
308,021
|
$
|
314,074
|
$
|
205,867
|
||||||
Supplemental disclosure of non-cash information: | ||||||||||||
Accrual for property, plant and equipment purchased during year
|
$
|
2,767
|
$
|
7,866
|
$
|
25,858
|
||||||
Conversion of debt to common stock
|
-
|
7,439
|
-
|
October 29
2017
|
October 30,
2016
|
|||||||
Finished goods
|
$
|
664
|
$
|
142
|
||||
Work in process
|
2,957
|
2,987
|
||||||
Raw materials
|
20,082
|
18,952
|
||||||
$
|
23,703
|
$
|
22,081
|
October 29,
2017
|
October 30,
2016
|
|||||||
Land
|
$
|
9,959
|
$
|
8,036
|
||||
Buildings and improvements
|
125,290
|
121,873
|
||||||
Machinery and equipment
|
1,547,870
|
1,475,755
|
||||||
Leasehold improvements
|
20,050
|
19,224
|
||||||
Furniture, fixtures and office equipment
|
12,989
|
12,700
|
||||||
Construction in progress
|
72,045
|
23,961
|
||||||
1,788,203
|
1,661,549
|
|||||||
Less: Accumulated depreciation and amortization
|
1,253,006
|
1,155,115
|
||||||
$
|
535,197
|
$
|
506,434
|
October 29,
2017
|
October 30,
2016
|
|||||||
Machinery and equipment
|
$
|
34,917
|
$
|
34,917
|
||||
Less accumulated amortization
|
13,843
|
10,352
|
||||||
$
|
21,074
|
$
|
24,565
|
As of October 29, 2017
|
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|||||||||
Technology license agreement
|
$
|
59,616
|
$
|
(45,374
|
)
|
$
|
14,242
|
|||||
Customer relationships
|
9,375
|
(7,793
|
)
|
1,582
|
||||||||
Software and other
|
8,195
|
(6,897
|
)
|
1,298
|
||||||||
$
|
77,186
|
$
|
(60,064
|
)
|
$
|
17,122
|
||||||
As of October 30, 2016
|
||||||||||||
Technology license agreement
|
$
|
59,616
|
$
|
(41,400
|
)
|
$
|
18,216
|
|||||
Customer relationships
|
8,657
|
(7,522
|
)
|
1,135
|
||||||||
Software and other
|
6,444
|
(5,941
|
)
|
503
|
||||||||
$
|
74,717
|
$
|
(54,863
|
)
|
$
|
19,854
|
Fiscal Years:
|
||||
2018
|
$
|
4,742
|
||
2019
|
4,564
|
|||
2020
|
4,510
|
|||
2021
|
2,747
|
|||
2022
|
128
|
Fiscal Year
|
||||||||
2016
|
2015
|
|||||||
Revenue
|
$
|
49,626
|
$
|
96,068
|
||||
Gross profit
|
2,736
|
1,215
|
||||||
Net loss
|
-
|
(151
|
)
|
October 29,
2017
|
October 30,
2016
|
|||||||
3.25% convertible senior notes due in April 2019
|
$
|
57,337
|
$
|
57,221
|
||||
2.77% capital lease obligation payable through July 2018
|
4,639
|
10,067
|
||||||
61,976
|
67,288
|
|||||||
Less current portion
|
4,639
|
5,428
|
||||||
$
|
57,337
|
$
|
61,860
|
Classification
|
Previously
Reported
|
Change Due
to Adoption
|
Retrospectively
Adjusted
|
|||||||||
Other assets
|
$
|
4,071
|
$
|
(279
|
)
|
$
|
3,792
|
|||||
Long-term borrowings
|
62,139
|
(279
|
)
|
61,860
|
2018
|
$
|
1,051
|
||
2019
|
684
|
|||
2020
|
439
|
|||
2021
|
380
|
|||
2022
|
371
|
|||
Thereafter
|
1,000
|
|||
$
|
3,925
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Expected volatility
|
32.2
|
%
|
48.4
|
%
|
53.7
|
%
|
||||||
Risk-free rate of return
|
1.9 – 2.0
|
%
|
1.2 – 1.7
|
%
|
1.3 – 1.6
|
%
|
||||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||
Expected term
|
5.0 years
|
5.1 years
|
4.7 years
|
Options
|
Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual Life
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding at October 31, 2016
|
3,535,335
|
$
|
7.59
|
||||||||||
Granted
|
344,750
|
11.33
|
|||||||||||
Exercised
|
(401,750
|
)
|
6.09
|
||||||||||
Cancelled and forfeited
|
(133,100
|
)
|
11.17
|
||||||||||
Outstanding at
October 29, 2017
|
3,345,235
|
$
|
8.01
|
5.8 years
|
$
|
7,108
|
|||||||
Exercisable at
October 29, 2017
|
2,142,094
|
$
|
6.60
|
4.6 years
|
$
|
6,661
|
|||||||
Vested and expected to vest as of
October 29, 2017
|
3,180,991
|
$
|
7.87
|
5.7 years
|
$
|
7,052
|
Restricted Stock
|
Shares
|
Weighted-Average
Fair Value at
Grant Date
|
||||||
Outstanding at October 31, 2016
|
162,375
|
$
|
9.61
|
|||||
Granted
|
317,750
|
10.94
|
||||||
Vested
|
(126,869
|
)
|
9.78
|
|||||
Cancelled
|
(14,075
|
)
|
10.89
|
|||||
Outstanding at
October 29, 2017
|
339,181
|
$
|
10.74
|
|||||
Vested and expected to vest as of
October 29, 2017
|
302,898
|
$
|
10.75
|
Year Ended
|
||||||||||||
October 29
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
United States
|
$
|
(11,544
|
)
|
$
|
6,270
|
$
|
6,646
|
|||||
Foreign
|
38,109
|
54,204
|
63,394
|
|||||||||
$
|
26,565
|
$
|
60,474
|
$
|
70,040
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Current: | ||||||||||||
Federal
|
$
|
173
|
$
|
492
|
$
|
160
|
||||||
State
|
(4
|
)
|
(2
|
)
|
(109
|
)
|
||||||
Foreign
|
3,474
|
8,115
|
9,729
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
-
|
-
|
-
|
|||||||||
State
|
15
|
10
|
7
|
|||||||||
Foreign
|
1,618
|
(3,817
|
)
|
3,394
|
||||||||
Total
|
$
|
5,276
|
$
|
4,798
|
$
|
13,181
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
U.S. federal income tax at statutory rate
|
$
|
9,298
|
$
|
21,166
|
$
|
24,514
|
||||||
Changes in valuation allowances
|
(3,632
|
)
|
(9,516
|
)
|
(11,471
|
)
|
||||||
Distributions from foreign subsidiaries
|
6,471
|
3,438
|
448
|
|||||||||
Foreign tax rate differentials
|
(5,230
|
)
|
(9,620
|
)
|
(4,356
|
)
|
||||||
Tax credits
|
(1,925
|
)
|
(944
|
)
|
(2,729
|
)
|
||||||
Uncertain tax positions, including reserves, settlements and resolutions
|
(932
|
)
|
134
|
(175
|
)
|
|||||||
Income tax holiday
|
(743
|
)
|
(507
|
)
|
(869
|
)
|
||||||
Employee stock compensation
|
512
|
452
|
634
|
|||||||||
Tax on foreign subsidiary earnings
|
1,712
|
225
|
6,589
|
|||||||||
Other, net
|
(255
|
)
|
(30
|
)
|
596
|
|||||||
$
|
5,276
|
$
|
4,798
|
$
|
13,181
|
As of
|
||||||||
October 29,
2017
|
October 30,
2016
|
|||||||
Deferred income tax assets
:
|
||||||||
Net operating losses
|
$
|
40,942
|
$
|
46,158
|
||||
Reserves not currently deductible
|
4,196
|
5,904
|
||||||
Alternative minimum tax credits
|
3,946
|
3,772
|
||||||
Tax credit carryforwards
|
10,037
|
8,814
|
||||||
Share-based compensation
|
2,335
|
1,972
|
||||||
Other
|
1,503
|
1,719
|
||||||
62,959
|
68,339
|
|||||||
Valuation allowances
|
(25,590
|
)
|
(29,315
|
)
|
||||
37,369
|
39,024
|
|||||||
Deferred income tax liabilities:
|
||||||||
Undistributed earnings of foreign subsidiaries
|
(4,335
|
)
|
(3,962
|
)
|
||||
Property, plant and equipment
|
(19,280
|
)
|
(19,977
|
)
|
||||
Other
|
(322
|
)
|
(254
|
)
|
||||
(23,937
|
)
|
(24,193
|
)
|
|||||
Net deferred income tax assets
|
$
|
13,432
|
$
|
14,831
|
||||
Reported as:
|
||||||||
Deferred income tax assets
|
$
|
15,481
|
$
|
16,322
|
||||
Deferred income tax liabilities
|
(2,049
|
)
|
(1,491
|
)
|
||||
$
|
13,432
|
$
|
14,831
|
Operating Loss Carryforwards
|
Amount
|
Expiration
Periods
|
||||||
Federal
|
$
|
86,358
|
2025-2033
|
|||||
State
|
214,532
|
2018-2037
|
||||||
Foreign
|
15,414
|
2019-2023
|
Tax Credit Carryforwards
|
Amount
|
Expiration
Period
|
||||||
Federal research and development
|
$
|
5,580
|
2019-2037
|
|||||
Federal alternative minimum
|
3,946
|
Indefinite
|
||||||
State
|
5,829
|
2018-2031
|
||||||
Foreign
|
667
|
2022
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Balance at beginning of year
|
$
|
4,606
|
$
|
4,029
|
$
|
4,993
|
||||||
Additions (reductions) for tax positions in prior years
|
207
|
744
|
(212
|
)
|
||||||||
Additions based on current year tax positions
|
323
|
268
|
318
|
|||||||||
Settlements
|
(922
|
)
|
(378
|
)
|
(720
|
)
|
||||||
Lapses of statutes of limitations
|
(830
|
)
|
(57
|
)
|
(350
|
)
|
||||||
Balance at end of year
|
$
|
3,384
|
$
|
4,606
|
$
|
4,029
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
13,130
|
$
|
46,200
|
$
|
44,625
|
||||||
Effect of dilutive securities: | ||||||||||||
Interest expense on convertible notes, net of related tax effects
|
-
|
2,938
|
4,363
|
|||||||||
Earnings for diluted earnings per share
|
$
|
13,130
|
$
|
49,138
|
$
|
48,988
|
||||||
Weighted-average common shares computations: | ||||||||||||
Weighted-average common shares used for basic earnings per share
|
68,436
|
67,539
|
66,331
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Share-based payment awards
|
852
|
974
|
967
|
|||||||||
Convertible notes
|
-
|
7,841
|
11,085
|
|||||||||
Dilutive common shares
|
852
|
8,815
|
12,052
|
|||||||||
Weighted-average common shares used for diluted earnings per share
|
69,288
|
76,354
|
78,383
|
|||||||||
Basic earnings per share
|
$
|
0.19
|
$
|
0.68
|
$
|
0.67
|
||||||
Diluted earnings per share
|
$
|
0.19
|
$
|
0.64
|
$
|
0.63
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Convertible notes
|
5,542
|
-
|
-
|
|||||||||
Share based payment awards
|
1,308
|
1,635
|
1,641
|
|||||||||
Total potentially dilutive shares excluded
|
6,850
|
1,635
|
1,641
|
Year Ended
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Net revenue
|
||||||||||||
Taiwan
|
$
|
187,818
|
$
|
193,216
|
$
|
205,141
|
||||||
Korea
|
122,165
|
141,017
|
147,921
|
|||||||||
United States
|
102,040
|
113,670
|
132,792
|
|||||||||
Europe
|
36,081
|
33,384
|
35,792
|
|||||||||
All other Asia
|
2,574
|
2,169
|
2,560
|
|||||||||
$
|
450,678
|
$
|
483,456
|
$
|
524,206
|
|||||||
IC
|
$
|
350,260
|
$
|
364,531
|
$
|
420,833
|
||||||
FPD
|
100,418
|
118,925
|
103,373
|
|||||||||
$
|
450,678
|
$
|
483,456
|
$
|
524,206
|
As of
|
||||||||||||
October 29,
2017
|
October 30,
2016
|
November 1,
2015
|
||||||||||
Long-lived assets
|
||||||||||||
Taiwan
|
$
|
186,192
|
$
|
176,644
|
$
|
185,087
|
||||||
United States
|
180,095
|
173,658
|
184,282
|
|||||||||
Korea
|
147,265
|
146,515
|
167,618
|
|||||||||
Europe
|
13,372
|
9,617
|
10,287
|
|||||||||
All other Asia
|
8,273
|
-
|
10
|
|||||||||
$
|
535,197
|
$
|
506,434
|
$
|
547,284
|
Year Ended October 29, 2017
|
||||||||||||||||
Foreign Currency
Translation
Adjustments
|
Amortization
of Cash
Flow Hedge
|
Other
|
Total
|
|||||||||||||
Balance at October 31, 2016
|
$
|
(6,567
|
)
|
$
|
(177
|
)
|
$
|
(927
|
)
|
$
|
(7,671
|
)
|
||||
Other comprehensive income before reclassifications
|
19,799
|
-
|
478
|
20,277
|
||||||||||||
Amounts reclassified from other accumulated comprehensive income
|
-
|
129
|
-
|
129
|
||||||||||||
Net current period other comprehensive income
|
19,799
|
129
|
478
|
20,406
|
||||||||||||
Less: other comprehensive income attributable to noncontrolling interests
|
(5,605
|
)
|
-
|
(239
|
)
|
(5,844
|
)
|
|||||||||
Balance at October 29, 2017
|
$
|
7,627
|
$
|
(48
|
)
|
$
|
(688
|
)
|
$
|
6,891
|
Year Ended October 30, 2016
|
||||||||||||||||
Foreign Currency
Translation
Adjustments
|
Amortization
of Cash
Flow Hedge
|
Other
|
Total
|
|||||||||||||
Balance at November 1, 2015
|
$
|
(9,634
|
)
|
$
|
(306
|
)
|
$
|
(633
|
)
|
$
|
(10,573
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
6,334
|
-
|
(589
|
)
|
5,745
|
|||||||||||
Amounts reclassified from other accumulated comprehensive income
|
-
|
129
|
-
|
129
|
||||||||||||
Net current period other comprehensive income (loss)
|
6,334
|
129
|
(589
|
)
|
5,874
|
|||||||||||
Less: other comprehensive (income) loss attributable to noncontrolling interests
|
(3,267
|
)
|
-
|
295
|
(2,972
|
)
|
||||||||||
Balance at October 30, 2016
|
$
|
(6,567
|
)
|
$
|
(177
|
)
|
$
|
(927
|
)
|
$
|
(7,671
|
)
|
October 29, 2017
|
October 30, 2016
|
|||||||||||||||
Fair Value
|
Carrying Value
|
Fair Value
|
Carrying Value
|
|||||||||||||
3.25% convertible senior notes due 2019
|
$
|
67,396
|
$
|
57,337
|
$
|
68,230
|
$
|
57,221
|
First
|
Second
|
Third
|
Fourth
|
Year
|
||||||||||||||||
Fiscal 2017:
|
||||||||||||||||||||
Net sales
|
$
|
109,831
|
$
|
108,297
|
$
|
111,579
|
$
|
120,971
|
$
|
450,678
|
||||||||||
Gross profit
|
22,999
|
20,157
|
21,717
|
26,442
|
91,315
|
|||||||||||||||
Net income
|
4,510
|
1,484
|
4,799
|
10,496
|
21,289
|
|||||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
1,946
|
1,797
|
4,001
|
5,386
|
13,130
|
|||||||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
0.03
|
$
|
0.03
|
$
|
0.06
|
$
|
0.08
|
$
|
0.19
|
||||||||||
Diluted
|
$
|
0.03
|
$
|
0.03
|
$
|
0.06
|
$
|
0.08
|
$
|
0.19
|
||||||||||
Fiscal 2016:
|
||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(a)(d)
|
|||||||||||||||||
Net sales
|
$
|
129,956
|
$
|
122,923
|
$
|
123,209
|
$
|
107,368
|
$
|
483,456
|
||||||||||
Gross profit
|
35,436
|
31,287
|
31,450
|
20,533
|
118,706
|
|||||||||||||||
Net income
|
23,501
|
14,153
|
11,453
|
6,569
|
55,676
|
|||||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
21,002
|
11,854
|
8,088
|
5,256
|
46,200
|
|||||||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
0.31
|
$
|
0.18
|
$
|
0.12
|
$
|
0.08
|
$
|
0.68
|
||||||||||
Diluted
|
$
|
0.28
|
$
|
0.16
|
$
|
0.12
|
$
|
0.08
|
$
|
0.64
|
(a) |
Includes $8.8 million gain on sale of investment in a foreign entity.
|
(b) |
Includes a tax benefit in Taiwan of $1.8 million related to prior years.
|
(c) |
Includes a tax benefit in Taiwan of $3.0 million related to the recognition of prior period tax benefits and other tax positions no longer deemed necessary.
|
(d) |
Includes tax benefits in Taiwan of $4.8 million primarily related to the recognition of prior period tax benefits and other tax positions no longer deemed necessary.
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Page
No.
|
||
1.
|
Financial Statements: See “INDEX TO CONSOLIDATED FINANCIAL STATEMENTS” in Part II, Item 8 of this Form 10-K.
|
28
|
2.
|
Financial Statement Schedule:
|
|
Report of Independent Registered Public Accounting Firm on financial statement schedule
|
59
|
|
Schedule II - Valuation and Qualifying Accounts for the years ended October 29, 2017, October 30, 2016 and November 1, 2015
|
59
|
|
All other schedules are omitted because they are not applicable.
|
||
3.
|
Exhibits
|
59
|
Valuation and Qualifying Accounts
for the Years Ended October 29, 2017, October 30, 2016
and November 1, 2015
(in $ thousands)
|
||||||||||||||||||
Balance at
Beginning of
Year
|
Charged to
Costs and
Expenses
|
Deductions
|
Balance at
End of
Year
|
|||||||||||||||
Allowance for Doubtful Accounts
|
||||||||||||||||||
Year-ended October 29, 2017
|
|
3,901
|
|
(1,600
|
)
|
(b)
|
|
18
|
(a)
|
|
2,319
|
|||||||
Year ended October 30, 2016
|
|
3,301
|
|
642
|
|
(42
|
)
|
(a)
|
|
3,901
|
||||||||
Year ended November 1, 2015
|
|
3,078
|
|
730
|
|
(507
|
)
|
(a)
|
|
3,301
|
||||||||
Deferred Tax Asset Valuation Allowance
|
||||||||||||||||||
Year-ended October 29, 2017
|
|
29,315
|
|
-
|
|
(3,725
|
)
|
(c)
|
|
25,590
|
||||||||
Year ended October 30, 2016
|
|
38,763
|
|
(4,262
|
)
|
(b)
|
|
(5,186
|
)
|
(c)
|
|
29,315
|
||||||
Year ended November 1, 2015
|
|
49,548
|
|
(2,364
|
)
|
(b)
|
|
(8,421
|
)
|
(c)
|
|
38,763
|
(a) |
Uncollectible accounts written off, net, and impact of foreign currency translation.
|
(b) |
Reversal of valuation allowance.
|
(c) |
Increase in deferred tax liability and utilization of net operating losses.
|
Merger Agreement dated January 16, 2014, between Photronics Semiconductor Mask Corporation and DNP Photomask Technology Taiwan Co., Ltd. (incorporated by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K/A filed July 8, 2015).
#
|
|
Executive Employment Agreement between the Company and Soo Hong Jeong dated May 31, 2011
(incorporated by reference to Exhibit 10.27 of the Company’s Annual Report on Form 10-K filed on January 6, 2017).
+
|
|
Executive Employment Agreement between the Company and Christopher J. Progler, Vice President, Chief Technology Officer dated September 10, 2007 (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed on January 11, 2008).
+
|
|
Executive Employment Agreement between the Company and Peter S. Kirlin dated May 4, 2015 (incorporated by reference to Exhibit 10.28 of the Company’s Quarterly Report on Form 10-Q filed on September 9, 2015).
+
|
|
Executive Employment Agreement between the Company and Richelle E. Burr dated May 21, 2010 (incorporated by reference to Exhibit 10.30 of the Company’s Annual Report on Form 10-K filed on January 7, 2016).
+
|
|
Executive Employment Agreement between the Company and John P. Jordan dated September 5, 2017*
+
|
|
Form of Amendment to Executive Employment Agreement dated March 16, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 16, 2012).
+
|
|
Third Amended and Restated Credit Agreement Dated as of December 5, 2013 (incorporated by reference to Exhibit 10.
24 to
the Company’s Annual Report on Form 10-K filed on January
3, 2014).
|
|
Amendment No. 1 Dated as of August 22, 2014 to the
Third
Amended and Restated
Credit
Agreement
Dated as of December 5, 2013
(incorporated by reference to Exhibit 10.
32
of the Company’s Annual Report on Form 10-K filed on January 6, 2015).
|
|
Amendment No. 2 to the Third Amended and Restated Credit Agreement Dated May 15, 2017 (incorporated by reference to Exhibit 10.30 of the Company’s Quarterly Report on Form 10-Q filed on june 8, 2017).
|
|
Second Amended and Restated Security Agreement (incorporated by reference to Exhibit 10.33 of the Company’s Annual Report on Form 10-K filed on January 6, 2015).
|
|
Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee and Photronics Singapore Pte. Ltd. dated August 18, 2016 (incorporated by reference to Exhibit 10.35 to the Company’s Quarterly Report on Form 10-Q filed on September 2, 2016).
#
|
|
10.38 |
Contribution Agreement dated May 16, 2017 among Dai Nippon Printing Co., Ltd. (“DNP), DNP Asia Pacific Pte. Ltd. (“DNP Asia Pacific”), Photronics, Inc. (“Photronics”), Photronics Sigapore Pte. Ltd., (“Photronics Sigapore”), and Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”) (incorporated by reference to Exhibit 10.26 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017).
#
|
10.39 | Joint Venture Operating Agreement dated May 16, 2017 among Photronics, Photronics Singapore, DNP and DNP Asia Pacific (incorporated by reference to Exhibit 10.27 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017). # |
10.40 | Outsourcing Agreement dated May 16, 2017 among Photronics, DNP, Photronics DNP Photomask Corporation (“PDMC”), and PDMCX (incorporated by reference to Exhibit 10.28 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017). # |
10.41 | Amended and Restated License Agreement dated May 16, 2017 between DNP and PDMC (incorporated by reference to Exhibit 10.29 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017). # |
10.42 |
Investment Cooperation Agreement between Hefei State Hi-tech Industry Development Zone and Photronics UK, Ltd. *
#
|
List of Subsidiaries of the Company.*
|
|
Consent of Deloitte & Touche LLP.*
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
+ |
Represents a management contract or compensatory plan or arrangement.
|
# |
Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.
|
* |
Represents an exhibit that is filed with this Annual Report on Form 10-K.
|
PHOTRONICS, INC.
|
|||
(Registrant)
|
|||
By
|
/s/ JOHN P. JORDAN
|
December 20, 2017
|
|
John P. Jordan
|
|||
Senior Vice President
|
|||
Chief Financial Officer
|
|||
(Principal Accounting Officer/
|
|||
Principal Financial Officer)
|
By
|
/s/ PETER S. KIRLIN
|
December
20, 2017
|
|
Peter S. Kirlin
|
|||
Chief Executive Officer
|
|||
Director
|
|||
(Principal Executive Officer)
|
|||
By
|
/s/ JOHN P. JORDAN
|
December
20, 2017
|
|
John P. Jordan
|
|||
Senior Vice President
|
|||
Chief Financial Officer
|
|||
(Principal Accounting Officer/
|
|||
Principal Financial Officer)
|
|||
By
|
/s/ CONSTANTINE S. MACRICOSTAS
|
December 20, 2017 | |
Constantine S. Macricostas
|
|||
Executive Chairman of the Board
|
|||
By
|
/s/ WALTER M. FIEDEROWICZ
|
December
20, 2017
|
|
Walter M. Fiederowicz
|
|||
Director
|
|||
By
|
/s/ JOSEPH A. FIORITA, JR.
|
December
20, 2017
|
|
Joseph A. Fiorita, Jr.
|
|||
Director
|
|||
By
|
/s/ LIANG-CHOO HSIA
|
December
20, 2017
|
|
Liang-Choo Hsia
|
|||
Director
|
|||
By
|
/s/ GEORGE MACRICOSTAS
|
December
20, 2017
|
|
George Macricostas
|
|||
Director
|
|||
By
|
/s/ MITCHELL G. TYSON
|
December
20, 2017
|
|
Mitchell G. Tyson
|
|||
Director
|
1.1 |
The purpose of Photronics, Inc. Employee Stock Purchase Plan is to provide eligible employees of the Company and its designated subsidiaries (if any) with an opportunity to acquire a proprietary interest in the Company by the purchase of shares of the Common Stock of the Company directly from the Company through payroll deductions. It is felt that employee participation in the ownership of the Company will be to the mutual benefit of both the employees and the Company.
|
1.2 |
The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The provisions of the Plan shall, accordingly, be construed so as to extend and/or limit eligibility and participation in a manner consistent, and so as to otherwise comply, with the requirements of the Code.
|
1.3 |
Eligibility and participation in the Plan shall give any Employee only such rights as are set forth in the Plan and any amendments hereto and shall in no way affect or in any manner limit the Company’s right to discharge the Employee, which right is expressly reserved by the Company, or impair the authority of the Plan Committee to limit the employee's rights, claims or causes, as provided in the Plan.
|
2.1 |
The following words and phrases, when used in the Plan, shall have the following respective meanings, unless the context clearly indicates otherwise:
|
3.1 |
Subject to the provisions of Article XIV hereof, the aggregate number of shares of Common Stock which may be issued under the Plan shall not exceed 200,000. The aggregate number of such shares which may be issued with respect to any Offering shall be determined by the Plan Committee with respect to such Offering. Such shares may be authorized but unissued shares of Common Stock or issued shares of Common Stock which are held by the Company. Any shares subscribed for under the Plan and not purchased as a result of the cancellation in whole or in part of such subscription shall (unless the Plan shall have terminated) be again available for issuance under the Plan.
|
4.1 |
Each Employee who has been continuously employed by the Company for the six complete calendar months ending immediately prior to an Offering Date shall be eligible to participate in the Offering under the Plan made on such Offering Date.
|
4.2 |
Notwithstanding the provisions of section 4.1, no Employee shall be offered Shares if, immediately after he would subscribe for such Shares, such Employee would own capital stock (including shares of Common Stock which may be purchased under such subscription and under any other outstanding subscriptions under the Plan or options to purchase shares of Common Stock of the Company held by such Employee, as computed in accordance with Section 423[b][3] of the Code or any successor provision thereto) possessing 5% or more of the total combined voting power or value of all classes of stock of the Company. For purposes of determining the stock ownership of any Employee, the provisions of section 424[d] of the Code shall apply.
|
5.1 |
Offerings under the Plan shall be made on such Offering Dates as shall be determined by the Plan Committee. Notwithstanding anything to the contrary, no Offering shall be made on any date prior to the date that a required registration statement with respect to such Offering filed under the Securities Act of 1933, as amended, has become effective. Nothing contained herein shall be deemed to require that an Offering be made in any year.
|
5.2 | [a] | Subject to the limitations set forth in Sections 5.2[b] and 6.3, and to the other terms and conditions of the Plan, in each offering under the Plan, each Eligible Employee on an Offering Date shall be offered the right during the Subscription Period as provided in section 6.2, to subscribe to purchase such number of Shares as the percentage designated by the Plan Committee for such offering (not to exceed 5%) of his compensation would buy, at a price equal to the product of (i) the fair market value of a Share on the Offering Date, multiplied by (ii) the Purchase Price percentage utilized under Section 5.3 hereof. |
[b] |
Notwithstanding anything to the contrary contained in Sub-Section [a] of this section 5.2, no Eligible Employee shall be eligible to subscribe for Shares in an offering if, immediately after he would subscribe for such Shares, such subscription would permit his rights to purchase shares of Common Stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 (or such other maximum amounts as may be prescribed from time to time under the Code) of the fair market value of such shares (determined as of the Offering Date for such Offering) for each calendar year in which such subscription would be outstanding at any time. For purposes of this limitation the provisions of section 423 [b] [8] of the Code shall be applicable.
|
5.3 |
The Purchase Price per share subscribed for all Shares in a particular Offering shall be an amount equal to such percentages, not greater than 100% nor less than 85%, as shall be determined by the Plan Committee on or prior to the Offering Date, of the fair market value of a share of Common Stock (determined in accordance with the provisions of Article XIII) on one of the following dates with respect to such Offering, with such date to be determined by the Plan Committee on or prior to the Offering Date: (i) the Offering Date, (ii) the Purchase Date, or (iii) the Offering Date or the Purchase Date (whichever would result in a lower Purchase Price for the Common Stock).
|
5.4 |
In order to participate in any Offering, an Eligible Employee entitled to subscribe for Shares in such Offering shall comply with the subscription procedures set forth in Article VI.
|
6.1 |
As soon as practicable after an Offering Date, the Company shall furnish to each Eligible Employee a Subscription Agreement setting forth the maximum number of Shares to which such Eligible Employee may subscribe in such Offering, the fair market value per share of Common Stock on the Offering Date, the Purchase Price for Shares in such Offering and such other terms and conditions consistent with the Plan as shall be determined by the Plan Committee.
|
6.2 |
Within fifteen (15) days after receipt of such Subscription Agreement, an Eligible Employee desiring to participate in the Offering shall notify the Plan Committee of the number of Shares for which he desires to subscribe. Such notification shall be effected by the Eligible Employee’s completing, executing and returning to the Secretary of the Company the Subscription Agreement. All such subscriptions shall be deemed to have been made as of the Offering Date. No subscription shall be accepted from any person who is not an Eligible Employee on the date his subscription is received by the Company.
|
6.3 |
The minimum number of Shares for which an Eligible Employee will be permitted to subscribe in any Offering is ten (10) (or the number of Shares offered to him if fewer than ten). If at any time the Shares available for an Offering are oversubscribed, the Number of Shares for which each Eligible Employee is entitled to subscribe pursuant to section 5.2 shall be reduced, pro rata, to such lower number as may be necessary to eliminate such over-subscription.
|
6.4 |
If an Eligible Employee fails to subscribe to the Shares within the period and in the manner prescribed in section 6.2, he shall waive all rights to purchase Shares in that Offering.
|
7.1 |
The aggregate Purchase Price for the Shares for which a Participant subscribes in any Offering in accordance with the provisions of Article VI of the Plan shall be paid by means of payroll deductions.
|
7.2 | [a] | The aggregate Purchase Price for Shares shall be paid by payroll deductions in equal amounts over a period of 24 months (or such shorter period as shall be determined by the Plan Committee in accordance with the Plan) from the Offering Date. The period over which such payroll deductions are to be made in hereinafter referred to as the “Payment Period” . |
[b] |
Such payroll deductions with respect to an Offering shall commence as soon as practicable after the receipt of the Company of the executed Subscription Agreement authorizing such payroll deductions, and shall cease upon the earlier of the termination of the Payment Period or payment in full of the Purchase Price for such Shares. A Participant may cancel his subscription to the extent provided for in Article X, but no other change in terms of his Subscription Agreement may be made during the Payment Period and, in particular, in no event may a Participant change the amount of his payroll deductions under such Subscription Agreement. All payroll deductions withheld from a Participant under a Subscription Agreement shall be credited to his account under the Plan. In the event that payroll deductions are simultaneously being made with respect to more than one Subscription Agreement, the aggregate amount of such payroll deductions at any payday shall be credited first toward the payment for Shares subscribed for in the earliest Offering. A Participant may not make any separate cash payment into his account, provided, however, that a Participant who has been deemed to be in the employ of the Company while on an Authorized Leave of Absence without pay during the Payment Period, may upon his return to the actual employ of the Company, make a cash payment into his account in an amount not exceeding the aggregate of the payroll deductions which would have been made during such Authorized Leave of Absence.
|
[c] |
All funds representing payroll deductions for the accounts of Participants will, except as provided in section 7.3, be paid into the general funds of the Company. No interest will be paid or accrued under any circumstances on any funds withheld by the Company as payroll deductions pursuant to this Section 7.2 or on any other funds paid to the Company for purchases of Shares under the Plan.
|
7.3 |
Notwithstanding anything in this Article VII to the contrary, with respect to any Offering which is made prior to the approval of the Plan by the stockholders of the Company, all payroll deductions withheld for the accounts of Participants shall, until the Plan is approved by the stockholders, be held by the Company in a special escrow account for the benefit of such Participants. No interest will be paid or accrued under any circumstances on such funds. No Shares will be issued to such Participants until after approval of the Plan by the stockholders. In the event that the Plan is not approved by the stockholders within the period specified in Article XVII, all such funds will thereupon be promptly refunded to the respective Participants.
|
7.4 |
Failure to pay for subscribed Shares as provided in this Article VII shall constitute the cancellation of such subscription to the extent that any such Shares shall not have been so paid for.
|
8.1 |
At the end of the Payment Period for an Offering, (each of which dates is referred to as a “Purchase Date”), the balance of all amounts then held in the account of a Participant representing payroll deductions pursuant to a Subscription Agreement shall be applied to the purchase by the Participant from the Company of the number of Shares equal to the amount of such balance divided by the Purchase Price per share for such Shares applicable on such Purchase Date up to the number of Shares provided for in the respective Subscription Agreement. Any amount remaining in the Participant’s account in excess of the sum required to purchase whole Shares on a Purchase Date shall be promptly refunded to the Participant. As soon as practicable after a Purchase Date, the Company will issue and deliver to the Participant a certificate representing the Shares purchased by him from the Company on such Purchase Date. No fractional shares will be issued at any time.
|
8.2 |
A Participant who disposes (whether by sale, exchange, gift or otherwise) of any of the Shares acquired by him pursuant to the Plan within two (2) years after the Offering Date for such Shares or within one (1) year after the issuance of Shares to him shall notify the Company in writing of such disposition within thirty (30) days after such disposition.
|
9.1 |
A Participant shall not have any rights to dividends or any other rights as a stockholder of the Company with respect to any Shares until such Shares shall have been issued to him as reflected by the books and records maintained by the Company’s transfer agent relating to stockholders of the Company.
|
10.1 |
A Participant may discontinue his payroll deductions under a Subscription Agreement at any time by giving written notice thereof to the Plan Committee, effective for all payroll periods commencing five (5) days after receipt of such notice by the Plan Committee. The balance in the account of such Participant following such discontinuance shall be promptly refunded to the Participant. withdrawal from an Offering pursuant to this Section 10.1 shall not affect an Eligible Employee’s eligibility to participate in any other Offering under the Plan.
|
10.2 |
If the Participant’s employment with the Company is terminated for any reason other than death while still an Employee, such Participant’s rights to purchase Shares under any Subscription Agreement shall immediately terminate. Any balance remaining in his account as of the date of such termination of employment shall be promptly refunded to the Participant.
|
10.3 |
In the event of the death of an Employee who was a Participant prior to the purchase of the Shares for which he subscribed pursuant to Article VI hereof, the person or persons who acquired by laws of descent and distribution (his “Estate”) his rights to purchase Shares under his Subscription Agreement(s), shall have the right within ninety (90) days after the death of the Participant (but in no event later than the termination of the Payment Period) to purchase from the Company that number of Shares subscribed for and not issued to the Participant prior to his death which the balance in the Participant’s payroll deduction account is sufficient to purchase. The failure of the person or persons so acquiring his rights to so give notice of intention to purchase shall constitute a forfeiture of all further rights of the Participant or other persons to purchase such Shares and in such event, the balance in the Participant’s payroll deduction account will be refunded, without interest. If the Participant dies more than fifty (50) days prior to the termination of the Payment Period and his Estate elects to purchase the Shares subscribed for, the Purchase Price for his Shares shall be the percentage, designated pursuant to section 5.3, of the fair market value on the Offering Date, irrespective of the Purchase Price for other Participants.
|
11.1 |
During the lifetime of a Participant, the Shares for which he
subscribes may be purchased only by him. No Subscription Agreement of a Participant and no right under or interest in the Plan or any such Subscription Agreement (hereinafter collectively referred to as “Subscription Rights” ) may be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise), except by the Participant’s will or by the applicable laws of descent and distribution, or may be subject to execution, attachment or similar process. Any assignment, transfer, pledge, hypothecation or other disposition of Subscription Rights, or any levy of execution, attachment or other process attempted upon Subscription Rights, shall be null and void and without effect, and in any such event all Subscription Rights shall, in the sole discretion of the Plan Committee (exercised by written notice to the Participant or to the person then entitled to purchase the Shares under the provisions of sections 10.3 hereof), terminate as of the occurrence of any such event.
|
12.1 |
The Plan shall be administered by a Plan Committee which shall consist of two (2) or more members of the Board of Directors, none of whom shall be eligible to participate in the Plan. The members of the Plan Committee shall be appointed, and may be removed, by the Board of Directors. The Board of Directors shall have the power to remove and substitute for members of the Plan Committee and to fill any vacancy which may occur in the Plan Committee.
|
12.2 |
Unless otherwise determined by the Board of Directors, the members of the Plan Committee shall serve without additional compensation for their services. All expenses in connection with the administration of the Plan, including, but not limited to, clerical, legal and accounting fees, and other costs of administration, shall be paid by the Company.
|
12.3 |
The Chairman of the Plan Committee shall be designated by the Board of Directors. The Plan Committee shall select a Secretary who need not be a member of the Plan Committee. The Secretary, or in his absence, any member of the Plan Committee designated by the Chairman, shall keep the minutes of the proceedings of the Plan Committee and all data, records and documents relating to the administration of the Plan by the Plan Committee.
|
12.4 |
A quorum of the Plan Committee shall be such number as the Committee shall from time to time determine, but shall not be less than a majority of the entire Plan Committee. The acts of a majority of the members of the Plan Committee present at any meeting at which a quorum is present shall be the act of the Plan Committee. Members of the Plan Committee may participate in a meeting by means of telephone conference or similar communications procedure pursuant to which all persons participating in the meeting can hear each other. The Plan Committee may take action without a meeting if such action is evidenced by a writing signed by at least a majority of the entire Plan Committee.
|
12.5 |
The Plan Committee may, by an instrument in writing, delegate to one or more of its members or to an officer or officers of the Company any of its powers and its authority under the Plan, including the execution and delivery on its behalf of instruments, instructions and other documents.
|
12.6 |
It shall be the sole and exclusive duty and authority of the Plan Committee to interpret and construe the provisions of the Plan, to decide any disputes which may arise with regard to the status, eligibility and rights of Employees under the terms of the Plan, and any other persons claiming an interest under the terms of the Plan, and, in general, to direct the administration of the Plan.
|
12.7 |
The Plan Committee may adopt, and from time to time amend, such rules and regulations consistent with the purposes and provisions of the Plan, as it deems necessary or advisable to administer and effectuate the Plan.
|
12.8 |
The Plan Committee may shorten, lengthen (but not beyond thirty (30) days) or waive the time required by the Plan for the filing of any notice or other form under the Plan.
|
12.9 |
The discretionary powers granted hereunder to the Plan Committee shall in no event be exercised in any manner that will discriminate against individual employees or a class of employees or discriminate in favor of employees who are shareholders, officers, supervisors or highly compensated employees of the Company.
|
13.1 |
For purposes of the Plan, the “fair market value” of a share of Common Stock as of any date shall be determined as follows:
|
[a] |
If the Common Stock is then listed on a national securities exchange, the “fair market value” shall be the closing price of a share of Common Stock on such exchange on such date, or, if there has been no sale of shares of Common Stock on that date, the closing price of a share of Common Stock on such exchange on the last preceding business day on which shares of Common Stock were traded.
|
[b] |
If the Common Stock is then listed on the National Association of Securities Dealers Automatic Quotation System National Market system, the “fair market value” shall be the average of the high and low sales prices of a share of Common Stock on that date, or if there has been no sale of shares of Common Stock on that date, the average of the high and low sales prices of Common Stock on the last preceding business day on which shares of Common Stock were traded.
|
14.1 |
If (i) the Company shall at any time be involved in a transaction to which sub-section [a] of Section 424 of the Code is applicable, (ii) the Company shall declare a dividend payable in, or shall sub-divide or combine, its Common Stock, or (iii) any other event shall occur which in the judgment of the Board of Directors necessitates action by way of adjusting the terms of the outstanding Subscription Agreements, the Board of Directors shall take any such action as in its judgment shall be appropriate to preserve Participant rights substantially proportionate to the rights existing prior to such event. To the extent that such action shall include an increase or decrease in the number of shares of Common Stock subject to outstanding Subscription Agreements, the aggregate number of shares available under Article III hereof for issuance under the Plan pursuant to outstanding Subscription Agreements and Subscription Agreements which may be entered into, and the aggregate number of shares available for issuance in any Offering and the number which may be subscribed for, shall be proportionately increased or decreased, as the case may be. No action shall be taken by the Board of Directors under the provisions of this Article XIV which, in its judgment, would constitute a modification, extension or renewal of the Subscription Agreement (within the meaning of section 424[h] of the Code), or would prevent the Plan from qualifying as an “employee stock purchase plan” (within the meaning of section 423 of the Code). The determination of the Board of Directors with respect to any matter referred to in this Article XIV shall be conclusive and binding upon each Participant.
|
15.1 |
The Board of Directors may, without further approval by the stockholders of the Company, at any time terminate or amend the Plan without notice, or make such modifications of the Plan as it shall deem advisable; provided that the Board of Directors may not, without prior approval by the holders of a majority of the outstanding shares of Common Stock of the Company, amend or modify the Plan so as to (i) increase the maximum number of shares of Common Stock which may be issued under the Plan (except as contemplated in Article XIV hereof), (ii) extend the term during which Offerings may be made under the Plan or (iii) increase the maximum number of Shares which an Eligible Employee is entitled to purchase (except as contemplated in Article XIV hereof); and provided further that the Board of Directors may not amend or modify the Plan in any manner which would prevent the Plan from qualifying as an “employee stock purchase plan” (within the meaning of section 423 of the Code). No termination, amendment or modification of the Plan may, without the consent of a Participant, adversely affect the rights of such Participant under an outstanding Subscription Agreement.
|
16.1 |
Unless otherwise expressly provided in the Plan, all notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received by the Secretary of the Company or when received in the form specified by the Company at the location and by the persons, designated by the Company for the receipt thereof.
|
16.2 |
Notwithstanding anything hereunder to the contrary, the offer, sale and delivery by the Company of Shares under the Plan to any Eligible Employee is subject to compliance with all applicable securities regulation and other federal and state laws. The terms of this Plan shall be construed under the laws of the State of Connecticut.
|
17.1 |
The Plan shall become effective at such time as the Plan has been adopted by the Board of Directors or such later date as shall be designated by the Board of Directors upon its adoption of the Plan; provided, however, that the Plan and all Subscription Agreements entered into thereunder shall be, and be deemed to have been, null and void if the Plan is not approved by the holders of a majority of the outstanding shares of Common Stock of the Company within twelve (12) months after the date on which the Plan is adopted by the Board of Directors.
|
By ; | /s/ Peter S Kirlin | |
Name:
|
Peter S Kirlin |
|
Title:
|
Chief Executive Officer |
|
EXECUTIVE
|
|
/s/ John P . Jordan
|
|
Name: John P . Jordan
|
|
|
Name
Date
|
|
|
|
Witness Date
|
Party A: Hefei [***]
|
|
(Stamp) [***]
|
|
|
|
Legal Representative or Authorized Representative) (Signature)
|
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Date |
Party B: Photronics UK, Ltd. [***]
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Legal Representative or Authorized Representative) (Signature)
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Date |
Party A: [***]
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(Stamp)
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(Legal Representative or Authorized Representative) (Signature)
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[***] |
Date
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Party B: Photronics UK, Ltd.
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(Legal Representative or Authorized Representative) (Signature)
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Date
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State or Jurisdiction of
Incorporation or Organization
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Align-Rite International, Ltd.
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(United Kingdom)
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Photronics (Wales) Limited
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(United Kingdom)
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Photronics California, Inc.
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(California, USA)
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Photronics Idaho, Inc.
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(Idaho, USA)
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Photronics Texas Allen, Inc.
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(Texas, USA)
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Photronics MZD, GmbH
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(Germany)
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Photronics Advanced Mask Corporation
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(Taiwan, R.O.C.)
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Photronics DNP Mask Corporation (1)
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(Taiwan, R.O.C.)
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PDMC Shanghai, Ltd.
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(Shanghai, P.R.C.)
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Photronics Singapore Pte, Ltd.
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(Singapore)
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Xiamen American Japan Photronics Mask Co., Ltd.
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(Xiamen, P.R.C.)
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Photronics UK, Ltd.
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(United Kingdom)
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PMCH
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(Hefei, P.R.C)
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PK, Ltd. (2)
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(Republic of Korea)
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PKLT Co., Ltd.
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(Taiwan, R.O.C.)
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Trianja Technologies, Inc.
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(Texas, USA)
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(1)
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50.01% owned by Photronics, Inc. and 49.99% owned by DNPJ
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(2)
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99.75% owned by Photronics, Inc., and 0.25% owned by minority shareholders
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1.
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I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ PETER S. KIRLIN
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Peter S. Kirlin
Chief Executive Officer
December 20, 2017
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1.
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I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ JOHN P. JORDAN
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John P. Jordan
Senior Vice President
Chief Financial Officer
(Principal Accounting Officer/
Principal Financial Officer)
December 20, 2017
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1.
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the Annual Report on Form 10-K of the Company for the year ended October 29, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ PETER S. KIRLIN
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Peter S. Kirlin
Chief Executive Officer
December 20, 2017
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1.
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the Annual Report on Form 10-K of the Company for the year ended October 29, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ JOHN P. JORDAN
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John P. Jordan
Senior Vice President
Chief Financial Officer
(Principal Accounting Officer/
Principal Financial Officer)
December 20, 2017
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