☒ |
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
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
COMMON
|
PLAB
|
NASDAQ Global Select Market
|
PREFERRED STOCK PURCHASE RIGHTS
|
N/A
|
N/A
|
Large Accelerated Filer
|
☒
|
Accelerated Filer
|
☐
|
Non-Accelerated Filer
|
☐
|
Smaller Reporting Company
|
☐
|
|
Emerging growth company
|
☐
|
Proxy Statement for the 2021
|
||
Annual Meeting of Shareholders
|
Incorporated into Part III
|
|
to be held on March 11, 2021
|
of this Form 10-K
|
|
Page
|
3
|
|
PART I:
|
|
4
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|
7
|
|
17
|
|
17
|
|
17
|
|
17
|
|
PART II:
|
|
18
|
|
19
|
|
21
|
|
35
|
|
36
|
|
70
|
|
71
|
|
72
|
|
PART III:
|
|
73
|
|
73
|
|
73
|
|
73
|
|
73
|
|
PART IV:
|
|
74
|
|
76
|
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;
|
• |
third party sales of common stock;
|
• |
our ability to execute our business plan, including but not limited to, our expansion into China;
|
• |
announcements and consummations of business acquisitions;
|
• |
operating results that fall below expectations;
|
• |
issuances or repurchases of our common stock;
|
• |
intellectual property disputes;
|
• |
industry developments;
|
• |
news or disclosures by competitors or customers;
|
• |
business combinations, divestitures, or bankruptcies by customers, suppliers, or competitors;
|
• |
economic and other external factors including (but not limited to) recessions, natural disasters, military actions, political instability, or social unrest; 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
|
||
Hefei, China
|
Owned
|
(1)
|
|
Dresden, Germany
|
Leased
|
||
Hsinchu, Taiwan
|
Owned
|
(1)
|
|
Hsinchu, Taiwan
|
Leased
|
||
Taichung, Taiwan
|
Owned
|
(1)
|
|
Xiamen, China
|
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
|
September 2020 Authorization
|
Total Number of
Shares Purchased
(in millions)
|
Average Price
Paid
Per share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Program (in millions)
|
Dollar Value of
Shares That May
Yet Be Purchased
(in millions)
|
||||||||||||
Fiscal year 2020 repurchases
|
||||||||||||||||
September 14, 2020 – September 27, 2020
|
0.8
|
$
|
9.93
|
0.8
|
$
|
92.1
|
||||||||||
September 28, 2020 – October 31, 2020
|
0.9
|
$
|
10.27
|
0.9
|
$
|
82.5
|
||||||||||
Total
|
1.7
|
$
|
10.11
|
1.7
|
August 2019 Authorization
|
Total Number of
Shares Purchased
(in millions)
|
Average Price
Paid
Per share
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program
(in millions)
|
Dollar Value of
Shares That May
Yet Be Purchased
(in millions)
|
||||||||||||
Fiscal year 2020 repurchases
|
||||||||||||||||
November 1, 2019 – December 2, 2019
|
0.9
|
$
|
12.01
|
0.9
|
$
|
78.0
|
||||||||||
February 3, 2020 – March 1, 2020
|
0.1
|
$
|
12.37
|
0.1
|
$
|
77.0
|
||||||||||
March 2, 2020 – March 29, 2020
|
0.5
|
$
|
10.48
|
0.5
|
$
|
0.0
|
*
|
|||||||||
Total
|
1.5
|
$
|
11.54
|
1.5
|
||||||||||||
Fiscal year 2019 repurchases
|
||||||||||||||||
September 23, 2019 – October 31, 2019
|
1.0
|
$
|
11.05
|
1.0
|
$
|
89.0
|
||||||||||
Total
|
1.0
|
1.0
|
2018 Authorizations
|
Total Number of
Shares Purchased
(in millions)
|
Average Price
Paid
Per share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Program (in millions)
|
Dollar Value of
Shares That May
Yet Be Purchased
(in millions)
|
||||||||||||
|
||||||||||||||||
Fiscal year 2019 repurchases
|
||||||||||||||||
November 1, 2018 – November 25, 2018
|
0.2
|
$
|
9.49
|
0.2
|
$
|
20.1
|
||||||||||
November 26, 2018 – December 23, 2018
|
0.7
|
$
|
9.38
|
0.7
|
$
|
13.4
|
||||||||||
December 24, 2018 – January 27, 2019
|
0.2
|
$
|
9.41
|
0.2
|
$
|
11.2
|
**
|
|||||||||
Total
|
1.1
|
$
|
9.40
|
1.1
|
Fiscal year 2018 repurchases
|
Total Number of
Shares Purchased
(in millions)
|
Average Price
Paid
Per share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Program (in millions)
|
Dollar Value of
Shares That May
Yet Be Purchased
(in millions)
|
||||||||||||
|
||||||||||||||||
July 10, 2018 – July 29, 2018
|
0.8
|
$
|
8.72
|
0.8
|
$
|
13.2
|
||||||||||
July 30, 2018 – August 26, 2018
|
0.9
|
$
|
9.05
|
0.9
|
$
|
5.0
|
||||||||||
September 23, 2018 – October 31, 2018
|
0.9
|
$
|
9.46
|
0.9
|
$
|
21.9
|
||||||||||
Total
|
2.6
|
$
|
9.04
|
2.6
|
ITEM 6. |
SELECTED FINANCIAL DATA
|
|
Year Ended
|
|||||||||||||||||||
October 31,
|
October 31,
|
October 31,
|
October 29,
|
October 30,
|
||||||||||||||||
2020
|
2019
|
2018
|
2017
|
2016
|
||||||||||||||||
OPERATING DATA:
|
||||||||||||||||||||
Revenue
|
$
|
609,691
|
$
|
550,660
|
$
|
535,276
|
$
|
450,678
|
$
|
483,456
|
||||||||||
Gross profit
|
$
|
134,654
|
$
|
120,841
|
$
|
131,503
|
$
|
91,315
|
$
|
118,706
|
||||||||||
Gross margin
|
22.1
|
%
|
21.9
|
%
|
24.6
|
%
|
20.3
|
%
|
24.6
|
%
|
||||||||||
Operating income
|
$
|
63,928
|
$
|
52,121
|
$
|
65,627
|
$
|
31,868
|
$
|
52,475
|
||||||||||
Operating margin
|
10.5
|
%
|
9.5
|
%
|
12.3
|
%
|
7.1
|
%
|
10.9
|
%
|
||||||||||
Effective tax rate (a)
|
34.5
|
%
|
20.1
|
%
|
10.7
|
%
|
19.9
|
%
|
7.9
|
%
|
||||||||||
Net income (a), (b), (c)
|
$
|
40,343
|
$
|
40,491
|
$
|
61,236
|
$
|
21,289
|
$
|
55,676
|
||||||||||
Net income attributable to Photronics, Inc.
|
||||||||||||||||||||
shareholders (a), (b), (c)
|
$
|
33,820
|
$
|
29,793
|
$
|
42,055
|
$
|
13,130
|
$
|
46,200
|
||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic (a), (b), (c)
|
$
|
0.52
|
$
|
0.45
|
$
|
0.61
|
$
|
0.19
|
$
|
0.68
|
||||||||||
Diluted (a), (b), (c)
|
$
|
0.52
|
$
|
0.44
|
$
|
0.59
|
$
|
0.19
|
$
|
0.64
|
||||||||||
Weighted-average diluted number of common shares outstanding:
|
65,470
|
69,155
|
74,821
|
69,288
|
76,354
|
|||||||||||||||
Net cash provided by operating activities
|
$
|
143,046
|
$
|
68,386
|
$
|
130,567
|
$
|
96,833
|
$
|
122,137
|
||||||||||
Purchases of property, plant and equipment
|
$
|
70,815
|
$
|
178,375
|
$
|
92,585
|
$
|
91,965
|
$
|
50,147
|
||||||||||
Purchases of treasury stock
|
$
|
34,394
|
$
|
21,696
|
$
|
23,111
|
$
|
-
|
$
|
-
|
||||||||||
Common shares repurchased
|
3,194
|
2,133
|
2,558
|
-
|
-
|
|||||||||||||||
Employees
|
1,728
|
1,775
|
1,575
|
1,475
|
1,530
|
BALANCE SHEET DATA
|
||||||||||||||||||||
|
As of
|
|||||||||||||||||||
|
October 31,
|
October 31,
|
October 31,
|
October 29,
|
October 30,
|
|||||||||||||||
|
2020
|
2019
|
2018
|
2017
|
2016
|
|||||||||||||||
|
||||||||||||||||||||
Working capital
|
$
|
357,200
|
$
|
275,573
|
$
|
311,655
|
$
|
367,348
|
$
|
360,269
|
||||||||||
Property, plant and equipment, net
|
$
|
631,475
|
$
|
632,441
|
$
|
571,781
|
$
|
535,197
|
$
|
506,434
|
||||||||||
Total assets
|
$
|
1,188,182
|
$
|
1,118,665
|
$
|
1,110,009
|
$
|
1,020,794
|
$
|
987,988
|
||||||||||
Long-term debt
|
$
|
54,980
|
$
|
41,887
|
$
|
-
|
$
|
57,337
|
$
|
61,860
|
||||||||||
Total Photronics, Inc. shareholders’ equity
|
$
|
804,962
|
$
|
769,892
|
$
|
759,671
|
$
|
744,564
|
$
|
710,363
|
||||||||||
Noncontrolling interests
|
$
|
157,304
|
$
|
141,200
|
$
|
144,898
|
$
|
120,731
|
$
|
115,111
|
(a) |
In 2016, 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.
|
(b) |
In 2018, includes $0.6 million gain on sale of assets.
|
(c) |
In 2016, 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.
|
ITEM 7. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|||||||||||
|
October 31,
2020
|
August 2,
2020
|
October 31,
2019
|
|||||||||
|
||||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
78.6
|
76.1
|
75.6
|
|||||||||
|
||||||||||||
Gross profit
|
21.4
|
23.9
|
24.4
|
|||||||||
Selling, general and administrative expenses
|
8.6
|
8.4
|
7.8
|
|||||||||
Research and development expenses
|
2.8
|
2.9
|
2.9
|
|||||||||
|
||||||||||||
Operating income
|
10.0
|
12.6
|
13.7
|
|||||||||
Other income (expense), net
|
(1.9
|
)
|
(1.3
|
)
|
(3.9
|
)
|
||||||
|
||||||||||||
Income before income tax provision
|
8.1
|
11.3
|
9.8
|
|||||||||
Income tax provision
|
2.3
|
3.2
|
1.5
|
|||||||||
|
||||||||||||
Net income
|
5.8
|
8.1
|
8.3
|
|||||||||
Net income attributable to noncontrolling interests
|
1.5
|
1.3
|
2.1
|
|||||||||
|
||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
4.3
|
%
|
6.8
|
%
|
6.2
|
%
|
|
Year Ended
|
|||||||||||
|
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
|||||||||
|
||||||||||||
|
||||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
77.9
|
78.1
|
75.4
|
|||||||||
|
||||||||||||
Gross profit
|
22.1
|
21.9
|
24.6
|
|||||||||
Selling, general and administrative expenses
|
8.8
|
9.5
|
9.6
|
|||||||||
Research and development expenses
|
2.8
|
2.9
|
2.7
|
|||||||||
|
||||||||||||
Operating income
|
10.5
|
9.5
|
12.3
|
|||||||||
Other income (expense), net
|
(0.4
|
)
|
(0.3
|
)
|
0.5
|
|||||||
|
||||||||||||
Income before income tax provision
|
10.1
|
9.2
|
12.8
|
|||||||||
Income tax provision
|
3.5
|
1.9
|
1.4
|
|||||||||
|
||||||||||||
Net income
|
6.6
|
7.3
|
11.4
|
|||||||||
Net income attributable to noncontrolling interests
|
1.1
|
1.9
|
3.5
|
|||||||||
|
||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
5.5
|
%
|
5.4
|
%
|
7.9
|
%
|
|
Q4 FY20 from Q3 FY20
|
Q4 FY20 from Q4 FY19
|
||||||||||||||||||
Revenue in Q4 FY20
|
Increase (Decrease)
|
Percent
Change
|
Increase (Decrease)
|
Percent
Change
|
||||||||||||||||
IC
|
||||||||||||||||||||
High-end
|
$
|
38.2
|
$
|
(0.5
|
)
|
(1.3
|
)%
|
$
|
(6.8
|
)
|
(15.1
|
)%
|
||||||||
Mainstream
|
67.8
|
(2.2
|
)
|
(3.2
|
)%
|
0.2
|
0.3
|
%
|
||||||||||||
Total IC
|
$
|
105.9
|
$
|
(2.7
|
)
|
(2.5
|
)%
|
$
|
(6.6
|
)
|
(5.9
|
)%
|
||||||||
FPD
|
||||||||||||||||||||
High-end
|
$
|
31.3
|
$
|
(5.4
|
)
|
(14.6
|
)%
|
$
|
5.9
|
23.1
|
%
|
|||||||||
Mainstream
|
12.1
|
(0.5
|
)
|
(4.0
|
)%
|
(6.2
|
)
|
(34.1
|
)%
|
|||||||||||
Total FPD
|
$
|
43.4
|
$
|
(5.9
|
)
|
(11.9
|
)%
|
$
|
(0.4
|
)
|
(0.8
|
)%
|
||||||||
Total Revenue
|
$
|
149.3
|
$
|
(8.6
|
)
|
(5.5
|
)%
|
$
|
(7.0
|
)
|
(4.5
|
)%
|
|
Q4 FY20 from Q3 FY20
|
Q4 FY20 from Q4 FY19
|
||||||||||||||||||
|
Revenue in
Q4 FY20
|
Increase
(Decrease)
|
Percent
Change
|
Increase
(Decrease)
|
Percent
Change
|
|||||||||||||||
|
||||||||||||||||||||
Taiwan
|
$
|
56.6
|
$
|
(4.2
|
)
|
(6.9
|
)%
|
$
|
(12.3
|
)
|
(17.8
|
)%
|
||||||||
Korea
|
36.6
|
(2.9
|
)
|
(7.4
|
)%
|
(0.8
|
)
|
(2.1
|
)%
|
|||||||||||
United States
|
26.7
|
(1.7
|
)
|
(5.9
|
)%
|
(3.8
|
)
|
(12.5
|
)%
|
|||||||||||
China
|
21.0
|
0.0
|
0.1
|
%
|
9.7
|
85.6
|
%
|
|||||||||||||
Europe
|
7.9
|
0.3
|
3.3
|
%
|
0.1
|
1.0
|
%
|
|||||||||||||
Other
|
0.5
|
(0.1
|
)
|
(13.7
|
)%
|
0.1
|
23.5
|
%
|
||||||||||||
|
||||||||||||||||||||
Total revenue
|
$
|
149.3
|
$
|
(8.6
|
)
|
(5.5
|
)%
|
$
|
(7.0
|
)
|
(4.5
|
)%
|
|
FY20 from FY19
|
|||||||||||
|
Revenue in
FY20
|
Increase (Decrease)
|
Percent
Change
|
|||||||||
|
||||||||||||
IC
|
||||||||||||
High-end
|
$
|
156.1
|
$
|
(0.3
|
)
|
(0.2
|
)%
|
|||||
Mainstream
|
262.3
|
12.5
|
5.0
|
%
|
||||||||
|
||||||||||||
Total IC
|
$
|
418.4
|
$
|
12.2
|
3.0
|
%
|
||||||
|
||||||||||||
FPD
|
||||||||||||
High-end
|
$
|
139.6
|
$
|
53.6
|
62.4
|
%
|
||||||
Mainstream
|
51.7
|
(6.8
|
)
|
(11.7
|
)%
|
|||||||
|
||||||||||||
Total FPD
|
$
|
191.3
|
$
|
46.8
|
32.4
|
%
|
||||||
|
||||||||||||
Total Revenue
|
$
|
609.7
|
$
|
59.0
|
10.7
|
%
|
|
FY20 from FY19
|
|||||||||||
|
Revenue in
FY20
|
Increase
(Decrease)
|
Percent
Change
|
|||||||||
|
||||||||||||
Taiwan
|
$
|
239.1
|
$
|
(5.3
|
)
|
(2.2
|
)%
|
|||||
Korea
|
153.1
|
5.3
|
3.6
|
%
|
||||||||
United States
|
104.9
|
(0.1
|
)
|
(0.1
|
)%
|
|||||||
China
|
79.4
|
60.4
|
317.5
|
%
|
||||||||
Europe
|
31.5
|
(1.1
|
)
|
(3.3
|
)%
|
|||||||
Other
|
1.7
|
(0.2
|
)
|
(10.2
|
)%
|
|||||||
|
||||||||||||
Total Revenue
|
$
|
609.7
|
$
|
59.0
|
10.7
|
%
|
|
Percent Change
|
|||||||||||||||||||
|
Q4 FY20
|
Q3 FY20
|
Q4 FY19
|
Q4 FY20
from
Q3 FY20
|
Q4 FY20
from
Q4 FY19
|
|||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Gross profit
|
$
|
31.9
|
$
|
37.7
|
$
|
38.2
|
(15.5
|
)%
|
(16.4
|
)%
|
||||||||||
Gross margin
|
21.4
|
%
|
23.9
|
%
|
24.4
|
%
|
|
Percent Change
|
|||||||||||
|
FY20
|
FY19
|
FY20
from
FY19
|
|||||||||
|
||||||||||||
Gross profit
|
$
|
134.7
|
$
|
120.8
|
11.4
|
%
|
||||||
Gross margin
|
22.1
|
%
|
21.9
|
%
|
|
Q4 FY20
|
Q3 FY20
|
Q4 FY19
|
|||||||||
Foreign currency transactions (losses) gains, net
|
$
|
(2.2
|
)
|
$
|
(1.6
|
)
|
$
|
(6.2
|
)
|
|||
Interest expense
|
(0.8
|
)
|
(0.6
|
)
|
(0.2
|
)
|
||||||
Interest income and other income (expense), net
|
0.1
|
-
|
0.3
|
|||||||||
Total other income (expense)
|
$
|
(2.9
|
)
|
$
|
(2.1
|
)
|
$
|
(6.1
|
)
|
|
FY20
|
FY19
|
||||||
Interest expense
|
$
|
(2.4
|
)
|
$
|
(1.4
|
)
|
||
Interest income and other income (expense), net
|
0.5
|
1.3
|
||||||
Foreign currency transactions (losses) gains, net
|
(0.5
|
)
|
(1.3
|
)
|
||||
Total other income (expense)
|
$
|
(2.3
|
)
|
$
|
(1.4
|
)
|
||
|
Q4 FY20
|
Q3 FY20
|
Q4 FY19
|
|||||||||
Income tax provision
|
$
|
3.5
|
$
|
4.9
|
$
|
2.3
|
||||||
Effective income tax rate
|
28.8
|
%
|
27.7
|
%
|
15.1
|
%
|
|
FY20
|
FY19
|
||||||
Income tax provision
|
$
|
21.3
|
$
|
10.2
|
||||
Effective income tax rate
|
34.5
|
%
|
20.1
|
%
|
|
Q4 FY20
|
Q3 FY20
|
Q4 FY19
|
FY20
|
FY19
|
|||||||||||||||
Net income attributable to noncontrolling interests
|
$
|
2.1
|
$
|
2.1
|
$
|
3.3
|
$
|
6.5
|
$
|
10.7
|
|
October 31,
2020
|
October 31,
2019
|
||||||
(in $ millions)
|
(in $ millions)
|
|||||||
Cash and cash equivalents
|
$
|
278.7
|
$
|
206.5
|
||||
Net cash provided by operating activities
|
$
|
143.0
|
$
|
68.4
|
||||
Net cash used in investing activities
|
$
|
(65.7
|
)
|
$
|
(151.4
|
)
|
||
Net cash used in financing activities
|
$
|
(16.0
|
)
|
$
|
(42.1
|
)
|
|
Payment due by period
|
|||||||||||||||||||
Contractual Obligations
|
Total
|
Less
Than
1 Year
|
1 - 3
Years
|
3 - 5
Years
|
More
Than
5 Years
|
|||||||||||||||
Debt
|
$
|
68,658
|
$
|
13,678
|
$
|
28,548
|
$
|
19,221
|
$
|
7,211
|
||||||||||
Operating leases
|
7,535
|
2,275
|
3,362
|
1,374
|
524
|
|||||||||||||||
Purchase obligations
|
130,431
|
124,365
|
5,802
|
264
|
-
|
|||||||||||||||
Interest
|
7,987
|
2,876
|
3,743
|
1,339
|
29
|
|||||||||||||||
Other noncurrent liabilities
|
15,099
|
674
|
2,110
|
887
|
11,428
|
|||||||||||||||
Total
|
$
|
229,710
|
$
|
143,868
|
$
|
43,565
|
$
|
23,085
|
$
|
19,192
|
• |
Revenue Recognition: Application of GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Specifically, the determination of whether revenues related to our revenue contracts should be recognized over time or at a point in time, as these determinations impact the timing and amount of our reported revenues and net income. Other significant judgments include the estimation of the point in the manufacturing process at which we are entitled to receive payment, as well as the progress of the job order to completion in order to determine the amount of arrangement consideration earned for contractual revenue recognized over time.
|
• |
Property, Plant and Equipment: Significant judgment and assumptions are employed when we establish estimated useful lives, depreciation periods and when depreciation should begin on such assets as this evaluation can significantly impact our gross margin and research and development expenses. Significant judgement is also required when we periodically review property, plant and equipment for any potential impairment in carrying values, whenever events such as a significant industry downturn, plant closures, technological obsolescence, or other change in circumstances indicate that their carrying amounts may not be recoverable as the recoverability assessment requires us to forecast future cash flows related to these assets; this evaluation can significantly impact our gross margin and operating expense.
|
• |
Leases: Significant judgement is applied in the determination of whether an arrangement is, or contains, a lease and, in certain instances, whether the lease should be classified as an operating lease or a finance lease, which can impact the timing and classification of lease costs.
|
• |
Contingencies: We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. In accounting for the resolution of contingencies, significant judgment may be necessary to estimate amounts pertaining to periods prior to the resolution that are charged to operations in the period of resolution and amounts related to future periods.
|
• |
Income Taxes: Our annual tax rate is determined based on our income and the jurisdictions where it is earned, statutory tax rates, and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Also inherent in determining our annual tax rate are judgments and assumptions regarding the recoverability of certain deferred tax balances, and our ability to uphold certain tax positions. We are subject to complex tax laws, in the U.S. and numerous foreign jurisdictions and the manner in which they apply can be open to interpretation. Realization of deferred tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction in future periods, which involves business plans, planning opportunities, and expectations about future outcomes. Our assessment relies on estimates and assumptions, and may involve a series of complex judgments about future events.
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
Page
|
|
|
37
|
|
|
|
40
|
|
|
|
41
|
|
|
|
42
|
|
|
|
43
|
|
|
|
44
|
|
|
|
45
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Revenue
|
$
|
609,691
|
$
|
550,660
|
$
|
535,276
|
||||||
Cost of goods sold
|
475,037
|
429,819
|
403,773
|
|||||||||
Gross profit
|
134,654
|
120,841
|
131,503
|
|||||||||
Operating expenses:
|
||||||||||||
Selling, general and administrative
|
53,582
|
52,326
|
51,395
|
|||||||||
Research and development
|
17,144
|
16,394
|
14,481
|
|||||||||
Total operating expenses
|
70,726
|
68,720
|
65,876
|
|||||||||
Operating income
|
63,928
|
52,121
|
65,627
|
|||||||||
Other income (expense):
|
||||||||||||
Interest expense
|
(2,367
|
)
|
(1,425
|
)
|
(2,262
|
)
|
||||||
Interest income and other income (expense), net
|
541
|
1,271
|
4,829
|
|||||||||
Foreign currency transaction (losses) gains, net
|
(501
|
)
|
(1,266
|
)
|
377
|
|||||||
Income before income tax provision
|
61,601
|
50,701
|
68,571
|
|||||||||
Income tax provision
|
21,258
|
10,210
|
7,335
|
|||||||||
Net income
|
40,343
|
40,491
|
61,236
|
|||||||||
Net income attributable to noncontrolling interests
|
6,523
|
10,698
|
19,181
|
|||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
33,820
|
$
|
29,793
|
$
|
42,055
|
||||||
Earnings per share:
|
||||||||||||
Basic
|
$
|
0.52
|
$
|
0.45
|
$
|
0.61
|
||||||
Diluted
|
$
|
0.52
|
$
|
0.44
|
$
|
0.59
|
||||||
Weighted-average number of common shares outstanding:
|
||||||||||||
Basic
|
64,866
|
66,347
|
68,829
|
|||||||||
Diluted
|
65,470
|
69,155
|
74,821
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Net income
|
$
|
40,343
|
$
|
40,491
|
$
|
61,236
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
36,381
|
(2,877
|
)
|
(16,672
|
)
|
|||||||
Amortization of cash flow hedge
|
-
|
-
|
48
|
|||||||||
Other
|
(390
|
)
|
(74
|
)
|
101
|
|||||||
Net other comprehensive income (loss)
|
35,991
|
(2,951
|
)
|
(16,523
|
)
|
|||||||
Comprehensive income
|
76,334
|
37,540
|
44,713
|
|||||||||
Less: comprehensive income attributable to noncontrolling interests
|
15,551
|
11,786
|
14,515
|
|||||||||
Comprehensive income attributable to Photronics, Inc. shareholders
|
$
|
60,783
|
$
|
25,754
|
$
|
30,198
|
|
Photronics, Inc. Shareholders
|
|||||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-In
|
Retained
|
Treasury
|
Accumulated
Other
Comprehensive
|
Non-
Controlling
|
Total
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income (Loss)
|
Interests
|
Equity
|
|||||||||||||||||||||||||
Balance at October 29, 2017
|
68,666
|
$
|
687
|
$
|
547,596
|
$
|
189,390
|
$
|
-
|
$
|
6,891
|
$
|
120,731
|
$
|
865,295
|
|||||||||||||||||
Net income
|
-
|
-
|
-
|
42,055
|
-
|
-
|
19,181
|
61,236
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
-
|
(11,857
|
)
|
(4,666
|
)
|
(16,523
|
)
|
|||||||||||||||||||||
Sales of common stock through employee stock option and purchase plan
|
870
|
9
|
4,683
|
-
|
-
|
-
|
-
|
4,692
|
||||||||||||||||||||||||
Restricted stock awards vesting and expense
|
164
|
1
|
1,747
|
-
|
-
|
-
|
-
|
1,748
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
1,432
|
-
|
-
|
-
|
-
|
1,432
|
||||||||||||||||||||||||
Contribution from noncontrolling interests
|
-
|
-
|
148
|
-
|
-
|
-
|
17,848
|
17,996
|
||||||||||||||||||||||||
Dividends to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(8,196
|
)
|
(8,196
|
)
|
||||||||||||||||||||||
Purchases of treasury stock
|
-
|
-
|
-
|
-
|
(23,111
|
)
|
-
|
-
|
(23,111
|
)
|
||||||||||||||||||||||
Balance at October 31, 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
|
-
|
-
|
-
|
29,793
|
-
|
-
|
10,698
|
40,491
|
||||||||||||||||||||||||
Other comprehensive (loss) income
|
-
|
-
|
-
|
-
|
-
|
(4,039
|
)
|
1,088
|
(2,951
|
)
|
||||||||||||||||||||||
Sale of common stock through employee stock option and purchase plans
|
390
|
4
|
2,524
|
-
|
-
|
-
|
-
|
2,528
|
||||||||||||||||||||||||
Restricted stock awards vesting and expense
|
196
|
2
|
2,497
|
-
|
-
|
-
|
-
|
2,499
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
1,183
|
-
|
-
|
-
|
-
|
1,183
|
||||||||||||||||||||||||
Contribution from noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
29,394
|
29,394
|
||||||||||||||||||||||||
Dividends to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(44,939
|
)
|
(44,939
|
)
|
||||||||||||||||||||||
Repurchase of common stock of subsidiary
|
-
|
-
|
-
|
-
|
-
|
-
|
(57
|
)
|
(57
|
)
|
||||||||||||||||||||||
Purchases of treasury stock
|
-
|
-
|
-
|
-
|
(21,696
|
)
|
-
|
-
|
(21,696
|
)
|
||||||||||||||||||||||
Retirement of treasury stock
|
(4,691
|
)
|
(47
|
)
|
(37,491
|
)
|
(7,269
|
)
|
44,807
|
-
|
-
|
-
|
||||||||||||||||||||
Balance at October 31, 2019
|
65,595
|
656
|
524,319
|
253,922
|
-
|
(9,005
|
)
|
141,200
|
911,092
|
|||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
33,820
|
-
|
-
|
6,523
|
40,343
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
26,963
|
9,028
|
35,991
|
||||||||||||||||||||||||
Sale of common stock through employee stock option and purchase plans
|
482
|
5
|
3,742
|
-
|
-
|
-
|
-
|
3,747
|
||||||||||||||||||||||||
Restricted stock awards vesting and expense
|
255
|
2
|
3,890
|
-
|
-
|
-
|
-
|
3,892
|
||||||||||||||||||||||||
Share-based compensation expense
|
-
|
-
|
787
|
-
|
-
|
-
|
-
|
787
|
||||||||||||||||||||||||
Contribution from noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
17,596
|
17,596
|
||||||||||||||||||||||||
Dividends to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(16,151
|
)
|
(16,151
|
)
|
||||||||||||||||||||||
Repurchase of common stock of subsidiary
|
-
|
-
|
255
|
-
|
-
|
-
|
(892
|
)
|
(637
|
)
|
||||||||||||||||||||||
Purchases of treasury stock
|
-
|
-
|
-
|
-
|
(34,394
|
)
|
-
|
-
|
(34,394
|
)
|
||||||||||||||||||||||
Retirement of treasury stock
|
(3,194
|
)
|
(32
|
)
|
(25,657
|
)
|
(8,705
|
)
|
34,394
|
-
|
-
|
-
|
||||||||||||||||||||
Balance at October 31, 2020
|
63,138
|
$
|
631
|
$
|
507,336
|
$
|
279,037
|
$
|
-
|
$
|
17,958
|
$
|
157,304
|
$
|
962,266
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
40,343
|
$
|
40,491
|
$
|
61,236
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization of property, plant and equipment
|
89,171
|
79,238
|
79,536
|
|||||||||
Amortization of intangible assets
|
4,643
|
4,641
|
4,797
|
|||||||||
Share-based compensation
|
4,927
|
3,680
|
3,180
|
|||||||||
Deferred income taxes
|
(445
|
)
|
(3,662
|
)
|
(273
|
)
|
||||||
Changes in assets, liabilities, and other:
|
||||||||||||
Accounts receivable
|
6,986
|
(12,321
|
)
|
(18,553
|
)
|
|||||||
Inventories
|
(6,938
|
)
|
(23,088
|
)
|
(6,162
|
)
|
||||||
Other current assets
|
7,849
|
(8,631
|
)
|
(11,731
|
)
|
|||||||
Accounts payable, accrued liabilities and other
|
(3,490
|
)
|
(11,962
|
)
|
18,537
|
|||||||
Net cash provided by operating activities
|
143,046
|
68,386
|
130,567
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property, plant and equipment
|
(70,815
|
)
|
(178,375
|
)
|
(92,585
|
)
|
||||||
Government incentives
|
5,263
|
27,003
|
1,005
|
|||||||||
Purchases of intangible assets
|
(159
|
)
|
(95
|
)
|
(218
|
)
|
||||||
Other
|
-
|
61
|
929
|
|||||||||
Net cash used in investing activities
|
(65,711
|
)
|
(151,406
|
)
|
(90,869
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from debt
|
20,340
|
54,633
|
-
|
|||||||||
Contributions from noncontrolling interests
|
17,596
|
29,394
|
17,996
|
|||||||||
Purchases of treasury stock
|
(34,394
|
)
|
(21,696
|
)
|
(23,111
|
)
|
||||||
Dividends paid to noncontrolling interests
|
(16,151
|
)
|
(45,050
|
)
|
(8,166
|
)
|
||||||
Repayments of debt
|
(7,392
|
)
|
(61,319
|
)
|
(4,639
|
)
|
||||||
Proceeds from share-based arrangements
|
4,239
|
2,071
|
4,634
|
|||||||||
Other
|
(248
|
)
|
(92
|
)
|
(519
|
)
|
||||||
Net cash used in financing activities
|
(16,010
|
)
|
(42,059
|
)
|
(13,805
|
)
|
||||||
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
|
10,986
|
2,381
|
(4,840
|
)
|
||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
72,311
|
(122,698
|
)
|
21,053
|
||||||||
Cash, cash equivalents, and restricted cash at beginning of year
|
209,291
|
331,989
|
310,936
|
|||||||||
Cash, cash equivalents, and restricted cash at end of year
|
$
|
281,602
|
$
|
209,291
|
$
|
331,989
|
||||||
Supplemental disclosure of non-cash information:
|
||||||||||||
Accrual for property, plant and equipment purchased during year
|
$
|
13,062
|
$
|
13,671
|
$
|
29,602
|
|
October 31
2020
|
October 31
2019
|
||||||
Raw materials
|
$
|
56,389
|
$
|
46,027
|
||||
Work in process
|
767
|
2,122
|
||||||
Finished goods
|
113
|
6
|
||||||
$
|
57,269
|
$
|
48,155
|
|
October 31,
2020
|
October 31,
2019
|
||||||
|
||||||||
Recoverable value added taxes
|
$
|
16,539
|
$
|
16,494
|
||||
Contract assets
|
6,313
|
7,596
|
||||||
Prepaid expenses
|
6,153
|
6,506
|
||||||
Prepaid and refundable income taxes
|
122
|
2,642
|
||||||
Other
|
608
|
5,150
|
||||||
$
|
29,735
|
$
|
38,388
|
|
October 31,
2020
|
October 31,
2019
|
||||||
Land
|
$
|
12,422
|
$
|
12,085
|
||||
Buildings and improvements
|
179,162
|
172,340
|
||||||
Machinery and equipment
|
1,812,791
|
1,748,483
|
||||||
Leasehold improvements
|
21,157
|
19,921
|
||||||
Furniture, fixtures and office equipment
|
15,665
|
14,404
|
||||||
Construction in progress
|
70,915
|
28,135
|
||||||
2,112,112
|
1,995,368
|
|||||||
Accumulated depreciation and amortization
|
(1,480,637
|
)
|
(1,362,927
|
)
|
||||
$
|
631,475
|
$
|
632,441
|
As of October 31, 2020
|
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|||||||||
Technology license agreement
|
$
|
59,616
|
$
|
(57,298
|
)
|
$
|
2,318
|
|||||
Customer relationships
|
2,060
|
(1,245
|
)
|
815
|
||||||||
Software and other
|
6,496
|
(6,192
|
)
|
304
|
||||||||
$
|
68,172
|
$
|
(64,735
|
)
|
$
|
3,437
|
||||||
As of October 31, 2019
|
||||||||||||
Technology license agreement
|
$
|
59,616
|
$
|
(53,323
|
)
|
$
|
6,293
|
|||||
Customer relationships
|
9,174
|
(8,186
|
)
|
988
|
||||||||
Software and other
|
6,537
|
(5,948
|
)
|
589
|
||||||||
$
|
75,327
|
$
|
(67,457
|
)
|
$
|
7,870
|
Fiscal Years:
|
||||
2021
|
$
|
2,839
|
||
2022
|
$
|
131
|
||
2023
|
$
|
129
|
||
2024
|
$
|
128
|
||
2025
|
$
|
128
|
||
Thereafter
|
$
|
82
|
|
October 31, 2020
|
October 31, 2019
|
||||||||||||||
Classification
|
Carrying
Amount
|
Photronics
Interest
|
Carrying
Amount
|
Photronics
Interest
|
||||||||||||
Current assets
|
$
|
56,095
|
$
|
28,053
|
$
|
24,142
|
$
|
12,074
|
||||||||
Noncurrent assets
|
141,097
|
70,562
|
114,015
|
57,019
|
||||||||||||
Total assets
|
197,192
|
98,615
|
138,157
|
69,093
|
||||||||||||
Current liabilities
|
31,922
|
15,964
|
16,889
|
8,446
|
||||||||||||
Noncurrent liabilities
|
55,676
|
27,844
|
42,094
|
21,051
|
||||||||||||
Total liabilities
|
87,598
|
43,808
|
58,983
|
29,497
|
||||||||||||
Net assets
|
$
|
109,594
|
$
|
54,807
|
$
|
79,174
|
$
|
39,596
|
|
October 31,
2020
|
October 31,
2019
|
||||||
Compensation related expenses
|
$
|
16,405
|
$
|
14,011
|
||||
Income taxes
|
11,432
|
13,227
|
||||||
Contract liabilities
|
8,024
|
11,542
|
||||||
Property, plant, and equipment
|
2,355
|
288
|
||||||
Operating leases
|
2,175
|
-
|
||||||
Value added and other taxes
|
1,925
|
3,761
|
||||||
Contract manufacturing
|
1,275
|
422
|
||||||
Professional fees
|
1,254
|
537
|
||||||
Inventory
|
1,026
|
224
|
||||||
Telecommunications and utilities
|
1,006
|
710
|
||||||
Other
|
7,006
|
4,980
|
||||||
Accrued liabilities
|
$
|
53,883
|
$
|
49,702
|
|
October 31,
2020
|
October 31,
2019
|
||||||
|
||||||||
Project Loans
|
$
|
50,063
|
$
|
34,490
|
||||
Working Capital Loans (value added tax component)
|
13,887
|
9,539
|
||||||
|
||||||||
|
63,950
|
44,029
|
||||||
Current portion of long-term debt
|
(8,970
|
)
|
(2,142
|
)
|
||||
|
||||||||
Long-term debt
|
$
|
54,980
|
$
|
41,887
|
2021
|
$
|
8,970
|
||
2022
|
15,142
|
|||
2023
|
13,406
|
|||
2024
|
9,789
|
|||
2025
|
9,432
|
|||
Thereafter
|
7,211
|
|||
|
$
|
63,950
|
|
Fiscal Year
|
|||||||||||||||||||||||
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
|||||||||||||||||||
Principal payments
|
$
|
6,705
|
$
|
7,334
|
$
|
9,592
|
$
|
9,789
|
$
|
9,432
|
$
|
7,211
|
|
Fiscal Year
|
|||||||||||
2021
|
2022
|
2023
|
||||||||||
Principal payments
|
$
|
2,265
|
$
|
7,808
|
$
|
3,814
|
|
Year Ended
|
Year Ended
|
||||||
Revenue by Product Type
|
October 31, 2020
|
October 31, 2019
|
||||||
IC
|
||||||||
High-end
|
$
|
156,129
|
$
|
156,418
|
||||
Mainstream
|
262,281
|
249,773
|
||||||
Total IC
|
$
|
418,410
|
$
|
406,191
|
||||
FPD
|
||||||||
High-end
|
$
|
139,558
|
$
|
98,832
|
||||
Mainstream
|
51,723
|
45,637
|
||||||
Total FPD
|
$
|
191,281
|
$
|
144,469
|
||||
$
|
609,691
|
$
|
550,660
|
Revenue by Geographic Origin
|
||||||||
Taiwan
|
$
|
239,101
|
$
|
244,377
|
||||
Korea
|
153,052
|
147,734
|
||||||
United States
|
104,949
|
105,045
|
||||||
China
|
79,374
|
19,010
|
||||||
Europe
|
31,501
|
32,585
|
||||||
All other Asia
|
1,714
|
1,909
|
||||||
$
|
609,691
|
$
|
550,660
|
Revenue by Timing of Recognition
|
||||||||
Over time
|
$
|
535,071
|
$
|
497,942
|
||||
At a point in time
|
74,620
|
52,718
|
||||||
$
|
609,691
|
$
|
550,660
|
- |
Election not to recognize short-term leases on the balance sheet.
|
- |
Practical expedient to not separate lease and non-lease components in a contract.
|
- |
Practical expedient “package” for transitioning to the new guidance:
|
- |
Not reassessing whether any expired or existing contracts are, or contain, leases.
|
- |
Not reassessing lease classification for any existing or expired leases.
|
- |
Not reassessing initial direct costs for any existing leases.
|
|
Fiscal Year
|
Total Lease
|
Imputed
|
|||||||||||||||||||||||||||||||||
|
2021
|
2022
|
2023
|
2024
|
2025
|
Thereafter
|
Payments
|
Interest*
|
Total
|
|||||||||||||||||||||||||||
Lease payments
|
$
|
2,275
|
$
|
2,157
|
$
|
1,205
|
$
|
756
|
$
|
618
|
$
|
524
|
$
|
7,535
|
$
|
352
|
$
|
7,183
|
|
Year Ended
|
|||
October 31, 2020
|
||||
Operating lease costs
|
$
|
3,076
|
||
Short-term lease costs
|
$
|
359
|
||
Variable lease costs
|
$
|
378
|
Supplemental cash flows information:
|
||||
Year Ended
|
||||
October 31, 2020
|
||||
Operating cash flows used for operating leases
|
$
|
3,584
|
||
ROU assets obtained in exchange for operating lease obligations
|
$
|
2,681
|
|
As of
|
|||
|
October 31, 2020
|
|||
|
||||
Weighted-average remaining lease term
|
4.1 years
|
|||
Weighted-average discount rate
|
2.37
|
%
|
2020
|
$
|
1,885
|
||
2021
|
1,613
|
|||
2022
|
1,535
|
|||
2023
|
742
|
|||
2024
|
424
|
|||
Thereafter
|
377
|
|||
$
|
6,576
|
Restricted Stock
|
Shares
|
Weighted-Average
Fair Value at
Grant Date
|
||||||
Outstanding at October 31, 2019
|
640,113
|
$
|
9.70
|
|||||
Granted
|
538,000
|
$
|
15.08
|
|||||
Vested
|
(271,347
|
)
|
$
|
10.90
|
||||
Cancelled
|
(94,450
|
)
|
$
|
12.41
|
||||
Outstanding at October 31, 2020
|
812,316
|
$
|
12.55
|
|||||
Expected to vest as of October 31, 2020
|
770,778
|
$
|
12.48
|
|
Year Ended
|
|
October 31,
2019
|
October 31,
2018
|
|
Expected volatility
|
33.1%
|
31.7%
|
Risk-free rate of return
|
2.5 – 2.9%
|
2.2 – 2.8%
|
Dividend yield
|
0.0%
|
0.0%
|
Expected term
|
5.1 years
|
5.0 years
|
Options
|
Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual Life
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding at October 31, 2019
|
2,170,767
|
$
|
9.00
|
||||||||||
Granted
|
-
|
-
|
|||||||||||
Exercised
|
(493,450
|
)
|
$
|
7.94
|
|||||||||
Cancelled and forfeited
|
(56,200
|
)
|
$
|
10.33
|
|||||||||
Outstanding at October 31, 2020
|
1,621,117
|
$
|
9.27
|
4.6 years
|
$
|
1,778
|
|||||||
Exercisable at October 31, 2020
|
1,366,864
|
$
|
9.21
|
4.2 years
|
$
|
1,651
|
|||||||
Vested and expected to vest as of October 31, 2020
|
246,055
|
$
|
9.61
|
7.3 years
|
$
|
123
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
United States
|
$
|
(10,672
|
)
|
$
|
(8,379
|
)
|
$
|
(9,859
|
)
|
|||
Foreign
|
72,273
|
59,080
|
78,430
|
|||||||||
$
|
61,601
|
$
|
50,701
|
$
|
68,571
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
-
|
$
|
(3,916
|
)
|
$
|
(30
|
)
|
||||
State
|
4
|
11
|
-
|
|||||||||
Foreign
|
21,698
|
17,777
|
11,584
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
-
|
3,673
|
(3,673
|
)
|
||||||||
State
|
8
|
10
|
(24
|
)
|
||||||||
Foreign
|
(452
|
)
|
(7,345
|
)
|
(522
|
)
|
||||||
Total
|
$
|
21,258
|
$
|
10,210
|
$
|
7,335
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
U.S. federal income tax at statutory rate
|
$
|
12,936
|
$
|
10,647
|
$
|
16,059
|
||||||
Changes in valuation allowances
|
6,942
|
2,673
|
4,554
|
|||||||||
Foreign tax rate differentials
|
1,718
|
218
|
(2,078
|
)
|
||||||||
Tax credits
|
(1,562
|
)
|
(1,268
|
)
|
(1,530
|
)
|
||||||
Uncertain tax positions, including reserves, settlements and
resolutions
|
1,637
|
134
|
(1,791
|
)
|
||||||||
Employee stock option
|
-
|
-
|
(1,433
|
)
|
||||||||
Income tax holiday
|
(318
|
)
|
(2,234
|
)
|
(2,648
|
)
|
||||||
Tax reform
|
-
|
-
|
(3,736
|
)
|
||||||||
Distributions from foreign subsidiaries
|
-
|
-
|
-
|
|||||||||
Tax on foreign subsidiary earnings
|
-
|
-
|
-
|
|||||||||
Other, net
|
(95
|
)
|
40
|
(62
|
)
|
|||||||
$
|
21,258
|
$
|
10,210
|
$
|
7,335
|
|||||||
Effective tax rate
|
34.5
|
%
|
20.1
|
%
|
10.7
|
%
|
• |
The Act repealed the corporate alternative minimum tax (“AMT”) for tax years beginning after December 31, 2017, and provided that existing AMT credit carryforwards are fully refundable. We recognized a $3.9 million benefit on AMT credit carryforwards that we previously determined were not more likely than not going to be realized and reversed the previously recorded valuation allowance.
|
• |
As of January 1, 2018, the Act reduced the corporate income tax rate from a maximum 35% to a flat 21%, requiring us to revalue our deferred tax assets and liabilities utilizing the rate applicable to the period when a temporary difference will reverse. Our net deferred tax asset is fully offset by a valuation allowance, and the revaluation of the deferred tax assets and liabilities resulted in a net-zero impact for the period.
|
• |
The Act imposed a transition tax for a one-time deemed repatriation of the accumulated earnings of foreign subsidiaries. The entire amount of transition tax was fully offset by tax credits (including carryforwards) that resulted in a provisional net-zero impact on the period.
|
|
As of
|
|||||||
October 31,
2020
|
October 31,
2019
|
|||||||
Deferred income tax assets:
|
||||||||
Net operating losses
|
$
|
34,457
|
$
|
32,229
|
||||
Reserves not currently deductible
|
6,287
|
5,013
|
||||||
Tax credit carryforwards
|
9,481
|
9,164
|
||||||
Share-based compensation
|
1,306
|
860
|
||||||
Property, plant and equipment
|
3,887
|
-
|
||||||
Other
|
398
|
434
|
||||||
55,816
|
47,700
|
|||||||
Valuation allowances
|
(33,973
|
)
|
(27,032
|
)
|
||||
21,843
|
20,668
|
|||||||
Deferred income tax liabilities:
|
||||||||
Property, plant and equipment
|
-
|
(251
|
)
|
|||||
Other
|
-
|
-
|
||||||
-
|
(251
|
)
|
||||||
Net deferred income tax assets
|
$
|
21,843
|
$
|
20,417
|
||||
Reported as:
|
||||||||
Deferred income tax assets
|
$
|
22,070
|
$
|
20,779
|
||||
Deferred income tax liabilities
|
(227
|
)
|
(362
|
)
|
||||
$
|
21,843
|
$
|
20,417
|
Operating Loss Carryforwards
|
Amount
|
Expiration
Periods
|
||||||
Federal
|
$
|
90,125
|
2028-Indefinite
|
|||||
State
|
205,649
|
2020-2040
|
||||||
Foreign
|
14,895
|
2022-2030
|
Tax Credit Carryforwards
|
Amount
|
Expiration
Period
|
||||||
Federal research and development
|
$
|
4,796
|
2024-2040
|
|||||
State
|
5,928
|
2020-2034
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Balance at beginning of year
|
$
|
1,758
|
$
|
1,775
|
$
|
3,384
|
||||||
Additions (reductions) for tax positions in prior years
|
227
|
(466
|
)
|
(44
|
)
|
|||||||
Additions based on current year tax positions
|
1,576
|
1,286
|
498
|
|||||||||
Settlements
|
(992
|
)
|
(204
|
)
|
(56
|
)
|
||||||
Lapses of statutes of limitations
|
(19
|
)
|
(633
|
)
|
(2,007
|
)
|
||||||
Balance at end of year
|
$
|
2,550
|
$
|
1,758
|
$
|
1,775
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Net income attributable to Photronics, Inc. shareholders
|
$
|
33,820
|
$
|
29,793
|
$
|
42,055
|
||||||
Effect of dilutive securities:
|
||||||||||||
Interest expense on convertible notes, net of tax
|
-
|
845
|
1,999
|
|||||||||
Earnings used for diluted earnings per share
|
$
|
33,820
|
$
|
30,638
|
$
|
44,054
|
||||||
Weighted-average common shares computations:
|
||||||||||||
Weighted-average common shares used for basic earnings per share
|
64,866
|
66,347
|
68,829
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Share-based payment awards
|
604
|
448
|
450
|
|||||||||
Convertible notes
|
-
|
2,360
|
5,542
|
|||||||||
Potentially dilutive common shares
|
604
|
2,808
|
5,992
|
|||||||||
Weighted-average common shares used for diluted earnings per share
|
65,470
|
69,155
|
74,821
|
|||||||||
Basic earnings per share
|
$
|
0.52
|
$
|
0.45
|
$
|
0.61
|
||||||
Diluted earnings per share
|
$
|
0.52
|
$
|
0.44
|
$
|
0.59
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Share based payment awards
|
795
|
1,250
|
1,627
|
|||||||||
Total potentially dilutive shares excluded
|
795
|
1,250
|
1,627
|
|
Year Ended
|
|||||||||||
October 31,
2020
|
October 31,
2019
|
October 31,
2018
|
||||||||||
Net revenue
|
||||||||||||
Taiwan
|
$
|
239,101
|
$
|
244,377
|
$
|
237,039
|
||||||
Korea
|
153,052
|
147,734
|
147,066
|
|||||||||
United States
|
104,949
|
105,045
|
112,648
|
|||||||||
China
|
79,374
|
19,010
|
1,157
|
|||||||||
Europe
|
31,501
|
32,585
|
35,540
|
|||||||||
All other Asia
|
1,714
|
1,909
|
1,826
|
|||||||||
$
|
609,691
|
$
|
550,660
|
$
|
535,276
|
|||||||
IC
|
$
|
418,410
|
$
|
406,191
|
$
|
416,064
|
||||||
FPD
|
191,281
|
144,469
|
119,212
|
|||||||||
$
|
609,691
|
$
|
550,660
|
$
|
535,276
|
|
As of
|
|||||||
October 31,
2020
|
October 31,
2019
|
|||||||
Long-lived assets
|
||||||||
China
|
$
|
262,800
|
$
|
232,394
|
||||
Taiwan
|
123,979
|
146,467
|
||||||
United States
|
130,164
|
130,935
|
||||||
Korea
|
110,815
|
117,755
|
||||||
Europe
|
3,717
|
4,890
|
||||||
$
|
631,475
|
$
|
632,441
|
|
Year Ended October 31, 2020
|
|||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2019
|
$
|
(8,331
|
)
|
$
|
(674
|
)
|
$
|
(9,005
|
)
|
|||
Other comprehensive income (loss)
|
36,381
|
(390
|
)
|
35,991
|
||||||||
Less: other comprehensive income (loss) attributable to noncontrolling interests
|
9,222
|
(194
|
)
|
9,028
|
||||||||
Balance at October 31, 2020
|
$
|
18,828
|
$
|
(870
|
)
|
$
|
17,958
|
|
Year Ended October 31, 2019
|
|||||||||||
Foreign Currency
Translation
Adjustments
|
Other
|
Total
|
||||||||||
Balance at October 31, 2018
|
$
|
(4,328
|
)
|
$
|
(638
|
)
|
$
|
(4,966
|
)
|
|||
Other comprehensive loss
|
(2,877
|
)
|
(74
|
)
|
(2,951
|
)
|
||||||
Less: other comprehensive income (loss) attributable to noncontrolling interests
|
1,126
|
(38
|
)
|
1,088
|
||||||||
Balance at October 31, 2019
|
$
|
(8,331
|
)
|
$
|
(674
|
)
|
$
|
(9,005
|
)
|
|
Fiscal Year 2020
Purchases
|
Fiscal Year 2019
Purchases
|
Fiscal Year 2018
Purchases
|
Total Purchases
Under Programs
|
||||||||||||
Number of shares repurchased
|
3,194
|
2,133
|
2,558
|
7,885
|
||||||||||||
Cost of shares repurchased
|
$
|
34,394
|
$
|
21,696
|
$
|
23,111
|
$
|
79,201
|
||||||||
Average price paid per share
|
$
|
10.77
|
$
|
10.17
|
$
|
9.04
|
$
|
10.04
|
|
First
|
Second
|
Third
|
Fourth
|
Year
|
|||||||||||||||
Fiscal 2020:
|
||||||||||||||||||||
Revenue
|
$
|
159,736
|
$
|
142,774
|
$
|
157,895
|
$
|
149,286
|
$
|
609,691
|
||||||||||
Gross profit
|
34,602
|
30,433
|
37,734
|
31,885
|
134,654
|
|||||||||||||||
Net income
|
10,928
|
7,972
|
12,864
|
8,579
|
40,343
|
|||||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
10,300
|
6,284
|
10,776
|
6,460
|
33,820
|
|||||||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
0.16
|
$
|
0.10
|
$
|
0.17
|
$
|
0.10
|
$
|
0.52
|
||||||||||
Diluted
|
$
|
0.16
|
$
|
0.10
|
$
|
0.17
|
$
|
0.10
|
$
|
0.52
|
||||||||||
First
|
Second
|
Third
|
Fourth
|
Year
|
||||||||||||||||
Fiscal 2019:
|
||||||||||||||||||||
Revenue
|
$
|
124,712
|
$
|
131,580
|
$
|
138,112
|
$
|
156,256
|
$
|
550,660
|
||||||||||
Gross profit
|
26,102
|
26,010
|
30,570
|
38,159
|
120,841
|
|||||||||||||||
Net income
|
7,768
|
9,852
|
9,834
|
13,037
|
40,491
|
|||||||||||||||
Net income attributable to Photronics, Inc. shareholders
|
5,267
|
8,479
|
6,347
|
9,700
|
29,793
|
|||||||||||||||
Earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
0.08
|
$
|
0.13
|
$
|
0.10
|
$
|
0.15
|
$
|
0.45
|
||||||||||
Diluted
|
$
|
0.08
|
$
|
0.13
|
$
|
0.10
|
$
|
0.15
|
$
|
0.44
|
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.
|
36
|
|||
2.
|
Financial Statement Schedule:
|
|||
76
|
||||
All other schedules are omitted because they are not applicable.
|
||||
3.
|
77
|
|
Balance at
Beginning of
Year
|
Charged to
Costs and
Expenses
|
Deductions
|
Balance at
End of
Year
|
||||||||||||
Allowance for Doubtful Accounts
|
||||||||||||||||
Year-ended October 31, 2020
|
$
|
1,334
|
$
|
(22
|
)
|
$
|
12
|
(a)
|
$
|
1,324
|
||||||
Year-ended October 31, 2019
|
$
|
1,526
|
$
|
(18
|
)
|
$
|
(174
|
)(a)
|
$
|
1,334
|
||||||
Year ended October 31, 2018
|
$
|
2,319
|
$
|
(809
|
)
|
$
|
16
|
(a)
|
$
|
1,526
|
(a) |
Uncollectible accounts written off, net, and impact of foreign currency translation.
|
ITEM 16. |
FORM 10-K SUMMARY
|
|
|
|
|
Incorporated by Reference
|
|
Filed or
Furnished
Herewith
|
||||
Exhibit
Number
|
|
Description
|
|
Form
|
|
Exhibit
|
|
Filing
Date
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of Incorporation as amended July 9, 1986, April 9, 1990, March 16, 1995, November 13, 1997, April 15, 2002 and June 20, 2005.
|
|
10-K
|
3.1
|
12/20/2019
|
|
||||
|
|
|
|
|
|
|||||
|
Amended and Restated By-laws of the Company dated as of September 7, 2016.
|
|
8-K
|
3.2
|
9/13/2016
|
|
|
|||
|
|
|
|
|
|
|||||
|
Description of Securities of the Company
|
|
10-K
|
4.1
|
12/20/2019
|
|
||||
|
|
|
|
|
|
|||||
|
Certificate of Amendment with Respect to Series A Preferred Stock, dated September 24, 2019
|
|
8-K
|
3.1
|
9/24/2019
|
|
|
|||
|
|
|
|
|
|
|||||
|
Indenture dated January 22, 2015, by and between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee.
|
|
8-K
|
4.2
|
1/28/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
The Company’s 1992 Employee Stock Purchase Plan
|
|
10-K
|
10.1
|
12/20/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment to the Employee Stock Purchase Plan as of March 24, 2004.+
|
|
10-K
|
10.2
|
1/6/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment to the Employee Stock Purchase Plan as of April 8, 2010.+
|
|
10-K
|
10.4
|
1/7/2016
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment to the Employee Stock Purchase Plan as of March 28, 2012.+
|
|
10-K
|
10.4
|
12/21/2018
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment to the Employee Stock Plan as of December 18, 2019*
|
|
10-K
|
10.5
|
12/23/2019
|
|
||||
|
|
|
|
|
|
|||||
|
2016 Equity Incentive Compensation Plan.+
|
|
DEF 14A
|
2/29/2016
|
|
|
||||
|
|
|
|
|
|
|||||
|
The Company’s 2007 Long-Term Equity Incentive Plan.+
|
|
DEF 14A
|
2/23/2007
|
|
|
Amendment to the 2007 Long-Term Equity Incentive Plan as of April 8, 2010.+
|
|
10-K
|
10.7
|
1/7/2016
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment to the 2007 Long Term Equity Incentive Plan as of April 11, 2014.+
|
|
10-K
|
10.7
|
12/23/2019
|
|
||||
|
|
|
|
|
|
|||||
|
2011 Executive Incentive Compensation Plan effective as of November 1, 2010.+
|
|
10-K
|
10.9
|
1/6/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Joint Venture Framework Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co., Ltd.#
|
|
10-K/A
|
10.19
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Joint Venture Operating Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co., Ltd.#
|
|
10-K/A
|
10.20
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Outsourcing Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation.#
|
|
10-K/A
|
10.21
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
License Agreement dated November 20, 2013, between the Company and Photronics Semiconductor Mask Corporation.#
|
|
10-K/A
|
10.22
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
License Agreement dated November 20, 2013, between Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation.#
|
|
10-K/A
|
10.23
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Margin Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and Photronics Semiconductor Mask Corporation.#
|
|
10-K/A
|
10.24
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Merger Agreement dated January 16, 2014, between Photronics Semiconductor Mask Corporation and DNP Photomask Technology Taiwan Co., Ltd.#
|
|
10-K/A
|
10.25
|
7/8/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Executive Employment Agreement between the Company and Christopher J. Progler, Vice President, Chief Technology Officer dated September 10, 2007.+
|
|
10-K
|
10.18
|
12/23/2019
|
|
|
|||
|
|
|
|
|
|
|||||
|
Executive Employment Agreement between the Company and Peter S. Kirlin dated May 4, 2015.+
|
|
10-Q
|
10.28
|
9/9/2015
|
|
|
|||
|
|
|
|
|
|
|||||
|
Executive Employment Agreement between the Company and Richelle E. Burr dated May 21, 2010.+
|
|
10-K
|
10.30
|
1/7/2016
|
|
|
|||
|
|
|
|
|
|
|||||
|
Executive Employment Agreement between the Company and John P. Jordan dated September 5, 2017.+
|
|
10-K
|
10.31
|
12/20/2017
|
|
|
|||
|
Executive Employment Agreement between Photronics Dai Nippon Mask Corporation and Frank Lee dated March 9, 2020
|
|
10-Q
|
10.36
|
3/11/2020
|
|
||||
|
Consulting Agreement between the Company and DEMA Associates, LLC dated January 20, 2018.
|
|
10-K
|
10.21
|
12/21/2018
|
|
|
|||
Amendment dated March 9, 2020 between DEMA Associates, LLC and the Company
|
10-Q
|
10.37
|
3/11/2020
|
|
Form of Amendment to Executive Employment Agreement dated March 16, 2012.+
|
|
10-K
|
10.23
|
12/23/2019
|
|
||||
|
|
|
|
|
|
|||||
|
Fourth Amended and Restated Credit Agreement dated as of September 27, 2018 among Photronics, Inc. the Foreign Subsidiary Borrower Party Thereto, the Lender Party Thereto, JPMorgan Chase Bank, N.A. as Administrative and Collateral Agent and Bank of America, N.A. as syndication agent
|
|
10-K
|
10.24
|
12/21/2018
|
|
|
|||
|
|
|
|
|
|
|||||
|
Third Amended and Restated Security Agreement entered into as of September 27, 2018 by and among Photronics, Inc., the subsidiaries of the Company and JPMorgan Chase Bank N.A.
|
|
10-K
|
10.25
|
12/21/2018
|
|
|
|||
|
|
|
|
|
|
|||||
|
Fixed Asset Loan Agreement between Photronics DNP Mask Corporation Xiamen and Industrial and Commercial Bank China Limited Xiamen Xiang’an Branch
|
|
10-K
|
10.26
|
12/21/2018
|
|
|
|||
|
|
|
|
|
|
|||||
|
Working Capital Loan Agreement between Industrial and Commercial Bank China Limited Xiamen Xiang’an Branch and Photronics DNP Mask Corporation Xiamen effective as of November 7, 2018.
|
|
10-K
|
10.27
|
12/21/2018
|
|
|
|||
|
|
|
|
|
|
|||||
|
Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee and Photronics Singapore Pte. Ltd.
|
|
10-Q
|
10.35
|
9/2/2016
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amendment No. 1 to the Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee and Photronics Singapore Pte, Ltd
|
|
10-K
|
10.29
|
12/23/2019
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
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 Singapore Pte. Ltd., (“Photronics Singapore”), and Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”).#
|
|
10-Q/A
|
10.26
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Joint Venture Operating Agreement dated May 16, 2017 among Photronics, Photronics Singapore, DNP and DNP Asia Pacific.#
|
|
10-Q/A
|
10.27
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Outsourcing Agreement dated May 16, 2017 among Photronics, DNP, Photronics DNP Photomask Corporation (“PDMC”), and PDMCX.#
|
|
10-Q/A
|
10.28
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Amended and Restated License Agreement dated May 16, 2017 between DNP and PDMC.#
|
|
10-Q/A
|
10.29
|
12/19/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Investment Cooperation Agreement between Hefei State Hi-tech Industry Development Zone and Photronics UK, Ltd.
|
|
10-K
|
10.42
|
12/20/2017
|
|
|
|||
|
|
|
|
|
|
|||||
|
Section 382 Rights Agreement, dated as September 23, 2019, between Photronics, Inc. and Computershare Trust Company, N.A. as rights agent.
|
|
8-K
|
4.1
|
9/24/2019
|
|
|
|||
|
|
|
|
|
|
|||||
Master Lease Agreement dated October 12, 2020 between TD Equipment Finance and the Company
|
X
|
|||||||||
Fixed Asset Loan Contract dated October 1, 2020 between TD Equipment Finance,Inc. and the Company
|
X
|
|||||||||
Maximum Mortgage Contract dated October 1, 2020 between Photronics Mask Corporation Hefei and China Construction Bank Corporation Hefei Shusshan Branch
|
X
|
|||||||||
|
List of Subsidiaries of the Company.
|
|
|
X
|
||||||
|
|
|
|
|
|
|||||
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
|
|
|
X
|
||||||
|
|
|
|
|
|
|||||
|
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.
|
|
|
X
|
||||||
|
|
|
|
|
|
|||||
|
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.
|
|
|
X
|
||||||
|
|
|
|
|
|
|||||
|
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.
|
|
|
X
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
X
|
+
|
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.
|
|
PHOTRONICS, INC.
|
||
|
(Registrant)
|
||
|
|
||
By
|
/s/ John P. Jordan
|
By
|
/s/ Eric Rivera
|
|
John P. Jordan
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
|
Eric Rivera
Vice President, Corporate Controller
(Principal Accounting Officer)
|
|
January 14, 2021
|
|
January 14, 2021
|
By
|
/s/ Peter S. Kirlin
|
|
January 14, 2021
|
|
Peter S. Kirlin
Chief Executive Officer
Director
(Principal Executive Officer)
|
|
|
|
|||
By
|
/s/ John P. Jordan
|
|
January 14, 2021
|
|
John P. Jordan
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|||
By
|
/s/ Eric Rivera
|
|
January 14, 2021
|
|
Eric Rivera
Vice President, Corporate Controller
(Principal Accounting Officer)
|
|
|
|
|
|
|
By
|
/s/ Constantine S. Macricostas
|
|
January 14, 2021
|
|
Constantine S. Macricostas
Chairman of the Board
|
|
|
|
|||
By
|
/s/ Walter M. Fiederowicz
|
|
January 14, 2021
|
|
Walter M. Fiederowicz
Director
|
|
|
|
|||
By
|
/s/ Daniel Liao
|
|
January 14, 2021
|
|
Daniel Liao
Director
|
||
|
|||
By
|
/s/ George Macricostas
|
|
January 14, 2021
|
|
George Macricostas
Director
|
|
|
|
|
||
By
|
/s/ Mary Paladino
|
|
January 14, 2021
|
|
Mary Paladino
Director
|
|
|
|
|||
By
|
/s/ Mitchell G. Tyson
|
|
January 14, 2021
|
|
Mitchell G. Tyson
Director
|
|
|
LESSEE:
|
PHOTRONICS, INC. |
|
LESSOR:
|
TD EQUIPMENT FINANCE, INC.
|
|
|
|
||
By:
|
/s/ John P. Jordan
|
|
By: | /s/ Alison L. Sauter |
|
|
|
||
Name:
|
John P. Jordan
|
|
Name: | Alison L. Sauter |
Title:
|
Executive Vice President and
|
Title: | Senior Manager | |
Chief Financial Officer |
Organizational Number: |
0036597
|
Chief Executive Office:
|
15 Secor Road, Brookfield, CT
|
Fax:
|
Tel: 0551-65126615
|
Fax:
|
Tel: 0551-65816387
|
[seal; text cut off]
|
1. |
Loan interest rate
|
|
2. |
Penalty interest rate
|
|
5. |
Interest settlement
|
|
1. |
Monthly settlement, on the 20th day of each month;
|
|
2. |
Quarterly settlement, on the 20th day of the last month of each quarter;
|
|
3. |
Blank
|
|
(1) |
legal, authentic, complete, accurate, valid;
|
|
(2) |
blank;
|
|
(3) |
blank;
|
|
(4) |
Other requirements put forward by Party B.
|
|
2. |
Plan for fund use
|
|
1. |
Loan account
|
|
2. |
Repayment reserve account
|
|
1. |
Principle of repayment
|
|
2. |
Payment of interests
|
|
3. |
Schedule for repayment of principal
|
|
(1) |
Schedule for repayment of principal as follows:
|
|
1. |
March 5, 2022, amount RMB 15 million;
|
|
2. |
September 5, 2022, amount RMB 15 million;
|
|
3. |
March 5, 2023, amount RMB 15 million;
|
|
4. |
September 5, 2023, amount RMB 15 million;
|
|
5. |
March 5, 2024, amount RMB 15 million;
|
|
6. |
September 5, 2024, amount RMB 25 million;
|
|
7. |
March 5, 2025, amount RMB 25 million;
|
|
8. |
September 5, 2025, amount RMB 25 million;
|
|
9. |
March 5, 2026, amount RMB 25 million;
|
|
10. |
September 30, 2026, amount RMB 25 million;
|
|
(2) |
This column is left blank
|
|
4. |
Method of repayment
|
|
5. |
Advanced repayment
|
|
1. |
Rights of Party A
|
|
2. |
Obligations of Party A
|
|
1. |
Default circumstances and default responsibilities of Party B
|
|
2. |
Default circumstances of Party B
|
|
3. |
Circumstances that may endanger the creditor right of Party B
|
|
1. |
Assumption of costs
|
|
|
|
Party A (official seal): |
|
|
|
[seal of Hefei Photronics Co., Ltd.] |
|
Legal representative (person in charge) or authorized agent (signature): |
|
|
|
October 1, 2020
|
Party B (official seal): |
[seal of China Construction Bank Corporation Hefei Shushan Branch] |
Person-in-charge or authorized agent (signature): [signature:] Xu Jun |
|
|
|
October 1, 2020
|
|
1. |
Project name: Hefei Photronics Co., Ltd., 10.5 generation plant new project
|
|
2. |
Total investment of the project:
|
|
3. |
Location of the project: Hefei
|
|
4. |
Construction and operation period of the project:
|
|
5. |
Specific purpose of use of the loan under this contract:
|
|
6. |
Sources of repayment of the loan under this contract:
|
|
7. |
Miscellaneous:
|
Fax: |
Tel: 0551-65126615
|
Fax:62816387 |
Tel: 0551- 62816387
|
|
(1) |
Issuance of RMB/foreign currency loans;
|
|
(2) |
Acceptance of commercial drafts;
|
|
(3) |
Issuing letter of credit;
|
|
(4) |
Issuing letter of guarantee;
|
|
(5) |
Other credit business: this column is left blank.
|
|
1. |
To require Party A correct the breach of contract within a time limit;
|
|
2. |
To require Party A to provide a new guarantee;
|
|
3. |
To require Party A to compensate for the loss;
|
|
4. |
To dispose of mortgaged property;
|
|
5. |
Other relief measures permitted by law.
|
Name of
mortgaged
property
|
Ownership
certificate and other
related certificate
No.
|
Premises
|
Area
or
quantity
|
Value of mortgaged
property (ten
thousand yuan)
|
Amount of
mortgage set
for other
claims (ten
thousand
yuan)
|
Remarks
|
Equipment
|
Name: Prexision-10# 1 Laser lithography machine Code: Prexl0M
Name:
Refurbishment of Prexision-10 system#2 Laser lithography machine Code: Prexl0N
|
No.360 Workshop Mingzhu Avenue, High-tech Zone
|
Two
|
Appraised value of RMB one hundred forty six point one million yuan (422.58 million yuan)
|
0
|
Wan’an H.Y.P.H. Z No. (2020) 0301 Equipment Status List Item 12 and 13 of Two Pieces of Equipment in the “Price Pre-evaluation Report”
|
State or Jurisdiction of
Incorporation or
Organization
|
|
Align-Rite International, Ltd.
|
(United Kingdom)
|
Photronics (Wales) Limited
|
(United Kingdom)
|
Photronics California, Inc.
|
(California, USA)
|
Photronics Idaho, Inc.
|
(Idaho, USA)
|
Photronics Texas Allen, Inc.
|
(Texas, USA)
|
Photronics MZD, GmbH
|
(Germany)
|
Photronics Advanced Mask Corporation
|
(Taiwan, R.O.C.)
|
Photronics DNP Mask Corporation (1)
|
(Taiwan, R.O.C.)
|
PDMC Shanghai, Ltd.
|
(Shanghai, P.R.C.)
|
Photronics Singapore Pte, Ltd.
|
(Singapore)
|
Xiamen American Japan Photronics Mask Co., Ltd. (2)
|
(Xiamen, P.R.C.)
|
Photronics UK, Ltd.
|
(United Kingdom)
|
Photronics Mask Corporation Hefei
|
(Hefei, P.R.C.)
|
Photronics Cheonan Co., Ltd.
|
(Republic of Korea)
|
PKLT Co., Ltd.
|
(Taiwan, R.O.C.)
|
Trianja Technologies, Inc.
|
(Texas, USA)
|
(1) |
50.01% owned indirectly by Photronics, Inc. and 49.99% owned by Dai Nippon Printing Co., Ltd.
|
(2) |
50.01% owned indirectly by Photronics, Inc. and 49.99% owned by DNP Asia Pacific Pte. Ltd.
|
1. |
I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
|
2. |
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;
|
3. |
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;
|
4. |
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:
|
|
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;
|
|
b) |
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;
|
|
c) |
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
|
|
d) |
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
|
5. |
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):
|
|
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
|
|
b) |
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.
|
/s/ Peter S. Kirlin
|
|
Peter S. Kirlin
Chief Executive Officer
January 14, 2021
|
1. |
I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;
|
2. |
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;
|
3. |
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;
|
4. |
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:
|
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;
|
b) |
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;
|
c) |
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
|
d) |
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
|
5. |
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):
|
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
|
b) |
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.
|
/s/ John P. Jordan
|
|
John P. Jordan
Chief Financial Officer
January 14, 2021
|
1. |
the Annual Report on Form 10-K of the Company for the year ended October 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Peter S. Kirlin
|
|
Peter S. Kirlin
Chief Executive Officer
January 14, 2021
|
1. |
the Annual Report on Form 10-K of the Company for the year ended October 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John P. Jordan
|
|
John P. Jordan
Chief Financial Officer
January 14, 2021
|