<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1996 0-20839
</TABLE>
------------------------
DUPONT PHOTOMASKS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 74-2238819
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) No.)
</TABLE>
100 TEXAS AVENUE
ROUND ROCK, TEXAS 78664
(Address of principal executive offices)
Registrant's telephone number, including area code: 512-310-6559
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of January 22, 1997, 15,100,000 shares of the registrant's common stock,
$.01 par value, were outstanding.
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<PAGE>
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Financial Statements
Income Statement for the Three Months Ended December
31, 1995, Pro Forma Income Statement for the Three
Months Ended December 31, 1995 and Income Statement
for the Three Months Ended December 31, 1996 3
Income Statement for the Six Months Ended December
31, 1995, Pro Forma Income Statement for the Six
Months Ended December 31, 1995 and Income Statement
for the Six Months Ended December 31, 1996 4
Balance Sheet at June 30, 1996 and December 31, 1996 5
Statement of Cash Flows for the Six Months Ended
December 31, 1995 and 1996 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security
Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
INCOME STATEMENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
Pro Forma
for the
Three Months Three Months Three Months
Ended Ended Ended
December 31, December 31, December 31,
1995 1995 1996
---- ---- ----
<S> <C> <C> <C>
Sales $50,279 $50,279 $64,260
Cost of goods sold 31,151 30,733 39,248
Selling, general and administrative expense 6,316 6,437 7,661
Research and development expense - net 2,450 2,038 2,933
Other operating expense - net 1,614 1,475 456
------- ------- -------
Operating profit 8,748 9,596 13,962
Interest (income) expense - net 1,634 48 (296)
Exchange (gain) loss 78 (68) 97
------- ------- -------
Income before income taxes and minority interest 7,036 9,616 14,161
Provision for income taxes 472 3,366 4,962
------- ------- -------
Income before minority interest 6,564 6,250 9,199
Minority interest in loss of majority owned
joint venture (234)
------- ------- -------
Net income $ 6,564 $ 6,250 $ 9,433
------- ------- -------
------- ------- -------
Earnings per share $ 0.41 $ 0.61
------- -------
------- -------
Weighted average shares outstanding 15,194,913 15,588,952
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
INCOME STATEMENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
Pro Forma
for the
Six Months Six Months Six Months
Ended Ended Ended
December 31, December 31, December 31,
1995 1995 1996
---- ---- ----
<S> <C> <C> <C>
Sales $96,318 $96,318 $128,504
Cost of goods sold 63,343 62,507 78,187
Selling, general and administrative expense 12,185 12,427 15,971
Research and development expense - net 4,908 4,083 5,371
Other operating expense - net 2,247 1,969 1,273
------- ------- --------
Operating profit 13,635 15,332 27,702
Interest (income) expense - net 3,466 94 (496)
Exchange loss 308 53 401
------- ------- --------
Income before income taxes and minority interest 9,861 15,185 27,797
Provision for income taxes 926 5,315 9,735
------- ------- --------
Income before minority interest 8,935 9,870 18,062
Minority interest in loss of majority owned joint venture (55) (55) (386)
------- ------- --------
Net income $ 8,990 $ 9,925 $ 18,448
------- ------- --------
------- ------- --------
Earnings per share $ 0.65 $ 1.19
------- --------
------- --------
Weighted average shares outstanding 15,194,913 15,517,302
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)
(UNAUDITED)
<TABLE>
June 30, December 31,
1996 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,179 $ 31,115
Accounts receivable, trade - net 32,293 33,490
Accounts receivable, related parties 4,726 5,762
Inventories 10,227 14,220
Deferred income taxes 1,543 2,004
Prepaid expenses and other current assets 3,238 4,501
-------- --------
Total current assets 72,206 91,092
Property and equipment - net 123,048 130,177
Accounts receivable, related parties 1,928 1,703
Deferred income taxes 3,245 3,492
Other assets 27,466 43,272
-------- --------
Total assets $227,893 $269,736
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 8,376 $ 13,254
Accounts payable, related parties 5,885 3,602
Accounts payable, other 2,006 4,630
Short-term borrowings 1,454 1,498
Income taxes payable 2,333 1,578
Other accrued liabilities 17,694 17,081
-------- --------
Total current liabilities 37,748 41,643
Long-term borrowings 9,324 9,149
Deferred income taxes 11,588 18,040
Other liabilities 3,747 2,227
Minority interest in net assets of majority owned joint venture 872 1,204
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares authorized;
15,100,000 issued and outstanding 151 151
Additional paid-in capital 152,880 156,625
Unrealized holding gain 11,583 22,249
Retained earnings 18,448
-------- --------
Total liabilities and stockholders' equity $227,893 $269,736
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Six Months
Ended
December 31,
1995 1996
-------- --------
Cash flows from operating activities:
Net income $ 8,990 $ 18,448
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 14,042 12,775
Other 87 (671)
Cash provided (used) by changes in
assets and liabilities
Accounts receivable 2,123 (2,304)
Inventories (542) (4,046)
Prepaid expenses and other
current assets 984 (536)
Accounts payable (3,067) 8,470
Other accrued liabilities 4,265 2,142
-------- --------
Net cash provided by operating activities 26,882 34,278
-------- --------
Cash flows from investing activities:
Capital expenditures (5,163) (22,814)
Payments for acquisitions (4,000)
Other 15
-------- --------
Net cash used in investing activities (9,148) (22,814)
-------- --------
Cash flows from financing activities:
Increase in borrowings 2,668 18
Cash paid to DuPont - net (20,828)
-------- --------
Net cash provided by (used in)
financing activities (18,160) 18
-------- --------
Effect of exchange rate changes on cash (312) (546)
-------- --------
Net (decrease) increase in cash and cash equivalents (738) 10,936
Cash and cash equivalents at beginning of period 8,412 20,179
-------- --------
Cash and cash equivalents at end of period $ 7,674 $ 31,115
-------- --------
-------- --------
The accompanying notes are an integral part of this statement.
<PAGE>
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of DuPont Photomasks,
Inc. and its subsidiaries (the Company) have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the audited financial
statements and accompanying notes thereto included in the Company's 1996
Annual Report on Form 10-K. The unaudited interim financial statements
include all adjustments, consisting only of normal recurring adjustments,
which management considers necessary for the fair presentation of the interim
periods. Results for interim periods are not necessarily indicative of
results for the year.
NOTE 2 - INVENTORIES
Inventories consist of the following:
June 30, December 31,
1996 1996
------- ------------
Raw materials and supplies $ 7,006 $11,674
Work-in-process 785 679
Finished product 2,436 1,867
------- -------
Inventories $10,227 $14,220
------- -------
------- -------
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company has various purchase commitments incident to the normal course of
business including non-refundable deposits to purchase equipment. In the
aggregate, such commitments are not at prices in excess of current market.
The Company is subject to litigation in the normal course of business.
Management believes the effect, if any, of an unfavorable settlement of such
litigation would not have a material adverse effect on the financial
position, results of operations, cash flows or liquidity of the Company.
NOTE 4 - SUBSEQUENT EVENT
Between January 20 and 23, 1997, the Company sold its entire investment in
Etec Systems, Inc. common stock. Aggregate net proceeds from the sale of
$39,219 will be used in operations.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with the financial statements of
the Company and the related notes thereto. Prior to the Company's initial
public offering (the IPO) on June 13, 1996, it was a wholly-owned subsidiary
of E.I. duPont de Nemours and Company (DuPont). The Company's historical
results prior to the IPO are not necessarily indicative of the results that
would have been achieved if the Company had been independent and may not be
an accurate indication of future results.
The pro forma income statement estimates the effects of certain events
associated with the IPO as if such events had taken place on July 1, 1995.
The pro forma income statement does not purport to represent what the results
of operations of the Company would actually have been had certain events in
fact occurred on July 1, 1995 or to project the results of operations of the
Company for any future period.
RESULTS OF OPERATIONS
SALES
Sales are comprised primarily of photomask sales to semiconductor
manufacturers. Sales increased 27.8% from $50.3 million in the quarter ended
December 31, 1995 to $64.3 million in the quarter ended December 31, 1996.
Sales in North America, Europe and Asia increased from $30.6 million, $11.7
million, and $8.0 million in the quarter ended December 31, 1995 to $35.7
million, $14.8 million, and $13.8 million in the quarter ended December 31,
1996. The quarter ended December 31, 1996 includes $0.7 million of sales
which are a consequence of realignment of a subsidiary's period end. Sales
increased 33.4% from $96.3 million in the six months ended December 31, 1995
to $128.5 million in the six months ended December 31, 1996. Sales in North
America, Europe and Asia increased from $57.1 million, $23.1 million, and
$16.1 million in the six months ended December 31, 1995 to $71.1 million,
$30.1 million, and $27.3 million in the six months ended December 31, 1996.
A continued increase in the demand for advanced photomasks which have higher
average selling prices was a primary contributor to the increase in sales
during these periods. This shift in demand reflects what the Company
believes to be a trend toward higher utilization of complex semiconductor
devices with finer line-widths. The increase in sales during these periods
also reflects the overall increase in demand for photomasks.
COST OF GOODS SOLD
Cost of goods sold consists of material, labor, depreciation, and overhead.
Cost of goods sold increased 26.0% from $31.2 million in the quarter ended
December 31, 1995 to $39.2 million in the quarter ended December 31, 1996 and
increased 23.4% from $63.4 million in the six months ended December 31, 1995
to $78.2 million in the six months ended December 31, 1996, resulting
primarily from higher costs associated with increased sales. As a percentage
of sales, cost of goods sold decreased from 62.0% in the quarter ended
December 31, 1995 to 61.1% in the quarter ended December 31, 1996 and from
65.8% in the six months ended December 31, 1995 to 60.8% in the six months
ended December 31, 1996. The percentage decrease was primarily due to
continued improvements in capacity utilization including increased use of
internally sourced photoblanks and pellicles.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense includes salaries of sales
personnel, marketing expense, general and administrative expense, and product
distribution expense. Prior to January 1, 1996, general and administrative
expense principally included allocated costs for services provided by
centralized DuPont organizations. The allocated costs are not necessarily
indicative of the costs that would have been incurred if the Company had been
<PAGE>
independent. Since January 1, 1996, general and administrative expense has
included fees incurred by the Company under Administrative Service Agreements
with DuPont. Selling, general and administrative expense as a percentage of
sales decreased from 12.6% in the quarter ended December 31, 1995 to 11.9% in
the quarter ended December 31, 1996 and decreased from 12.6% in the six
months ended December 31, 1995 to 12.4% in the six months ended December 31,
1996. Selling, general and administrative expense increased 21.3% from $6.3
million in the quarter ended December 31, 1995 to $7.7 million in the quarter
ended December 31, 1996 and increased 31.1% from $12.2 million in the six
months ended December 31, 1995 to $16.0 million in the six months ended
December 31, 1996. The increase was due largely to increases in selling
expenses corresponding to increased sales and increases in incentive
compensation expenses corresponding to increases in earnings.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense consists primarily of employee costs, cost
of material consumed, depreciation of equipment, engineering related costs,
and the Company's allocated share of DuPont's central research and
development. These allocations were $0.5 million in the quarter ended
December 31, 1995 and were $1.1 million in the six months ended December 31,
1995. Such allocations terminated December 31, 1995. Since that time, the
Company has received services from DuPont central research and development
pursuant to Administrative Service Agreements with DuPont. Research and
development expense, excluding DuPont allocations, increased from $1.9
million in the quarter ended December 31, 1995 to $2.9 million in the quarter
ended December 31, 1996 and increased from $3.8 million in the six months
ended December 31, 1995 to $5.4 million in the six months ended December 31,
1996. Research and development expense is net of funds the Company received
from customers, industry groups such as SEMATECH Inc. and the Joint European
Submicron Strategic Initiative and government sources. The Company
anticipates that research and development expense will continue to increase
in absolute terms in the future reflecting the Company's strategy of
advancing its technological leadership. However, there can be no assurance
that such expenditures will enable the Company to develop new technologies or
to maintain its technological leadership.
OTHER OPERATING EXPENSE
Other operating expense consists primarily of costs not directly related to
the manufacture of the Company's products. Historically, a significant
portion of this item has been the expense associated with the early
retirement of equipment resulting from technological obsolescence. The
photomasks industry is characterized by rapid technological change and new
product introductions and enhancements which may, in the future, result in
additional technological obsolescence. The timing and amounts of these
retirements are uncertain and difficult to predict. Other operating expense
decreased from $1.6 million in the quarter ended December 31, 1995 to $0.5
million in the quarter ended December 31, 1996 and decreased from $2.2
million in the six months ended December 31, 1995 to $1.3 million in the six
months ended December 31, 1996. The decreases were primarily related to
reduced early retirement of equipment which was partially offset by increased
pre-operating losses from the Company's joint venture in China and the
Company's greenfield site in Scotland.
INTEREST (INCOME) EXPENSE
Interest expense was $1.6 million in the quarter ended December 31, 1995 and
interest income was $0.3 million in the quarter ended December 31, 1996 and
interest expense was $3.5 million in the six months ended December 31, 1995
and interest income was $0.5 million in the six months ended December 31,
1996 . The primary source of interest expense in the periods ended December
31, 1995 was the Company's master note arrangements with DuPont. On June 28,
1996, DuPont contributed the $90.5 million balance outstanding on the master
notes to the Company as a capital contribution. Interest income results from
short-term investment of the Company's cash balances.
EXCHANGE LOSS
Exchange loss consists of gains and losses resulting from the remeasurement
of the Company's accounts denominated in non-U.S. currencies into U.S.
Dollars, which is the Company's functional currency. Exchange
<PAGE>
loss was $0.1 million in the quarter ended December 31, 1995 compared to $0.1
million in the quarter ended December 31, 1996 and was $0.3 million in the
six months ended December 31, 1995 compared to $0.4 million in the six months
ended December 31, 1996 primarily due to fluctuations of the U.S. Dollar
against the German Mark, French Franc and Korean Won. Exchange loss is net of
the impact of hedging activities designed to reduce exchange rate exposure.
PROVISION FOR INCOME TAXES
Prior to the IPO, tax expense was determined and allocated to the Company by
applying the separate taxpayer approach outlined in FAS 109. Under this
approach, the Company had net operating loss carryforwards in the U.S. and
Europe some of which became fully utilized during the year ended June 30,
1996. The Company's operations in Korea are subject to a government granted
tax exemption. The Company will continue to enjoy the full benefits of the
tax exemption in Korea until 2001 and a partial benefit thereafter until the
tax exemption terminates in 2003. In actuality, the Company's results were
included in consolidated tax returns filed by DuPont and the tax benefit of
prior year losses was realized by DuPont. Since the IPO, tax expense has
been determined in accordance with FAS 109 and approximates the U.S.
statutory rate.
MINORITY INTEREST IN LOSS OF MAJORITY OWNED JOINT VENTURE
The minority interest impact of the Company's joint venture in China was
($0.1 million) in the six months ended December 31, 1995 compared to ($0.4
million) in the six months ended December 31, 1996, reflecting increased
pre-operating losses from, and partner funding of, the joint venture.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $34.5 million at June 30, 1996 and $49.4
million at December 31, 1996. The increase in working capital for the six
months ended December 31, 1996 is due principally to higher cash balances.
Cash and cash equivalents were $20.2 million at June 30, 1996 and $31.1
million at December 31, 1996. The increase in 1996 was primarily due to the
Company retaining a portion of the cash generated from operations. The
Company's ongoing cash requirement will be for capital expenditures, research
and product development, and working capital.
Cash provided by operations was $26.9 million in the six months ended
December 31, 1995 and $34.3 million in the six months ended December 31,
1996. The increase was primarily the result of higher sales and resultant net
income. The Company believes that cash provided by operations will be its
primary source of liquidity. Cash used in investing activities was $9.1
million in the six months ended December 31, 1995 and $22.8 million in the
six months ended December 31, 1996. The Company's most significant use of
cash for investing activities was capital expenditures. The Company expects
capital expenditures for the remainder of the year ended June 30, 1997 will
be approximately $22 to $28 million. These capital expenditures will be used
primarily to expand the Company's manufacturing capacity and advance the
Company's technical capability. Cash used in financing activities was $18.2
million in the six months ended December 31, 1995 and $0.0 million in the six
months ended December 31, 1996. Prior to the IPO, the Company participated
in DuPont's centralized cash management system whereby substantially all of
the net cash generated by the Company was transferred, principally via the
master notes, to DuPont.
The Company and DuPont have entered into a two-year credit agreement
effective as of January 1, 1996 pursuant to which DuPont has agreed to
provide a revolving credit/working capital facility to the Company in an
aggregate amount of $30.0 million. The credit facility serves as a back-up to
cash from operations. To date, there have been no borrowings under credit
facility. There can be no assurance that alternative sources of financing
will be available upon expiration of the credit facility or that alternative
sources of funding will be available if the Company's borrowing requirements
exceed the facility. The credit agreement contains, among other things,
covenants restricting the Company's ability to incur additional debt. In
addition, there can be no assurance that, even if funding is available, the
terms thereof will be attractive to the Company.
<PAGE>
OTHER MATTERS
The Company has negotiated an agreement with three other companies that
resulted in the formation of a limited liability company that will pursue
development of advanced photomask fabrication technologies. The Company
believes that, through its participation, it will be able to help meet the
future technology needs of the semiconductor industry for advanced
photomasks. There can be no assurance that the limited liability company will
yield results that are favorable to the Company.
Non-U.S. operations are subject to certain risks inherent in conducting
business abroad, including price and currency exchange controls, fluctuation
in the relative value of currencies, and restrictive governmental actions.
Changes in the relative value of currencies occur from time to time and may,
in certain instances, have a material effect on the Company's results of
operations. The financial statements reflect remeasurement of items
denominated in non-U.S. currencies to U.S. Dollars, the Company's functional
currency. Exchange gains or losses are included in income in the period in
which they occur. Prior to the IPO, DuPont managed the Company's exposure to
fluctuations in currency exchange rates as part of its overall management of
exchange rate exposure. No separate hedging of the Company's exchange rate
exposure was undertaken. Accordingly, the financial statements prior to the
IPO do not reflect any hedging activities. Effective with the completion of
the IPO, the Company monitors its exchange rate exposure and attempts to
reduce such exposure by hedging. In July 1996, the Company entered into a
Korean Won forward contract designed to reduce such exposure. There can be
no assurance that such forward contract or any other hedging activity will be
adequate to eliminate, or even mitigate, the impact of the Company's exchange
rate exposure. The risks associated with non-U.S. operations have not, to
date, had a material adverse impact on the Company's liquidity and results of
operations. There can, however, be no assurance that such risks will not
have a material adverse impact on the Company's liquidity and results of
operations in the future.
Inflation impacts the Company through increases in the cost of labor,
services, and raw materials. In general, these increases have been mitigated
by periodic increases in the prices of the Company's products.
DISCUSSION OF PRO FORMA
The pro forma income statement estimates the effects that the IPO, various
realignment transactions, and the following would have had on the Company's
results of operations had they occurred as of July 1, 1995: (i) the
discontinuance of DuPont's postretirement benefits and replacement of
DuPont's defined benefit pension plan with the Company's defined contribution
pension plan; (ii) the elimination of DuPont allocated overhead expenses that
are not expected to be incurred by the Company following the IPO; (iii) the
cost of services to be provided by third parties or DuPont, pursuant to
Administrative Service Agreements with DuPont and its subsidiaries, and
additional employees assumed to be hired by the Company to replace those
services previously provided by DuPont; and (iv) recognition of expenses
relating to the Company's stock performance plan. The principal effect of
these adjustments would have been a decrease in costs of goods sold of $0.8
million for the six months ended December 31, 1995. In addition, selling,
general and administrative expense would have increased by $0.2 million and
research and development expense would have decreased $0.8 million. As a
result of these adjustments, operating profit would have increased by $1.7
million for the six months ended December 31, 1995. Furthermore, elimination
of the master notes would have decreased interest expense by $3.4 million.
Consequently, net income (offset by an increase in the provision for income
taxes) would have increased by $0.9 million for the six months ended December
31, 1995.
FORWARD LOOKING STATEMENTS
The discussion in this document contains analysis or trends and other forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements involve management assumptions and are subject to
risks and uncertainties, including the risk factors set forth below which are
fully described in the Company's Annual Report on Form 10-K in
<PAGE>
"Business - Risk Factors" pages 10 to 13: (i) capital intensive industry,
(ii) rapid technological change, (iii) relationship with and dependence on
semiconductor industry, (iv) concentration of customers, (v) concentration of
and dependence on suppliers, (vi) competition; reversal of consolidation
trend, (vii) significant international operations, (viii) dependence on
management and technical personnel, (ix) control by and relationship with
DuPont, (x) no independent operating history prior to the IPO, (xi)
intellectual property, (xii) fluctuations in quarterly and annual earnings
and (xiii) changes in governmental laws and regulations.
<PAGE>
PART II
Item 1. Legal Proceedings
The Company is not currently involved in any material legal proceedings.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held October 28,
1996 (the "Annual Meeting"). At the Annual Meeting, (i) the
Company's nine existing directors were reelected to the Board of
Directors and (ii) the selection of Price Waterhouse LLP as the
Company's independent accountants for the year ended June 30, 1997
was ratified. Votes cast at the Annual Meeting are as follows:
For Withheld
--- --------
J. Michael Hardinger 14,344,366 17,650
John L. Doyle 14,344,366 17,650
John C. Hodgson 14,344,366 17,650
Charles O. Holliday 14,344,366 17,650
Peter G. Kehoe 14,344,366 17,650
Gary W. Pankonien 14,344,366 17,650
John C. Sargent 14,344,366 17,650
Marshall C. Turner 14,344,366 17,650
Susan A. Vladuchick 14,344,366 17,650
For Against Abstain
--- ------- -------
Ratification of the selection
of Price Waterhouse LLP 14,353,816 5,300 2,900
<PAGE>
Item 5. Other Information
Between January 20 and 23, 1997, the Company sold its entire
investment in Etec Systems, Inc. ("Etec") common stock. Aggregate
net proceeds from the sale of $39,219,297 will be used in
operations. The 1,025,640 shares of common stock were sold by the
Company in open market transactions on the Nasdaq National Market
System. Etec is the Company's principal supplier of electron beam
and laser beam systems.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
(11) Statement re Computation of Per Share Earnings
(27) Financial Data Schedule
(B) Reports on Form 8-K
Form 8-K, dated October 2, 1996, filed in connection with the
Company's announced technology venture for advance photomask
technology development and pilot line fabrication of leading-edge
photomasks.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DUPONT PHOTOMASKS, INC.
(Registrant)
Date: January 29, 1997 By: /s/ J. MICHAEL HARDINGER
---------------------------------------
J. Michael Hardinger
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: January 29, 1997 By: /s/ DAVID S. GINO
---------------------------------------
David S. Gino
Executive Vice President - Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT 11
DUPONT PHOTOMASKS, INC.
EARNINGS PER SHARE COMPUTATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Quarter Ended December 31,1996
------------------------------
Primary Fully Diluted
---------- -------------
Weighted average shares outstanding 15,100,000 15,100,000
Dilutive effect of stock performance plans 439,182 488,952
---------- ----------
15,539,182 15,588,952
---------- ----------
---------- ----------
Net income for the period $9,433 $9,433
Earnings per share $0.61 $0.61
Six Months Ended December 31, 1996
----------------------------------
Primary Fully Diluted
---------- -------------
Weighted average shares outstanding 15,100,000 15,100,000
Dilutive effect of stock performance plans 343,047 417,302
---------- ----------
15,443,047 15,517,302
---------- ----------
---------- ----------
Net income for the period $18,448 $18,448
Earnings per share $1.19 $1.19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DUPONT PHOTOMASKS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 31115
<SECURITIES> 0
<RECEIVABLES> 33490
<ALLOWANCES> 0
<INVENTORY> 14220
<CURRENT-ASSETS> 91092
<PP&E> 302821
<DEPRECIATION> 172644
<TOTAL-ASSETS> 269736
<CURRENT-LIABILITIES> 41643
<BONDS> 9149
0
0
<COMMON> 151
<OTHER-SE> 197322
<TOTAL-LIABILITY-AND-EQUITY> 269736
<SALES> 128504
<TOTAL-REVENUES> 128504
<CGS> 78187
<TOTAL-COSTS> 78187
<OTHER-EXPENSES> 6644
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (496)
<INCOME-PRETAX> 27797
<INCOME-TAX> 9735
<INCOME-CONTINUING> 18448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18448
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
