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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission file number 0-20839
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DUPONT PHOTOMASKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 74-2238819
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
131 Old Settlers Boulevard
Round Rock, Texas 78664
(Address of our principal executive offices)
Registrant's telephone number, including area code: (512) 310-6500
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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 October 20, 1999, there were 15,430,254 shares of the registrant's
common stock, $.01 par value, outstanding.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Part I
<C> <S> <C>
Item 1. Financial Statements
Income Statements for the Three Months Ended September 30, 1998
and 1999....................................................... 3
Balance Sheet at June 30, 1999 and September 30, 1999.......... 4
Cash Flow Statement for the Three Months Ended September 30,
1998 and 1999.................................................. 5
Notes to Financial Statements.................................. 6
Management's Discussion and Analysis of Financial Condition and
Item 2. Results of Operations.......................................... 8
Item 3. Quantiative and Qualitative Disclosures About Market Risk...... 12
Part II
Item 1. Legal Proceedings.............................................. 13
Item 2. Changes in Securities and Use of Proceeds...................... 13
Item 3. Defaults Upon Senior Securities................................ 13
Item 4. Submission of Matters to a Vote of Security Holders............ 13
Item 5. Other Information.............................................. 13
Item 6. Exhibits and Reports on Form 8-K............................... 13
Signatures..................................................... 14
</TABLE>
2
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PART I
Item 1. Financial Statements
DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
INCOME STATEMENT
(Dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------
1998 1999
----------- -----------
<S> <C> <C>
Sales.................................................. $ 60,995 $ 74,122
Cost of goods sold..................................... 43,948 50,894
Selling, general and administrative expense............ 7,981 8,869
Research and development expense....................... 3,866 5,004
----------- -----------
Operating profit....................................... 5,200 9,355
Other expense.......................................... 447 212
----------- -----------
Income before income taxes and minority interest....... 4,753 9,143
Provision for income taxes............................. 1,473 2,558
----------- -----------
Income before minority interest........................ 3,280 6,585
Minority interest in joint ventures.................... 8
----------- -----------
Net income............................................. $ 3,280 $ 6,577
=========== ===========
Basic earnings per share............................... $ 0.21 $ 0.43
=========== ===========
Basic weighted average shares outstanding.............. 15,275,126 15,364,005
=========== ===========
Diluted earnings per share............................. $ 0.21 $ 0.41
=========== ===========
Diluted weighted average shares outstanding............ 15,613,591 16,003,505
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
3
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DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
BALANCE SHEET
(Dollars in thousands, except par value amounts)
(unaudited)
<TABLE>
<CAPTION>
June 30, 1999 September 30, 1999
------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 61,311 $ 50,691
Accounts receivable, trade.................. 45,272 47,848
Accounts receivable, related parties........ 1,388 1,414
Inventories................................. 12,707 12,041
Deferred income taxes....................... 9,547 8,618
Prepaid expenses and other current assets... 9,421 9,718
-------- --------
Total current assets...................... 139,646 130,330
Property and equipment........................ 312,240 334,935
Accounts receivable, related parties.......... 1,324 1,254
Deferred income taxes......................... 3,596 4,534
Other assets.................................. 23,600 22,582
-------- --------
Total assets.............................. $480,406 $493,635
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade..................... $ 34,563 $ 43,033
Accounts payable, related parties........... 1,742 2,222
Short-term borrowings....................... 2,702 2,865
Income taxes payable........................ 5,179 4,905
Other accrued liabilities................... 24,326 20,683
-------- --------
Total current liabilities................. 68,512 73,708
Long-term borrowings.......................... 4,659 3,387
Long-term borrowings, related parties......... 100,000 100,000
Deferred income taxes......................... 13,644 13,879
Other liabilities............................. 2,837 2,986
Minority interest in net assets of joint
ventures..................................... 16,453 16,461
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; 25,000,000
shares authorized; 15,332,282 and
15,419,094 issued and outstanding.......... 153 154
Additional paid-in capital.................. 164,342 166,677
Retained earnings........................... 109,806 116,383
======== ========
Total liabilities and stockholders'
equity................................... $480,406 $493,635
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
4
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DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
September 30,
----------------
1998 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 3,280 $ 6,577
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 9,002 13,063
Other...................................................... (1,370) 1,086
Cash provided (used) by changes in assets and liabilities:
Accounts receivable....................................... 3,296 (2,241)
Inventories............................................... 569 667
Prepaid expenses and other current assets................. (2,579) (526)
Accounts payable.......................................... (6,935) 8,792
Other accrued liabilities................................. (558) (3,489)
------- -------
Net cash provided by operating activities................ 4,705 23,929
------- -------
Cash flows from investing activities:
Capital expenditures........................................ (18,739) (34,663)
------- -------
Net cash used in investing activities.................... (18,739) (34,663)
------- -------
Cash flows from financing activities:
Increase (decrease) in borrowings........................... 14,416 (1,155)
Proceeds from issuance of common stock...................... 582 1,970
------- -------
Net cash provided by financing activities................ 14,998 815
------- -------
Effect of exchange rate changes on cash...................... (1,769) (701)
------- -------
Net decrease in cash and cash equivalents.................... (805) (10,620)
Cash and cash equivalents at beginning of period............. 19,688 61,311
------- -------
Cash and cash equivalents at end of period................... $18,883 $50,691
======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
5
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DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
(unaudited)
Note 1--Basis of Presentation
Our accompanying unaudited interim financial statements 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 our audited financial statements
and accompanying notes thereto included in our 1999 Annual Report on Form 10-K.
Our unaudited interim financial statements include all adjustments, consisting
only of normal recurring adjustments, which our 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 primarily of raw materials.
Note 3--Segment Information
In accordance with FAS 131, segment information as of or for the quarter
ended September 30 is as follows:
<TABLE>
<CAPTION>
United States Europe Asia Total
------------- ------- -------- -------
<S> <C> <C> <C> <C>
1998
Sales.............................. $ 34,833 $13,739 $ 12,423 $60,995
Transfers between geographic
areas............................. 4,647 648 138
-------- ------- -------- -------
39,480 14,387 12,561 60,995
======== ======= ======== =======
Net income (loss).................. 3,870 (3,264) 2,674 3,280
Identifiable assets................ 169,152 83,470 109,981 362,603
1999
Sales.............................. $ 43,357 $13,717 $ 17,048 $74,122
Transfers between geographic
areas............................. 5,669 365 2,704
-------- ------- -------- -------
49,026 14,082 19,752 74,122
======== ======= ======== =======
Net income (loss).................. 4,113 (1,652) 4,116 6,577
Identifiable assets................ 271,550 72,760 149,325 493,635
</TABLE>
Sales outside the United States of products manufactured in and exported from
the United States are not significant. Products are transferred between
geographic areas on a basis intended to approximate the market value of such
products.
Note 4--Commitments and Contingencies
We are undertaking a significant global expansion to support the future
growth of our business. We have established a joint venture with UMC Group to
produce photomasks in Taiwan. We also began construction on a new photomask
production facility in Gresham, Oregon that we subsequently and indefinitely
delayed. If additional capacity were to be needed, we could complete the
Gresham facility within approximately six months. In addition, we are
constructing a photomask production facility in Singapore.
6
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DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
We have entered into an agreement with Etec Systems to upgrade our existing
MEBES electron-beam pattern generation tools. The hardware and software
upgrades will enhance the capability of the tools while simultaneously
increasing the speed at which they operate. As part of the agreement, Etec
Systems purchased the use of technology developed by us. The tools to be
upgraded currently reside throughout our integrated network of production
facilities.
We have various purchase commitments incidental 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. We
are subject to litigation in the normal course of business. We believe the
effect, if any, of an unfavorable settlement of such litigation would not have
a material adverse effect on our financial position, results of operations,
cash flows or liquidity.
7
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Item 2.
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 our financial statements and
related notes thereto. References to years are to fiscal years ended June 30.
Results for interim periods are not necessarily indicative of results for the
full year.
Overview
Based on worldwide sales, we believe we are the largest photomask
manufacturer in the world. We sell our products to over 200 customers in 20
different countries. Essentially all of our sales are to customers in the
semiconductor manufacturing industry. We manufacture a broad range of
photomasks based on customer-supplied design data. We also manufacture
photoblanks and pellicles, the principal components of photomasks, primarily
for internal consumption. We operate globally with established manufacturing
facilities in North America, Europe and Asia.
The demand for photomasks is driven primarily by semiconductor design
activity. A number of recent trends have fueled growth in photomasks,
including:
. The proliferation of semiconductor applications;
. Increasing customization of semiconductor designs;
. Growing complexity of semiconductor devices; and
. Decreasing feature size of semiconductor designs.
These trends have increased the importance of photomask technology in the
semiconductor manufacturing process.
Photomask manufacturing operations are capital intensive. Accordingly, at a
given threshold of manufacturing capacity, a high proportion of our operating
costs are fixed and remain relatively constant as sales volume increases or
decreases. To the extent that we have under-utilized production capacity,
operating profit increases or decreases significantly as sales volume increases
or decreases. In the early 1990's, we had excess capacity. As sales increased
through 1997, costs associated with manufacturing remained relatively unchanged
and our operating margin over the period increased. In 1998 and 1999, our
operating costs on an absolute basis increased more than our sales. As a
result, our operating margin declined. We anticipate that our operating costs
will continue to increase as we add capacity to position ourselves for future
growth. If our sales growth does not keep pace with increases in operating
costs, our operating margin will decline further.
Results of Operations
Sales. Sales are comprised primarily of photomask sales to semiconductor
manufacturers. Sales increased 21.5% from $61.0 million in the quarter ended
September 30, 1998 to $74.1 million in the quarter ended September 30, 1999.
Sales in North America and Asia increased from $34.9 million and $12.4 million
in the quarter ended September 30, 1998 to $43.4 million and $17.0 million in
the quarter ended September 30, 1999. Sales in Europe were flat. Increased
average selling price and increased unit volume both contributed to the
increase in sales during this period. Average selling price increases
represented approximately one-half of the increase in sales in the quarter
ended September 30, 1999. Unit volume increases represented the other one-half
of the increase in sales in the quarter ended September 30, 1999. We continue
to experience an increase in demand for advanced photomasks, those with design
technology of 0.25 micron and below, which now represent approximately 33% of
our sales. This shift in demand reflects what we believe to be a continued
trend toward higher utilization of complex semiconductor devices with finer
line widths.
8
<PAGE>
Cost of Goods Sold. Cost of goods sold consists of material, labor,
depreciation and overhead. Cost of goods sold increased 15.8% from $43.9
million in the quarter ended September 30, 1998 to $50.9 million in the quarter
ended September 30, 1999. The increase resulted primarily from higher costs
associated with increased manufacturing capacity. As we add capacity to
position ourselves for future growth, we will incur additional costs related to
new facilities and costs related to capacity expansions at existing facilities.
As a percentage of sales, cost of goods sold decreased from 72.1% in the
quarter ended September 30, 1998 to 68.7% in the quarter ended September 30,
1999. The percentage of sales decrease was primarily due to improved capacity
utilization.
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. Selling,
general and administrative expense as a percentage of sales decreased from
13.1% in the quarter ended September 30, 1998 to 12.0% in the quarter ended
September 30, 1999 resulting primarily from higher sales. Selling, general and
administrative expense increased 11.1% from $8.0 million in the quarter ended
September 30, 1998 to $8.9 million in the quarter ended September 30, 1999 as a
result of increased costs related to new facilities and initiatives as
partially offset by regularized incentive compensation expense. We anticipate
that selling, general and administrative expense will increase in the future.
Research and Development Expense. Research and development expense consists
primarily of employee costs, cost of material consumed, depreciation,
engineering related costs and our share of costs of the DPI Reticle Technology
Center. Research and development expense increased from $3.9 million in the
quarter ended September 30, 1998 to $5.0 million in the quarter ended September
30, 1999. The increase was due primarily to increased focus on research and
development at our facility in Ichon and our joint venture participation with
Advanced Micro Devices, Micron Technology and Motorola in the DPI Reticle
Technology Center, which was formed to develop advanced photomask technology
and fabricate leading-edge photomasks. We believe that, through our
participation in the DPI Reticle Technology Center, we will be able to help
meet the future technology needs of the semiconductor industry for advanced
photomasks. We anticipate that research and development expense will continue
to increase in absolute dollars in the future reflecting our strategy of
advancing our technological leadership. However, there can be no assurance that
such expenditures will enable us to develop new technologies or to maintain our
technological leadership.
Other Expense. Other expense includes interest expense, interest income and
exchange gains and losses. Other expense was $0.4 million in the quarter ended
September 30, 1998 and $0.2 million in the quarter ended September 30, 1999.
Provision for Income Taxes. Our tax expense has been determined in accordance
with FAS 109 and is based on the statutory rates in effect in the countries in
which we operate. Our effective tax rate was 31% for the quarter ended
September 30, 1998 and was 28% for the quarter ended September 30, 1999.
Certain of our operations in Asia are subject to government granted tax
exemptions.
Minority Interest in Joint Ventures. The minority interest impact of our
joint ventures was negligible in the quarter ended September 30, 1999. Minority
interest reflects the partners' share of the joint venture operations.
Liquidity and Capital Resources
Our working capital was $71.1 million at June 30, 1999 and $56.6 million at
September 30, 1999. The decrease in working capital was due principally to
lower cash balances resulting from capital expenditures. Cash and cash
equivalents were $61.3 million at June 30, 1999 and $50.7 million at September
30, 1999. Cash provided by operating activities increased from $4.7 million in
the quarter ended September 30, 1998 to $23.9 million in the quarter ended
September 30, 1999.
9
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Cash used in investing activities (capital expenditures) was $18.7 million in
the quarter ended September 30, 1998 and $34.7 million in the quarter ended
September 30, 1999. Management expects capital expenditures for the remainder
of 2000 will be approximately $85 to $95 million. Capital expenditures have
been and will be used primarily to expand our manufacturing capacity and
advance our technical capability. We may in the future pursue additional
acquisitions of businesses, products and technologies, or enter into other
joint venture arrangements that could complement or expand our business. Any
material acquisition or joint venture could result in a decrease to our working
capital depending on the amount, timing and nature of the consideration to be
paid.
Cash provided by financing activities was $15.0 million in the quarter ended
September 30, 1998 and $0.8 million in the quarter ended September 30, 1999
and, for the quarter ended September 30, 1998, primarily reflects net
borrowings on our credit agreement. Pursuant to our credit agreement with
DuPont, DuPont originally agreed to provide a credit facility in an aggregate
amount of $100.0 million. This credit facility expires in 2001 and any loans
thereunder will bear interest at LIBOR plus 0.25% per annum. At our option,
advances under this credit facility are convertible into term loans with
maturities up to seven years. We had borrowed a maximum of approximately $69
million under this credit facility and, at September 30, 1999, no borrowings
were outstanding under this credit facility. In March 1999, we amended our
credit agreement with DuPont to add a second credit facility with an additional
borrowing capacity of $100.0 million. The new credit facility has a term of
three years and outstanding amounts bear interest at 0.25% per annum for the
first two years and LIBOR plus 0.25% per annum for the third year. We have
borrowed a maximum of $100.0 million under this credit facility and, at
September 30, 1999, borrowings of $100.0 million were outstanding under this
credit facility. The amended credit agreement contains, among other things,
covenants restricting our ability to incur additional debt.
Our ongoing cash requirements will be for capital expenditures, acquisitions,
research and development and working capital. We have established a joint
venture with UMC Group to produce photomasks in Taiwan. We also began
construction on a new photomask production facility in Gresham, Oregon that we
subsequently and indefinitely delayed. If additional capacity were to be
needed, we could complete the Gresham facility within approximately six months.
In addition, we are constructing a new photomask production facility in
Singapore. Further, we have entered into an agreement with Etec Systems to
upgrade our existing MEBES(R) electron-beam pattern generation tools. These
plans reflect a significant capital investment over the next five years.
Management believes that cash provided by operations and the credit agreement
with DuPont will be sufficient to meet our cash requirements for at least the
next 12 months. Based on our current operating plans, we will require external
financing from time to time to fund our capital expenditures. There can be no
assurance that we will be able to obtain the additional financing required to
fund these capital investments on reasonable terms, or at all.
Furthermore, there can be no assurance that alternative sources of financing
will be available upon expiration of the DuPont credit facilities or that
alternative sources of funding will be available if our borrowing requirements
exceed the facilities. In addition, there can be no assurance that, even if
funding is available, the terms thereof will be attractive.
Other Matters
Changing Accounting Standards. In June 1998, the Financial Accounting
Standards Board issued FAS 133 which is not expected to have a material impact
on our results.
Foreign Currency Exposure. 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 our
results of operations. Our financial statements reflect remeasurement of items
denominated in non-U.S. currencies to U.S. Dollars, our functional currency.
Exchange gains or losses are included in income in the period in which they
occur. We monitor our exchange rate
10
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exposure and attempt to reduce such exposure by hedging. We have entered into
Japanese Yen, Korean Won, Singapore Dollar and Taiwan Dollar forward contracts
designed to reduce such exposure. At September 30, 1999, we held forward
contracts with a notional amount of approximately $6.4 million, a carrying
amount of approximately $6.5 million and an unrealized loss of approximately
$0.1 million. There can be no assurance that such forward contracts or any
other hedging activity will be available or adequate to eliminate, or even
mitigate, the impact of our exchange rate exposure. There can be no assurance
that such risks will not have a material adverse impact on our liquidity and
results of operations in the future.
Year 2000 Issues. Many currently installed computer systems are not capable
of distinguishing 21st century dates from 20th century dates. As a result, in
less than ninety days, computer systems and/or software used by many companies
in a wide variety of applications will experience operating difficulties unless
they are modified or upgraded to adequately process information involving,
related to or dependent upon the century change. Significant uncertainty still
exists concerning the scope and magnitude of problems associated with the
century change.
We recognize the need to ensure our operations will not be adversely impacted
by Year 2000 software failures and have established a project team to address
Year 2000 risks. The project team has coordinated the implementation of changes
to computer hardware and software applications that will attempt to ensure
availability and integrity of our information systems and the reliability of
our operational systems and manufacturing processes. We have also assessed the
potential overall impact of the impending century change on our business,
results of operations and financial position.
We reviewed our information and operational systems and manufacturing
processes to identify those products, services or systems that were not Year
2000 compliant. As a result of this review, we have modified or replace certain
information and operational systems so that they are Year 2000 compliant. These
modifications and replacements are substantially complete. As of September 30,
1999, we have spent substantially all of the currently estimated $2.0 million
total cost of the Year 2000 compliance program. Costs incurred consisted of the
costs of programmers, including third-party consultants, utilized to write
software patches and to update applications and operating systems. Funds for
the Year 2000 compliance program were provided from available working capital.
Based on available information, we do not believe any material exposure to
significant business interruption exists as a result of Year 2000 compliance
issues. Accordingly, we have not adopted any formal contingency plan. There can
be no assurance that we have sufficiently identified and remediated all
significant Year 2000 problems or that such problems will not have a material
adverse effect on our business, results of operations or financial position.
We also face risk to the extent that suppliers of products, services and
systems purchased by us and others with whom we transact business on a
worldwide basis do not comply with Year 2000 requirements. We have had formal
communications with significant suppliers and customers to determine the extent
to which we are vulnerable to failures by these third parties to remediate
their own Year 2000 issues. Areas addressed include major third-party suppliers
as well as full reviews of our manufacturing equipment, telephone and voice
mail systems, security systems and other office support systems. Most of our
equipment suppliers provided patches that have been tested and installed. In
the event that Year 2000 issues prevent such third parties from timely delivery
of products or services required by us, our results of operations could be
materially adversely affected. To the extent Year 2000 issues cause significant
delays in, or cancellation of, decisions to purchase our products or services,
our business, results of operations and financial position would be materially
adversely affected.
Forward Looking Statements
This document contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "anticipate," "intend," "plan," "estimate," "expect," "believe,"
"may," "should," "would," "will" and "could" or similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, contain projections of our future results of operations or of our
financial position or state other forward-looking information. We
11
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believe that it is important to communicate our future expectations. However,
there may be events in the future that we are unable to accurately predict or
control. The factors listed in our 1999 Annual Report on Form 10-K in the
section captioned "Risk Factors," which are highlighted below, as well as any
cautionary language in this document, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements. Risk Factors listed
in our 1999 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on September 21, 1999 include: (i) our operations are dependent on
the activities of semiconductor manufacturers, (ii) our financial results may
be affected by factors outside of our control, (iii) we may not obtain
sufficient capital to fund our needs, (iv) our operating results will be
adversely affected by under-utilized production capacity, (v) rapid
technological change could render our products obsolete, (vi) our market is
highly competitive and subject to pricing pressures, (vii) our international
operations present special risks, (viii) our operating results are influenced
by the performance of Asian economies, (ix) we face risks associated with
manufacturing difficulties, (x) we depend on a few significant customers, (xi)
we depend on a limited number of equipment manufacturers, (xii) we depend on a
limited number of raw material suppliers, (xiii) we depend on a limited number
of management and technical personnel, (xiv) DuPont controls all stockholder
votes, (xv) we must integrate and manage our recent acquisitions and joint
ventures, (xvi) we are subject to risks associated with future acquisitions or
joint ventures, (xvii) we may be unable to enforce or defend our ownership and
use of proprietary technology, (xviii) we may be unprepared for changes in
environmental laws and regulations, (xix) Year 2000 issues expose use to
liability, (xx) we face uncertainty implementing a new global information
system, (xxi) our market price is volatile and (xxii) our stock price may be
affected when additional shares are sold.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Included in Management's Discussion and Analysis of Financial Condition and
Results of Operations.
12
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PART II
Item 1. Legal Proceedings
We are 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
Not Applicable
Item 5. Other Information
On November 1, 1999, we announced that David S. Gino, Executive Vice
President--Finance and Chief Financial Officer will resign effective November
30, 1999.
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
Not applicable
13
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, we
have duly caused this report to be signed on our behalf by the undersigned,
thereunto duly authorized.
Date: November 5, 1999
DuPont Photomasks, Inc.
(Registrant)
/s/ Marshall C. Turner
By: _________________________________
Marshall C. Turner
Chairman of the Board and Chief
Executive Officer (Principal
Executive Officer)
Date: November 5, 1999
/s/ David S. Gino
By: _________________________________
David S. Gino
Executive Vice President--Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
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EXHIBIT 11
DUPONT PHOTOMASKS, INC.
EARNINGS PER SHARE COMPUTATION
Dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Basic Diluted
--------------- -----------
Quarter Ended September 30,
1998
----------------------------
<S> <C> <C>
Weighted average shares outstanding............................................................. 15,275,126 15,275,126
Dilutive effect of stock performance plans...................................................... 338,465
--------------- -----------
15,275,126 15,613,591
--------------- -----------
Net income...................................................................................... $3,280 $3,280
Earnings per share.............................................................................. $0.21 $0.21
Basic Diluted
--------------- -----------
Quarter Ended September 30,
1999
----------------------------
Weighted average shares outstanding............................................................. 15,364,005 15,364,005
Dilutive effect of stock performance plans...................................................... 639,500
--------------- -----------
15,364,005 16,003,505
--------------- -----------
Net income...................................................................................... $6,577 $6,577
Earnings per share.............................................................................. $0.43 $0.41
</TABLE>
At September 30, 1999, we had outstanding anti-dilutive commitments under our
stock performance plans covering 96,650 shares.
<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> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 50,691
<SECURITIES> 0
<RECEIVABLES> 47,848
<ALLOWANCES> 0
<INVENTORY> 12,041
<CURRENT-ASSETS> 130,330
<PP&E> 586,652
<DEPRECIATION> 251,717
<TOTAL-ASSETS> 493,635
<CURRENT-LIABILITIES> 73,708
<BONDS> 103,387
0
0
<COMMON> 154
<OTHER-SE> 283,060
<TOTAL-LIABILITY-AND-EQUITY> 493,635
<SALES> 74,122
<TOTAL-REVENUES> 74,122
<CGS> 50,894
<TOTAL-COSTS> 50,894
<OTHER-EXPENSES> 5,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,143
<INCOME-TAX> 2,558
<INCOME-CONTINUING> 6,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,577
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.41
</TABLE>
