As filed with the Securities and Exchange Commission on July 10, 1995.
Registration No. 33-_____________
======================================================================
SECURITIES AND EXCHANGE COMMISSION
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PHOTRONICS, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0854886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1061 EAST INDIANTOWN ROAD
JUPITER, FLORIDA 33477
(407) 747-4163
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JEFFREY P. MOONAN, ESQ.,
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
1061 EAST INDIANTOWN ROAD
JUPITER, FLORIDA 33477
(407) 747-4163
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
STEVEN L. WASSERMAN, ESQ.
REID & PRIEST LLP
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration
Statement as determined by market conditions and other factors.
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box: [x]
CALCULATION OF REGISTRATION FEE
====================================================================
TITLE
OF
EACH
CLASS PROPOSED
OF MAXIMUM PROPOSED
SECURITIES AMOUNT OFFERING MAXIMUM AMOUNT
TO TO PRICE AGGREGATE OF
BE BE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (1) PRICE (1) FEE
---------- ---------- --------- -------- ------------
Common Stock,
par value
$.01 per
share 98,559 $31.63 $3,117,421 $1,074.97
=====================================================================
(1) Estimated solely for the purpose of determining the
registration fee pursuant to Rule 457, based upon the average of
the high and low prices of the Registrant's Common Stock on the
Nasdaq National Market on July 7, 1995.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
==========================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 10, 1995
PHOTRONICS, INC.
98,559 SHARES
COMMON STOCK
This Prospectus relates to the offering of 98,559 shares (the "Shares")
of Common Stock, par value $.01 per share (the "Common Stock"), of
Photronics, Inc., a Connecticut corporation (the "Company" or
"Photronics"), by a selling shareholder of the Company (the "Selling
Shareholder"). See "Selling Shareholder."
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "PLAB." On July 7, 1995, the last sales price was $32.50 for
the Common Stock, as reported by Nasdaq.
It is anticipated that the Selling Shareholder will offer the Shares for
sale at prevailing prices on the Nasdaq National Market on the date or
dates of sale. The Selling Shareholder may also make private sales
directly or through broker-dealers at prevailing market prices or at prices
otherwise negotiated. None of the proceeds from the sale of the Shares
will be received by the Company. All costs, expenses and fees incurred in
connection with the registration of the Shares are being borne by the
Company, but all brokerage commission and other selling expenses incurred
by the Selling Shareholder will be borne by the Selling Shareholder. See
"Selling Shareholder" and "Plan of Distribution."
--------------------
SEE "RISK FACTORS" FOR A DESCRIPTION OF CERTAIN RISKS AND OTHER FACTORS
TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES
OFFERED HEREBY.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is , 1995
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR
AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Incorporation of Certain Documents by Reference . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 7
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Shareholder . . . . . . . . . . . . . . . . . . . . . . . 13
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 13
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Available Information . . . . . . . . . . . . . . . . . . . . . . 14
--------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Securities and Exchange Commission (the "Commission") (File Number 0-15451)
pursuant to the Securities Exchange Act of 1934, as amended (the "1934
Act"), are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1994, except for
Item 8; (ii) the Company's Current Reports on Form 8-K, dated December 5,
1994 and March 24, 1995; (iii) the Company's Current Report on Form 8-K/A
Amendment 1, dated January 27, 1995; (iv) the Company's Quarterly Reports
on Form 10-Q for the fiscal quarters ended January 31, 1995 and April 30,
1995; (v) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated March 3, 1987, pursuant
to Section 12 of the 1934 Act. The Company has also filed with the
Securities and Exchange Commission a Registration Statement No. 33-58239 on
Form S-3 under the Securities Act of 1933, as amended, that includes
consolidated financial statements contained on pages F-1 to F-17 which are
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the 1934 Act, after the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by
reference and to be a part hereof from the respective dates of filing. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
The Company will furnish, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the
foregoing documents incorporated herein by reference (other than certain
exhibits). Requests for such documents should be directed to Michael
McCarthy, Manager of Investor Relations, Photronics, Inc., P.O. Box 5226,
15 Secor Road, Brookfield, Connecticut, 06804, telephone (203) 775-9000.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements incorporated by reference
herein.
The Company
The Company is a leading manufacturer of photomasks, which are primarily
used by the semiconductor industry in the manufacture of integrated
circuits. The Company's photomasks, which are high precision photographic
quartz plates containing microscopic images of electronic circuits, are
manufactured in the Company's five manufacturing facilities in the United
States in accordance with circuit designs provided on a confidential basis
by its customers. The Company images circuit patterns onto photomasks
using laser-based or electron beam technologies and, to a lesser degree,
optical-based technologies. Photronics is one of the largest photomask
manufacturers in the United States.
Photomasks are a key element in the manufacture of semiconductors and
are used as masters to transfer circuit patterns onto semiconductor wafers
during the fabrication of integrated circuits and, to a lesser extent,
other types of electronic components. Each circuit consists of a series of
separate patterns, each of which is imaged onto a different photomask. The
resulting series of photomasks is then used to successively layer the
circuit patterns onto the semiconductor wafer.
Demand for photomasks is driven both by semiconductor design activity
and increases in the complexity of integrated circuits. As the complexity
of integrated circuits has increased, the number of photomasks used in the
manufacture of a single circuit also has increased. The market for
photomasks consists primarily of semiconductor manufacturers and designers
in the United States, Europe and the Pacific Rim. According to the
International Data Corporation, in 1994 worldwide semiconductor sales were
approximately $100 billion. Based upon industry estimates, photomask sales
for 1994 exceeded $300 million in North America and $1.1 billion worldwide.
Photomasks are manufactured by independent manufacturers, like the
Company, and captives, which are semiconductor manufacturers that produce
almost exclusively for their own fabrication of integrated circuits. Since
the mid-1980s, there has been in the United States a trend toward the
divestiture or closing of captive photomask operations by semiconductor
manufacturers. As a result, the share of the market served by independents
has increased significantly. During the same period, due in part to
competitive pressures and increasing capital requirements, the number of
significant independent manufacturers decreased from approximately 12 in
the mid-1980s to four in 1994. In response to these trends, the Company
has completed a number of strategic acquisitions, including acquisitions of
operations in Texas in October 1993 and in California in December 1994.
These two recent acquisitions were primarily responsible for the
significant increases in the Company's net sales and net income in fiscal
1994 and the first three months of fiscal 1995.
The Company's objective is to expand its position as a leader in the
manufacture of photomasks. The Company's strategy includes ensuring strong
customer relationships through high levels of customer satisfaction,
maintaining technological leadership through investment in state-of-the-art
manufacturing capabilities and leveraging the Company's network of
manufacturing facilities to provide timely product delivery and rapid
response to customer demands. The Company has expanded sales in
international markets by serving customers from its facilities in the
United States and by forming strategic alliances with photomask
manufacturers in certain foreign countries. In March 1995, the Company
announced that it will establish a facility in Singapore, and it intends to
continue to increase its presence in selected international markets.
The Company sells its products primarily through a direct sales force.
The Company conducts its sales activities from 11 sales locations in the
United States and one in the United Kingdom. The Company's customers
include Advanced Micro Devices, Inc., Cypress Semiconductor Corporation,
LSI Logic Corporation, Micron Technology, Inc., Motorola, Inc., National
Semiconductor Corporation, Orbit Semiconductor, Inc., Raytheon Company,
Texas Instruments Incorporated, VLSI Technology, Inc. and Zilog, Inc.
The Company is a Connecticut corporation, organized in 1969. The
Company changed its name in April 1990 from Photronics Labs, Inc. Its
principal executive offices are located at 1061 East Indiantown Road,
Jupiter, Florida 33473, telephone (407) 747-4163.
3
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
should be considered carefully in evaluating the Company and its business
before purchasing the Common Stock offered by this Prospectus.
UNCERTAIN DEMAND FOR PHOTOMASKS; CYCLICAL NATURE OF SEMICONDUCTOR INDUSTRY
In recent years, demand for photomasks has fluctuated significantly.
The Company believes that, during the early 1990s, unit sales of photomasks
were relatively flat, and the Company and other independent manufacturers
experienced price reductions. Although demand for photomasks increased in
1994, there can be no assurance that demand will not decline or that
pressure to reduce prices will not continue. In addition, substantially
all of the Company's net sales are derived from customers in the
semiconductor industry. This industry is highly cyclical and has been
characterized by periodic downturns, which in some cases have had severe
effects on suppliers to the industry. There can be no assurance that any
of the foregoing factors will not have a material adverse effect on the
Company's business and results of operations. See "Business -- Industry
Overview."
DEPENDENCE ON MAJOR CUSTOMERS
Approximately 36% of the Company's net sales in fiscal 1994 was derived
from sales to Texas Instruments. An additional 18% of net sales in fiscal
1994 was derived from sales to the Company's next four largest customers,
no one of which accounted for more than approximately 5% of net sales.
None of the Company's customers has contracts requiring it to purchase any
minimum quantity of photomasks from the Company, and any loss of, or
significant reduction in, orders from any of these customers, particularly
Texas Instruments, could have a material adverse effect on the Company's
business and results of operations. The Company currently supplies
substantially all of the photomasks used by the operations of Texas
Instruments in North America. Large semiconductor manufacturers typically
have multiple sources of supply of photomasks, and Texas Instruments could
utilize additional sources of supply in the future, which could have a
material adverse effect on the Company's business and results of
operations. See "Business -- Customers."
MANAGEMENT OF EXPANDING OPERATIONS; LIMITED ADDITIONAL ACQUISITION
OPPORTUNITIES
The Company has recently experienced rapid expansion of its operations,
primarily due to its acquisitions of the photomask manufacturing operations
of Toppan Printronics (USA), Inc. ("TPI") in October 1993 and Micro Mask in
December 1994. In addition, the Company currently is expanding its
manufacturing capacity and plans to relocate its Texas manufacturing
operations to a new facility and establish a manufacturing facility in
Singapore. The Company also from time to time evaluates and enters into
negotiations with respect to potential acquisitions, and the Company may
make additional acquisitions in the future. This expansion has placed, and
is expected to continue to place, significant demands on the Company's
administrative, operational and financial personnel and systems. The
Company has in the past experienced, and could in the future experience,
difficulties and delays in ramping up new production facilities. Managing
acquired operations entails numerous operational and financial risks,
including difficulties in the assimilation of acquired operations,
diversion of management's attention to other business concerns,
amortization of acquired intangible assets and potential loss of key
employees of acquired operations. Sales of acquired operations also may
decline following the acquisition, particularly if there is an overlap of
customers served by the Company and the acquired operation, and such
customers transition to another vendor in order to ensure a second source
of supply. In this respect, the Company believes that there was some
degree of overlap between the Company's customers and those of Micro Mask,
and some of these customers may transition to second sources of supply.
Furthermore, in connection with any future acquisitions, the Company would
be required to utilize its cash reserves and/or issue new securities, which
could have a dilutive effect on the Company's earnings per share,
particularly during the initial integration of the acquired operations into
the Company's operations. Any failure of the Company to successfully
manage its expanding operations could have a material adverse effect on the
Company's business and results of operations.
4
<PAGE>
A substantial majority of the Company's increases in net sales in fiscal
1994 and the six months ended April 30, 1995 were attributable to the
acquisitions of TPI and Micro Mask, respectively. The Company believes
that there are limited remaining opportunities to acquire significant
photomask operations in the United States. Any future growth in net sales
in the United States therefore will substantially depend upon growth in the
Company's existing business, and there can be no assurance that such growth
will occur.
EXPANSION INTO INTERNATIONAL MARKETS
In fiscal 1994, international sales accounted for approximately 13% of
the Company's net sales. The Company believes that achieving significant
additional international sales will require it, among other things, to
develop a local presence in the markets on which it is focused, which would
require a significant investment of financial, management, operational and
other resources. In March 1995, the Company announced plans to establish a
facility in Singapore. In international markets, existing independent
photomask suppliers, including, in certain markets, DuPont Photomasks, Inc.
("DuPont"), have significant local presences and market share.
Accordingly, the Company expects to encounter significant competition which
could affect the Company's success in establishing a significant presence
in international markets that it targets.
Operations outside the United States are subject to inherent risks,
including fluctuations in exchange rates, political and economic conditions
in various jurisdictions, unexpected changes in regulatory requirements,
tariffs and other trade barriers, difficulties in staffing and managing
foreign operations, longer accounts receivable payment cycles and
potentially adverse tax consequences. There can be no assurance that such
factors will not have a material adverse effect on the Company's ability to
generate sales outside the United States and, consequently, on the
Company's business and results of operations. See "Business -- Strategy."
TECHNOLOGICAL CHANGE
The photomask industry has been and is expected to continue to be
characterized by technological change and evolving industry standards. In
order to remain competitive, the Company will be required to continually
anticipate, respond to and utilize changing technologies. In particular,
the Company believes that as semiconductor geometries continue to become
smaller, the Company will be required to manufacture optical proximity
correction and phase-shift photomasks. These technologies currently are in
developmental stages and the Company has not yet manufactured these types
of photomasks in volume. In addition, demand for photomasks has been and
could in the future be adversely affected by changes in methods of
semiconductor manufacturing (which could affect the type or quantity of
photomasks utilized). If the Company were unable, due to resource,
technological or other constraints, to anticipate, respond to or utilize
these or other changing technologies, the Company's business and results of
operations could be materially adversely affected. In addition, the
Company's business and results of operations could be adversely affected by
increased market acceptance of alternative methods of transferring circuit
designs onto semiconductor wafers. See "Business -- Research and
Development."
FUTURE CAPITAL NEEDS UNCERTAIN
The manufacture of photomasks requires a significant investment in
capital equipment. The Company expects that it will be required to
continue to make significant capital expenditures in connection with its
operations in the United States. The Company also has initiated a strategy
to increase its presence in certain international markets in which it does
not yet have a significant presence. Any expansion of the Company's
operations in these markets would require significant additional investment
in new manufacturing facilities. There can be no assurance that the
Company will be able to obtain any additional capital required in
connection with such expansion on reasonable terms, or at all, or that any
such expansion will not have a material adverse effect on the Company's
business and results of operations, particularly during the start-up phase
of new operations.
5
<PAGE>
COMPETITION
The photomask industry is highly competitive, and most of the Company's
customers utilize more than one photomask supplier. In the United States,
the Company competes primarily with DuPont and, to a lesser extent, with
other smaller independent photomask suppliers. The Company also competes
with semiconductor manufacturers' captive photomask manufacturing
operations. The Company expects to face continued competition from these
and other suppliers in the future. DuPont, which has competed aggressively
in the past, and certain potential competitors in international markets
have substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition, than the Company.
The Company's ability to compete primarily depends upon the consistency
of product quality and timeliness of delivery, as well as pricing,
technical capability and service. The Company also believes that proximity
to customers is an important competitive factor in certain markets. In the
past, competition led to pressure to reduce prices which, the Company
believes, contributed to the decrease in the number of independent
manufacturers. There can be no assurance that pressure to reduce prices
will not continue. See "Business -- Competition."
FLUCTUATIONS IN QUARTERLY PERFORMANCE
In the past, the Company experienced fluctuations in its quarterly
operating results and it anticipates that such fluctuations will continue
and could intensify in the future. Fluctuations in operating results may
result in volatility in the price of the Common Stock. Operating results
may fluctuate as a result of many factors, including size and timing of
orders and shipments, product mix, sales of used equipment (which have
widely varying gross margins), technological change, competition, loss of
significant customers and general economic conditions. The Company's
customers generally order the Company's products on an as-needed basis, and
substantially all of the Company's net sales in any quarter are dependent
on orders received during that quarter. Since the Company operates with a
limited backlog and the rate of new orders may vary significantly from
month to month, the Company's capital expenditures and expense levels are
based primarily on sales forecasts. Consequently, if anticipated sales in
any quarter do not occur when expected, capital expenditures and expense
levels could be disproportionately high, and the Company's operating
results would be adversely affected.
DEPENDENCE ON SUPPLIERS
Raw materials utilized by the Company generally include high precision
quartz plates, which are used as photomask blanks, pellicles, which are
protective transparent cellulose membranes and electronic grade chemicals
used in the manufacturing process. The Company has established purchasing
arrangements with each of Hoya Corporation USA, the parent of Micro Mask
("Hoya"), and Toppan Printing Co., Ltd. ("Toppan") pursuant to which the
Company purchases substantially all of its photomask blanks. The Company
expects that it will continue to purchase substantially all of its
photomask blanks from Hoya and Toppan so long as their price, quality and
delivery and service are competitive. Any delays or quality problems in
connection with significant raw materials, particularly photomask blanks
from either Hoya or Toppan, could cause delays in shipments of photomasks
which could adversely affect the Company's business and results of
operations. See "Business Materials and Supplies." The fluctuation of
exchange rates with respect to prices of significant raw materials used in
manufacturing also could have a material adverse effect on the Company's
business and results of operations, although the Company has not
experienced any such effects to date.
CONTROL BY MANAGEMENT
As of April 25, 1995, officers and directors of the Company and their
affiliates beneficially owned approximately 37% of the Company's
outstanding Common Stock, including shares held by Toppan that are subject
to an agreement with the Company which, among other things, requires Toppan
to vote its shares for nominees for director proposed by the Company's
board. This concentration of ownership will enable management to exercise
substantial influence over the election of directors and other corporate
transactions requiring shareholder approval,
6
<PAGE>
including mergers, consolidations or other significant transactions.
This concentration of ownership could prevent or delay a change in
control of the Company.
DEPENDENCE ON MANAGEMENT AND TECHNICAL PERSONNEL
The Company's success depends upon, in part, key managerial, engineering
and technical personnel, as well as its ability to continue to attract and
retain additional personnel. The loss of certain key personnel could have
a material adverse effect upon the Company's business and results of
operations. There can be no assurance that the Company can retain its key
managerial, engineering and technical employees or that it can attract
similar additional employees in the future. While the Company believes
that it provides competitive compensation and incentive packages, it does
not have written employment agreements with employees.
FLUCTUATIONS IN STOCK PRICE
The trading prices of the Company's Common Stock have fluctuated
significantly. The prices at which the Common Stock trades are determined
in the marketplace and may be influenced by many factors, including the
performance of, and investor expectations for, the Company, the trading
volume in the Common Stock and general economic and market conditions. In
addition, in recent years the stock market in general, and the shares of
technology companies in particular, have experienced extreme price and
volume fluctuations. This volatility has substantially affected the market
prices of securities issued by many companies for reasons unrelated to
their operating performance. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock. There can be no
assurance as to the price at which the Common Stock will trade in the
future.
SHARES ELIGIBLE FOR FUTURE SALE
As of May 23, 1995, the Company had 11,413,415 shares of Common Stock
outstanding. Of these shares, 7,592,015 shares were freely tradable
without restriction or further registration under the Securities Act of
1933, as amended (the "1933 Act"), and 3,821,400 shares were "restricted"
securities within the meaning of Rule 144. As of such date, 1,843,900 of
such restricted shares were eligible for sale in the open market under and
subject to restrictions contained in Rule 144. The Company is unable to
estimate the number of shares that may be sold pursuant to the foregoing
methods of sale because such sales will depend on the market price for the
Common Stock, the personal circumstances of sellers and other factors. In
addition, options and warrants to purchase 994,028 shares of Common Stock
were outstanding as of January 31, 1995. The holder of 1,590,000 shares of
Common Stock has certain demand and piggyback registration rights beginning
in 1996. Any sale of substantial amounts of Common Stock in the open
market may significantly reduce the market price of the Common Stock.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Shares by the
Selling Shareholder.
7
<PAGE>
BUSINESS
Photronics is a leading manufacturer of photomasks, which are primarily
used by the semiconductor industry in the manufacture of integrated
circuits. The Company's photomasks, which are high precision photographic
quartz plates containing microscopic images of electronic circuits, are
manufactured in Photronics' four manufacturing facilities in the United
States in accordance with circuit designs provided on a confidential basis
by its customers. The Company images circuit patterns onto photomasks
using laser-based or electron beam technologies and, to a lesser degree,
optical-based technologies. Photronics is one of the largest photomask
manufacturers in the United States.
INDUSTRY OVERVIEW
Photomasks are a key element in the manufacture of semiconductors and
are used as masters to transfer circuit patterns onto semiconductor wafers
during the fabrication of integrated circuits and, to a lesser extent,
other types of electrical components. Each circuit design consists of a
series of separate patterns, each of which is imaged onto a different
photomask. The resulting series of photomasks is then used to successively
layer the circuit patterns onto the semiconductor wafer.
The market for photomasks consists primarily of semiconductor
manufacturers and designers in the United States, Europe and Pacific Rim
regions. According to International Data Corporation, in 1994 world-wide
semiconductor sales were approximately $100 billion. Based upon industry
estimates, photomask sales exceeded $300 million in North America and
$1.1 billion worldwide.
Photomasks are manufactured by independent manufacturers and by
captives, which are semiconductor manufacturers that produce almost
exclusively for their own fabrication of integrated circuits. Since the
mid-1980s, there has been in the United States a trend towards the
divestiture or closing of captive photomask operations by semiconductor
manufacturers. The Company believes this trend is attributable to
increasing capital requirements and costs related to these operations, the
presence of a cost-effective source of supply from independent suppliers
and a general desire by semiconductor manufacturers to focus on core
business matters. As a result, the share of the market served by
independents has increased significantly. During the same period, due in
part to competitive pressures and increasing capital requirements, the
number of significant independent manufacturers decreased from
approximately 12 in the mid-1980s to four in 1994.
During the early 1990s, the total photomask market was relatively flat.
This resulted from a number of factors, including: (i) recessionary
pressures on the semiconductor industry; (ii) improvements in design
technology, which reduced the number of design iterations required to
create a functioning semiconductor design; and (iii) shortened photomask
delivery cycles (less than 24 hours), which reduced the need for back-up
photomask sets. These factors, along with excess available capacity, also
led to competitive pressures, forcing manufacturers to reduce prices in
order to stimulate sales.
Beginning in late 1993, independent manufacturers experienced increased
demand as a result of several factors. First, the Company believes that
semiconductor design activity increased due both to new generic
semiconductor designs and proliferating use of application-specific
integrated circuits ("ASICs"), each of which requires a separate set of
photomasks. In addition, the Company believes factors that adversely
affected the photomask industry in the early 1990s no longer significantly
affected the growth in demand for photomasks. According to industry
statistics, a typical 16 Mbit DRAM in production today utilizes 18 masks
compared to 14 masks for a 1 Mbit DRAM.
8
<PAGE>
STRATEGY
The Company's strategy to expand its position as a leader in the
manufacture of photomasks consists of the following elements:
Ensure Strong Customer Relationships. Critical to the Company's position
as an industry leader is its focus on developing and maintaining high
levels of customer satisfaction. Because each photomask is specific to a
particular circuit design and customers expect rapid delivery, the Company
believes that consistency of product quality and timeliness of delivery are
critical to its success. The Company works closely with each customer to
ensure that its specific needs are properly reflected in the final product.
Maintain Technological Leadership. Maintaining technological leadership in
photomask manufacture is important to the Company's long term success. The
Company believes that it has established the critical mass necessary to
support the increased research and development efforts required by
advancing semiconductor manufacturing technology. The Company recently has
invested in several state-of-the-art manufacturing systems and is devoting
significant resources to the development of technologies for the
manufacture of advanced photomasks, including optical proximity correction
and phase-shift photomasks.
Leverage Strategically Located Manufacturing Facilities. The Company
believes that in certain markets proximity to customers is an important
competitive factor. The Company has established multiple manufacturing
facilities in key locations to accelerate delivery times and respond to
customer demands. In addition, the Company currently is in the process of
relocating its Texas facility and establishing operations in Singapore.
Provide Global Solution. As the semiconductor industry becomes
increasingly global, the Company believes that it must be able to satisfy
customers' requirements in multiple markets throughout the world. The
Company has pursued strategic alliances with photomask manufacturers abroad
and intends to establish international manufacturing operations, including
its proposed Singapore operations, in order to achieve these objectives.
PRODUCTS AND SERVICES
The Company's photomasks are manufactured in accordance with circuit
designs provided on a confidential basis by its customers. Each circuit
design consists of a series of separate patterns, each of which is imaged
onto a different photomask. The resulting series of photomasks is then
used by the customer to successively image the patterns onto a
semiconductor wafer.
The Company currently manufactures photomasks using laser-based or
electron beam technologies and, to a lesser degree, optical-based
technologies. A laser-based or electron beam system is capable of
producing the finer line resolution, tighter overlay and larger die size
for the larger and more complex circuits currently being designed. Laser
and electron beam generated photomasks can be used with the most advanced
processing techniques to produce very large scale integrated circuit
("VLSI") devices. Compared to laser or electron beam generated photomasks,
the production of photomasks by the optical method is less expensive, but
also less precise. The optical method is traditionally used on less
complex and lower priced photomasks. The Company currently owns a number
of ETEC CORE laser writing systems and ETEC MEBES electron beam systems and
has made commitments to purchase additional advanced systems and system
upgrades to maintain technological superiority. The ETEC CORE laser-based
systems and the ETEC MEBES electron beam systems are the predominant
lithography systems used for photomask manufacture.
The first several levels of photomasks frequently are required to be
delivered by the Company within 24 hours of receiving a customer's design.
The ability to manufacture high quality photomasks within short time
periods is dependent upon efficient manufacturing methods, high yields and
high equipment reliability. The Company has
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<PAGE>
made significant investments in manufacturing and data processing systems
and statistical process control methods to optimize the manufacturing
process and reduce cycle times.
Quality control is an integral step in the photomask manufacturing
process. Photomasks are manufactured in temperature, humidity and
particulate controlled cleanrooms because of the high level of precision,
quality and yields required. Each photomask is inspected several times
during the manufacturing process to ensure compliance with customer
specifications. The Company has made a substantial investment in
equipment to inspect and repair photomasks and to insure that customer
specifications are met. After inspection and any necessary repair, the
Company utilizes technological processes to clean the photomasks prior
to shipment.
In addition to the manufacture of photomasks, the Company, through Beta
Squared, Inc., a wholly-owned engineering services subsidiary ("Beta"),
manufactures, sells and services a wafer plasma etching system used in the
processing of semiconductor wafers. The system was developed by Texas
Instruments which licensed the right to manufacture and sell it to Beta.
Beta also sells refurbished semiconductor manufacturing equipment,
engineering services and replacement parts and field service for such
equipment on a third-party basis. Such activities represented less than 4%
of the Company's net sales during fiscal 1994.
SALES AND MARKETING
The Company conducts its marketing activities through a staff of full-
time sales personnel and customer service representatives who work closely
with the Company's general management and technical personnel. In addition
to the sales personnel at the Company's manufacturing facilities in
Milpitas and Sunnyvale, California, Brookfield, Connecticut and Dallas,
Texas, the Company has sales offices in Carlsbad, California, Fort Collins,
Colorado, Jupiter, Florida, Derry, New Hampshire, Raleigh, North Carolina,
Beaverton, Oregon, Austin, Texas and the United Kingdom.
The Company typically negotiates an established price for a customer's
orders based on the customer's specifications in order to expedite the
placement of individual purchase orders. Some of these prices may remain
in effect for up to one year. The Company also negotiates prices, and
occasionally enters into purchase arrangements, based on the understanding
that, so long as the Company's performance is competitive, the Company will
receive a specified percentage of that customer's photomask requirements.
As part of the acquisition in October 1993 of operations in Texas, the
Company assumed an agreement with Texas Instruments, which continues until
March 31, 2000 and provides that the Company is Texas Instruments'
principal photomask supplier so long as the Company's price, quality,
service and delivery are competitive. The agreement also requires the
Company to insure that prices charged to Texas Instruments are not less
favorable than those otherwise extended by the Company to other customers
with similar specifications, volume, delivery and other requirements.
In addition to sales to domestic customers, the Company has been
marketing its products in international markets. The Company has sub-
contract manufacturing arrangements in France and Taiwan, a sales
representative in the United Kingdom and arrangements with an independent
sales representative in Korea. The Company considers its presence in
international markets important to attracting new customers, to providing
global solutions to existing customers and to servicing certain customers'
manufacturing foundries outside of the United States, principally in the
Pacific Rim.
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<PAGE>
CUSTOMERS
The Company primarily sells its products to leading semiconductor
manufacturers, including the following:
Advanced Micro Devices, Inc. Motorola, Inc.
Alliance Semiconductor Corp. National Semiconductor Corporation
American Microsystems, Inc. Orbit Semiconductor, Inc.
Analog Devices Raytheon Company
Atmel Corp. Silicon Systems, Inc.
Cypress Semiconductor Corporation Symbios Logic Inc. (formerly NCR
Harris Semiconductor Microelectronics)
LSI Logic Corp. Texas Instruments Incorporated
Lattice Semiconductor Corporation Toppan Printing Company, Ltd.
Micron Technology, Inc. VLSI Technology, Inc.
Zilog, Inc.
Since 1987, the Company has expanded its customer base and in fiscal
1994 sold its products and services to approximately 250 customers.
However, as a result of the acquisition of the Texas operations in 1993,
Texas Instruments has become a more significant customer of the Company,
representing approximately 36% of net sales in fiscal 1994, and the loss of
Texas Instruments or a significant decrease in the amount of the purchases
by Texas Instruments from the Company could have a material adverse effect
on the business and results of operations of the Company. An additional
18% of net sales in fiscal 1994 was derived from sales to the Company's
next four largest customers, no one of which accounted for more than
approximately 5% of net sales. Foreign sales accounted for approximately
2% of the Company's net sales in fiscal 1992, 8% in fiscal 1993 and 13% in
fiscal 1994. Current international customers include companies in Taiwan,
Singapore, the United Kingdom, Canada, Germany, Japan, Switzerland, Italy
and Australia.
RESEARCH AND DEVELOPMENT
The photomask industry has been and is expected to continue to be
characterized by technological change and evolving industry standards. In
order to remain competitive, the Company will be required to continually
anticipate, respond to and utilize changing technologies. The Company has
an ongoing research and development program which is intended to improve
continually the Company's level of technology and manufacturing efficiency.
The Company has increased its commitment to research and development
activities and current efforts include phase-shift and optical proximity
correction photomasks for advanced semiconductor manufacturing. The
Company incurred expenses of $2.5 million, $2.7 million and $4.7 million
for research and development in fiscal 1992, 1993 and 1994, respectively.
In addition, the Company leverages the investments in research and
development made by its equipment and material suppliers. See "Risk
Factors -- Technological Change."
While the Company believes that it possesses valuable proprietary
information, the Company does not believe that patents are a material
factor in the photomask manufacturing business and only holds one patent.
The Company relies on non-disclosure agreements with employees and vendors
to protect its proprietary processes. There can be no assurance that the
Company's means of protecting its proprietary rights will be adequate or
that the Company's competitors will not independently develop similar
processes. In addition, there can be no assurance that third parties will
not claim that the Company's current or future products infringe on their
proprietary rights. Any such claim, with or without merit, could result in
costly litigation or might require the Company to enter into licensing
agreements. Such agreements, if required, may not be available on terms
acceptable to the Company or at all.
MATERIALS AND SUPPLIES
Raw materials utilized by the Company generally include high precision
quartz plates, which are used as photomask blanks, primarily obtained from
Hoya and Toppan; pellicles, which are protective transparent cellulose
11
<PAGE>
membranes; and electronic grade chemicals used in the manufacturing
process. The Company has established purchasing arrangements with each of
Toppan and Hoya pursuant to which the Company purchases substantially all
of its photomask blanks from Hoya and Toppan so long as their price,
quality, delivery and service are competitive. Any delays or quality
problems in connection with significant raw materials, in particular
photomask blanks purchased from either Hoya or Toppan, could cause delays
in shipments of photomasks, which could adversely affect the Company's
business and results of operations. The fluctuation of exchange rates with
respect to prices of significant raw materials used in manufacturing also
could have a material adverse effect on the Company's business and results
of operations, although the Company has not experienced any such effects to
date.
COMPETITION
The photomask industry is highly competitive, and most of the Company's
customers utilize more than one photomask supplier. In the United States,
the Company competes primarily with DuPont and, to a lesser extent, with
other smaller independent photomask suppliers. The Company also competes
with semiconductor manufacturers' captive photomask manufacturing
operations. The Company expects to face continued competition from these
and other suppliers in the future. DuPont, which has competed aggressively
in the past, and certain potential competitors in international markets
have substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition than the Company.
The Company's ability to compete primarily depends upon the consistency
of product quality and timeliness of delivery, as well as pricing,
technical capability and service. The Company also believes that proximity
to customers is an important competitive factor in certain markets. In the
past, competition led to pressure to reduce prices which, the Company
believes, contributed to the decrease in the number of independent
manufacturers. There can be no assurance that pressure to reduce prices
will not continue.
EMPLOYEES
The Company's success depends upon, in part, key managerial, engineering
and technical personnel, as well as its ability to continue to attract and
retain additional personnel. The loss of certain key personnel could have
a material adverse effect upon the Company's business and results of
operations. As of January 31, 1995, the Company employed a total of
approximately 590 persons on a full-time basis, including 56 engaged in
engineering, 416 in manufacturing and technical services, 45 in sales, and
73 in administrative activities. The Company believes that it offers
competitive compensation and other benefits and that its employee relations
are good. None of the Company's employees is represented by a union. See
"Risk Factors -- Dependence on Management and Technical Personnel."
PROPERTIES
The Company's principal executive offices are located in Jupiter,
Florida. The Company owns one of the buildings in which its Connecticut
manufacturing facility is located and leases a second building at that
site. Both are modern buildings of approximately 19,600 square feet and
20,000 square feet, respectively. The building that is owned by the
Company is subject to a mortgage of approximately $500,000. The second
building, which houses service and manufacturing support functions and
general administrative staff, is leased by the Company until August 2004.
The leased building is owned by a partnership controlled by Constantine S.
Macricostas, the Chairman of the Board and Chief Executive Officer of the
Company. The Company leases a parcel of land contiguous to these
buildings, under a lease which expires in November 2005, from an entity
controlled by Mr. Macricostas. The foregoing leases are at fixed lease
rates which were determined by reference to fair market value rates at the
beginning of the lease term.
The Company's Milpitas, California, manufacturing facility is located in
two leased facilities aggregating approximately 49,000 square feet under
leases which expire in March 2001 and March 1996, respectively, subject in
each case to one five-year renewal option. The Company's Sunnyvale,
California, manufacturing facility is
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<PAGE>
located in three contiguous buildings owned by the Company with an
aggregate of approximately 40,000 square feet. The Company's
manufacturing facility in Texas currently is located in Dallas in
a leased facility of approximately 32,000 square feet under a lease with
Texas Instruments which expires in June 1995. The Company has purchased
property in Allen, Texas, a suburb of Dallas, and is constructing
a facility of approximately 55,000 square feet to relocate its operations.
The Company leases a 30,000 square foot building which houses its
manufacturing facility in Colorado Springs, Colorado. The lease on this
property expires on January 31, 1997 with an option to renew for an
additional five years. The Company also leases small amounts of office and
manufacturing space in Dallas, Texas, Derry, New Hampshire, Carlsbad,
California and Austin, Texas.
Other than new manufacturing systems which have not yet been placed into
service, the Company believes it substantially utilized its facilities
during the 1994 fiscal year.
On December 1, 1994, the Company acquired substantially all of the
assets of Micro Mask, an independent photomask manufacturer with
manufacturing operations located in Sunnyvale, California. The transaction
included the purchase of land, buildings (described above), inventory and
certain assets other than cash and receivables. In addition, significant
manufacturing systems owned by Micro Mask were leased by the Company from
Micro Mask. The acquisition was financed with the Company's available cash
reserves and involved the payment of approximately $7.2 million in cash at
closing and the obligation to pay $3.0 million and $1.8 million, without
interest, six months and four years after the closing, respectively. The
lease of the manufacturing systems has terms ranging, depending on the
system leased, from 44 to 62 months, with the right to purchase the leased
system at its then fair market value at the expiration of the lease period.
SELLING SHAREHOLDER
The following table sets forth certain information known to the Company
regarding the Selling Shareholder's beneficial ownership of the Common
Stock of Photronics, Inc. as of July 7, 1995 and after giving effect to the
offering.
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING OFFERING
------------------- ------------------
NAME AND ADDRESS OF SHARES TO BE
BENEFICIAL OWNER NUMBER PERCENT SOLD NUMBER PERCENT
------------------- ------ ------- ------------- ------ -------
Microphase
Laboratories, Inc. 98,559 * 98,559 0 *
-----------
* Represents less than 1%.
The Selling Shareholder was issued 98,559 shares of Common Stock (the
"Shares") in connection with the acquisition by the Company of assets of
the Selling Shareholder in June 1995. As part of the agreement for such
acquisition, the Company agreed to register the resale of the Shares by the
Selling Shareholder or its stockholders.
PLAN OF DISTRIBUTION
The Shares offered hereby are being sold by the Selling Shareholder
acting as principal for its own account. The Company will receive none of
the proceeds from this offering. See "Use of Proceeds."
The distribution of the Shares by the Selling Shareholder is not subject
to any underwriting agreement. The Company anticipates that the Selling
Shareholder will sell its Shares covered by this Prospectus through
customary brokerage channels, either through broker-dealers acting as
agents or brokers for the seller, or through broker-
13
<PAGE>
dealers acting as principals, who may resell the Shares through the
Nasdaq National Market, or through private sales or otherwise, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices of negotiated prices. The Selling Shareholder
may effect such transactions by selling the Shares to or through other
broker-dealers, and such broker-dealers may receive compensation in the
form of concessions or commissions from the Selling Shareholder and/or
the purchasers of the Shares for whom they may act as agent (which
compensation may be in excess of customary commissions.) The Selling
Shareholder and any broker-dealers that participate with the Selling
Shareholder in the distribution of the Shares may be deemed to be
underwriters and commissions received by them and any profit on the
resale of the Shares positioned by them might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Selling Shareholder is not restricted as to the price or prices at
which they may selling the Shares. Sales of such Shares at less than
market prices may depress the market price of the Company's Common Stock.
Moreover, the Selling Shareholder is not restricted as the number of Shares
which may be sold at any one time.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Reid & Priest LLP, New York, New York.
EXPERTS
The consolidated financial statements as of October 31, 1993 and 1994
and for each of the three years in the period ended October 31, 1994 and
the related financial statement schedule incorporated in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The financial statements
of Hoya Micro Mask, Inc. as of March 31, 1993 and March 31, 1994, and for
the years then ended, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the 1933 Act, with respect to
the Shares offered hereby. This Prospectus, which constitutes a part of
the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and such shares of
Common Stock, reference is hereby made to such Registration Statement and
to the exhibits and schedules thereto. The Company is subject to the
informational requirements of the 1934 Act, and, in accordance therewith,
files reports, proxy statements, and other information with the Commission.
Such Registration Statement, reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices
of the Commission: New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048; and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
14
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and
commissions, are:
Securities and Exchange Commission registration fee . $ 1,075
Legal fees and expenses . . . . . . . . . . . . . . . 2,000
Accounting fees and expenses . . . . . . . . . . . . . 2,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . 500
------
Total . . . . . . . . . . . . . . . . . . $ 5,575
======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Connecticut Stock Corporation Act (the "Act") provides for
indemnification of directors, officers, shareholders, employees and agents
of a corporation. Under the Act, a corporation is required to indemnify a
director against judgments and other expenses of litigation when he is sued
by reason of his being a director in any proceeding brought, other than on
behalf of the corporation, if a director is successful on the merits in
defense, or acted in good faith and in a manner reasonably believed to be
in the best interests of the corporation, or in a criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
In a proceeding brought on behalf of a corporation (a derivative action), a
director is entitled to be indemnified by the corporation for reasonable
expenses of litigation, if the director is finally adjudged not to have
breached his duty to the corporation. In addition, a director is entitled
to indemnification for both derivative and non-derivative actions, if a
court determines, upon application, that the director is fairly and
reasonably entitled to be indemnified.
Article Ninth of the Company's Certificate of Incorporation limits
directors' monetary liability for actions or omissions made in good faith,
which are later determined to be a breach of their duty as directors of the
Company. Article Ninth does not eliminate or limit a director's liability
for breaches of fiduciary duty for actions or omissions which (i) involved
a knowing and culpable violation of law; (ii) enabled a director or an
associate (as defined in the Act) to receive an improper personal economic
gain; (iii) showed a lack of good faith and conscious disregard for his
duty as a director under circumstances where the director was aware that
his actions created an unjustifiable risk of serious injury to the Company;
(iv) constituted a sustained and unexcused pattern of inattention that
amounted to an abdication of his duty; or (v) involved the improper
distribution of Company assets to its shareholders or an improper loan to
an officer, director or 5% shareholder. Article Ninth also does not
preclude suits for equitable relief, such as an injunction, nor would it
shield directors from liability for violations of the federal securities
laws. Moreover, Article Ninth does not limit the liability of directors
for any act or omission that occurred prior to the date the Article became
effective and does not limit the potential liability of officer-directors
in their capacity as officers.
The Company has purchased directors' and officers' liability insurance
covering certain liabilities incurred by its directors in connection with
the performance of their duties.
II-1
<PAGE>
ITEM 16. EXHIBITS.
4. - Form of Stock Certificate.(1)
5. - Opinion of Reid & Priest LLP.
23(a). - Consent of Deloitte & Touche LLP.
23(b). - Consent of Reid & Priest LLP (To be
included in Exhibit 5).
23(c). - Consent of KPMG Peat Marwick LLP.
24. - Power of Attorney. (Included at
page II-4).
-------------------
(1) Filed as an exhibit to the Company's Registration Statement on Form
S-1, File Number 33-11694, which was declared effective by the
Commission on March 10, 1987, and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(c) The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the Prospectus, to each person to whom the Prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
Prospectus, to deliver, or cause to be delivered to each person to whom the
Prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the Prospectus to provide such
interim financial information.
(d) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Brookfield, State of Connecticut,
on the 7th day of July, 1995.
PHOTRONICS, INC.
By s/ Constantine S. Macricostas
------------------------------
Constantine S. Macricostas,
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Michael J. Yomazzo and Jeffrey P.
Moonan, and each of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, to act, without the
other, for him and in his name, place and stead, in any and all capacities,
to sign any or all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated.
SIGNATURE TITLE DATE
--------- ----- ----
s/ Constantine S. Macricostas Chairman of the Board of July 7, 1995
----------------------------- Directors, Chief Executive
Constantine S. Macricostas Officer and Director
(Principal Executive
Officer)
s/ Michael J. Yomazzo President and Director July 7, 1995
-----------------------------
Michael J. Yomazzo
II-4
<PAGE>
s/ Robert J. Bollo Vice President/Finance July 7, 1995
---------------------------- Chief Financial Officer
Robert J. Bollo (Principal Financial and
Accounting Officer)
s/ Walter M. Fiederowicz Director July 7, 1995
----------------------------
Walter M. Fiederowicz
s/ Joseph A. Fiorita, Jr. Director July 7, 1995
----------------------------
Joseph A. Fiorita, Jr.
---------------------------- Director July 7, 1995
Masahiro Fujii
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
-------
5 Opinion of Reid & Priest LLP.
23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Reid & Priest LLP. (To be included in
Exhibit 5)
23(c) Consent of KPMG Peat Marwick LLP.
24 Power of Attorney. (Included at page II-4)
Exhibit 5
Reid & Priest LLP
A New York Registered Limited Liability Partnership
40 West 57th Street
New York, New York 10019
Telephone 212 603-2000
Fax 212 603-2298
New York, New York
July 10, 1995
Photronics, Inc.
1061 East Indiantown Road, Suite 318
Jupiter, Florida 33477
Re: Photronics, Inc.
Registration Statement on Form S-3
----------------------------------
Dear Sirs:
We have acted as counsel for Photronics, Inc., a
Connecticut corporation (the "Company"), in connection with the
preparation and filing of a Registration Statement on Form S-3
under the Securities Act of 1933, as amended (the "Act"), with
respect to the proposed offering of up to 98,559 shares of the
Company's common stock, par value $.01 per share (the "Shares").
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of
Incorporation and By-laws of the Company, each as amended and
such other documents, corporate records, certificates of public
officials and instruments as we have considered necessary or
advisable for the purpose of this opinion. We have assumed the
authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted
to us as copies. We have not independently verified such
information and assumptions.
<PAGE>
Photronic, Inc.
July 10, 1995
Page 2
We are not members of the Bar of any jurisdiction other
than the State of New York, and we express no opinion as to the
law of any jurisdiction other than the laws of the State of New
York. Insofar as our opinion concerns Connecticut law, we have
relied upon the opinion of Jeffrey P. Moonan, Esq., Executive
Vice President and General Counsel of the Company, which we have
attached hereto, and our opinion is subject to such
qualifications and assumptions set forth in such opinion, which
are incorporated herein.
Subject to the foregoing, and based on such examination
and review, we are of the opinion that:
1. The Company is a corporation organized and
existing in good standing under the laws of the State of
Connecticut.
2. 98,559 Shares have been duly authorized, are
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to us
contained under the heading "Legal Matters" in the Prospectus
which forms part of the Registration Statement. In giving the
foregoing consent, we do not thereby admit that we belong to the
category of persons whose consent is required under Section 7 of
the Act, or the rules and regulations promulgated by the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Reid & Priest LLP
<PAGE>
Photronics, Inc.
July 7, 1995
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Re: Photronics, Inc.
----------------
Ladies and Gentlemen:
I am General Counsel of Photronics, Inc., a Connecticut
corporation (the "Company"), and have been requested by the
Company to furnish to you my legal opinion in connection with the
public offering (the "Offer") of up to 98,559 shares of the
Company's common stock, par value $.01 per share (the "Common
Stock"), by a certain shareholder (the "Selling Shareholder")
whose name is set forth in the Registration Statement (as defined
below). The Offer is to be made pursuant to a Registration
Statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended.
In connection with rendering this opinion, I have
examined originals, or copies certified or otherwise identified
to my satisfaction, of such corporate records and other
instruments as I have deemed necessary or appropriate for the
purposes of rendering this opinion, including: (a) the
Certificate of Incorporation, as amended, of the Company; (b) the
by-laws, as amended, of the Company; (c) the minutes of meetings
or written consents of the Board of Directors of the Company (the
"Board"); and (d) the Registration Statement. I have also
examined such other documents, records, certificates of public
officials and such other matters of law as I have deemed
necessary or appropriate for the purposes of this opinion.
In my examination of the foregoing instruments,
certificates and other documents, I have assumed that: (a) the
statements of facts made therein are accurate and complete; (b)
the signatures on documents and instruments examined by me are
authentic; (c)
<PAGE>
Reid & Priest LLP -2- July 10, 1995
the required consideration for the shares of Common Stock to be
sold by the Selling Shareholder has been fully paid to the
Company; and (d) documents submitted to me as copies of original
documents conform with the originals thereof and the originals
thereof are authentic.
Based upon the foregoing and in reliance thereon, and
subject to the assumptions, exceptions, qualifications and
limitations set forth herein, I am of the opinion that:
1. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Connecticut.
2. The 98,559 shares of Common Stock to be offered to
the public by the Selling Shareholder have been duly authorized,
are validly issued, fully paid and non-assessable.
The opinions expressed herein are qualified in their
entirety insofar as no opinion is expressed herein with respect
to laws other than the laws of the State of Connecticut.
I understand that you will be relying upon this opinion
to enable you to opine with respect to the validity of the shares
of Common Stock included in the Offer, and that your opinion will
be included as an exhibit to the Registration Statement. I
hereby consent to such reliance.
In addition to being General Counsel of the Company, I
am Senior Vice President and Secretary of the Company and am an
officer and/or director of subsidiaries of the Company. I also
hold options to acquire 65,000 shares of Common Stock, own 3,750
shares of Common Stock and hold 7,400 shares of Common Stock
subject to restrictive stock awards.
Very truly yours,
/s/ Jeffrey P. Moonan
-----------------------------
Jeffrey P. Moonan
General Counsel
Exhibit 23(a)
Independent Auditors' Consent
We consent to the incorporation by reference in this
Registration Statement of Photronics, Inc. on Form S-3 of our
report dated December 13, 1994 (March 20, 1995 as to note 14)
relating to the financial statements in the Registration
Statement No. 33-58239 on Form S-3 contained on pages F-1 to F-17
and our report dated December 13, 1994 on the financial statement
schedule incorporated by reference from the Annual Report on Form
10-K for the year ended October 31, 1994 contained in Item
14(A)(2) and to the reference to us under the heading "Experts"
in this Registration Statement.
Deloitte & Touche LLP
Hartford, Connecticut
July 7, 1995
Exhibit 23(c)
CONSENT OF INDEPENDENT AUDITORS
- - - - - - - - - - - - - - - -
The Board of Directors
Photronics, Inc.:
We consent to the incorporation by reference in the registration
statement on Form S-3 of Photronics, Inc. of our report dated
November 18, 1994, except as to Note 8 which is as of November
30, 1994, with respect to the balance sheet of Hoya Micro Mask,
Inc. as of March 31, 1994 and 1993, and the related statements of
operations and accumulated deficit, and cash flows for the years
then ended, which report appears in the Form 8-K/A of Photronics,
Inc. dated January 27, 1995 and to the reference to our firm
under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
San Jose, California
July 7, 1995
