<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ......July 31, 1995.......
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from................. to ................
Commission file number...0-15451...
...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 No.)
......1061 East Indiantown Road, Jupiter, FL...... ..33477..
(Address of principal executive offices) (Zip Code)
...(203) 775-9000...
(Registrant's telephone number, including area code)
......P.O. Box 5226, 15 Secor Road, Brookfield, CT 06804......
(Former name, former address and former fiscal year,
if changed since last report)
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 .....
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1995
Common Stock, $.01 par value 11,599,938 Shares
<PAGE>
PHOTRONICS, INC.
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at July 31,
1995 (unaudited) and October 31, 1994 3-4
Condensed Consolidated Statement of Earnings
for the three and nine months ended July 31,
1995 and 1994 (unaudited) 5
Condensed Consolidated Statement of Cash Flows
for the nine months ended July 31,
1995 and 1994 (unaudited) 6
Notes to Condensed Consolidated Financial
Statements (unaudited) 7-8
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(dollars in thousands)
ASSETS
<CAPTION>
July 31, October 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash, cash equivalents and
short-term investments $ 54,562 $27,627
Accounts receivable (less allowance
for doubtful accounts of $195 in
1995 and $135 in 1994) 18,081 10,218
Inventories 5,267 2,469
Other current assets 2,094 2,140
-------- -------
Total current assets 80,004 42,454
Property, plant and equipment 59,714 39,205
Intangible assets (less accumulated
amortization of $1,883 in 1995
and $1,117 in 1994) 10,494 5,523
Investments and other assets 20,966 11,164
-------- -------
$171,178 $98,346
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(dollars in thousands, except per share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
July 31, October 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 35 $ 467
Accounts payable 14,184 5,053
Accrued salaries and wages 4,005 2,615
Other accrued liabilities 4,496 1,423
Income taxes payable 1,214 567
-------- -------
Total current liabilities 23,934 10,125
Long-term debt 1,846 495
Deferred income taxes 11,307 7,077
Other liabilities 275 247
-------- -------
Total liabilities 37,362 17,944
-------- -------
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, $0.01 par value,
2,000,000 shares authorized,
none issued and outstanding - -
Common stock, $0.01 par value,
10,000,000 shares authorized in 1994
and 20,000,000 shares authorized in 1995,
11,736,438 shares issued in 1995
and 6,659,929 shares in 1994 117 67
Additional paid-in capital 75,145 41,338
Retained earnings 47,885 34,338
Unrealized gains on investments 11,354 5,608
Treasury stock, 136,500 shares in 1995
and 91,000 shares in 1994, at cost (245) (245)
Deferred compensation on restricted stock (440) (704)
-------- --------
Total shareholders' equity 133,816 80,402
-------- -------
$171,178 $98,346
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Earnings
(in thousands, except per share amounts)
(Unaudited)
<CAPTIONS>
Three Months Ended Nine Months Ended
July 31, July 31,
------------------ -----------------
1995 1994 1995 1994
--------- ------- -------- -------
<S> <C> <C> <C> <C>
Net sales $32,854 $21,313 $89,067 $58,811
Costs and expenses:
Cost of sales 20,015 13,096 54,854 37,799
Selling, general and administrative 4,489 3,088 12,136 7,621
Research and development 3,177 1,254 6,120 3,495
------- ------- ------- -------
Operating income 5,173 3,875 15,957 9,896
Interest and other income, net 5,187 405 5,700 575
------- ------- ------- -------
Income before income taxes and
cumulative effect of change
in accounting for income taxes 10,360 4,280 21,657 10,471
Provision for income taxes 3,900 1,515 8,110 3,558
------- ------- ------- -------
Income before cumulative
effect of change in
accounting for income taxes 6,460 2,765 13,547 6,913
Cumulative effect of change in
accounting for income taxes - - - 237
------- ------- ------- -------
Net income $ 6,460 $ 2,765 $13,547 $ 7,150
======= ======= ======= =======
Net income per common share:
Income before cumulative effect
of change in accounting for
income taxes $0.54 $0.27 $1.24 $0.69
Cumulative effect of change in
accounting for income taxes - - - 0.02
----- ----- ----- -----
Net income $0.54 $0.27 $1.24 $0.71
===== ===== ===== =====
Weighted average number of
common shares outstanding 11,945 10,098 10,905 10,023
====== ====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(in thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
July 31,
--------------------
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $13,547 $ 7,150
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,270 6,485
Net gain on disposition of investments (5,110) -
Deferred income taxes (113) 227
Cumulative effect of change in
accounting for income taxes - (237)
Research and development expense
from acquisition 1,484 -
Other 392 124
Changes in assets and liabilities, net of
effects of acquisitions in 1995:
Accounts receivable (7,863) (814)
Inventories (1,832) (111)
Other current assets 92 (1,129)
Accounts payable and accrued liabilities 13,069 133
Income taxes payable 647 1,694
------- -------
Net cash provided by operating activities 21,583 13,522
------- -------
Cash flows from investing activities:
Acquisition of photomask operations (10,468) -
Deposits on and purchases of property,
plant and equipment (20,942) (3,351)
Net change in short-term investments (5,444) 559
Proceeds from sale of investments 5,750 -
Other (14) (282)
------- -------
Net cash used in investing activities (31,118) (3,074)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (431) (485)
Net proceeds from issuance of common stock 31,457 1,142
------- -------
Net cash provided by financing activities 31,026 657
------- -------
Net increase in cash and cash equivalents 21,491 11,105
Cash and cash equivalents at beginning of period 25,092 8,225
------- -------
Cash and cash equivalents at end of period $46,583 $19,330
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $32 $58
Income taxes $6,684 $1,273
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PHOTRONICS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended July 31, 1995
(Unaudited)
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements of the Company included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of management, reflect
all adjustments which are necessary to present fairly the results for the
three and nine-month periods ended July 31, 1995 and 1994. Interim financial
data presented herein are unaudited. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations; however, management believes that the
disclosures are adequate to make the information presented not misleading.
This report should be read in conjunction with the consolidated financial
statements and footnotes as of October 31, 1994, which give a complete
discussion of these matters.
NOTE 2 - ACQUISITION OF PHOTOMASK OPERATIONS
OF HOYA MICRO MASK, INC.
On December 1, 1994, the Company acquired certain assets held by Hoya Micro
Mask, Inc. ("Micro Mask"), an independent photomask manufacturer with
manufacturing operations located in Sunnyvale, California. The transaction
included the purchase of land, buildings, 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 through available cash reserves and involved the
payment of approximately $7.2 million in cash at closing, $3.0 million on
June 1, 1995, and the obligation to pay $1.8 million, without interest, four
years after the closing. In addition, the Company incurred approximately
$0.3 million of costs in connection with the acquisition. The operating
lease of the significant manufacturing systems has a term ranging from 44 to
62 months and includes the right to purchase the systems at fair market value
at the end of the lease.
The acquisition was accounted for as a purchase and, accordingly, the
acquisition price was allocated to property, plant and equipment as well as
certain intangible assets based on relative fair value. Intangible assets
include goodwill of approximately $5.2 million which will be amortized over
twenty (20) years. The consolidated statement of earnings includes the
results of Micro Mask's operations from December 1, 1994, the effective date
of the acquisition.
The consolidated results of the Company's operations on a proforma basis for
the three and nine months ended July 31, 1994, as though the purchase had
been made as of the beginning of that period, would have reflected sales of
approximately $27.9 million and $77.2 million and net income of $3.3 million,
or $0.33 per share, and $7.7 million, or $0.77 per share before the change in
accounting for income taxes. The proforma results of operations are not
necessarily indicative of the actual operating results that would have
occurred had the transaction been consummated at the beginning of the period,
or of the future operating results of the combined companies.
NOTE 3 - ACQUISITION OF PHOTOMASK OPERATIONS OF MICROPHASE LABORATORIES, INC.
On June 20, 1995, the Company acquired the manufacturing operations and
assets, exclusive of cash and accounts receivable, of Microphase
Laboratories, Inc. ("Microphase"), an independent photomask manufacturer
located in Colorado Springs, Colorado, in exchange for 98,559 shares of
common stock of the Company valued at $2.4 million. The acquisition was
accounted for as a purchase. The fair value of assets acquired was
approximately $2.4 million, including $1.5 million of Microphase's research
and development projects that have no alternative future use and,
accordingly, was charged to research and development expenses. The results
of the Microphase operations are not material to the Company.
<PAGE>
NOTE 4 - SHAREHOLDERS' EQUITY
In January 1995, the Company's Board of Directors approved a three-for two
stock split which became effective on March 20, 1995. On March 16, 1995, the
shareholders approved an amendment to the Company's Certificate of
Incorporation increasing the number of common shares which the Company is
authorized to issue from 10,000,000 shares to 20,000,000 shares.
Shareholders of record on March 20, 1995, received three shares of common
stock for each two they owned on that date. A total of 3.3 million shares
were issued in connection with the stock split which was effected in the form
of a dividend. All applicable share and per share data reflected in the
financial statements have been adjusted to reflect the stock split.
On April 18, 1995, the Company issued 1,290,000 new shares of common stock at
a price of $21.00 per share ($19.85 per share after underwriting discounts),
40,000 shares of common stock due to the exercise of stock options at prices
ranging from $1.83 to $3.17 per share and 7,500 additional shares of common
stock resulting from the exercise of a warrant at $5.24 per share. The gross
proceeds and costs of the issue were $25.7 million and approximately $0.3
million, respectively. Issuance costs were recorded as a reduction of
additional paid-in capital. On May 16, 1995, the underwriters exercised the
210,000 share over-allotment option at a net price of $19.85 per share,
providing additional proceeds totaling $4.2 million. The net proceeds will
be used to fund current expansion plans.
NOTE 5 - REVOLVING CREDIT AGREEMENT
In March 1995, the Company entered into a new unsecured revolving credit
facility that provides for borrowings of up to $10 million per year in each
of the next three years, subject to a carryover in the second and third year
of up to $3 million. Such borrowings are convertible into term loans,
payable in equal quarterly installments over five years. The new facility
provides for essentially the same terms and conditions as the Company's
previous revolving credit agreement, including compliance with and
maintenance of certain financial covenants and ratios.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Material Changes in Results of Operations
Three and Nine Months Ended July 31, 1995 versus July 31, 1994
A significant portion of the material changes in each category of the
Company's results of operations for the three and nine months ended July 31,
1995, as compared to the same periods in the prior fiscal year are
attributable to the acquisition, on December 1, 1994, of the photomask
manufacturing operations and assets of Hoya Micro Mask, Inc. ("Micro Mask"),
an independent photomask manufacturer with manufacturing operations located
in Sunnyvale, California. The operations acquired represent a full-service,
state-of-the-art photomask manufacturing facility. Further, on June 20,
1995, the Company acquired the manufacturing operations of Microphase
Laboratories, Inc. ("Microphase") in Colorado Springs, Colorado. Except for
a one-time charge to research and development expenses (see Note 3), the
financial results of the new Colorado facility did not have a material effect
on the Company's results of operations or financial position.
Net sales for the three and nine months ended July 31, 1995, increased
54.2% to $32.9 million and 51.4% to $89.1 million, respectively, compared
with $21.3 million and $58.8 million in the same periods in the prior fiscal
year. The increases are attributable to the inclusion of sales, commencing
December 1, 1994, by the Company's new Sunnyvale facility and increased
shipments to customers from existing facilities due to stronger demand
generally and greater manufacturing capacity resulting from the
implementation of the Company's capacity expansion program.
Cost of sales for the three and nine months ended July 31, 1995,
increased 52.8% to $20.0 million and 45.1% to $54.9 million, respectively,
compared to $13.1 million and $37.8 million for the same periods in the prior
fiscal year. These increases principally are due to increased sales,
together with greater personnel-related expenses, resulting from staffing
increases to meet production demands and higher employee incentive
compensation expenses resulting from the Company's performance. As a
percentage of net sales, cost of sales decreased to 60.9% and 61.6% for the
three and nine months ended July 31, 1995 as compared with 61.4% and 64.3% in
the corresponding periods last year. The improvement primarily was due to
the higher capacity utilization and greater operating efficiencies afforded
by sales volume increases and a more favorable mix of more complex
photomasks. The Company anticipates that its fixed operating costs will
increase in connection with its continuing capacity expansion. However, the
Company expects to match these higher costs with continued increases in sales
levels.
Selling, general and administrative expenses increased 45.4% to $4.5
million and 59.2% to $12.1 million for the three and nine months ended July
31, 1995, respectively, compared with $3.1 million and $7.6 million for the
same periods in the prior fiscal year. The increases were due largely to the
inclusion of expenses of the Company's Sunnyvale facility, charges for
certain non-recoverable assets and increased staffing levels, as well as
general increases in wages. Employee incentive compensation expense
provisions for the three months ended July 31, 1994, were higher than the
corresponding current year period; however, as a result of the Company's
sequential quarterly performance increases in fiscal 1995, incentive
compensation expenses were provided more ratably over the nine months ended
July 31, 1995, as compared with the same period in the prior year. As a
percentage of net sales, selling, general and administrative expenses
decreased to 13.7% for the three months ended July 31, 1995, compared with
14.5% for the same period last year primarily due the larger employee
incentive compensation provisions in the prior year period. For the nine
months ended July 31, 1995, selling, general and administrative expenses
increased to 13.6%, as compared with 13.0% in the corresponding period last
year.
<PAGE>
Research and development expenses for the three and nine months ended
July 31, 1995, increased 153.3% to $3.2 million and 75.1% to $6.1 million,
respectively, compared to $1.3 million and $3.5 million from the same periods
for the prior fiscal year. In connection with the Microphase acquisition,
the Company recorded a one-time charge of $1.5 million. This charge
represented amounts assigned to certain Microphase research and development
projects, principally for the manufacture of large area masks, which were
expensed upon acquisition. Excluding this non-recurring charge, research and
development expenses for the three and nine month periods ended July 31,
1995, increased 34.9% and 32.6%, respectively, compared to the same periods
last year. These increases reflect the expansion of the Company's research
and development organization and its development efforts, focusing on
developing new photomask technologies such as phase shift and optical
proximity corrected photomasks. As a percentage of net sales, excluding the
Microphase charge, research and development expenses declined to 5.2% for the
three and nine months ended July 31, 1995, respectively, compared to 5.9% in
the corresponding prior fiscal year periods, reflecting increased net sales.
Interest and other income, net, for the three and nine months ended July
31, 1995, increased to $5.2 million and $5.7 million, respectively, compared
to $405,000 and $575,000 for the same periods in the prior fiscal year
principally due to a net gain of $4.7 million from the sale of an equity
investment during the three months ended July 31, 1995. The Company had
additional net gains on the disposition of investments in the first quarter
of fiscal 1995 and during the three months ended July 31, 1994. Interest
income for the three and nine months ended July 31, 1995, increased to
$519,000 and $1.0 million, respectively, compared with $150,000 and $346,000
in the prior year's corresponding periods primarily due to higher levels of
funds available for investment.
For the three and nine months ended July 31, 1995, the Company provided
Federal and state income taxes at an estimated combined effective annual tax
rate of 37.6% and 37.4%, respectively, as compared to 35.4% and 34.0% in the
same periods for the prior fiscal year. The increase in the Company's
estimated tax rate primarily is the result of a larger portion of income
being subject to the 35% incremental Federal income tax rate and a greater
portion of the Company's income being generated in California. For the nine
months ended July 31, 1994, the Company recognized the cumulative effect of
the adoption of SFAS 109, "Accounting for Income Taxes," resulting in a
benefit of $237,000, or $0.02 per share.
Liquidity and Capital Resources
The Company's cash, cash equivalents and short-term investments
increased $26.9 million during the nine months ended July 31, 1995, largely
as a result of the $29.6 million of net proceeds from the issuance of
1,500,000 new shares of common stock in a public equity offering completed
during the period and the $5.8 million of proceeds from the disposition of
investments. These proceeds were offset by cash of $10.5 million expended to
fund the acquisition of Micro Mask. Excluding the net proceeds from the
stock offering, sales of equity investments and the funds utilized in the
Micro Mask acquisition, investing activities used cash totaling $26.4
million, principally for deposits on and purchases of property, plant and
equipment and the increase in short-term investments, and financing
activities provided cash totaling $1.4 million, largely from exercises of
stock options. Operating activities, however, provided cash totaling $21.6
million, after utilizing approximately $2.0 million for initial working
capital at the Sunnyvale site.
<PAGE>
Accounts receivable increased to $18.1 million at July 31, 1995, from
$10.2 million at October 31, 1994, principally as a result of higher sales
levels, particularly due to the inclusion of sales from the new Sunnyvale and
Colorado operations. Inventories increased to $5.3 million at July 31, 1995,
from $2.5 million at October 31, 1994, primarily due to higher equipment
inventory levels at the Company's wholly-owned subsidiary, Beta Squared,
Inc., the addition of the Sunnyvale and Colorado facilities and general
increases to accommodate the escalating sales volume.
Property, plant and equipment increased to $59.7 million at July 31,
1995, from $39.2 million at October 31, 1994, largely as a result of the $5.1
million and $820,000 of fixed assets acquired in connection with the Micro
Mask and Microphase acquisitions, respectively, and other deposits on and
purchases of property, plant and equipment totaling $21.1 million. These
increases were offset by normal depreciation expense totaling $6.5 million.
Intangible assets increased to $10.5 million at July 31, 1995, from $5.5
million at October 31, 1994, due to the $5.7 million of intangible assets
resulting from the Micro Mask acquisition, offset by normal amortization
totaling $766,000.
Investments and other assets increased to $21.0 million at July 31,
1995, from $11.2 million at October 31, 1994, principally due to additional
unrealized gains recorded as a result of the increased fair value of the
Company's investments, net of dispositions, during the period.
Accounts payable and other accrued liabilities at July 31, 1995,
increased from October 31, 1994, primarily due to increased payables related
to recent equipment purchases, higher levels of raw materials purchases due
to growing production needs, and the addition of the Sunnyvale and Colorado
operations. Accrued salaries and wages increased from October 31, 1994,
largely as a result of provisions for incentive compensation for fiscal 1995,
offset by payments during the period of fiscal 1994 and current year
incentive compensation, and the addition of the Sunnyvale and Colorado
operations.
As a result of an obligation incurred in connection with the Micro Mask
acquisition, long-term debt, less the current portion, increased $1.4 million
(net of imputed interest) during the nine months ended July 31, 1995.
Current portion of long-term debt decreased $432,000 during the same period
as a result of a balloon payment and normal monthly payments which became
due. Deferred income taxes at July 31, 1995, increased $4.2 million from
October 31, 1994, to $11.3 million largely due to amounts provided on the
unrealized gains on investments.
<PAGE>
The Company's commitments represent investments in additional
manufacturing capacity, as well as advanced equipment for research and
development of the next generation of high-end, more complex photomasks. As
of July 31, 1995, the Company had commitments for the purchase or lease of
additional property, plant and equipment with an acquisition cost of $49.0
million, of which $15.7 million had been paid or accrued at that date.
Included in commitments are $11.3 million, of which $1.7 million had been
paid or accrued, related to the construction of the Company's new facility in
the Dallas area. Additional commitments for relocation of the Company's
current Texas operations and the proposed Singapore operations will be
incurred later in fiscal 1995.
The Company will use its working capital, bank credit lines, leasing
arrangements and the net proceeds from its recently completed stock offering
to finance its capital expenditures. In March 1995, the Company entered into
a new unsecured revolving credit facility that provides for borrowings of up
to $10 million per year in each of the next three years, subject to a
carryover in the second and third year of up to $3 million. Such borrowings
are convertible into term loans, payable in equal quarterly installments over
five years. The new facility provides for essentially the same terms and
conditions as the Company's previous revolving credit agreement, including
compliance with and maintenance of certain financial covenants and ratios.
The Company believes that its currently available resources, together with
its capacity for substantial growth, are sufficient to satisfy its cash
requirements for the foreseeable future.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
10 Form of Agreement between the Company and each of Messrs
Macricostas, Yomazzo and Moonan.+
27 Financial Data Schedule
__________
+ Represents a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form.
----------
(b) Reports on Form 8-K
During the quarter for which this report is filed, no reports on Form 8-K
were filed by the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHOTRONICS, INC.
(Registrant)
By:______ROBERT J. BOLLO_________
Robert J. Bollo
Vice President/Finance
(Duly Authorized Officer and
Principal Financial Officer)
Date: September 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Earnings and the Condensed Consolidated
Balance Sheet and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 46,583
<SECURITIES> 7,979
<RECEIVABLES> 18,081
<ALLOWANCES> 195
<INVENTORY> 5,267
<CURRENT-ASSETS> 80,004
<PP&E> 98,600
<DEPRECIATION> 38,886
<TOTAL-ASSETS> 171,178
<CURRENT-LIABILITIES> 23,934
<BONDS> 1,846
<COMMON> 117
0
0
<OTHER-SE> 133,699
<TOTAL-LIABILITY-AND-EQUITY> 171,178
<SALES> 89,067
<TOTAL-REVENUES> 89,067
<CGS> 54,854
<TOTAL-COSTS> 54,854
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 21,657
<INCOME-TAX> 8,110
<INCOME-CONTINUING> 13,547
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,547
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 0
</TABLE>
<PAGE>
AGREEMENT
Agreement made as of April 26, 1995, by and between
Photronics, Inc., a Connecticut corporation having its principal
offices at 1061 East Indiantown Road, Jupiter, Florida 33477 (the
"Company") and ______________, _________________, ________,
________________ (the "Owner").
WHEREAS, the ____________________ (the "Executive) serves as
an Executive Officer of the Company; and
WHEREAS, the Company and the Owner desire to enter into an
agreement whereby the Company will provide certain insurance and
other benefits on the life of the Executive.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Company and the Owner
hereby agree as follows:
I - DEFINITION OF TERMS AND CONSTRUCTION
A) Definitions:
(1) "Owner" shall mean the owner of the Policy.
(2) "Policy" shall mean the life insurance policy on the life of
the Executive owned by the Owner which is purchased with premiums
paid by the Company.
(3) "Board of Directors" shall mean the Board of Directors of the
Company.
(4) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
(5) "Effective Date" shall mean the date hereof.
B) Plurals:
Where appearing in this Agreement, the singular shall include
the plural, and vice-versa, unless the context clearly indicates a
different meaning.
C) Headings:
The headings and sub-headings in this Agreement are inserted
for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
<PAGE>
II - PAYMENT OF PREMIUMS
The Company agrees that provided the Executive remains in the
employ of the Company, the Company will timely pay $______ each
year for insurance premiums (the "Premiums") under the Policy for
a period of ten (10) years from the Effective Date. If the
Executive leaves the employ of the Company (including as a result
of a discharge by the Company), the Company shall have no further
obligations to make payments pursuant to this Article II, except as
set forth in Article IV, below. Except as provided in Article IV,
below, in the event the Executive shall only be in the employ of
the Company for a portion of any year during the ten (10) year
period referred to above, the obligation of the Company to pay
premiums for that year shall be pro-rated based on the number of
whole or partial months the Executive was employed for that year
divided by twelve (12).
III - REPAYMENT OF PREMIUMS
The Owner shall assign to the Company, in accordance with the
form of assignment attached hereto (the "Assignment"), the right to
the proceeds and cash value of the Policy to the extent of Premiums
paid by the Company. The Owner shall have all other rights to the
Policy except that the Owner shall not surrender or cancel the
Policy or withdraw any cash value of the Policy unless and until
the Company's right to receive a refund of Premiums paid has been
satisfied or waived; provided further, however, that nothing
contained herein shall require the Owner or the Executive to pay
any premiums under the Policy. The Company's right to receive a
repayment of Premiums paid shall be limited to the proceeds and
cash value of the Policy and shall be non-recourse to the Owner and
the Executive.
IV - RETIREMENT
In the event the Executive retires from the employ of the
Company, the Company agrees that it shall continue paying Premiums
for that number of years equal to the number of complete years of
service with the Company completed by the Executive since the date
of this Agreement but for not more than five (5) years or the
remaining portion of term set forth in Article II, above, whichever
is less; provided that, if the Executive shall be engaged in any
activities which are competitive with the Company, which activities
continue after written notice from the Company, the Company shall
have no further obligation to pay any Premiums under this
Agreement. In order to retire from the Company, the Executive must
be at least 55 years of age, have been employed by the Company for
at least 20 years and have been employed by the Company for at
least three (3) years since the date of this Agreement. In the
event the Executive retires and has been employed by the Company
for at least three (3) years since the date of this Agreement, the
Company agrees that it shall waive, upon such retirement, its right
to receive a refund of Premiums in accordance with Article III.
<PAGE>
V - TERMINATION OF EMPLOYMENT
In the event the Executive leaves the employ of the Company
for any reason (including discharge by the Company), except for
retirement in accordance with Article IV, above, the Company
reserves the right, and the Owner assigns to the Company, the right
to cancel the Policy in order to obtain a repayment of Premiums
paid from the cash value of the Policy. Any cash value in excess
of the Premiums shall belong to the Owner.
VI - BENEFICIARY/DIVIDENDS
Except as set forth in Article III above, or Article VII
below, the Owner shall have the right to designate the beneficiary
of the Policy. The Owner agrees that so long as the Company's
right to receive a refund of Premiums paid has not been satisfied
or waived, all dividends declared on the Policy shall be applied to
purchase additional paid up insurance on the life of the Executive
unless the Company consents to another application.
VII - RIGHTS TO THE PROCEEDS AT DEATH
Upon the death of the Executive while this Agreement is in
force, the Owner will, without delay, take whatever action is
necessary and required to collect the total death proceeds payable
under the Policy from the insurer. Proceeds of the Policy equal to
the Premiums paid by the Company shall be paid to the Company by
the insurer unless repayment of the Premiums have been waived by
the Company. The balance of the proceeds of the Policy shall be
paid to the beneficiary of the Policy by the insurer.
VIII - AMENDMENTS
(1) The Company and the Executive may, by a written instrument
signed by both such parties, amend this Agreement at any time and
in any manner.
(2) The Company reserves the right to amend, in whole or in part,
and in any manner, any or all of the provisions of this Agreement
by action of its Board of Directors for the purposes of complying
with any provision of the Code or any other technical or legal
requirements, provided that no such amendment shall reduce the
amount of the Premiums to be paid by the Company.
IX - RELEASE
At any time, the Owner shall have the right to pay cash to the
Company in an amount equal to the Premiums paid by the Company in
exchange for the Company's interest in such Policy. In such event,
the Company shall transfer its interest in such Policy to the
Owner. Upon release by the Company of all of its interest in such
Policy, the Owner will thereafter own such Policy free from the
Assignment and from this Agreement.
<PAGE>
X - MISCELLANEOUS
A) Rights of Creditors:
Neither the Owner, the Executive nor any other persons shall
have any interest in any Premiums to be paid by the Company or in
amounts to be paid to the Company under the Policy by the insurer,
such amounts being subject to the claims of the Company's general
creditors.
B) Agents:
The Company may employ agents and provide for such clerical,
legal, actuarial, accounting, advisory or other services as it
deems necessary to perform its duties under this Agreement. The
Company shall bear the cost of such services and all other expenses
it incurs in connection with the administration of this Agreement.
C) Liability and Indemnification:
Except for its own gross negligence, willful misconduct or
willful breach of the terms of this Agreement, the Company shall be
indemnified and held harmless by the Owner against liability or
losses occurring by reason of any act or omission of the Company or
any other person.
D) Cooperation of Parties:
All parties to this Agreement and any person claiming any
interest hereunder agree to perform any and all acts and execute
any and all documents and papers which are necessary or desirable
for carrying out this Agreement or any of its provisions.
E) Governing Law:
This Agreement is made and entered into in the State of
Florida and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of
Florida.
F) Non-Guarantee of Employment:
Nothing contained in this Agreement shall be construed as a
contract or guarantee of employment between the Company and the
Executive.
G) Counsel:
The Company may consult with legal counsel with respect to the
meaning or construction of this Agreement, its obligations or
duties hereunder or with respect to any action or proceeding or any
question of law, and it shall be fully protected with respect to
any action taken or omitted by it in good faith pursuant to the
advice of legal counsel.
<PAGE>
H) Notices:
For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered
personally or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or by nationally
recognized overnight delivery service providing for a signed return
receipt, addressed to the Executive at the home address set forth
in the Company's records and to the Company at the address set
forth on the first page of this Agreement, provided that all
notices to the Company shall be directed to the attention of the
Board of Directors, or, where appropriate, to the Company's
Personnel Department, or to such other address as either party may
have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only
upon receipt.
I) Entire Agreement:
This Agreement contains the entire understanding between the
Company and the Owner with respect to the payment of Premiums or
repayment of Premiums.
J) Severability:
In the event any one or more provisions of this Agreement are
held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of
the other provisions hereof and such other provisions shall remain
in full force and effect unaffected by such invalidity or
unenforceability.
K) Execution in Counterparts:
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
PHOTRONICS, INC.
By: _________________________
Name:
Title:
_________________________
The undersigned, the Executive named in the above agreement,
consents to the issuance of the Policy.
______________________________
<PAGE> ASSIGNMENT OF LIFE INSURANCE DEATH BENEFIT
AS COLLATERAL
(Execute in duplicate)
A) For value received, the undersigned hereby assigns, transfers
and sets over to PHOTRONICS, INC., its successors or assigns,
(herein called the Assignee") the death benefit under Policy No.
_________, issued by Massachusetts Mutual Life Insurance Company or
its MML affiliated Insurance Company (herein called the "Insurer";
the identity of the Insurance Company is determined by the policy
number) and any supplementary contracts issued in connection
therewith (said policy and contracts being herein called the
"Policy"); upon the life of __________________________ and the
right to surrender the Policy subject to all of the terms and
conditions of the Policy and to all superior liens, if any, which
the Insurer may have against the Policy. The undersigned by this
instrument agrees and the Assignee by the acceptance of this
assignment agrees to the conditions and provisions herein set
forth.
B) It is understood and agreed that the Assignee shall have the
right to collect from the Insurer the net proceeds of the Policy
when it becomes a claim by death or maturity and the right to
surrender the Policy and that all other rights under the Policy,
including, by way of illustration and not limitation, the right to
make the Policy loans, the right to designate and change the
beneficiary, and the right to elect and to receive dividends are
reserved exclusively to the owner of the Policy and are excluded
from this assignment and do not pass by virtue hereof and may be
exercised by the owner on the sole signature of the owner;
provided, further however, that the owner of the Policy shall not
make any Policy loans or change the manner in which dividends are
received or applied without the written consent of the Assignee.
Nothing herein shall affect funds, if any, now or hereafter held by
the Insurer for the purpose of paying premiums under the Policy.
C) The Assignee covenants and agrees with the undersigned as
follows:
1) That any balance of sums received hereunder from the
Insurer remaining after payment of the then existing Liabilities,
matured or unmatured, shall be paid by the Assignee to the persons
entitled thereto under the terms of the Policy had this assignment
not been executed.
2) That the Assignee, not having any right to obtain
policy loans from the Insurer, will not take any steps to borrow
against the Policy, except that the owner of the Policy MAY direct
the Insurer to pay the proceeds of any Policy loan to the Assignee,
in which event the Assignee shall reduce the amount of existing
Liabilities by the amount of such Policy loan and interest accrued
to the date such Policy loans are repaid by the Assignee.
<PAGE>
3) That the Assignee will upon request forward without
unreasonable delay to the Insurer the Policy for endorsement of any
designation or change of beneficiary or any election of an optional
mode of settlement; provided, however, that any such designation,
change or election shall be made subject to this assignment and to
the rights of the Assignee hereunder.
4) That, upon surrender of the Policy or any portion
thereof or upon the surrender of any or all of the paid-up
additions standing to the credit of the Policy, if any, by the
undersigned at any time before any death benefit is payable under
the Policy, the Assignee shall have the right to collect such
surrender proceeds of the Policy or any such surrender value of
such paid-up additions up to the amount of the Liabilities and any
balance shall be paid to the owner of the Policy.
D) This assignment of the life insurance death benefit under the
Policy is made as collateral security for all liabilities of the
undersigned, or any of them, to the Assignee, either now existing
or that may hereafter arise with respect to premiums advanced for
or paid on the Policy by the Assignee (all of which liabilities
secured or to become secured are herein called "Liabilities").
E) The Insurer is hereby authorized to recognize the Assignee's
claim hereunder. In the event any death benefit, surrender value,
cash value or other proceeds of the Policy are to be paid, the
Insurer shall request a joint statement from the Assignee and the
undersigned of the allocation of such proceeds. Separate checks in
accordance with such joint statement shall be issued by the Insurer
and shall constitute full disclosure and release therefor to the
Insurer. In the event the Assignee and the undersigned do not
agree to a joint schedule, the Insurer shall have the right to
place such proceeds in an escrow account for the benefit of
Assignee and the undersigned, as their interests may appear, and
the Escrow Agent shall hold such proceeds until the matter is
settled, either by mutual consent or a final binding judgment which
is no longer appealable.
F) The Assignee may take or release other security, may release
any party primarily or secondarily liable for any of the
Liabilities, may grant extensions, renewals or indulgences with
respect to the Liabilities, or may apply to the Liabilities in such
order as the Assignee shall determine, the insurance death benefit
payable under the Policy hereby assigned without resorting or
regard to other security.
G) In the event of any conflict between the provisions of this
assignment and provisions of the note or other evidence of any
Liability, with respect to the Policy or rights of collateral
security therein, the provisions of this assignment shall prevail.
<PAGE>
H) The undersigned declares no proceedings in bankruptcy are
pending against him and that his property is not subject to any
assignment for the benefit of creditors.
Signed and sealed this _________________ day of ___________, 19__.
____________________________ __________________________
Witness Owner
____________________________ ___________________________
Address Address
ACCEPTANCE OF ASSIGNMENT ___________________________
Date
ATTEST (TYPE/PRINT NAME OF ASSIGNEE)
(SEAL) ___________________________
BY:__________________________ BY:________________________
Signature and Title Signature and Title
RELEASE OF ASSIGNMENT
For Value Received, the Policy and all claims thereunder
conveyed by the within assignment are hereby released.
PHOTRONICS, INC.
By:___________________________
Title:________________________
Date:_________________________
