XML 66 R11.htm IDEA: XBRL DOCUMENT
v2.4.0.6

JOINT VENTURE, TECHNOLOGY LICENSE AND OTHER AGREEMENTS WITH MICRON TECHNOLOGY, INC | 12 Months Ended
--- | ---
Oct. 28, 2012
JOINT VENTURE, TECHNOLOGY LICENSE AND OTHER AGREEMENTS WITH MICRON TECHNOLOGY, INC. [Abstract] |
JOINT VENTURE, TECHNOLOGY LICENSE AND OTHER AGREEMENTS WITH MICRON TECHNOLOGY, INC. | NOTE 4 - JOINT VENTURE, TECHNOLOGY LICENSE AND OTHER AGREEMENTS WITH MICRON TECHNOLOGY, INC. In May 2006 Photronics and Micron entered into the MP Mask joint venture ("MP Mask"), which develops and produces photomasks for leading-edge and advanced next generation semiconductors. As part of the formation of the joint venture, Micron contributed its existing photomask technology center located in Boise, Idaho, (headquarters of MP Mask) and Photronics invested $135 million in exchange for a 49.99% interest in MP Mask (to which $64.2 million of the original investment was allocated), a license for photomask technology of Micron, and certain supply agreements. This joint venture is a variable interest entity ("VIE") (as that term is defined in the Accounting Standards Codification ("ASC") ) because all costs of the joint venture are passed on to the Company and Micron through purchase agreements they have entered into with the joint venture, and it is dependent upon the Company and Micron for any additional cash requirements. On a quarterly basis the Company reassesses whether its interest in MP Mask gives it a controlling financial interest in this VIE. The purpose of this quarterly reassessment is to identify the primary beneficiary (which is defined in the ASC as the entity that consolidates a VIE) of the VIE. As a result of the reassessments in fiscal year 2012, the Company determined that Micron is still the primary beneficiary of the VIE, by virtue of its tie-breaking voting rights within MP Mask's Board of Managers, thereby giving it the power to direct the activities of MP Mask that most significantly impact its economic performance, including its decision making authority in the ordinary course of business and its purchasing the majority of products produced by the VIE. The Company has utilized MP Mask for both high-end IC photomask production and research and development purposes. MP Mask charges its variable interest holders based on their actual usage of its facility and charges separately for any research and development activities it engages in at the requests of its owners. MP Mask is governed by a Board of Managers, appointed by Micron and the Company. Since MP Mask's inception, Micron, as a result of its majority ownership, has held majority voting power on the Board of Managers. The voting power held by each party is subject to change as ownership interests change. Under the MP Mask joint venture operating agreement, the Company may be required to make additional capital contributions to MP Mask up to the maximum amount defined in the operating agreement. However, should the Board of Managers determine that further additional funding is required, MP Mask shall pursue its own financing. If MP Mask is unable to obtain its own financing, it may request additional capital contributions from the Company. Should the Company choose not to make a requested contribution to MP Mask, its ownership percentage may be reduced. During fiscal 2012 and fiscal 2011 the Company made additional capital contributions of $13.4 million and $18.3 million, respectively, to the MP Mask joint venture, which were primarily related to capital calls made by the joint venture. The Company did not receive any distributions from MP Mask during fiscal 2012 or fiscal 2011. The Company's investment in the VIE, which represents its maximum exposure to loss, was $93.3 million and $80.0 million at October 28, 2012 and October 30, 2011, respectively. These amounts are reported in the Company's consolidated balance sheets as Investment in joint venture. The Company recorded a loss from its investment in MP Mask of $0.1 million and income of $0.6 million and $0.2 million in fiscal years 2012, 2011 and 2010, respectively. Income (loss) from MP Mask is included in Interest and other income, net, in the consolidated statements of income. As of October 28, 2012, the Company owed MP Mask $6.4 million and had a receivable from Micron of $9.0 million, both primarily related to the aforementioned supply agreements. The Company, in 2012, recorded $1.6 million of commission revenue earned under the supply agreements it has with Micron and MP Mask. Amortization of $0.4 million of the supply agreement intangible asset resulted in net revenue related to the supply agreements of $1.2 million in 2012. The recorded commission revenue of $1.6 million represents the excess of $41.5 million in orders received from Micron over the Company's cost of $39.9 million to fulfill the orders through MP Mask. The Company, for certain sales made during 2012, also recorded cost of sales in the amount of $7.6 million for photomasks produced by MP Mask for the Company's customers, and incurred expenses of $2.0 million for research and development activities and other goods and services purchased from MP Mask by the Company. In 2012, the Company purchased equipment from MP Mask for $1.9 million, of which $1.5 million was recorded as the cost of the equipment and $0.4 million was recorded as an investment in joint venture. As of October 30, 2011, the Company owed MP Mask $6.3 million and had a receivable from Micron of $3.4 million, both primarily related to the aforementioned supply agreements. The Company, in 2011, recorded $1.7 million of commission revenue earned under the supply agreements it has with Micron and MP Mask. Amortization of $0.5 million of the supply agreement intangible asset resulted in net revenue related to the supply agreements of $1.2 million in 2011. The recorded commission revenue of $1.7 million represents the excess of $35.0 million in orders received from Micron over the Company's cost of $33.3 million to fulfill the orders through MP Mask. The Company, for certain sales made during 2011, also recorded cost of sales in the amount of $18.5 million for photomasks produced by MP Mask for the Company's customers, and incurred expenses of $3.1 million for research and development activities and other goods and services purchased from MP Mask by the Company. In 2011, the Company purchased equipment from MP Mask for $4.6 million, of which $2.3 million was recorded as the cost of the equipment and $2.3 million was recorded as an investment in joint venture. The Company, in 2010, recorded $1.7 million of commission revenue earned under the supply agreements it has with Micron and MP Mask. Amortization of $0.5 million of the supply agreement intangible asset resulted in net revenue related to the supply agreements of $1.2 million in 2010. The recorded commission revenue of $1.7 million represents the excess of $35.3 million in orders received from Micron over the Company's cost of $33.6 million to fulfill the orders through MP Mask. The Company, for certain sales made during 2010, also recorded cost of sales in the amount of $5.9 million for photomasks produced by MP Mask for the Company's customers, and incurred expenses of $1.9 million for research and development activities and other goods and services purchased from MP Mask by the Company. In the first quarter of 2008 a capital lease agreement with Micron commenced for the U.S. nanoFab facility in Boise, Idaho. Quarterly lease payments, which bore interest at 8%, were $3.8 million through January 2013. This lease was cancelled in the third fiscal quarter of 2009, at which time the Company and Micron (the lessor) entered into a new lease agreement for the facility. Under the provisions of the new lease agreement, quarterly lease payments were reduced from $3.8 million to $2.0 million, the term of the lease was extended from December 31, 2012 to December 31, 2014, and ownership of the property would not transfer to the Company at the end of the lease term. The interest rate of the new lease agreement remained at 8%. As a result of the new lease agreement, the Company reduced its lease obligation and the carrying value of its assets under capital leases by approximately $28 million. The Company paid the capital lease obligation in full in April 2011 with a portion of the net proceeds of the March 2011 issuance of its 3.25% convertible senior notes. In the second quarter of fiscal 2012 the Company paid $35 million to Micron in connection with the purchase of the U.S. nanoFab facility and the remaining term of the operating lease agreement through 2014 was cancelled. Also in connection with this purchase, the Company entered into a $25 million term loan agreement in the second quarter of fiscal 2012 (see Notes 7 and 9 for further discussion). Summarized financial information of MP Mask is presented below.
|  | As of October |
|  | 2012 |  |  | 2011 |
Current assets |  | $ | 25,701 |  |  | $ | 22,264 |
Noncurrent assets |  |  | 170,226 |  |  |  | 157,176 |
Current liabilities |  |  | 15,597 |  |  |  | 25,941 |
Noncurrent liabilities |  |  | - |  |  |  | - |
|  | Year Ended October |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Net sales |  | $ | 84,216 |  |  | $ | 79,766 |  |  | $ | 63,161 |
Gross profit |  |  | 1,799 |  |  |  | 2,649 |  |  |  | 1,976 |
Net income |  |  | 831 |  |  |  | 6,691 |  |  |  | 540 |

X
- Definition Policy for consolidation: judgments and assumptions made to determine if a variable interest held requires the VIE to be consolidated and/or disclose info on involvement with the VIE; methodology used to determine if it is the primary beneficiary of the VIE; judgments made to determine that the power to direct activities that significantly impact economic performance of the VIE are shared. Includes information on agreements entered with Micron Technologies at the time of formation of the JV. + References No definition available. + Details
Name: | plab_JointVentureAndOtherAgreementsTextBlock
Namespace Prefix: | plab_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | plab_JointVentureTechnologyLicenseAndOtherAgreementsWithMicronTechnologyIncAbstract
Namespace Prefix: | plab_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration