JUPITER, Fla. -- Photronics Inc. here today announced a series of plant closings and consolidation of photomask operations in the U.S. as well as Europe to increase its competitiveness. The moves are also aimed at shifting more focus to advanced reticles for 0.13-micron and below process technologies, the company said.
The restructuring of Photronics' manufacturing units was described as the final phase in the company's merger with Align-Rite International Inc. of Los Angeles, which was acquired for $115 million in stock (see Sept. 16, 1999, story). After the acquisition, Photronics announced last summer that it was consolidating Align-Rite and its existing photomask-making operations.
As part of the consolidation, Photronics said it will cut its workforce by 8-to-10% and create new state-of-the-art reticle manufacturing facility in the Silicon Valley region. Facilities in Palm Bay, Fla., and Heilbronn, Germany, will be ramped down and their operations moved to Photronics' plants in Brookfield, Conn., and Bridgend, Wales, respectively. Photronics said it will also move production from its Burbank, Calif., plant to a new Phoenix facility.
The company indicated that the closing of its Palm Bay and Heilbronn facilities have been accelerated from an earlier plan. Photronics said it now expects to complete the closing of those facilities during the next several quarters.
"When Photronics and Align-Rite agreed to merge, we identified opportunities to leverage our combined infrastructure, bringing even greater economies of scale to the merged global manufacturing network, our technology development team, and our customer service organization," said James L. Mac Donald, president of Photronics. "Facilities consolidation, including the establishment of a new state-of-the-art manufacturing center in the Silicon Valley region, is consistent with Photronics' vision as a photomask industry leader, which positions the company to meet the expectations of our customers, our employees, and our shareholders."
To create the new Silicon Valley photomask facility, Photronics said it will close down its existing Northern California reticle plant in Milpitas. According to Photronics, the new Silicon Valley facility will be the first new reticle-manufacturing operation brought into service in the area in more than 15 years. It will contain a class 1 cleanroom and utilize the company's proprietary Sub-Wavelength Reticle Solutions processes for 0.13-micron and below technology nodes.
The company said several potential locations for the new mask plant have been identified in Silicon Valley, and a final decision on a site will be announced this summer.
To cover the costs for consolidation, Photronics said it will take after-tax charges of $23 million to $26 million (or $0.67 to $0.75 per diluted share) in the fiscal second quarter, which ends today. The workforce cuts and reduced operating expenses from the consolidation will enable Photronics to recover all of the related charges in less than two years, according to the company.