On Tuesday, Aug. 15, Photronics (NASDAQ:PLAB) released Q3 2006 earnings for the period ended July 31, 2006.

  • While all margins came down from last year, the drop gets steeper as we walk down the income statement toward the bottom line. That's often a sign of issues with cost control.
  • The lower cash on hand is partly due to a $65.5 million investment in a joint venture with Micron Technology (NYSE:MU) this quarter.
  • In all the doom and gloom, it's encouraging to see free cash flow turning positive.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$108

$108

$115

(5.8%)

Net Profit

--

$5

$15

(68.9%)

EPS

$0.12

$0.11

$0.35

(68.6%)

Diluted Shares

42

45

(7.9%)



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

30.41%

34.46%

(4.05)

Operating Margin

8.13%

15.58%

(7.45)

Net Margin

4.25%

12.88%

(8.63)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$164

$316

(48.1%)

Accounts Rec.

$80

$111

(27.3%)

Inventory

$23

$17

36.9%


Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$47

$80

(41.7%)

Long-Term Debt

$252

$262

(4%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

$30

$46

(36%)

Capital Expenditures

$27

$57

(53.1%)

Free Cash Flow

$3

($11)

N/A



Find out why Fools always follow the money.

Related Companies:

  • Micron
  • Entegris (NASDAQ:ENTG)
  • Taiwan Semiconductor (NYSE:TSM)
  • NEC (NASDAQ:NIPNY)
  • Rockwood Holdings (NYSE:ROC)
  • IBM (NYSE:IBM)

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At the time of publication, Anders Bylund had no position in any of the companies mentioned. Fool rules are here .