What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-06-15 compared with 2022-03-10 · 151 added, 123 removed, 110 unchanged (71% of the section changed)

20 unchanged sentences

demand, excess production capacity, and accelerated erosion of selling prices, with a concomitant effect on revenue and profitability.

We are typically required to fulfill

customer orders within a short period of time .

results in a minimal level of backlog, typically two to three weeks of backlog for FPD photomasks and one to two weeks of backlog for IC photomasks .

However, the demand for some IC photomasks has expanded beyond the industry’s capacity to supply them within the

traditional time period, thus the backlog in some cases can

expand to as long as 2-3 months.

We are typically required to fulfill customer orders within a short period of time.

This results in a minimal level of backlog, typically two to three weeks of backlog for FPD photomasks and one

to two weeks for IC photomasks.

However, the demand for some IC photomasks has expanded beyond the industry’s capacity to supply them within the traditional time period, thus the backlog in some cases can expand to as long as two to three months.

The global semiconductor and FPD industries are driven by end markets which have been closely tied to consumer-driven applications of high-performance devices, including, but not limited to,

6 unchanged sentences

All of our facilities have continued to operate throughout the COVID-19 pandemic.

The pandemic, particularly at its height, impacted our business in a number of ways including customer shut

downs, which led to delays in new photomask design releases, and travel restrictions, which delayed tool installations and servicing.

To date we have not experienced significant raw material shortages, however, supply chain disruptions could

potentially delay or prevent us from fulfilling customer orders.

The pandemic, particularly at its height, impacted our business in a number of ways including customer shutdowns,

which led to delays in new photomask design releases, and travel restrictions, which delayed tool installations and servicing.

To date we have not experienced significant raw material shortages, however, supply chain disruptions could potentially

delay or prevent us from fulfilling customer orders.

While our business has continued to grow over the course of the pandemic, we cannot predict its future impact on our business with a high level of certainty.

Results of Operations

Three-Months ended January 30, 2022

Three and Six Months Ended May 1, 2022

The following table presents selected operating information expressed as a percentage of revenue.

1 unchanged sentence

Three Months Ended

Six Months Ended

Cost of goods sold

2 unchanged sentences

Operating income

Other income, net

Non-operating income (expense), net

Income before income tax provision

2 unchanged sentences

Net income attributable to Photronics, Inc.

All the following tabular comparisons, unless otherwise indicated, are for the three-months ended January 30, 2022 (Q1 FY22), October 31, 2021 (Q4 FY21), and January 31,

2021 (Q1 FY21).

All tabular comparisons included in the following discussion, unless otherwise indicated, are for the three months ended May 1, 2022 (Q2 FY22), January 30, 2022 (Q1

FY22), and May 2, 2021 (Q2 FY21), and for the six months ended May 1, 2022 (YTD FY22) and May 2, 2021 (YTD FY21), in millions of dollars.

The columns may not foot due to rounding.

Our quarterly revenues can be affected by the seasonal purchasing practices of our customers.

As a result, demand for our

products is typically reduced during the first quarter of our fiscal year by the North American, European, and Asian holiday periods, as some of our customers reduce their development and, consequently, their buying activities during those

The following tables present changes in disaggregated revenue in Q1 FY22 from revenue in prior reporting periods.

Our quarterly revenues can be affected by the seasonal

purchasing practices of our customers.

As a result, demand for our products is typically reduced during the first or second quarter of our fiscal year by the North American, European, and Asian holiday periods, as some of our customers reduce

their development and, consequently, their buying activities during those periods.

The following tables present changes in disaggregated revenue in Q2 FY22 and YTD FY22 from revenue in prior reporting periods.

Quarterly Changes in Revenue by Product Type

1 unchanged sentence

Q2 FY22 from Q2 FY21

YTD FY22 from YTD FY21

Revenue in Q2 FY22

Increase (Decrease)

Revenue in YTD FY22

Increase (Decrease)

Total Revenue

3 unchanged sentences

Q2 FY22 from Q2 FY21

YTD FY22 from YTD FY21

United States

Total Revenue

** This table disaggregates revenue by the location in which it was earned.

Revenue in Q1 FY22 of $189.8 million increased 4.7% compared with Q4 FY21 and 24.8% from Q1 FY21.

IC revenue increased 3.4% and 23.6%, compared with Q4 FY21 and Q1 FY21, respectively.

These increases were driven by strong demand for high-end logic photomasks in Asia and improved demand for mainstream photomasks

used for computer chips needed for the production of internet-of-things products, 5G wireless technology applications, cryptocurrency mining, and consumer products.

The strengthened demand for mainstream photomasks also allowed for better

FPD revenue increased 7.6% in Q1 FY22, compared with Q4 FY21, and 27.5% compared with Q1 FY21.

Improved demand for photomasks used in high-end mobile AMOLED and G10.5+ applications gave rise to these increases.

Revenues from mainstream FPD products were up 10.6% from the prior year quarter but declined 7.2% consecutively due to capacity being dedicated to high-end production.

Three Months Ended

Gross margin increased by 2.8 percentage points in Q1 FY22, from Q4 FY21, primarily as a result of the increase in revenue

from the prior quarter.

Revenue in Q2 FY22 was $204.5 million, representing an increase of 7.7% compared with Q1 FY22 and 28.0% from Q2 FY21.

Revenue in YTD FY22 was $394.3 million, representing an increase of 26.5% over YTD FY21.

IC photomask revenue increased 12.4% and 30.2% in Q2 FY22, compared with Q1 FY22 and Q2 FY21, respectively, and increased 27.0% in YTD FY22, compared with YTD FY21.

These increases were driven by continued demand

growth and better pricing for mainstream photomasks used for computer chips needed for the production of products considered part of the “internet-of-things”, 5G wireless technology applications, cryptocurrency mining, and consumer products.

Concurrently, strong demand for high-end logic photomasks in Asia also allowed for better pricing.

FPD revenue decreased 2.3% in Q2 FY22, compared with Q1 FY22, due to a decline in mainstream demand, unfavorable product mix, and the weakening of the Japanese yen, as well as softened demand for G10.5+ large area

FPD revenues increased 22.9% in Q2 FY22, compared with Q2 FY21, as a result of improved demand for both AMOLED photomasks used in mobile applications and G10.5+ large area masks.

Demand and ASPs also improved from the prior year quarter

for mainstream photomasks.

On a year-to-date basis, FPD revenue increased 25.2% as a result of improved demand for AMOLED photomasks and ASPs for mainstream products.

Gross margin increased by 2 .8 percentage points

in Q2 FY22, from Q1 FY22, primarily as a result of the increase in revenue from the prior quarter.

Material costs increased 2.4% from the prior quarter, but decreased, as a percentage of revenue, by 140 basis points.

Labor costs increased 6.8% (20 basis points, as a percentage of revenue), primarily driven by higher

labor costs in Asia.

Equipment and other overhead costs decreased 3.3%, or 250 basis points as a percentage of revenue, primarily driven by increased tool utilization for customer qualifications, which also drove the increase in our research

and development costs in the current quarter.

Gross margin increased by 11.4 percentage points in Q1 FY22, from Q1 FY21, primarily as a result of the increase in revenue from the prior year quarter.

Material costs increased 10.4% from the prior year quarter, but

decreased 360 basis points, as a percentage of revenue.

Labor costs increased 9.3% from the prior year quarter, but fell 160 basis points as a percent of revenue;

Labor costs increased 5.4%,

but decreased 20 basis points, as a percentage of revenue.

Equipment and other overhead costs increased 3.4% but decreased 120 basis points as a percentage of revenue, primarily driven by increased importation costs into China,

partially offset by decreased outside processing costs, including sputtering and coating.

Gross margin increased by 9.7 percentage points

in Q2 FY22, from Q2 FY21, primarily as a result of the increase in revenue from the prior year quarter.

Material costs increased 13.1% from the prior year quarter, but decreased 340 basis points, as a percentage of revenue.

Labor costs increased

15.8% from the prior year quarter but decreased 110 basis points as a percent of revenue;

the increase was primarily the result of increased labor costs in Asia.

and other overhead costs rose 3.1%, but fell 630 basis points, as a percentage of revenue.

Increased outsourced manufacturing costs, which were partially offset by decreased depreciation expense, were the most significant contributors to the net

increase in equipment and other overhead costs.

Equipment and other overhead costs rose 8 .4%, but decreased 520 basis points, as a percentage of revenue.

Increased outsourced manufacturing costs and importation costs into China , which were partially offset by decreased depreciation expense, were the most significant contributors to the net increase in

equipment and other overhead costs.

Gross margin increased by 10.6 percentage points in YTD FY22, from YTD FY21, primarily as a result of the increase in revenue from

the prior year.

Material costs increased 11.8% from the prior year quarter, but decreased 350 basis points, as a percentage of revenue.

Labor costs increased 12.5% from the prior year quarter but decreased 140 basis points as a percent of

the increase was primarily the result of increased labor costs in Asia.

Equipment and other overhead costs rose 5.7 %, but decreased 570 basis points, as a percentage of revenue.

Increased outsourced manufacturing costs

and importation costs into China , which were partially offset by decreased depreciation expense, were the most significant contributors to the net increase in equipment and other overhead costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $15.7 million in Q1 FY22, compared with $14.3 million in Q4 FY21, and $14.1 million in Q1 FY21.

The increase from Q4 FY21 was primarily the result of increased

professional fees of $0.7 million and compensation and related expenses of $0.4 million, and the increase from the prior-year quarter was primarily the result of increased compensation and related expenses of $1.5 million.

Research and Development Expenses

Research and development expenses, which primarily consist of development and qualification efforts related to high-end

process technologies for high-end IC and FPD applications, were $5.9 million in Q1 FY22, compared with $4.1 million in Q4 FY21;

the increase was primarily caused by increased development activities in the U.S.

Selling, general and administrative expenses were $16.6 million in Q2 FY22, compared with $15.7 million in Q1 FY22.

The increase of $0.9

million was primarily the result of increased compensation and related expenses of $1.2 million, which were partially offset by decreased professional fees of $0.3 million.

Selling, general and administrative expenses increased $2.5 million in

Q2 FY22, from $14.1 million in Q1 FY21, primarily as a result of increased compensation and related expenses of $2.4 million.

The increases in compensation and related expenses from both prior periods included increased severance costs of $0.7

million, primarily related to the retirement of our former chief executive officer.

Selling, general and administrative expenses were $32.3 million in YTD FY22, compared with $28.1 million in YTD FY21.

The increase of $4.2 million was primarily the result of increased compensation and related

expenses of $3.9 million, and increased export duties of $0.3 million.

Research and Development Expenses

increased by $1.2 million in Q1 FY22, compared with $4.7 million in Q1 FY21, with increased development activities in the U.S.

exceeding a decrease of activities at our Asia-based facilities.

Other Income (Expense)

Three Months Ended

Research and development expenses, which primarily consist of development and qualification efforts related to process technologies for high-end IC and FPD applications, were $4.2 million in Q2

FY22, compared with $5.9 million in Q1 FY22;

the decrease was primarily the result of decreased development activities in the U.S.

Research and development expenses decreased by $0.2 million in Q2 FY22, from $4.4 million incurred in Q2 FY21,

with decreased development activities in the U.S.

and China exceeding increases at our Taiwan-based facilities.

Research and development expenses increased by $1.1 million in YTD FY22 to $10.1 million, compared with $9.1 million in YTD FY21.

The increase was driven by more development activities in the

and Taiwan, which were partially offset by a decrease in such activities in China.

Non-operating Income (Expense)

Foreign currency transactions impact, net

Interest expense

Interest income and other income, net

Other income (expense)

Other income (expense) increased $0.9 million in Q1

QY22, compared with Q4 FY21, primarily due to favorable movements of the South Korean won against the U.S.

Interest expense, net

Interest income and other income (expense), net

Non-operating income (expense), net

Non-operating income (expense) increased $3.3 million to $8.0 million in Q2 FY22, compared with $4.7 million in Q1 FY22, primarily due to

favorable movements of the South Korean won and the New Taiwan dollar against the U.S.

dollar offsetting unfavorable movements of the RMB against the U.S.

Other income (expense) increased $4.0 million in Q1 FY22,

compared with Q1 FY21, primarily due to favorable movements of the South Korean won and the New Taiwan dollar against the U.S.

In addition, our interest expense decreased by $0.9 million as a result of

subsidies we received on our China-based debt.

Non-operating income (expense) increased $8.8 million to $8.0 million in Q2 FY22, compared with $(0.8) million in Q2 FY21, and increased $12.8 million to $12.7 million in YTD FY22, compared with $(0.1) million in YTD

These increases were primarily due to favorable movements of the South Korean won and the New Taiwan dollar against the U.S.

dollar, which were partially offset by unfavorable movements of the RMB against the U.S.

favorable foreign currency results were partially offset by increased interest expense in the current year periods, which resulted from our receiving lower subsidies on our China-based debt.

Income Tax Provision

Three Months Ended

Income tax provision

Effective income tax rate

The effective income tax rate is sensitive to the jurisdictional mix of earnings, due, in part, to the non-recognition of tax benefits on losses in jurisdictions with

valuation allowances where the tax benefit of the losses is not available.

The effective income tax rate increase in Q1 FY22, compared with Q4 FY21, is primarily due to a decrease in credits in a non-US jurisdiction and an increase of uncertain tax positions in non-U.S.

jurisdictions in Q1

The effective income tax rate increase in Q1 FY22, compared with Q1 FY21, is primarily due to a decrease in credits in a non-US jurisdiction and an increase of uncertain tax positions in non-U.S.

jurisdictions in Q1

The effective income tax rate is sensitive to the jurisdictional mix of earnings, due, in part, to the non-recognition of tax benefits on

losses in jurisdictions with valuation allowances where the tax benefit of the losses is not available.

The effective income tax rate decrease in Q2 FY22, compared with Q1 FY22, is primarily due to changes in the jurisdictional mix of earnings.

The effective income tax rate increase in Q2 FY22, compared with Q2 FY21, is primarily due to a decrease in credits in a non-U.S.

jurisdiction and the release of valuation allowance for a loss carryforward in a

jurisdiction in Q2 FY21.

The effective income tax rate increase in YTD FY22, compared with YTD FY21, is primarily due to a decrease in credits in a non-U.S.

jurisdiction and the release of valuation allowance for a loss carryforward in a

jurisdiction in YTD FY21.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $15.6 million in Q2 FY22, compared with $8.7 million in Q1 FY22, and $5.8 million in Q2 FY21.

The decrease from the prior quarter was due to lower net income at

our China-based IC facility, which was partially offset by increased net income at our Taiwan-based IC facility.

The increase from the prior-year quarter resulted from increased net income at both of these majority-owned facilities in the

current-year quarter.

On a year-to-date basis, net income attributable to noncontrolling

interests increased to $24.3 million in YTD FY22 from $7.3 million in YTD FY21.

The increases from all prior periods resulted from increased net income at our Taiwan-based and China-based IC joint ventures.

Liquidity and Capital Resources

Cash and cash equivalents totaled $314.2 million and $276.7 million as of January 30, 2022, and October 31, 2021, respectively.

As of the most recent

balance sheet date, total cash and cash equivalents included $255.1 million held by foreign subsidiaries.

Net Cash , a non-GAAP financial measure as defined and

discussed in the “Non-GAAP financial measures” section below, was $217.3 million and $165.0 million as of January 30, 2022 and October 31, 2021.

primary sources of liquidity are our cash on hand, cash we generate from operations, and borrowing capacity we have available from financial institutions.

Our corporate credit agreement has a $50 million borrowing limit, with an

expansion capacity to $100 million.

Cash and cash equivalents was $329.3 million and

$276.7 million as of May 1, 2022, and October 31, 2021, respectively.

As of the most recent balance sheet date, total cash and cash equivalents included $266.1 million held by foreign subsidiaries.

Net Cash, a non-GAAP financial measure as

defined and discussed in the Non-GAAP Financial Measures section below, was $246.7 million and $165.0 million as of May 1, 2022 , and October 31, 2021, respectively.

Our primary sources of liquidity

are our cash on hand, cash we generate from operations, and borrowing capacity we have available from financial institutions.

Our corporate credit agreement has a $50 million borrowing limit, with an expansion capacity to $100 million.

Although we have not accessed funds under our corporate credit facilities since 2011, it continues to afford us financial flexibility.

In addition, in China, we currently have approximately $30.4 million of borrowing capacity to support local operations.

See Note 5 to the condensed consolidated financial statements for additional information.

See Note 5 to the condensed consolidated financial statements for additional information on our currently available financing.

We continually evaluate alternatives for efficiently funding our capital expenditures and ongoing operations.

10 unchanged sentences

We estimate capital expenditures for the remainder of FY22 will be approximately $65 million;

investments will be targeted towards high-end and mainstream point tools that will increase our operating capacity and efficiency, and enable us to support our customers’ near-term demands.

As of January 30, 2022, we had outstanding capital commitments of approximately $108 million and recognized liabilities related to capital equipment purchases of approximately $10 million.

Although payment timing

could vary, primarily as a result of the timing of tool installation and testing, we currently estimate that we will fund $100 million of our total $118 million committed and recognized obligations for capital expenditures over the next

twelve months.

these investments will

be targeted towards high-end and mainstream point tools that will increase our operating capacity and efficiency, and enable us to support our customers’ near-term demands.

As of May 1, 2022, we had outstanding capital commitments of approximately $115 million and recognized liabilities related to capital equipment purchases of approximately $8 million.

Although payment timing could

vary, primarily as a result of the timing of tool installation and testing, we currently estimate that we will fund $96 million of our total $123 million committed and recognized obligations for capital expenditures over the next twelve

Please refer to Notes 5 and 7, respectively, to the condensed consolidated financial statements for information on our outstanding debt and lease commitments.

1 unchanged sentence

This authorization does not obligate the Company to repurchase any dollar amount or number of shares of common stock.

As of January 30, 2022, our current share repurchase program had approximately $31.7 million remaining

under its authorization.

As of May 1, 2022, our current share repurchase program had approximately $31.7 million remaining under

its authorization.

Depending on market conditions, we may utilize some or the entire remaining approved amount to reacquire additional shares.

As discussed in Note 4 to the condensed consolidated financial statements, DNP, the noncontrolling interest in our China-based joint venture has, under certain circumstances, the right to put its

interest in the joint venture to Photronics, or to purchase our interest in the joint venture.

Under all such circumstances, the sale of DNP’s interest would be at its ownership percentage of the joint venture’s net book value, with closing to

take place within three business days of obtaining required approvals and clearance.

As discussed in Note 4 to the condensed consolidated financial statements, DNP, the noncontrolling interest in our China-based joint venture has, under certain circumstances, the right to put

its interest in the joint venture to Photronics, or to purchase our interest in the joint venture.

Under all such circumstances, the sale of DNP’s interest would be at its ownership percentage of the joint venture’s net book value, with closing

to take place within three business days of obtaining required approvals and clearance.

As of the date of issuance of this report, DNP had not indicated its intention to exercise this right.

As of January 30, 2022, Photronics and DNP each had net

As of May 1, 2022, Photronics and DNP each had net

investments in this joint venture of approximately $92.6 million.

Three Months Ended

Net cash provided by operating activities

2 unchanged sentences

Operating Activities:

Net cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation and amortization, share-based compensation,

and the effects of changes in operating assets and liabilities.

Net cash provided by operating activities increased by $32.8 million in Q1 FY22, compared with Q1 FY21, due to increased net income and net changes in working capital, predominantly

Free Cash Flow and LTM Free Cash Flow both of which

are non-GAAP financial measures as discussed in the “Non-GAAP financial measures” section below, increased by $30.8 and $11.1 million, respectively, compared with Q1 FY21, primarily due to the increase in Net cash provided by operating activities discussed above.

Net cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation and

amortization, share-based compensation, and the effects of changes in operating assets and liabilities.

Net cash provided by operating activities increased by $45.1 million in YTD FY22, compared with YTD FY21, due to increased net income, which

was partially offset by lower depreciation expense.

Free Cash Flow and LTM (“Last Twelve Months”) Free Cash Flow, which are non-GAAP financial measures as discussed in the “ Non-GAAP Financial Measures ”

section below, increased by $79.4 and $95.3 million, respectively, compared with YTD FY21, primarily due to the increase in Net cash provided by operating activities discussed above.

Investing Activities:

Net cash flows used in investing activities primarily consisted of purchases of property, plant and equipment, which increased $1.6 million in Q1 FY22, as compared

with Q1 FY21.

The remainder of the $2.0 million increase was primarily due to our receiving $0.4 million of investment related government incentives in China in Q1 FY21;

we did not receive any investment related government incentives in Q1 FY22.

Net cash flows used in investing activities primarily consisted of purchases of property, plant and equipment of $34.8

million, which decreased $38.7 million in YTD FY22, as compared with YTD FY21.

The reduced spending on property, plant and equipment was partially offset by a $4.4 million decrease in investment related government incentives received in China.

Financing Activities:

Net cash flows used in financing activities primarily consist of share repurchases, proceeds from and repayments of debt, and contributions from and distributions to

noncontrolling interests.

Net cash used in financing activities decreased by $14.0 million in Q1 FY22, compared with Q1 FY21, primarily due to a contribution from noncontrolling interests in our majority owned subsidiaries in Taiwan and China of

$15.0 million, decreased share repurchases of $10.7 million, and increased debt repayments of $7.4 million.

In addition, we received debt proceeds of $6.2 million in Q1 FY21, and did not incur debt in Q1 FY22.

Net cash flows used in financing activities primarily consist of share repurchases, proceeds from and repayments of debt, and

contributions from noncontrolling interests.

Net cash used in financing activities decreased by $16.5 million in YTD FY22, compared with YTD FY21, primarily due to contributions from noncontrolling interests in our majority owned subsidiaries in

Taiwan and China of $25.0 million, decreased share repurchases of $20.7 million, and increased debt repayments of $18.9 million.

In addition, we received debt proceeds of $12.4 million in YTD FY21 and did not incur debt in YTD FY22.

Non-GAAP Financial Measures

We consider Free Cash Flow, LTM Free Cash Flow, and Net Cash, which are “non-GAAP financial measures” (as such term is defined by the

SEC), to be useful metrics in measuring our cash-generating performance.

(Note that we may define these terms differently than other companies that use similarly named non-GAAP financial measures.) These non-GAAP metrics are not intended to

represent funds available for our discretionary use or to be used as a substitute for Cash and cash equivalents or Net cash provided by operating activities, as measured under GAAP.

The following tables reconcile Free Cash Flow to Net cash

provided by operating activities and present the calculations of LTM Free Cash Flow for Q1 FY22 and Q1 FY21.

We consider Free Cash Flow, LTM Free Cash Flow, and Net Cash, which are “non-GAAP financial measures” (as such term is defined by the SEC), to be useful metrics in measuring our cash-generating

(Note that we may define these terms differently than other companies that use similarly-named non-GAAP financial measures.) These non-GAAP metrics are not intended to represent funds available for our discretionary use or to be used

as a substitute for Cash and cash equivalents or Net cash provided by operating activities , as measured under GAAP.

The following tables reconcile Net cash provided by operating activities to Free Cash Flow and present the calculations of LTM Free Cash Flow for Q2 FY22 and Q2 FY21.

The columns may not foot due to rounding.

Three Months Ended

Free Cash Flow

4 unchanged sentences

LTM Free Cash Flow

First three months of the respective fiscal year

First six months of the respective fiscal year

October fiscal year end

First three months of the prior year

First six months of the prior year

LTM free cash flow

The following table reconciles Cash and cash equivalents to Net Cash at the balance sheet dates.

The increase in Net Cash was primarily driven by an increase in Net cash provided by operating

activities, as discussed above.

The increase in Net Cash was primarily driven by an

increase in Net cash provided by operating activities and decreased spending on property, plant and equipment, as discussed above.

The columns may not foot due to rounding.

3 unchanged sentences

Business Outlook

Our current business outlook and guidance was provided in the Photronics Q1-FY22 Earnings Release, Earnings Presentation, and Investor conference call, but is not incorporated herein.

These can be accessed in the

investor section of our website - www.photronics.com.

Our future results of operations and the other forward-looking statements contained in this filing and in the Photronics Q1-FY22 Earnings Presentation and the related earnings call and slide deck

involve a number of risks and uncertainties, some of which are discussed in Part I, Item 1A of our 2021 Form 10-K.

Our current business outlook and guidance was provided in the Photronics Q2 FY22 earnings release, Earnings Presentation, and financial results conference call, but is not incorporated herein.

These can be accessed in the investor section of our website - www.photronics.com.

Our future results of operations and the other forward-looking statements contained in this filing and in the Photronics Q2 FY22 Earnings Presentation and the related financial results conference

call and slide deck involve a number of risks and uncertainties, some of which are discussed in Part I, Item 1A of our 2021 Form 10-K.

A number of other unforeseeable factors could cause actual results to differ materially from our expectations.

1 unchanged sentence

Please refer to Part II, Item 7 of our 2021 Form 10-K for discussion of our critical accounting estimates.

There have been no changes to our critical accounting estimates since the filing of our Annual Report on Form

10-K for the year ended October 31, 2021.

There have been no changes to our critical accounting estimates since the filing of our Form 10-K for the

year ended October 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis