What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-12-17 compared with 2024-12-19 · 499 added, 645 removed, 478 unchanged (71% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP (PCAOB ID 34 )

Balance Sheets

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Equity

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Photronics, Inc., and subsidiaries (the “Company”) as of October 31, 2024 and 2023, the

related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended October 31, 2024, and the related notes (collectively referred to as the “financial statements”).

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2024 and October 31, 2023, and the results of its operations and its cash flows for each of the three years in the

period ended October 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal

control over financial reporting as of October 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December

18, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have audited the accompanying consolidated balance sheets of Photronics, Inc., and subsidiaries (the “Company”) as of October 31, 2025 and 2024, the related consolidated statements of income, comprehensive

income, equity, and cash flows for each of the three years in the period ended October 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all

material respects, the financial position of the Company as of October 31, 2025 and October 31, 2024, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2025, in conformity with

accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2025, based on criteria established

in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December 17, 2025, expressed an unqualified opinion on the Company's internal control over

financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of

the Securities and Exchange Commission and the PCAOB.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting

firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or

required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the

accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1)

relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on

the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Revenue – Contracts with Customers— Refer to Note 1 & 10 of the financial statements.

Critical Audit Matter Description

The Company recognizes revenue over time for in-process production orders that have not shipped for contracts with customers for which it has an

enforceable right to bill and collect consideration, including a reasonable profit, in the event the in-process orders are cancelled by the customers.

In addition, as photomasks are manufactured to customer specifications, they have no alternative

use to the Company.

The Company recognizes revenue over time for in-process production orders that have not shipped for contracts with customers for which it has an enforceable right

to bill and collect consideration, including a reasonable profit, in the event the in-process orders are cancelled by the customers.

In addition, as photomasks are manufactured to customer specifications, they have no alternative use to the

This results in the Company recording a corresponding contract asset as of period-end for these contracts.

Significant judgment is exercised by the Company in determining the amount of revenue to recognize for these contracts

and the corresponding contract asset, specifically in estimating the point within the production cycle at which the production orders stand in relation to the Company’s enforceable right within the contract.

Significant judgment is exercised by the Company in determining the amount of revenue to recognize for these contracts and the

corresponding contract asset, specifically in estimating the point within the production cycle at which the production orders stand in relation to the Company’s enforceable right within the contract.

Pursuant to these contracts, revenue

recognized over time and the associated contract asset as of October 31, 2025 was $ 12.7 million.

We identified the determination of revenue recognized over time for in-process productions orders as of October 31, 2024 as a critical auditing matter

because of the significant estimates and assumptions management makes in determining the amount of revenue to recognize for these contracts.

This required a high degree of audit judgment and an increased extent of effort when performing audit

procedures to evaluate the reasonableness of management’s determination of the progress point of in-process orders and the amount of revenue recognized over time and the corresponding contract asset as of October 31, 2024.

We identified the determination of revenue recognized over time for in-process productions orders as of October 31, 2025 as a critical auditing matter because of the significant estimates and assumptions

management makes in determining the amount of revenue to recognize for these contracts.

This required a high degree of audit judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of

management’s determination of the progress point of in-process orders and the amount of revenue recognized over time and the corresponding contract asset as of October 31, 2025.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s determination of the progress point of in-process orders and resulting revenue recognized over time and

corresponding contract asset as of October 31, 2024 included the following:

- We tested the operating effectiveness of controls over management’s determination of the point in the production

process and correlation to stated contractual rights.

- We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue

recognized in the consolidated financial statements.

- We tested the accuracy and completeness of the in-process orders report by performing physical observation.

- We selected a sample of in-process production orders as of October 31, 2024 and performed the following

procedures for each selection:

- Obtained and read the customer agreement/purchase order, invoice, and quote to determine whether the company

has an enforceable right to bill and collect consideration.

- Evaluated management’s identification of significant contract terms and resulting revenue recognition for the

in-process production order.

- Evaluated management estimate of the production point for the in-process order corresponding revenue

recognition and contract asset based on the Company’s enforceable right within the contract.

Our audit procedures related to the Company’s determination of the progress point of in-process orders and resulting revenue recognized over time and corresponding contract asset as of October 31, 2025 included

the following:

We tested the operating effectiveness of controls over management’s determination of the point in the production process and correlation to stated contractual rights.

We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the consolidated financial statements.

We tested the accuracy and completeness of the in-process orders report by performing physical observations.

We selected a sample of in-process production orders as of October 31, 2025 and performed the following procedures for each selection:

Obtained and read the customer agreement/purchase order, invoice, and quote to determine whether the company has an enforceable right to bill and collect consideration.

Evaluated management’s identification of significant contract terms and resulting revenue recognition for the in-process production order.

Evaluated management estimate of the production point for the in-process order and corresponding revenue recognition and contract asset based on the Company’s enforceable right within

the contract.

Recalculated revenue recognized by testing actual costs incurred and by recalculating percentage completion based on total expected costs for each sampled order.

/s/ Deloitte & Touche LLP

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PHOTRONICS, INC.

Balance Sheets

Consolidated Balance Sheets

(in thousands, except per share amounts)

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Preferred stock, $ 0.01 par value, 2,000 shares authorized, none issued and outstanding

Common stock, $ 0.01 par value, 150,000 shares authorized, 61,949 shares issued and outstanding at October 31, 2024 ,

and 61,310 shares issued and outstanding at October 31, 2023

Common stock, $ 0.01 par value, 150,000 shares authorized, 57,633 shares issued and outstanding at October 31, 2025, and 61,949 shares issued and outstanding at October 31, 2024

Additional paid-in capital

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PHOTRONICS, INC.

Statements of

Consolidated Statements of Income

(in thousands, except per share amounts)

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Operating income

Non-operating income (expense):

Other income (expense):

Foreign currency transactions impacts, net

Interest income and other income, net

Interest expense, net of subsidies

Interest expense

Income before income tax provision

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PHOTRONICS, INC.

Consolidated Statements of

Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(in thousands)

Other comprehensive income (loss), net of tax of $ 0 :

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

Net other comprehensive income (loss)

Net other comprehensive income

Comprehensive income

comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) attributable to Photronics, Inc.

Comprehensive income attributable to Photronics, Inc.

See accompanying notes to consolidated financial statements.

PHOTRONICS, INC.

Statements of

Consolidated Statements of Equity

Years Ended October 31, 2025, 2024 and 2023

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Balance as of October 31, 2022

Other comprehensive loss

Other comprehensive income (loss)

Shares issued under equity plans

Share-based compensation expense

Contribution from noncontrolling interest

Purchases of treasury stock

Retirement of treasury stock

Balance as of October 31, 2023

Other comprehensive income (loss)

Other comprehensive income

Shares issued under equity plans

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Share-based compensation expense

Purchase and retirement of common

stock through repurchase program

Balance as of October 31, 2025

See accompanying notes to consolidated financial statements.

PHOTRONICS, INC.

Cons olidated Statements of

Consolidated Statements of Cash Flows

(in thousands)

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Repayments of debt

Purchases of treasury stock

Contributions from noncontrolling interests

Common stock repurchases

Proceeds from share-based arrangements

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Effects of exchange rate changes on cash, cash equivalents, and restricted cash

Net increase in cash, cash equivalents, and restricted cash

Net change in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of year

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Photronics, Inc.

(“Photronics”, “the Company”, “we”, “our”, or “us”) is one of the world’s leading manufacturers of

photomasks, which are high-precision photographic quartz or glass plates containing microscopic images of electronic circuits.

Photomasks are a key element in the manufacture of ICs and FPDs, and are used as masters to transfer circuit patterns

onto semiconductor wafers and FPD substrates during the fabrication of integrated circuits, a variety of FPDs and, to a lesser extent, other types of electrical and optical components.

The Company currently has eleven manufacturing facilities, located in Taiwan ( 3 ),

China ( 2 ), Korea ( 1 ), the

United States ( 3 ), and Europe ( 2 ).

The Company operates as a single operating segment as a manufacturer of photomasks, which are high precision quartz or glass plates containing microscopic images of electronic circuits for use

in the fabrication of IC’s and FPDs.

In accordance with ASC 280 – “ Segment Reporting ”, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating

results to make decisions about allocating resources and assessing performance for the entire Company.

Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information

quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.

All material operating units qualify for aggregation under

“Segment Reporting” due to their similar customer base and similarities in:

economic characteristics;

nature of products and services;

and procurement, manufacturing and distribution processes.

Since the Company operates in one segment, all

financial information required by “Segment Reporting” can be found in the accompanying notes to consolidated financial statements.

(“Photronics”, “the Company”, “we”, “our”, or “us”) is one of the world’s leading manufacturers of photomasks, which are high-precision photographic quartz or glass plates containing microscopic images of electronic circuits.

Photomasks are a key element in the manufacture of ICs and FPDs, and are used as masters to transfer circuit patterns onto semiconductor wafers and FPD substrates during the fabrication of integrated circuits, a variety of FPDs and, to a lesser extent, other types of electrical and optical components.

The Company currently has eleven manufacturing facilities, located in Taiwan ( 3 ), China ( 2 ), South Korea ( 1 ), the United States ( 3 ), and Europe ( 2 ).

Basis of Presentation

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

The accounting policies used to prepare these financial statements are the same as

those used to prepare the consolidated financial statements in prior years, except as described in these notes or for the adoption of new standards as outlined below.

The accounting policies used to prepare these financial

statements are the same as those used to prepare the consolidated financial statements in prior years, except as described in these notes or for the adoption of new standards as outlined below.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Photronics, Inc., its

wholly owned subsidiaries, in which Photronics is considered the primary beneficiary, and the majority-owned subsidiaries which it controls.

The accompanying consolidated financial statements include the accounts of Photronics, Inc., its wholly owned subsidiaries, in which Photronics is considered the primary beneficiary, and the majority-owned

subsidiaries which it controls.

All intercompany balances and transactions have been eliminated in consolidation.

Noncontrolling interests in subsidiaries related to Photronics ownership interests of

less than 100 % are reported as Noncontrolling interests in the consolidated balance sheets.

The results of noncontrolling ownership

interests held by Photronics, net of tax, are reported as Net (income) attributable to noncontrolling interests in the consolidated statements of income.

Noncontrolling interests in subsidiaries related to Photronics ownership interests of less than 100 % are reported as Noncontrolling interests in the consolidated balance sheets.

The results of noncontrolling ownership interests held by Photronics, net of tax, are reported as Net (income) attributable to noncontrolling interests in the consolidated statements of income.

Estimates and Assumptions

The preparation of financial statements in

conformity with U.S.

The preparation of financial statements in conformity with U.S.

GAAP requires Photronics to make estimates and assumptions that affect amounts reported in them.

The Company’s estimates are based on historical experience and on various assumptions that are believed to be reasonable, based on

the facts and circumstances available at the time they are made.

The Company’s estimates are based on historical

experience and on various assumptions that are believed to be reasonable, based on the facts and circumstances available at the time they are made.

Subsequent actual results may differ from such estimates.

The Company reviews these estimates periodically and reflect any effects of revisions in the period in which they are

The Company reviews these estimates

periodically and reflects any effects of revisions in the period in which they are determined.

Translation of Foreign Currency Financial Statements

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The functional currency of the majority of Photronics foreign subsidiaries is their local currency.

As such, amounts included in the consolidated

statements of income, comprehensive income, cash flows, and changes in equity are translated using average exchange rates during each period.

Assets and liabilities are translated at period-end exchange rates and resulting foreign currency

translation adjustments are recorded in the consolidated balance sheets as a component of Accumulated other comprehensive loss.

As such, amounts included in the consolidated statements of

income, comprehensive income, cash flows, and changes in equity are translated using average exchange rates during each period.

Assets and liabilities are translated at period-end exchange rates and resulting foreign currency translation

adjustments are recorded in the consolidated balance sheets as a component of Accumulated other comprehensive loss.

Foreign Currency Transactions

Monetary assets and liabilities denominated in

currencies other than the functional currency are remeasured into their respective functional currencies at exchange rates in effect at the balance sheet date.

The resulting exchange gain or loss is included in Photronics ’ consolidated statements of income as Foreign currency transactions impacts, net .

Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured into their respective functional currencies at exchange rates in effect at the balance sheet date.

resulting exchange gain or loss is included in Photonics’ consolidated statements of income as Foreign currency transactions impact, net.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with an original

maturity of three months or less, readily convertible to known amounts of cash, and so near to their maturity that they present insignificant risk of changes in value because of changes in interest rates.

Restricted cash is included with cash and

cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows.

The carrying values of cash equivalents approximate their fair values, due to the short-term maturities of

these instruments.

Cash and cash equivalents include cash and highly liquid investments with an original maturity of three months or less, readily convertible to known amounts of cash, and so near to their maturity that they present

insignificant risk of changes in value because of changes in interest rates.

Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated

statements of cash flows.

The carrying values of cash equivalents approximate their fair values, due to the short-term maturities of these instruments.

Restricted Cash

Restricted cash in the amounts of $ 2.8 million and $ 2.6 million are included in Other assets on the

Company’s October 31, 2024 and October 31, 2023, consolidated balance sheets, respectively.

Restricted cash in the amounts of $ 2.9 million and $ 2.8 million are included in Other assets on the Company’s October 31, 2025 and October 31, 2024, consolidated balance sheets, respectively.

The restrictions on these amounts are primarily related to land lease agreements and customs requirements.

The Company invests in various bank time deposits, money markets and U.S.

Government Securities.

The Company’s classification

of investments is as follows:

The Company’s classification of investments is as follows:

Maturing within three months or less from the date of purchase

5 unchanged sentences

Long-term marketable investments

October 31, 2024 and 2023, all of the Company’s investments from their dates of purchase had remaining maturities of more than three months, but less than one year, and have been classified as short-term investments.

upon the Company’s intent and ability to hold its time deposits to maturity (which maturities range up to twelve months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates

market value.

Money markets are classified as cash and cash equivalents.

Based upon the Company’s intent and ability to hold its time deposits to maturity, maturities of which range up to twelve months at purchase, such securities are classified as held-to-maturity

and are carried at amortized cost, which approximates market value.

The Company’s U.S.

Government Securities are classified as available-for-sale.

Available-for-sale investments are reported at fair value, with unrealized gains or losses

(net of tax) reported in Accumulated other comprehensive income (loss).

In the event of a sale of these securities, the Company would determine the cost of the investment sold at the specific individual security level and would include any gain

or loss in Interest income and other income, net , where the Company also reports periodic interest earned and the amortization (accretion) of discounts (premiums) related to these investments.

table below provides information on the Company’s available-for-sale debt securities and time deposits classified as short-term investments.

October 31, 2024

October 31, 2023

Government Securities (1)

Time deposits

Matured during 2024

Company’s investments in marketable securities consist primarily of investments in time deposits and U.S.

Government Securities.

Market values were determined for each individual security in the investment portfolio.

When evaluating the

investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company’s ability and intent to hold

the investment for a period of time, which may be sufficient for anticipated recovery in market values.

Government Securities, commercial paper and money market funds are classified as available-for-sale.

Available-for-sale investments are reported at fair

value, with unrealized gains or losses (net of tax) reported in Accumulated other comprehensive income (loss) .

In the event of a sale of these securities, the Company would determine the cost of the

investment sold at the specific individual security level and would include any gain or loss in Interest income and other income, net , where the Company also reports periodic interest earned and the

amortization (accretion) of discounts (premiums) related to these investments.

When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below cost basis, the financial

condition of the issuer, and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery in market values.

Accounts Receivable, Unbilled Receivables and Allowance for Credit Losses

We generally record the Company’s accounts receivable at their billed amounts.

Company recognizes unbilled receivables when the Company has satisfied its performance obligations, has an unconditional right to consideration, but has not yet issued an invoice.

All outstanding past due customer invoices are reviewed for

collectability during, and at the end of, every reporting period.

To the extent that the Company believes a loss on the collection of a customer invoice is probable, the Company records the loss and credits an allowance for credit losses.

event that an amount is determined to be uncollectible, the Company charges the allowance for credit losses and derecognizes the related receivable.

Refer to the Company’s revenue recognition policy, below, for additional information on the

Company’s accounting for accounts receivable.

Inventories are stated at the lower

of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value.

The Company recognizes unbilled receivables when the Company has satisfied its performance obligations, has an unconditional right to

consideration, but has not yet issued an invoice.

All outstanding past due customer invoices are reviewed for collectability during, and at the end of, every reporting period.

To the extent that the Company believes a loss on the collection of

a customer invoice is probable, the Company records the loss and credits an allowance for credit losses.

In the event that an amount is determined to be uncollectible, the Company charges the allowance for credit losses and derecognizes the

related receivable.

Refer to the Company’s revenue recognition policy, below, for additional information on the Company’s accounting for accounts receivable.

Inventories are stated at the lower of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value.

Please refer to Note 4 for additional information on the Company’s inventories.

Inventory reserves are established when conditions indicate that the net

realizable value is less than costs due to assigned expiration dates or other causes based on individual facts and circumstances.

If net realizable value is less than cost at the balance sheet date, the carrying amount is reduced to the realizable

value, and the difference is recognized as a loss on valuation of inventories within cost of sales.

Inventory reserves are established when conditions indicate that the net realizable value is less than cost due to assigned expiration dates or other causes based on individual facts and circumstances.

If net realizable value is less than cost

at the balance sheet date, the carrying amount is reduced to the realizable value, and the difference is recognized as a loss on valuation of inventories within cost of sales.

Property, Plant and Equipment, Net

Property, plant and equipment, except as explained below under “Impairment of Long-Lived Assets,” is stated at cost less

accumulated depreciation and amortization.

Repairs and maintenance, as well as renewals and replacements of a routine nature, are charged to operations as incurred, while those that improve or extend the lives of existing assets are capitalized.

sale or other disposition, the cost of the asset and its related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in earnings.

Depreciation and amortization, essentially all of which are included in Cost of goods sold

in the Company’s consolidated statements of income, are computed using the straight-line method over the estimated useful lives of the related assets.

Buildings and improvements are depreciated over 10 to 39 years, machinery and equipment over 5 to 15 years, and furniture, fixtures, and

office equipment over 3 to 5

Property, plant and equipment, except as described below under “Impairment of Long-Lived Assets,” is stated at cost less accumulated depreciation and amortization.

Repairs and maintenance, as well as renewals and

replacements of a routine nature, are charged to operations as incurred, while those that improve or extend the lives of existing assets are capitalized.

Upon sale or other disposition, the cost of the asset and its related accumulated

depreciation are removed from the accounts, and any resulting gain or loss is reflected in earnings.

Depreciation and amortization, essentially all of which are included in Cost of goods sold in the Company’s consolidated statements of income, are computed using the straight-line method over the estimated useful lives of the related assets.

Buildings and improvements are depreciated over 10 to 39 years, machinery and equipment over 5 to 15 years, and furniture, fixtures, and office equipment over 3 to 5 years.

Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the improvement.

The Company employs judgment when making assumptions about the estimated useful lives and depreciation periods the

Company assigns to property, plant and equipment, and when events or changes in circumstances such as a significant industry downturn, plant closures, technological obsolescence, or other occurrences indicate that their carrying amounts may not be

The Company employs judgment when making assumptions about the estimated useful lives and depreciation periods the Company assigns to property, plant and equipment, and when events or changes in circumstances such as a significant industry downturn, plant closures, technological obsolescence, or other occurrences indicate that their carrying amounts may not be recoverable.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such

assets may not be recoverable.

Determinations of recoverability are based upon the Company’s judgment and estimates of undiscounted future cash flows resulting from the use of the assets and their eventual disposition.

Measurement of an impairment

loss for long-lived assets that the Company expects to hold and use is based on the fair value of the assets, determined using a market or income approach, compared with the carrying value of the asset.

The carrying values of assets determined to be

impaired would be reduced to their estimated fair values.

Property, plant and equipment and other long-lived assets to be sold or otherwise disposed of are

reported at the lower of carrying amount or fair value less cost to sell.

Treasury Stock

The Company records treasury stock purchases under the cost method,

recording the entire cost of the acquired stock as treasury stock.

Gains and losses on subsequent reissuances would be credited or charged to additional paid-in capital, and the Company would employ the average cost method (with average cost being

determined separately for each share repurchase program), in the event that the Company subsequently reissues shares.

When the Company retires the Company’s treasury stock, any excess of the repurchase price paid over par value is allocated between

additional paid-in capital and retained earnings.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Determinations of recoverability are based upon the

Company’s judgment and estimates of undiscounted future cash flows resulting from the use of the assets and their eventual disposition.

Measurement of an impairment loss for long-lived assets that the Company expects to hold and use is based on

the fair value of the assets, determined using a market or income approach, compared with the carrying value of the asset.

The carrying values of assets determined to be impaired would be reduced to their estimated fair values.

Property, plant and equipment and other long-lived assets to be sold or otherwise disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Stock Repurchases

The Company records stock repurchases under the cost method, recording the entire cost of the acquired stock.

When the Company retires the Company’s repurchased shares, any excess of the repurchase price paid over

par value is allocated between additional paid-in capital and retained earnings.

Revenue Recognition

The Company recognizes revenue when, or as, control of a good or service transfers to a customer, in

an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those goods or services.

The Company accounts for an arrangement as a revenue contract when each party has approved and is committed

to perform under the contract, the rights of the contracting parties regarding the goods or services to be transferred and the payment terms are identifiable, the arrangement has commercial substance, and collection of consideration is probable.

The Company recognizes revenue when, or as, control of a good or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for

transferring those goods or services.

The Company accounts for an arrangement as a revenue contract when each party has approved and is committed to perform under the contract, the rights of the contracting parties regarding the goods or

services to be transferred and the payment terms are identifiable, the arrangement has commercial substance, and collection of consideration is probable.

Substantially all of the Company’s revenue comes from the sales of photomasks.

The Company typically contracts with the Company’s customers to sell sets of photomasks, which are comprised of multiple layers, the predominance of which the Company

invoices as they ship to customers.

As the photomasks are manufactured to customer specifications, they have no alternative use to the Company and, as the Company’s contracts generally provide the Company with the right to payment for work

completed to date, the Company recognizes revenue as the Company performs, or “over time,” on most of the Company’s contracts.

The Company measures the Company’s performance to date using an input method, which is based on the Company’s estimated

costs to complete the various manufacturing phases of a photomask.

At the end of a reporting period, there are a number of uncompleted revenue contracts on which the Company has performed;

for any such contracts under which the Company is entitled

to be compensated for the Company’s costs incurred plus a reasonable profit, the Company recognizes revenue and a corresponding contract asset for such performance.

The Company accounts for shipping and handling activities that the Company performs

after a customer obtains control of a good as being activities to fulfill the Company’s promise to transfer the good to the customer, rather than as promised services, or performance obligations, under the contract.

The Company reports the

Company’s revenue net of any sales or similar taxes the Company collects on behalf of governmental entities.

typically contracts with the Company’s customers to sell sets of photomasks, which are comprised of multiple layers, the predominance of which the Company invoices as they ship to customers.

As the photomasks are manufactured to customer

specifications, they have no alternative use to the Company and, as the Company’s contracts generally provide the Company with the right to payment for work completed to date, the Company recognizes revenue as the Company performs, or “over

time,” on most of the Company’s contracts.

The Company measures the Company’s performance to date using an input method, which is based on the Company’s estimated costs to complete the various manufacturing phases of a photomask.

At the end of

a reporting period, there are a number of uncompleted revenue contracts on which the Company has performed;

for any such contracts under which the Company is entitled to be compensated for the Company’s costs incurred plus a reasonable profit,

the Company recognizes revenue and a corresponding contract asset for such performance.

The Company accounts for shipping and handling activities that the Company performs after a customer obtains control of a good as being activities to

fulfill the Company’s promise to transfer the good to the customer, rather than as promised services, or performance obligations, under the contract.

The Company reports the Company’s revenue net of any sales or similar taxes the Company

collects on behalf of governmental entities.

As stated above, photomasks are manufactured to customer specifications in accordance with their proprietary designs;

thus, they are

individually unique.

Due to their uniqueness and other factors, their transaction prices are individually established through negotiations with customers;

thus, they are individually unique.

Due to their uniqueness and other factors, their transaction

prices are individually established through negotiations with customers;

consequently, the Company’s photomasks do not have standard or “list” prices.

The transaction

prices of the vast majority of the Company’s revenue contracts include only fixed amounts of consideration.

In certain instances, such as when the Company offers a customer an early payment discount, an estimate of variable consideration would be

included in the transaction price, but only to the extent that a significant reversal of revenue would not occur when the uncertainty related to the variability was resolved.

The transaction prices of the vast majority of the Company’s revenue contracts include only

fixed amounts of consideration.

In certain instances, such as when the Company offers a customer an early payment discount, an estimate of variable consideration would be included in the transaction price, but only to the extent that a

significant reversal of revenue would not occur when the uncertainty related to the variability was resolved.

Contract Assets and Contract Liabilities

The Company recognizes a contract asset when the Company’s performance under a contract precedes the Company’s receipt of

consideration from a customer, or before payment is due, and the Company’s receipt of consideration is conditional upon factors other than the passage of time.

Contract assets reflect the Company’s transfer of control to customers of photomasks that

are in process or completed but not yet shipped to customers.

The Company recognizes a contract asset when the Company’s performance under a contract precedes the Company’s receipt of consideration from a customer, or before payment is due, and the Company’s receipt of consideration is conditional upon factors other than the passage of time.

Contract assets reflect the Company’s transfer of control to customers of photomasks that are in process or completed but not yet shipped to customers.

A receivable is recognized when the Company has an unconditional right to payment for the Company’s performance, which generally occurs when the Company ships the photomasks.

The Company’s

contract assets primarily consist of a significant amount of the Company’s in-process production orders and fully manufactured photomasks which have not yet shipped, for which the Company has an enforceable right to collect consideration (including a

reasonable profit) in the event the in-process orders are cancelled by customers.

The Company’s contract assets primarily consist of a significant amount of the Company’s in-process production orders and fully manufactured photomasks which have not yet shipped, for which the Company has an enforceable right to collect consideration (including a reasonable profit) in the event the in-process orders are cancelled by customers.

On an individual contract basis, the Company nets contract assets with contract liabilities (deferred revenue) for financial reporting purposes.

The Company’s net

credit losses on the accounts receivable during 2024 were insignificant.

The Company did no t impair any contract assets or accounts

receivable in 2024 or 2023.

The Company’s net credit losses on the accounts receivable during 2025 were immaterial.

The Company did not impair any contract assets or accounts receivable in 2025 or 2024.

Contract Costs

The Company pays commissions to third-party sales agents for certain sales that they procure on the Company’s behalf.

bases of the commissions are the transaction prices of the sales, which are completed in less than one year;

However, the basis of the commissions are the transaction prices of the sales, which are

completed in less than one year;

thus, no relationship is established with a customer that will result in future business.

Therefore, the Company would not recognize any

portion of these sales commissions as costs of obtaining a contract, nor does the Company currently foresee other circumstances under which the Company would recognize such assets.

Therefore, the Company would not recognize any portion of these sales commissions as costs of obtaining a contract, nor

does the Company currently foresee other circumstances under which the Company would recognize such assets.

Remaining Performance Obligations

As the Company is typically required to fulfill customer orders within a short time period, the

Company’s backlog of orders is generally not in excess of one to two weeks for IC photomasks and two to three weeks for FPD photomasks.

However, the demand for some IC photomasks can extend beyond the traditional time period;

thus the backlog, in some

individual cases, can extend to as long as two to three months .

More recently however, backlogs for most high demand products have returned to historical levels of less than a month.

As allowed under ASC 606 – Revenue Contracts

with Customers, the Company has elected not to disclose the Company’s remaining performance obligations, which represent the costs associated with the completion of the manufacturing process of in-process photomasks related to contracts

that have an original duration of one year or less.

As the Company is typically required to fulfill customer orders within a short time period, the Company’s backlog of orders is generally not in excess of one to two weeks for IC photomasks and two to three weeks for FPD photomasks.

As allowed under ASC 606 – Revenue Contracts with Customers , the Company has elected not to disclose the Company’s remaining performance obligations, which represent the costs associated with the completion of the manufacturing process of in-process photomasks related to contracts that have an original duration of one year or less.

Product Warranties

The Company’s photomasks are sold under warranties that generally range from one to twenty-four months .

The Company warrants that the Company’s

photomasks conform to customer specifications, and the Company will typically repair, replace, or issue a refund for any photomasks that fail to do so.

The warranties do not represent separate performance obligations in the Company’s revenue

The Company warrants that the Company’s photomasks conform to customer specifications, and the Company will typically repair, replace, or issue a refund for any photomasks that fail to do so.

The warranties do not represent separate performance obligations in the Company’s revenue contracts.

Historically, customer claims under warranties have been immaterial.

The Company determines if an agreement is, or contains, a lease on the earlier of the date of the agreement or the date on which the

Company commits to entering the agreement and evaluates at that time whether the lease is an operating lease or a finance lease.

The Company recognizes right-of-use assets and lease liabilities for operating and finance leases with terms greater

than 12 months.

The Company determines if an agreement is, or contains, a lease on the earlier of the date of the agreement or the date on which the Company commits to entering the agreement and evaluates at that time whether the

lease is an operating lease or a finance lease.

The Company recognizes right-of-use assets and lease liabilities for operating and finance leases with terms greater than 12 months.

Please refer to Note 11 – Leases for additional information.

The Company’s involvement in lease arrangements has typically been as a lessee.

The Company determines if an agreement is, or contains, a lease on the earlier of the date of the agreement or the date on which the Company commits to

entering the agreement.

The Company determines if an agreement is, or contains, a lease on the earlier of the date of the agreement or the date on which the

Company commits to entering the agreement.

An arrangement is determined to be a lease when it conveys to the Company the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company’s having the right to control an

identified asset is determined by whether the Company is entitled to substantially all of its economic benefits and can direct its use.

The Company recognizes leases on the Company’s consolidated balance sheet when a lessor makes an asset

underlying a lease having a term in excess of twelve months available for the Company’s use.

As allowed under ASC Topic 842 – “ Leases ” (“Topic 842”), the Company has elected 1) not to apply the recognition

requirements to leases that, at their commencement dates, have lease terms of twelve months or less and do not include options to purchase their underlying assets that the Company is reasonably certain to exercise and 2) for all classes of

assets, the practical expedient to not separate lease components of a contract from non-lease components of a contract.

If an arrangement is determined to be, or includes a lease, the Company then applies the classification criteria in ASC 842 - Leases to determine whether the lease is a finance lease or an

operating lease.

For both types of leases, at their commencement dates (which are the dates on which a lessor makes an underlying asset available for the Company’s use), the Company recognizes Right-of-Use (“ROU”) assets, which represent the

Company’s rights to use the underlying assets, and lease liabilities which represent the Company’s obligation to make payments for such rights.

The present value of lease payments over the term of the lease provides the basis for the initial

measurement of ROU assets and their related lease liabilities.

Variable lease payments, other than those that are dependent on an index or on a rate (at which they are measured on their commencement dates), are not included in the measurement of

ROU assets and their related lease liabilities.

The Company’s having

the right to control an identified asset is determined by whether the Company is entitled to substantially all of its economic benefits and can direct its use.

The Company recognizes leases on the Company’s consolidated balance sheet when a

lessor makes an asset underlying a lease having a term in excess of twelve months available for the Company’s use.

As allowed under ASC Topic 842 – “ Leases ” (“Topic 842”), the Company has elected 1) not

to apply the recognition requirements to leases that, at their commencement dates, have lease terms of twelve months or less and do not include options to purchase their underlying assets that the Company is reasonably certain to exercise and

2) for all classes of assets, the practical expedient to not separate lease components of a contract from non-lease components of a contract.

If an arrangement is determined to be, or includes a lease, the Company then applies the classification criteria in ASC 842 - Leases to determine whether the lease is a

finance lease or an operating lease.

which represent the Company’s rights to use the underlying assets, and lease liabilities which represent the Company’s obligation to make payments for such rights.

The present value of lease payments over the term of the lease provides the

basis for the initial measurement of ROU assets and their related lease liabilities.

Variable lease payments, other than those that are dependent on an index or on a rate (at which they are measured on their commencement dates), are not

included in the measurement of ROU assets and their related lease liabilities.

Lease terms include extension periods if the lease agreement includes an option to extend the lease that the Company is reasonably certain to exercise.

The initial measurement process for finance leases and operating leases is the same, except that, for operating leases, the Company generally applies the

Company’s incremental borrowing rates for collateralized borrowings over terms similar to those of the leases to determine the lease liability while, for finance leases, the Company uses the interest rates implicit in the leases.

measurement of ROU assets may require further adjustments for lease prepayments and initial direct costs the Company incurs.

The initial measurement process for finance leases and operating leases is the same, except that, for operating leases, the Company generally applies the Company’s incremental borrowing rates for collateralized

borrowings over terms similar to those of the leases to determine the lease liability while, for finance leases, the Company uses the interest rates implicit in the leases.

The initial measurement of ROU assets may require further adjustments

for lease prepayments and initial direct costs the Company incurs.

Operating leases are expensed on a straight-line basis over the terms of the leases, and are included in the consolidated statement of income in Cost of goods sold , Selling, general and administrative , or Research and development expense in accordance with the use of the underlying asset.

Finance lease ROU

assets are amortized over the estimated useful life of the underlying asset;

Finance lease ROU assets are amortized

over the estimated useful life of the underlying asset;

the expenses are included in the consolidated statement of income in Cost of goods sold .

Finance lease liabilities are

subsequently remeasured by increasing the liability to reflect interest accrued during a period and decreasing the liability to reflect payments made during the period.

Interest expense incurred on finance leases is included in Interest expense on the consolidated statements of income.

Cash paid for operating leases and interest paid for finance leases are included in the consolidated statement of cash flows as operating activities in Accounts payable, accrued liabilities and other ;

Finance lease liabilities are subsequently remeasured by

increasing the liability to reflect interest accrued during a period and decreasing the liability to reflect payments made during the period.

Interest expense incurred on finance leases is included in Interest

expense, net on the consolidated statements of income.

Cash paid for operating leases and interest paid for finance leases are included in the consolidated statement of cash flows as operating activities in Accounts payable, accrued

liabilities and other ;

cash paid for finance lease principal is included in Repayments of debt in the financing activities section of the consolidated statement of cash flows.

Share-Based Compensation

We recognize share-based compensation expense on a straight-line basis over the requisite service period during which the awards

are expected to vest.

Share-based compensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates.

Changes in estimated forfeitures are recognized in the period of change and will impact the amount of expense to be recognized in future periods.

Determining the appropriate option pricing model, calculating the grant date fair value of share-based

awards, and estimating forfeiture rates requires considerable judgment, including estimations of stock price volatility and the expected term of options granted.

We use the Black-Scholes option pricing model to value employee stock

The Company estimates stock price volatility based on daily averages of the Company’s common stock’s historical volatility over a term approximately equal to the estimated time period the grant will remain outstanding.

The expected term of

options and forfeiture rate assumptions are derived from historical data.

We recognize share-based compensation expense on a straight-line basis over the requisite service period during which the awards are expected to vest.

Share-based compensation expense includes the estimated effects

of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ, or are expected to differ, from such estimates.

Changes in estimated forfeitures are recognized in the period of change and will

impact the amount of expense to be recognized in future periods.

Determining the appropriate option pricing model, calculating the grant date fair value of share-based awards, and estimating forfeiture rates requires considerable judgment,

including estimations of stock price volatility and the expected term of options granted.

We use the Black-Scholes option pricing model to value employee stock options.

The Company estimates stock price volatility based on daily averages of the Company’s common stock’s historical volatility over a term

approximately equal to the estimated time period the grant will remain outstanding.

The expected term of options and forfeiture rate assumptions are derived from historical data.

Research and Development

Research and development costs are expensed as incurred and consist primarily of development efforts related to high-end process

technologies for advanced subwavelength reticle solutions for IC and FPD photomask technologies.

Research and development expenses were $ 16.6

million, $ 13.7 million, and $ 18.3

million for the years ended October 31, 2024, 2023 and 2022, respectively.

Research and development costs are expensed as incurred and consist primarily of development efforts related to high-end process technologies for advanced subwavelength reticle solutions for IC and FPD photomask technologies.

Research and development expenses were $ 15.8 million, $ 16.6 million, and $ 13.7 million for the years ended October 31, 2025, 2024 and 2023, respectively.

Government Grants

The Company receives or expects to receive in the future, various types of

government assistance, primarily in the form of grants or refundable tax credits.

Government assistance is recognized when there is reasonable assurance that:

(1) the Company will comply with the relevant conditions and (2) the assistance will

Government assistance related to reimbursing fixed asset purchases, such as reimbursement grants and refundable federal investment tax credits, are recorded as a reduction to the related asset(s), which then reduces depreciation

expense over the expected useful life of the asset on a straight-line basis.

If some, or all, of the amount of government assistance becomes repayable (e.g.

due to non-fulfillment of the grant conditions) or there is no longer reasonable

assurance the amount will be received (e.g.

due to additional interpretive guidance) then the adjustment is accounted for prospectively as a change in accounting estimate.

The effect of the change in estimate is recognized in the period in which

management concludes that it is no longer reasonably assured that all of the grant conditions will be met.

A corresponding financial liability is recognized for the amount of the repayment, if any .

The Company accounts for funds the Company receives from government grants by either reducing the costs of the

assets (if the grant relates to capital expenditures) or expenses which could be Cost of goods sold, Selling, general and administrative, or Research and development expenses in the consolidated statements of income.

If the funds the Company receives cannot be attributed to specific assets or expenses, they would be recognized as other income, and included in Interest income and other income, net in the consolidated statements of income.

Funds the Company receive from government grants are classified in

the Company’s consolidated statements of cash flows as either Net cash

provided by operating activities or Net cash provided by investing activities , in accordance with how the Company expends the funds.

When a grant is received before conditions of the grant have been met, the

grant is recorded in Accrued liabilities or Other liabilities in the Consolidated Balance Sheets.

For the years ended October 31, 2024, October 31, 2023, and October 31, 2022, grants recorded in the Company’s Consolidated Financial Statements were not material.

The Company expects to receive refundable

federal investment tax credits through the CHIPS Act in connection with ongoing expansion projects.

As of October 31, 2024, the Company has reduced property, plant and equipment, net by $ 5.0 million as a result of expected refundable tax credits in connection with the CHIPS Act .

The Company has also applied for direct capital grants through the CHIPS Act in connection with proposed projects.

The income tax provision is computed on the basis of the income or loss before income taxes for each entity in its respective tax

jurisdiction.

Deferred income taxes reflect the tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and their amounts used for income tax purposes, as well as the tax effects of net

operating losses and tax credit carryforwards.

We employ judgment and make assumptions when establishing valuation allowances for deferred income tax assets, if their realization is not deemed to be more likely than not, by considering future market

growth, operating forecasts, future taxable income, and the mix of earnings among the tax jurisdictions in which we operate.

The Company receives or expects to receive in the future, various types of government assistance, primarily in the form of grants or refundable tax credits.

Government assistance is recognized when there is

reasonable assurance that:

(1) the Company will comply with the relevant conditions and (2) the assistance will be received.

Government assistance related to reimbursing fixed asset purchases, such as reimbursement grants and refundable federal

investment tax credits, are recorded as a reduction to the related asset(s), which then reduces depreciation expense over the expected useful life of the asset on a straight-line basis.

If some, or all, of the amount of government assistance

becomes repayable (e.g.

due to non-fulfillment of the grant conditions) or there is no longer reasonable assurance the amount will be received (e.g.

due to additional interpretive guidance) then the adjustment is accounted for prospectively as

a change in accounting estimate.

The effect of the change in estimate is recognized in the period in which management concludes that it is no longer reasonably assured that all of the grant conditions will be met.

A corresponding financial

liability is recognized for the amount of the repayment, if any.

The Company accounts for funds the Company receives from government grants by either reducing the costs of the assets (if the grant relates to capital expenditures) or expenses which could be Cost of goods sold, Selling, general and administrative, or Research and development expenses in the consolidated statements of income.

If the funds the Company receives cannot be attributed to specific

assets or expenses, they would be recognized as other income, and included in Interest income and other income, net in the consolidated statements of income.

Funds the Company receive from government

grants are classified in the Company’s consolidated statements of cash flows as either Net cash provided by operating activities or Net cash provided by investing activities, in accordance with how the

Company expends the funds.

When a grant is received before conditions of the grant have been met, the grant is recorded in Accrued liabilities or Other liabilities in

the Consolidated Balance Sheets .

The Company expects to receive refundable federal investment tax credits through the CHIPS Act in connection with ongoing capital expenditure expansion projects.

As a result, as of October 31, 2025, the Company has reduced property, plant and equipment, net by $ 15.9 million of which $ 5.0 million was recorded during fiscal year 2024.

The application submitted in 2024 for direct capital grants through the CHIPS Act in connection with the proposed projects is still under review process.

For the years ended October 31, 2025, 2024, and 2023, the Company’s subsidiaries in China received cash subsidies from local government authorities related to the acquisition of property, plant, and equipment in the amounts of $ 2.2 million, $ 2.1 million, and $ 2.5 million, respectively.

The Company has recorded these subsidies as reductions of property, plant, and equipment.

The income tax provision is computed on the basis of the income or loss before income taxes for each entity in its respective tax jurisdiction.

Deferred income taxes reflect the tax effects of differences between

the carrying amounts of assets and liabilities for financial reporting purposes and their amounts used for income tax purposes, as well as the tax effects of net operating losses and tax credit carryforwards.

We employ judgment and make

assumptions when establishing valuation allowances for deferred income tax assets, if their realization is not deemed to be more likely than not, by considering future market growth, operating forecasts, future taxable income, and the mix of

earnings among the tax jurisdictions in which we operate.

Accordingly, income taxes charged against earnings may have been impacted by changes in the valuation allowances.

eligible for investment tax credits in U.S.

tax jurisdictions.

We are eligible for investment tax credits in U.S.

jurisdictions.

We account for investment tax credits under the “flow-through” method of accounting.

As permitted in ASC 740 “Income Taxes”, under the flow-through method of accounting, the

tax benefit from an investment tax credit is recorded as a reduction of income taxes in the period in which the credit is generated.

As permitted in ASC 740 “Income Taxes”, under the flow-through method of accounting, the tax benefit from an investment tax credit is recorded

as a reduction of income taxes in the period in which the credit is generated.

We consider income taxes in each of the tax jurisdictions in which we operate in order to determine our effective income tax rate.

Our current income tax expense is thus identified, and temporary differences resulting from differing treatments of items for tax and financial reporting purposes are assessed.

These differences result in deferred tax assets, which are presented on

our consolidated balance sheets, and deferred tax liabilities, which are included in Other liabilities on our consolidated balance sheets.

We account for uncertain tax positions by recording a liability for unrecognized tax benefits

resulting from uncertain tax positions taken, or expected to be taken, in our tax returns.

We include any applicable interest and penalties related to uncertain tax positions in the liability and in our income tax provision.

Our current income tax expense is thus identified, and temporary differences

resulting from differing treatments of items for tax and financial reporting purposes are assessed.

These differences result in deferred tax assets, which are presented on our consolidated balance sheets, and deferred tax liabilities, which are

included in Other liabilities on our consolidated balance sheets.

We account for uncertain tax positions by recording a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in our tax returns.

We include any applicable

interest and penalties related to uncertain tax positions in the liability and in our income tax provision.

Earnings Per Share

Basic earnings per share (“EPS”) attributed to Photronics shareholders for both basic and diluted is

computed independently for each period presented and is based on the weighted-average number of common shares outstanding for the period, excluding any dilutive common share equivalents.

Diluted EPS reflects the potential dilution that could occur

if certain share-based payment awards were exercised or earned.

Basic earnings per share attributed to Photronics shareholders is computed independently for each period presented and is based on the weighted-average number of common shares outstanding for the period, excluding

any dilutive common share equivalents.

Diluted earnings per share (“EPS”) reflects the potential dilution that could occur if certain share-based payment awards were exercised or earned.

Variable Interest Entities

We account for the investments the Company makes in certain legal entities in which equity investors do not have:

1) sufficient

equity at risk for the legal entity to finance its activities without additional subordinated financial support or, 2) as a group, the holders of the equity investment at risk do not have either the power, through voting or similar rights, to direct

the activities of the legal entity that most significantly impact the entity’s economic performance or, 3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity as

“variable interest entities”, or “VIEs”.

We consolidate the results of any such entity in which the Company has determined that the Company has a controlling financial

The Company would have a “controlling financial interest” (and thus be considered the “primary beneficiary” of the entity) in such an entity when the Company has both the power to direct the activities that most significantly affect the

VIE’s economic performance and the obligation to absorb the losses of, or right to receive the benefits from, the VIE that could be potentially significant to the VIE.

On a quarterly basis, the Company reassesses whether the Company has a controlling

financial interest in any investments the Company has in these entities.

We would account for investments the Company makes in VIEs in which the Company has determined that the Company does not have a

controlling financial interest but have a significant influence over, and hold at least a twenty percent ownership interest in, using the

equity method.

1) sufficient equity at risk for the legal entity to finance its activities without additional

subordinated financial support or, 2) as a group, the holders of the equity investment at risk do not have either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the

entity’s economic performance or, 3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity as “variable interest entities”, or “VIEs”.

We consolidate the results of any such entity in which the Company has determined that the Company has a controlling financial interest.

The Company would have a “controlling financial interest” (and thus be

considered the “primary beneficiary” of the entity) in such an entity when the Company has both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or

right to receive the benefits from, the VIE that could be potentially significant to the VIE.

On a quarterly basis, the Company reassesses whether the Company has a controlling financial interest in any investments the Company has in these

We would account for investments the Company makes in VIEs in which the Company has determined that the Company does not have a controlling financial interest but have a significant influence over, and hold at least a twenty percent ownership interest in, using the equity method.

An investment not meeting the parameters to be accounted for under the equity method would be accounted for using the cost method, unless the investment had a readily determinable fair value, at which value it would then be reported.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU No.

2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date, which clarified the effective date of ASU 2024-03.

ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as

applicable, as well as qualitatively describe remaining amounts included in those captions.

The guidance in this ASU will be effective for Photronics in its fiscal year 2028 Form 10-K, with early application of the amendments allowed.

Company is currently evaluating the impact the adoption of this ASU may have on the Company’s consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to

Income Tax Disclosures”, to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this Update related to the rate reconciliation and income taxes paid disclosures to improve the transparency of income tax

disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The amendments allow investors to better assess, in their capital

allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows.

The guidance in this Update will be effective for

Photronics in its fiscal year 2026 Form 10-K, with early application of the amendments allowed.

The Company is currently evaluating the effect the adoption of this ASU may have on the Company’s disclosures.

Improvements to Income Tax Disclosures”, to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in

this ASU related to the rate reconciliation and income taxes paid disclosures to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and

(2) income taxes paid disaggregated by jurisdiction.

The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational

opportunities affect its income tax rate and prospects for future cash flows.

The guidance in this ASU will be effective for Photronics in its fiscal year 2026 Form 10-K, with early application of the amendments allowed.

The Company is

currently evaluating the effect of this ASU adoption on its disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance in this Update is effective for Photronics in its fiscal year

2025 Form 10-K, with early adoption permitted.

The Company is currently evaluating the effect the adoption of this ASU may have on the Company’s disclosures.

NOTE 2 – ACCOUNTS RECEIVABLE

components of Accounts Receivable at the

balance sheet dates are presented below.

Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced

disclosures about significant segment expenses.

The guidance in this ASU is effective for Photronics in its fiscal year 2025 Form 10-K.

The Company adopted ASU 2023-07, please see NOTE 18 – SEGMENT REPORTING .

NOTE 2 – ACCOUNTS RECEIVABLE, NET

The components of Accounts Receivable, net at the balance sheet dates are presented below.

Accounts Receivable

Unbilled Receivable

Unbilled Receivables

Allowance for Credit Losses

NOTE 3 - OTHER CURRENT ASSETS

Presented below are the components of Other current assets at

the balance sheet dates.

Presented below are the components of Other current assets at the balance sheet dates.

Contract assets

2 unchanged sentences

Prepaid and refundable income taxes

The Company expects to receive refundable federal investment tax

credits of $ 5 million through CHIPS Act in connection with the Company’s ongoing expansion projects.

(1) Includes expected refundable federal investment tax credits through the CHIPS Act in the amount of $ 10.9 million and $ 5.0 million as of October 31, 2025 and 2024, respectively.

NOTE 4 - INVENTORIES

4 unchanged sentences

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET

Presented below are the components of Property, plant and equipment, net at the balance

Presented below are the components of Property, plant and equipment, net at the balance sheet dates.

Buildings and improvements

5 unchanged sentences

Information on ROU assets resulting from finance leases, at the balance sheet dates, is presented below.

During 2025, the Company exercised its early buy-out option for a high-end lithography tool and a high-end inspection tool.

Please refer to Note 8 for further information.

Machinery and equipment

Accumulated amortization

The following table presents depreciation expense (including the amortization of ROU assets) related to property, plant and

equipment incurred during the reporting periods.

The following table presents depreciation expense (including the amortization of ROU assets) related to property, plant and equipment incurred during the reporting periods.

Depreciation and amortization expense

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In January 2018, Photronics, Inc., through its wholly-owned Photronics Singapore PTE.

(hereinafter, within this Note “we”, “Photronics”, “ us ”, or “our”), and DNP, through its wholly owned subsidiary “DNP Asia Pacific PTE, Ltd.”, entered into a joint

venture under which DNP obtained a 49.99 % interest in the Company’s IC business in Xiamen, China.

joint venture, which the Company refers to as “PDMCX”, was established to develop and manufacture photomasks for semiconductors.

The Company entered into this joint venture to enable the Company to compete more effectively for the merchant

photomask business in China, and to benefit from the additional resources and investment that DNP provides to enable the Company to offer advanced-process technology to our customers .

In 2020, in combination with local financing obtained by PDMCX, Photronics and DNP fulfilled their investment obligations under the PDMCX operating

agreement ( “ the Agreement ” ).

As discussed in Note 8, liens were granted to the local financing entity on property, plant, and equipment and were paid off during

fiscal year 2023 and there was no remaining debt at October 31, 2023.

Under the Agreement, should either Photronics’ or DNP’s ownership interest fall below 20.0 %

for a period of more than six consecutive months, such party (an “exiting party”) has the option to sell to the other party, and the other

party has the option to purchase from such exiting party, the exiting party’s remaining ownership interest.

In either case, the sales of ownership interests would be at the exiting party’s 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.

subsidiary (hereinafter, within this Note “we”, “Photronics”, “us”, or “our”), and DNP, through its wholly owned subsidiary DNP Asia Pacific PTE, Ltd., entered into a joint venture under which DNP obtained a 49.99 % interest in the Company’s IC business in Xiamen, China.

The joint venture, which the Company refers to as “PDMCX”, was established to develop and manufacture photomasks for semiconductors.

The Company entered into this joint venture to enable the Company to compete more effectively for the merchant photomask business in China, and to benefit from the additional resources and investment that DNP provides to enable the Company to offer advanced-process technology to the Company’s customers.

In 2020, in combination with local financing obtained by PDMCX, Photronics and DNP fulfilled their investment obligations under the PDMCX operating agreement (“the Agreement”).

Liens were granted to the local financing entity on property, plant, and equipment and were paid off during fiscal year 2023 and there was no remaining debt at October 31, 2023.

Under the Agreement, should either Photronics’ or DNP’s ownership interest fall below 20.0 % for a period of more than six consecutive months , such party (an “exiting party”) has the option to sell to the other party, and the other party has the option to purchase from such exiting party, the exiting party’s remaining ownership interest.

In either case, the sales of ownership interests would be at the exiting party’s 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.

The following table presents net income the Company recorded from the operations of PDMCX during the reporting periods.

Net income from PDMCX

As required by the guidance in ASC Topic 810 - “ Consolidation ”, the Company evaluated the Company’s involvement

in PDMCX for the purpose of determining whether the Company should consolidate its results in the Company’s financial statements.

As required by the guidance in ASC Topic 810 - “ Consolidation ”, the Company evaluated the Company’s involvement in PDMCX for the purpose of determining whether the Company should consolidate its results in the Company’s financial statements.

The initial step of the Company’s evaluation was to determine whether PDMCX was a VIE.

Due to its lack of sufficient

equity at risk to finance its activities without additional subordinated financial support, the Company determined that it is a VIE.

Having made this determination, the Company then assessed whether the Company was the primary beneficiary of the VIE,

and concluded that the Company was the primary beneficiary during the current and prior years reporting periods;

Due to its lack of sufficient equity at risk to finance its activities without additional subordinated financial support, the Company determined that it is a VIE.

Having made this determination, the Company then assessed whether the Company was the primary beneficiary of the VIE, and concluded that the Company was the primary beneficiary during the current and prior years reporting periods;

thus, as required, the PDMCX financial results have been consolidated with Photronics.

The Company’s conclusion was based on the fact

that the Company held a controlling financial interest in PDMCX (which resulted from the Company’s having the power to direct the activities that most significantly impacted its economic performance) and had both the obligation to absorb losses and

the right to receive benefits that could potentially be significant to PDMCX.

The Company’s conclusion that the Company had the power to direct the activities that most significantly affected the economic performance of PDMCX during the current and

prior year periods were based on the Company’s right to appoint the majority of its Board of Directors, which has, among others, the powers to manage the business (through its rights to appoint and evaluate PDMCX’s management), incur indebtedness,

enter into agreements and commitments, and acquire and dispose of PDMCX’s assets.

In addition, as a result of the 50.01 % variable interest

the Company held during the current and prior year periods, the Company had the obligation to absorb losses, and the right to receive benefits, that could potentially be significant to PDMCX.

The Company’s conclusion was based on the fact that the Company held a controlling financial interest in PDMCX (which resulted from the Company’s having the power to direct the activities that most significantly impacted its economic performance) and had both the obligation to absorb losses and the right to receive benefits that could potentially be significant to PDMCX.

The Company’s conclusion that the Company had the power to direct the activities that most significantly affected the economic performance of PDMCX during the current and prior year periods were based on the Company’s right to appoint the majority of its Board of Directors, which has, among others, the powers to manage the business (through its rights to appoint and evaluate PDMCX’s management), incur indebtedness, enter into agreements and commitments, and acquire and dispose of PDMCX’s assets.

In addition, as a result of the 50.01 % variable interest the Company held during the current and prior year periods, the Company had the obligation to absorb losses, and the right to receive benefits, that could potentially be significant to PDMCX.

The following table presents the carrying amounts of PDMCX assets and liabilities included in the Company’s consolidated balance sheets.

creditors of PDMCX do not have recourse to the assets of Photronics (other than the net assets of PDMCX);

therefore, the Company’s maximum exposure to loss from PDMCX is the Company’s interest in the carrying amount of the net assets of the joint

General creditors of PDMCX do not have recourse to the assets of Photronics (other than the net assets of PDMCX);

therefore, the Company’s maximum exposure to loss from PDMCX is the Company’s interest in the carrying amount of the net assets of the joint venture.

Classification

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NOTE 7 - ACCRUED LIABILITIES

below are the components of Accrued liabilities at the balance sheet dates.

Presented below are the components of Accrued liabilities at the balance sheet dates.

Compensation related expenses

Contract liabilities

Value added and other taxes

Property, plant, and equipment

Value added and other taxes

Service contracts

Operating leases

Telecommunications and utilities

Service Contracts

Accrued liabilities

NOTE 8 - DEBT

As of October 31, 2024, the Current portion of long-term debt and the Long-term debt balances were comprised of finance leases as described below:

As of October 31, 2024

Principal due:

Next 12 months

Months 13 – 24

Months 25 – 36

Months 37 – 48

Months 49 – 60

Long-term debt

Interest rate at balance sheet date

Basis spread on interest rates

Interest rate reset

Maturity date

Periodic payment amount

Varies as Lease matures

Periodic payment frequency

Loan collateral (carrying amount)

Represents the

carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests.

The table below provides information on the Company’s long-term debt as of October 31, 2023.

As of October 31, 2023

As of October 31, 2025 and October 31, 2024, the Current portion of long-term debt and the Long-term debt balances were comprised of finance leases as described below:

Principal due:

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Periodic payment amount

Varies as Lease matures

Lease matures

Periodic payment frequency

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In February 2021, the Company entered into a five-year $ 7.2 million finance lease for a high-end inspection tool.

payments on the lease, which commenced in February 2021, are $ 0.1 million per month.

Upon the payment of the fiftieth monthly payment

and prior to payment of the fifty-first monthly payment, the Company may exercise an early buyout option to purchase the tool for $ 2.4

After the original term or any renewal periods, the Company may return the tool, elect to extend the lease, or purchase the tool at its fair market value.

Management has determined that the Company will exercise its early buyout option

during the first half of 2025.

December 2020, the Company entered into a five-year $ 35.5

million finance lease for a high-end lithography tool.

Monthly payments on the lease, which commenced in January 2021, increased from $ 0.04

million during the first three months to $ 0.6 million for the following nine months, followed by forty-eight monthly payments of $ 0.5 million.

As of the due date of the forty-eighth monthly payment, the Company may exercise an early buyout option to purchase the tool for $ 14.1 million.

At the Company’s option, after the original term, the Company may return the tool, elect to extend the lease term for a period and a lease payment

to be agreed with lessor at the time, or purchase the tool for its then-fair market value, as determined by the lessor.

The lease agreement incorporates the covenants included in the Company’s Credit Agreement, as defined below (expired in

September 2023), which are detailed below, and includes a cross-default provision for any agreement or instrument with an outstanding, committed balance greater than $ 5.0

million in which the Company is the indebted party.

Management has determined that the Company will exercise its early buyout option during the first half of 2025.

Xiamen Project Loans

In November 2018, PDMCX obtained approval to borrow RMB 345.0 million from the Industrial and Commercial Bank of China.

From November 2018 through July 2020, PDMCX entered into separate loan agreements (the “Project Loans”) for the

entire approved amount.

In February 2023, PDMCX repaid the entire outstanding balance of RMB 26.4 million ($ 3.9 million).

As of October 31, 2024, PDMCX had no

amount outstanding and the amounts may not be re-borrowed.

The Project Loans were used to finance certain capital expenditures at the PDMCX facility and were collateralized by liens granted on the land use right, building, and certain equipment

located at the facility.

The interest rates on the Project Loans were variable (based on the RMB Loan Prime Rate of the National Interbank Funding Center), and interest incurred on the loans was eligible for reimbursement through incentives

provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided for such reimbursements up to a prescribed limit and duration.

The Project Loans were subject to covenants and provisions, certain of which related to the assets

pledged as security for the loans, all of which the Company were in compliance with at the time of repayment.

Monthly payments on the lease, which commenced in February 2021, were $ 0.1 million per month.

Upon the fiftieth monthly payment and prior to payment of the fifty-first monthly payment, the Company could exercise an early buyout option to purchase the tool for $ 2.4 million.

After the original term or any renewal periods, the Company could return the tool, elect to extend the lease, or purchase the tool at its fair market value.

The Company exercised the early buyout option to purchase the tool for $ 2.4 million during the fiscal year 2025.

In December 2020, the Company entered into a five-year $ 35.5 million finance lease for a high-end lithography tool.

Monthly payments on the lease, which commenced in January 2021, increased from $ 0.04 million during the first three months to $ 0.6 million for the following nine months, followed by forty-eight monthly payments of $ 0.5 million.

The lease agreement provided an early buyout option to purchase the tool for $ 14.1 million, which the Company exercised during the fiscal year 2025.

Xiamen Working Capital Loans

In November 2018, PDMCX obtained approval for revolving, unsecured credit of RMB 200 million ($ 25 million), pursuant to which PDMCX may enter into

separate loan agreements with varying terms to maturity.

In December 2022, the Company repaid the Company’s entire outstanding balance of RMB 25.6

million ($ 3.6 million).

The interest rates are variable, based on the RMB Loan Prime Rate of the National Interbank Funding Center.

Interest incurred on the loans related to the amount borrowed was eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided for such reimbursements up to a prescribed limit and

In November 2018, PDMCX obtained approval for revolving, unsecured credit of CNY 200 million ($ 25 million), pursuant to which PDMCX may enter into separate loan agreements with varying terms to maturity.

In December 2022, the Company repaid the Company’s entire outstanding balance of CNY 25.6 million ($ 3.6 million).

The interest rates are variable, based on the CNY Loan Prime Rate of the National Interbank Funding Center.

Interest incurred on the loans related to the amount borrowed was eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided such reimbursements up to a prescribed limit and duration.

This facility is subject to annual reviews and extensions.

In August 2024, the Company was issued an extension to the revolving, unsecured credit agreement for RMB 200 million (approximately $ 28.1 million) with an expiration date

of July 31, 2025 .

In July 2025, the Company was issued an extension to the revolving, unsecured credit agreement for CNY 200 million or USD 25 million with an expiration date of July 31, 2026 .

As of October 31, 2025, PDMCX had no outstanding borrowings against the approval.

Corporate Credit Agreement

In September 2018, the

Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”), which had a $ 50

million borrowing limit, with an expansion capacity to $ 100 million.

The Credit Agreement was secured by substantially all of the Company’s assets located in the United

States and common stock the Company owns in certain subsidiaries.

The Credit Agreement was subject to covenants around minimum interest coverage ratio, total leverage ratio, and minimum unrestricted cash balance (all of which the Company were

in compliance with at the termination of the agreement in September 2023), and limited the amount of cash dividends, distributions, and redemptions the Company could pay on the Company’s common stock to an aggregate annual amount of $ 50 million.

The Credit Agreement expired and was not renewed as of October 31, 2023.

There were no outstanding borrowings against the

Credit Agreement at its expiration.

Interest Paid for Debt

Interest payments were $ 0.3 million in 2024, $ 0.5 million in

2023, and $ 2.8 million in 2022.

The weighted-average interest rate on the Company’s current portion of long-term debt for the periods

ended October 31, 2024 and October 31, 2023 was 1.5 % and 1.5 %, respectively.

Interest payments were $ 0.1 million in 2025, $ 0.3 million in 2024, and $ 0.5 million in 2023.

The weighted-average interest rate on the Company’s current portion of long-term debt for the periods ended October 31, 2025 and October 31, 2024 was 5.9 % and 1.5 %, respectively.

NOTE 9 - OTHER LIABILITIES

Presented below are the components of Other liabilities at

the balance sheet dates.

Presented below are the components of Other liabilities at the balance sheet dates.

Unrecognized tax benefit

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NOTE 10 - REVENUE

The following tables present the Company’s revenue for the years ended October 31, 2024, October 31, 2023, and October 31, 2022,

disaggregated by product type, geographic origin, and timing of recognition.

The following tables present the Company’s revenue for the years ended October 31, 2025, October 31, 2024, and October 31, 2023, disaggregated by product type, geographic origin, and timing of recognition.

Revenue by Product Type

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Contract Assets and Contract Liabilities

following table provides information about the Company’s contract balances at the balance sheet dates.

The following table provides information about the Company’s contract balances at the balance sheet dates.

Classification

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Other liabilities

The following table presents revenue recognized

from contract liabilities that existed at the beginning of the reporting periods.

The following table presents revenue recognized from contract liabilities that existed at the beginning of the reporting periods.

Revenue recognized from beginning liability

The Company’s invoice terms generally

range from net thirty to ninety days ,

depending on both the geographic market in which the transaction occurs and the Company’s payment agreements with specific customers.

In the event that the Company’s evaluation of a customer’s business prospects and financial condition indicate

that the customer presents a collectability risk, the Company will modify terms of sale, which may require payment in advance of performance.

At the time of adoption, the Company elected the practical expedient allowed under ASC Topic 606 “Revenue

from Contracts with Customers” (“Topic 606”) that permits the Company not to adjust a contract’s promised amount of consideration to reflect a financing component when the period between when the Company transfers control of goods or services to

customers and when the Company is paid is one year or less.

instances when the Company is paid in advance of the Company’s performance, the Company records a contract liability and, as allowed under the practical expedient in Topic 606, recognize interest expense only if the period between when the

Company receives payment from the customer and the date when the Company expects to be entitled to the payment is greater than one year.

Historically, advance payments the Company has received from customers have generally not preceded the

completion of the Company’s performance obligations by more than one year.

The Company’s invoice terms generally range from net thirty to ninety days , depending on both the geographic market in which the transaction occurs and the Company’s payment agreements with specific customers.

In the event that the Company’s evaluation of a customer’s business prospects and financial condition indicate that the customer presents a collectability risk, the Company will modify terms of sale, which may require payment in advance of performance.

At the time of adoption, the Company elected the practical expedient allowed under ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) that permits the Company not to adjust a contract’s promised amount of consideration to reflect a financing component when the period between when the Company transfers control of goods or services to customers and when the Company is paid is one year or less.

In instances when the Company is paid in advance of the Company’s performance, the Company records a contract liability and, as allowed under the practical expedient in Topic 606, recognize interest expense

only if the period between when the Company receives payment from the customer and the date when the Company expects to be entitled to the payment is greater than one year.

Historically, advance payments the Company has received from

customers have generally not preceded the completion of the Company’s performance obligations by more than one year.

NOTE 11 - LEASES

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Long-term debt

following table presents future lease payments under noncancelable operating and finance leases as of October 31, 2024.

The following table presents future lease payments under noncancelable operating and finance leases as of October 31, 2025.

Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.

9 unchanged sentences

Amortization of ROU assets

following table presents statistical information related to the Company’s operating and finance leases.

The following table presents statistical information related to the Company’s operating and finance leases.

The information presented is as of the balance sheet dates.

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ROU assets obtained in exchange for operating lease obligations

NOTE 12 - SHARE-BASED

In March 2016, shareholders

approved the Company’s current equity incentive compensation plan (“the Plan”), under which incentive stock options, non-qualified stock options, stock grants, stock-based awards, restricted stock, restricted stock units, stock appreciation rights,

performance units, performance stock, and other stock or cash awards may be granted.

Shares to be issued under the Plan may be authorized and unissued shares, issued shares that have been reacquired by the Company (in the open market or in private transactions), or a combination thereof.

number of shares of common stock approved that may be issued under the Plan was four million shares.

On March 16, 2023, at its annual meeting of shareholders,

the shareholders of Photronics, Inc., approved amendments to the Plan to increase the number of shares available for issuance by an additional one

million shares, thereby increasing the shares available for issuance under the Plan from four million to five million.

Awards may be granted to officers, employees, directors, consultants, advisors, and independent contractors of Photronics or its

subsidiaries.

In the event of a change in control (as defined in the Plan) or at the discretion of the compensation committee;

the vesting of awards may be accelerated.

The Plan, aspects of which are more fully described below, prohibits further awards from being issued under prior plans.

The table below presents

information on the Company’s share-based compensation expenses for the three most recent fiscal years.

NOTE 12 - SHARE-BASED COMPENSATION

On April 2, 2025, at its annual meeting of shareholders, the shareholders of Photronics, Inc., approved the Company’s 2025 Equity Incentive Compensation Plan (the “2025 Plan”) under which incentive stock options, non-qualified stock options, stock grants, stock-based awards, restricted stock, restricted stock units, stock appreciation rights, performance units, performance stock, and other stock or cash awards may be granted.

The maximum number of shares of common stock that may be issued under the 2025 Plan is five million shares.

At the time of approval of the 2025 Plan, the Company’s 2016 Equity Incentive Compensation Plan (which was largely replicated by the 2025 Plan) was due to expire in early 2026 and had a limited quantity of shares remaining available for issuance.

Awards may be granted to officers, employees, directors, consultants, advisors, and independent contractors of Photronics or its subsidiaries.

In the event of a change in control (as defined in the 2025 Plan), the vesting of awards may be accelerated.

The 2025 Plan prohibits further awards from being issued under prior plans.

The table below presents information on the Company’s share-based compensation expenses for the three most recent fiscal years.

Expense reported in:

5 unchanged sentences

Restricted stock awards *

Restricted stock units

Stock options

2 unchanged sentences

Income tax benefits of share-based compensation

* During the year ended October 31, 2024, upon the departure of two executives

from the Company and in accordance with the terms of their separation agreements, previously granted time-vesting restricted stock awards accelerated vesting.

The Company accounted for the effects of the accelerated vesting of these stock awards as

a modification, and recognized $ 1.2 million of incremental stock-based compensation for the acceleration of restricted stock awards,

within selling, general and administrative expenses on the Consolidated Statements of Income for the year ended October 31, 2024.

* During the year ended October 31, 2024, upon the departure of two executives from the Company and in accordance with the terms of their separation agreements, previously granted time-vesting restricted stock awards accelerated vesting.

The Company accounted for the effects of the accelerated vesting of these stock awards as a modification, and recognized $ 1.2 million of incremental stock-based compensation expense for the acceleration of restricted stock awards, within selling, general and administrative expenses on the Consolidated Statements of Income for the year ended October 31, 2024.

Restricted Stock Awards

We periodically grant restricted stock awards, the restrictions on which

typically lapse over a service period of one to four years .

The Company periodically grants restricted stock awards, the restrictions on which typically lapse over a service period of one to four years .

The fair values of the awards are determined on the date of grant, based on the closing stock price of the Company’s common stock.

13 unchanged sentences

Shares outstanding at balance sheet date

Restricted Stock Units

Commencing Q2 FY25, the Company began granting restricted stock units, the restrictions on which typically lapse over a service period of one to four years .

The fair value of the awards is determined on the date of grant, based on the closing price of the Company’s common stock.

A summary of restricted stock unit activity during 2025 and the status of the Company’s restricted stock unit awards as of October 31, 2025, is presented below.

Restricted Stock Units

Weighted-Average

Fair Value at

Outstanding at October 31, 2024

Outstanding at October 31, 2025

Expected to vest as of October 31, 2025

The table below presents additional information on the Company’s restricted stock unit awards for the three most recent fiscal years.

Number of units granted

Weighted-average grant-date fair value of awards (in dollars per share)

Compensation costs not yet recognized

Weighted-average amortization period (in years)

Fair value of awards for which restrictions lapsed

Restricted stock units outstanding at balance sheet date

Stock Options

Option awards generally vest in one to four years and have a ten-year contractual term.

All incentive and non-qualified stock option grants must have an exercise price no less than the market value of the underlying

common stock on the date of grant.

All incentive and non-qualified stock option grants must have an exercise price no less than the market value of the underlying common stock on the date of grant.

The grant-date fair values of options are based on closing prices of the Company’s common stock on the dates of grant and are calculated using the Black-Scholes option pricing model.

Expected volatility is based on

the historical volatility of the Company’s common stock.

The Company uses historical option exercise behavior and employee termination data to estimate expected term, which represents the period of time that options granted are expected to remain

Expected volatility is based on the historical volatility of the Company’s common stock.

The Company uses historical option exercise behavior and employee termination data to estimate expected term, which represents the period of time that options granted are expected to remain outstanding.

The risk-free rate of return for the estimated term of an option is based on the U.S.

Treasury yield curve in effect at the date of grant.

The table below presents a summary of stock

options activity during 2024 and information on stock options outstanding at October 31, 2024.

The table below presents a summary of stock options activity during 2025 and information on stock options outstanding at October 31, 2025.

Weighted-Average

3 unchanged sentences

Intrinsic Value

Outstanding at

October 31, 2023

Cancellations,

forfeitures, and adjustments

Outstanding at

October 31, 2024

Exercisable at

October 31, 2024

Expected to vest as

of October 31, 2024

Outstanding at October 31, 2024

Cancellations, forfeitures, and adjustments

Outstanding at October 31, 2025

Exercisable at October 31, 2025

Expected to vest as of October 31, 2025

The table below presents additional information on stock option awards for the three most recent fiscal years.

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Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“ESPP”) permits employees to purchase

Photronics, Inc.

common shares at 85 % of the lower of the closing market price at the commencement or ending date of the Plan year

(which is approximately one year from the commencement date).

The Company’s Employee Stock Purchase Plan (“ESPP”) permits employees to purchase Photronics, Inc.

common shares at 85 % of the lower of the closing market price at the commencement or ending date of the Plan year (which is approximately one year from the commencement date).

The Company recognizes the ESPP expense over that same period.

October 31, 2024, the maximum number of shares of common stock approved by the Company’s shareholders to be purchased under the ESPP was 1.85

million shares, of which approximately 1.6 million shares had been issued through October 31, 2024.

As of October 31, 2024, there is

unrecognized compensation cost of $ 0.2 million.

As of October 31, 2025, the maximum number of shares of common stock approved by the Company’s shareholders to be purchased under the ESPP was 1.85 million shares, of which approximately 1.7 million shares had been issued through October 31, 2025.

As of October 31, 2025, there is $ 0.2 million of unrecognized compensation cost.

NOTE 13 - EMPLOYEE RETIREMENT PLANS

We maintain a 401(k) Savings and Profit-Sharing Plan (“401(k) Plan”) which covers all full and certain part-time U.S.

employees who

have completed three months of service and are 18 years of age or older.

Under the terms of the 401(k) Plan, employees may contribute up to 50 % of

their salary, subject to certain maximum amounts, which will be matched by the Company at 100 % of the employee’s contributions that are up

to 4 % of the employee’s compensation.

The Company maintains a 401(k) Savings and Profit-Sharing Plan (“401(k) Plan”) which covers all full and certain part-time U.S.

employees who have completed three months of service and are 18 years of age or older.

Under the terms of the 401(k) Plan, employees may contribute up to 50 % of their salary, subject to certain maximum amounts, which will be matched by the Company at 100 % of the employee's contributions that are up to 4 % of the employee's compensation.

Employee and employer contributions vest immediately upon contribution.

The total employer

contributions for all of the Company’s defined contribution plans were $ 1.2 million, $ 0.8 million and $ 0.7 million in 2024, 2023, and 2022, respectively.

Contribution expense for the 401(k) plan was $ 1.2 million, $ 1.2 million, and $ 0.8 million in fiscal year 2025, 2024, and 2023, respectively.

NOTE 14 – INCOME TAXES

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum

effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework.

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization

for Economic Co-operation and Development (OECD) Pillar Two Framework.

The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive.

significant number of other countries are expected to also implement similar legislation with varying effective dates.

The Company is currently not subject to Pillar Two but is continuously evaluating the potential impact of the Pillar Two

Framework to ensure we are compliant in the future.

A significant number of other countries are expected to continue

to implement similar legislation with varying effective dates.

The Company is currently subject to Pillar Two, but we estimate that the financial impact is immaterial.

We will continue to monitor further developments to determine any potential impact in the countries in

which we operate.

Income before the income tax provisions consists of the following:

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The table below presents a reconciliation of income taxes calculated by applying the statutory U.S.

federal income tax rate to our

income tax provisions of the reporting periods.

federal income tax rate to our income tax provisions of the reporting periods.

federal income tax at statutory rate

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jurisdictions, the establishment of uncertain tax positions in

jurisdiction and loss jurisdiction pre-tax losses not being benefited due to valuation allowances.

jurisdiction and release of valuation allowance against certain U.S.

Federal and state tax attributes that have been determined to be partially realizable

pre-tax income being taxed at higher statutory rates in non-U.S.

jurisdictions, the establishment of uncertain tax positions in

jurisdiction and loss jurisdiction pre-tax losses not being benefited due to valuation allowances.

jurisdictions, the establishment of uncertain tax positions in non-U.S.

jurisdiction and loss

jurisdiction pre-tax losses not being benefited due to valuation allowances.

pre-tax income being taxed at higher statutory rates in non-U.S.

jurisdictions;

and the establishment of uncertain tax positions in non-U.S.

jurisdiction.

Deferred Income Tax Assets

and Liabilities

jurisdictions, the establishment of uncertain tax positions in non-U.S.

jurisdiction and loss

jurisdiction pre-tax losses not being benefited due to valuation allowances.

Deferred Income Tax Assets and Liabilities

The net deferred income tax assets consist of the following:

Deferred income tax

Deferred income tax assets

Net operating losses

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Other liabilities

We have established a valuation allowance for a portion of our deferred tax assets because we believe, based on the weight of all available evidence,

that it is more likely than not that a portion of our deferred tax assets will expire prior to utilization.

In 2024 the valuation allowance decreased as a result of management’s determination that tax benefits on deferred tax assets would more likely

than not be realized and, therefore, decreased the valuation allowance to include these deferred tax assets.

We have established a valuation allowance for the portion of our deferred tax assets that, based on the weight of all available evidence, we believe is more likely than not to expire before it can be utilized.

In 2025, the valuation allowance against certain federal and state tax attributes was released as a result of management’s determination that these deferred tax asset benefits are now more likely than not to be realized.

The portion of

deferred tax assets that is still not expected to be realizable before expiration continues to be subject to a valuation allowance.

Due to the Tax Cuts and Jobs Act, which was signed into law in December 2017, as of fiscal year end 2018, U.S.

deferred taxes were no longer provided on

the undistributed earnings of non-U.S.

deferred taxes were no longer provided on the undistributed earnings of non-U.S.

subsidiaries.

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state and foreign withholding taxes.

Therefore, should we elect in the future to repatriate the remaining foreign earnings deemed to be indefinitely reinvested, we may incur additional state and foreign withholding tax expense on those earnings, the amount of which is not practicable to

Tax Credits and Carryforwards

The following tables present our available operating loss and credit carryforwards as of October 31, 2024, and their related

expiration periods.

The following tables present our available operating loss and credit carryforwards as of October 31, 2025, and their related expiration periods.

Operating Loss Carryforwards

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2026-Indefinite

2027-Indefinite

Tax Credit Carryforwards

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Federal research and development

Federal 48D credit

CHIPS Act (Federal 48D credit)

Uncertain Tax Positions

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A reconciliation of the beginning and ending amounts of unrecognized tax benefits is presented below.

The amounts in the table

include settlements of non-U.S.

The amounts in the table include settlements of non-U.S.

Balance at beginning of year before interest and penalties

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Balance at end of year including interest and penalties

The following table presents additional information

on our uncertain tax positions, as of the balance sheet dates.

The following table presents additional information on our uncertain tax positions, as of the balance sheet dates.

Unrecognized tax benefits that, if recognized, would impact the effective tax rate

Accrued interest and penalties related to uncertain tax positions

Although the timing of the reversal of uncertain tax positions may be uncertain, as they can be dependent upon the settlement of tax audits or

expirations of statutes of limitations, the Company believes that the amount of uncertain tax positions (including accrued interest and penalties, and net of tax benefits) that may be resolved over the next twelve months is $ 0.4 million.

Although the timing of the reversal of uncertain tax positions may be uncertain, as they can be dependent upon the settlement of tax audits or expirations of statutes of limitations, the Company believes that the amount of uncertain tax positions (including accrued interest and penalties, and net of tax benefits) that may be resolved over the next twelve months is approximately $ 1.0 million.

Resolution of these uncertain tax positions may result from either or both the lapses of statutes of limitations and tax settlements.

Company is no longer subject to tax authority examinations in the U.S., major foreign, or state tax jurisdictions for years prior to fiscal year 2019.

The Company is no longer subject to tax authority examinations in the U.S., major foreign, or state tax jurisdictions for years prior to fiscal year 2019.

During Q4 FY25, the Company resolved a routine income tax audit by authorities in a foreign jurisdiction and as a result released approximately $ 4.0 million of related income tax reserves at October 31, 2025.

Subsequent to the balance sheet date one of the subsidiaries in a foreign jurisdiction reached a settlement with the local tax authority for the FY24 income tax audit, the impact is immaterial and will be recorded in Q1 FY26.

In addition, the Company was also notified that it will be subject to a routine income tax audit by authorities in another foreign jurisdiction.

The audit process is in its initial stages, and at this time, the Company is unable to reasonably estimate any potential impact from the tax audit.

Income Tax Payments and Refunds

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Net income attributable to Photronics, Inc.

Effect of dilutive securities

Earnings used for diluted earnings per share

Weighted-average common shares outstanding:

Weighted-average common shares outstanding (in thousands):

Effect of dilutive securities:

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Net Income attributable to Photronics shareholders - Diluted

The table below sets forth the outstanding weighted-average share-based payment awards that were excluded from the calculation of

diluted earnings per share because their exercise price exceeded the average market value of the common shares for the period or, under application of the treasury stock method, they were otherwise determined to be antidilutive.

Share based payment awards

The table below sets forth the outstanding weighted-average share-based payment awards that were excluded from the calculation of diluted earnings per share because their exercise price exceeded the average market value of the common shares for the period or, under application of the treasury stock method, they were otherwise determined to be antidilutive.

Share-based payment awards, in shares

Total potentially dilutive shares excluded

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Presented below are the Company’s unrecognized unconditional purchase obligations, which are mainly payments for the acquisition of property, plant and

equipment, with a remaining term in excess of one year as of October 31, 2024.

The amounts below do not include the Company’s

commitments under the Company’s debt and lease arrangements, which are presented in Notes 8 and 11, respectively.

We are subject to various claims that arise in the ordinary course of business.

The Company believes that the Company’s potential

liability under such claims, individually and in the aggregate, will not have a material effect on the Company’s consolidated financial statements.

As of October 31, 2024, and October 31, 2023, the Company was not involved in environmental

litigation to which a government was a party.

NOTE 17 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME BY COMPONENT

The following tables set forth the changes in the Company’s accumulated other comprehensive (loss) income by component (net of tax

of $ 0 ) for the years ended October 31, 2024, and October 31, 2023.

The Company believes that the Company’s potential liability under such claims, individually and in the aggregate, will not have a

material effect on the Company’s consolidated financial statements.

As of October 31, 2025, and October 31, 2024, the Company was not involved in environmental litigation to which a government was a party.

NOTE 17 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

The following tables set forth the changes in the Company’s accumulated other comprehensive income (loss) by component (net of tax) for the years ended October 31, 2025, and October 31, 2024.

Year Ended October 31, 2025

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Other comprehensive income (loss)

Other comprehensive (loss) income attributable to noncontrolling interests

Other comprehensive income (loss) attributable to noncontrolling interests

Balance at October 31, 2025

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Balance at October 31, 2024

NOTE 18 - SEGMENT REPORTING

The Company operates and manages its business as one operating and reportable segment based on the organizational structure of the Company and information reviewed by the Company’s Chief Executive Officer, who is also the chief operating decision maker (“CODM”).

The CODM allocates capital resources across the Company’s entire asset base to maximize profitability without regard to geography, legal entity, or end market basis and evaluates the performance based on consolidated net income attributable to Photronics, Inc.

shareholders .

The following table presents selected financial information with respect to the Company’s single operating segment for the years ended October 31, 2025, 2024, and 2023:

Year Ended October 31,

Cost of goods sold

Selling, general and administrative expense

Research and development expense

Other operating expense

Operating Income

Non-operating income, net

Income tax provision

Net income attributable to noncontrolling interests

Net income attributable to Photronics, Inc.

NOTE 19 - RISKS AND CONCENTRATIONS

Financial instruments that potentially subject the Company to credit risk principally consist of trade accounts receivable and

short-term cash investments.

The Company sells the Company’s products primarily to semiconductor and FPD manufacturers in Asia, North America, and Europe.

The Company believes that the concentration of credit risk in the Company’s trade receivables

is substantially mitigated by the Company’s ongoing credit evaluation process and relatively short collection terms.

Financial instruments that potentially subject the Company to credit risk principally consist of trade accounts receivable and short-term cash investments.

The Company sells the Company’s products primarily to

semiconductor and FPD manufacturers in Asia, North America, and Europe.

The Company believes that the concentration of credit risk in the Company’s trade receivables is substantially mitigated by the Company’s ongoing credit evaluation

process and relatively short collection terms.

The Company does not generally require collateral from customers.

The Company establishes an allowance for credit losses based upon

factors surrounding the credit risk of specific customers, historical trends, and other information.

Our cash and cash equivalents are deposited in several financial institutions, including institutions located within all of the

countries in which the Company manufactures photomasks.

Portions of deposits in some of these institutions may exceed the amount of insurance available for such deposits at these institutions.

As these deposits are generally redeemable upon demand

and are held by high quality, reputable institutions, the Company considers them to bear minimal credit risk.

The Company further mitigates credit risks related to the Company’s cash and cash equivalents by spreading such risk among a number of

institutions.

The following table presents the percentages of the

Company’s net accounts receivable attributable to customers that accounted for more than ten percent of the total balance as of the balance sheet dates.

The following table presents the percentages of the Company’s revenue attributable to customers that accounted for more than ten

percent of the total revenue during the reporting periods.

We operate as a single reporting segment as a manufacturer of photomasks, which are high precision quartz or glass plates containing

microscopic images of electronic circuits for use in the fabrication of ICs and FPDs.

The Company establishes an allowance for credit losses based upon factors surrounding the credit risk of specific customers,

historical trends, and other information.

Our cash and cash equivalents are deposited in several financial institutions, including institutions located within all of the countries in which the Company manufactures photomasks.

Portions of deposits in

some of these institutions may exceed the amount of insurance available for such deposits at these institutions.

As these deposits are generally redeemable upon demand and are held by high quality, reputable institutions, the Company

considers them to bear minimal credit risk.

The Company further mitigates credit risks related to the Company’s cash and cash equivalents by spreading such risk among a number of institutions.

The following table presents the percentages of the Company’s net accounts receivable attributable to customers that accounted for more than ten percent of the total balance as of the balance sheet dates.

The following table presents the percentages of the Company’s revenue attributable to customers that accounted for more than ten percent of the total revenue during the reporting periods.

As of the balance sheet dates, the Company’s long-lived assets and net assets were, by geographic area, as presented below.

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October 31, 2024

Long-lived Assets

Europe and Other

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NOTE 20 - RELATED PARTY TRANSACTIONS

Our chief executive officer is related to an individual in a position of authority at one of the Company’s largest customers.

Company recorded revenue from this customer of $ 127.0 million, $ 126.5 million and $ 119.0 million, in 2024, 2023, and 2022,

respectively.

One of our executive officers is related to an individual in a position of authority at one of the Company’s largest customers.

The Company recorded revenue from this customer of $ 137.3 million, $ 127.0 million, and $ 126.5 million, in 2025, 2024, and 2023, respectively.

As of October 31, 2025, and October 31, 2024, the Company had accounts receivable of $ 38.3 million and $ 38.8 million, respectively, from this customer.

The Company believes that the terms of the transaction described above was negotiated at arm’s length and were no less favorable to

the Company than terms the Company could have obtained from unrelated third parties.

The Company believes the terms of the transactions described above were negotiated at arm’s length and were no less favorable to the Company than terms the Company could have obtained from unrelated third

NOTE 21 - FAIR VALUE MEASUREMENTS

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information

used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements.

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements.

The fair value hierarchy consists of three tiers as follows:

Level 1- These are investments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access.

Level 2- These are investments where values are based on quoted market prices that are not active or model derived valuations in which all significant inputs are

observable in active markets.

Level 2- These are investments where values are based on quoted market prices that are not active or model derived valuations in which all

significant inputs are observable in active markets.

Level 3- These are investments where values are derived from techniques in which one or more significant inputs are unobservable.

The following are the major categories of assets measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1),

significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):

The following are the major categories of assets measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):

October 31, 2025

October 31, 2024

Cash and cash

Government Securities

Time deposits

Money market funds

NOTE 21 - SHARE REPURCHASE PROGRAMS

In September 2020, the Company’s Board of Directors authorized the repurchase of up to $ 100 million of its common stock, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Act.

The repurchase authorization by the Board of Directors has no expiration date, does not obligate us to acquire any

common stock, and is subject to market conditions.

Share repurchases under this authorization commenced on September 16, 2020 .

The most recent 10b5-1 plan expired on September 15, 2022 , and has not been renewed.

In 2022, we repurchased 0.2

million shares at a cost of $ 2.5 million (an average of $ 13.43 per share) and, since the program’s inception, we have repurchased 5.8 million shares at a cost

of $ 68.3 million (an average of $ 11.70

Commercial paper

Time deposits

Restricted Cash (1)

Cash, cash equivalents, and restricted cash

(1) Restricted cash is included in other assets and primarily relates to customs requirements and land lease agreements.

The table below provides information on the Company’s available-for-sale short-term investments.

October 31, 2025

October 31, 2024

Government Securities

Commercial paper

Time deposits

NOTE 22 - SHARE REPURCHASE PROGRAM

In September 2020, the Company’s Board of Directors authorized the repurchase of up to $ 100 million of its common stock, pursuant to a repurchase plan under Rule 10b-18 of the Exchange Act.

The repurchase authorization by the Board of Directors has no expiration date, does not obligate the Company to acquire any common stock, and is subject to market conditions.

From September 2020 through October 2022, the Company repurchased 5.8 million shares at a cost of $ 68.3 million.

In August 2024, the Board of Directors authorized an increase to the Company’s existing share repurchase program from the remaining $ 31.7 million up to $ 100 million.

In June 2025, the Board of Directors authorized an additional $ 25 million share repurchase.

In fiscal year 2025, the Company repurchased 5.0 million shares at a cost of $ 97.4 million (an average of $ 19.52 per share).

All shares repurchased under the program have been retired prior to the end of the fiscal year in which they were purchased.

On August 28, 2024, the Board of Directors authorized an increase to the Company’s existing share repurchase program from the

remaining $ 31.7 million up to $ 100 million

under the Board of Director authorization.

In 2024, we did no t repurchase any further shares as part of this program.

The table below presents information on the repurchase programs for the three most recent fiscal years .

Number of shares repurchased

Cost of shares repurchased

As of October 31, 2025, $ 27.6 million remained available under this authorization for the repurchase of additional shares.

The table below presents information on the repurchase program for the three most recent fiscal years.

Number of shares repurchased (in thousands)

Cost of shares repurchased (in millions)

Average price paid per share

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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-K

Item 8. Financial Statements and Supplementary Data