PHOTRONICS INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP (PCAOB ID 34 ) 38 Consolidated Balance Sheets 40 Consolidated Statements of Income 41 Consolidated Statements of Comprehensive Income 42 Consolidated Statements of Equity 43 Consolidated Statements of Cash Flows 44 Notes to Consolidated Financial Statements 45 37 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Photronics, Inc. Opinion on the Financial Statements 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. 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. 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. 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 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. 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. Pursuant to these contracts, revenue recognized over time and the associated contract asset as of October 31, 2025 was $ 12.7 million. 38 Table of Contents 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, 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: o 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. o Evaluated management’s identification of significant contract terms and resulting revenue recognition for the in-process production order. o 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. o 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 Boston, Massachusetts December 17, 2025 We have served as the Company’s auditor since 1991. 39 Table of Contents PHOTRONICS, INC. Consolidated Balance Sheets (in thousands, except per share amounts) October 31, 2025 October 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 492,256 $ 598,485 Short-term investments 95,909 42,184 Accounts receivable, net of allowance of $ 1,166 in 2025 and $ 1,126 in 2024 195,921 200,830 Inventories 61,767 56,527 Other current assets 44,199 33,036 Total current assets 890,052 931,062 Property, plant and equipment, net 854,436 745,257 Deferred income taxes 40,207 23,059 Other assets 19,839 12,681 Total assets $ 1,804,534 $ 1,712,059 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ 11 $ 17,972 Accounts payable 84,209 78,717 Accrued liabilities 81,653 87,122 Total current liabilities 165,873 183,811 Long-term debt 13 25 Other liabilities 41,341 47,464 Total liabilities 207,227 231,300 Commitments and contingencies (Note 16) Equity: Preferred stock, $ 0.01 par value, 2,000 shares authorized, none issued and outstanding - - 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 576 619 Additional paid-in capital 486,934 514,757 Retained earnings 772,199 691,807 Accumulated other comprehensive loss ( 86,120 ) ( 86,319 ) Total Photronics, Inc. shareholders’ equity 1,173,589 1,120,864 Noncontrolling interests 423,718 359,895 Total equity 1,597,307 1,480,759 Total liabilities and equity $ 1,804,534 $ 1,712,059 See accompanying notes to consolidated financial statements. 40 Table of Contents PHOTRONICS, INC. Consolidated Statements of Income (in thousands, except per share amounts) Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Revenue $ 849,294 $ 866,946 $ $ 892,076 Cost of goods sold 549,464 551,000 555,914 Gross profit 299,830 315,946 336,162 Operating expenses: Selling, general and administrative 75,625 77,760 69,458 Research and development 15,804 16,576 13,654 Total operating expenses 91,429 94,336 83,112 Other operating expense ( 240 ) ( 92 ) - Operating income 208,161 221,518 253,050 Other income (expense): Foreign currency transactions impacts, net ( 8,310 ) 2,168 2,466 Interest income and other income, net 21,988 24,063 14,863 Interest expense ( 55 ) ( 334 ) ( 433 ) Income before income tax provision 221,784 247,415 269,946 Income tax provision 31,550 63,567 70,312 Net income 190,234 183,848 199,634 Net income attributable to noncontrolling interests 53,829 53,160 74,149 Net income attributable to Photronics, Inc. shareholders $ 136,405 $ $ 130,688 $ $ 125,485 Earnings per share: Basic $ 2.29 $ 2.12 $ $ 2.05 Diluted $ 2.28 $ 2.09 $ $ 2.03 Weighted-average number of common shares outstanding: Basic 59,606 61,726 61,139 Diluted 59,920 62,391 61,755 See accompanying notes to consolidated financial statements. 41 Table of Contents PHOTRONICS, INC. Consolidated Statements of Comprehensive Income (in thousands) Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Net income $ 190,234 $ 183,848 $ 199,634 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 9,954 8,630 5,615 Other 239 ( 81 ) ( 3 ) Net other comprehensive income 10,193 8,549 5,612 Comprehensive income 200,427 192,397 205,246 Less: comprehensive income attributable to noncontrolling interests 63,823 59,293 70,039 Comprehensive income attributable to Photronics, Inc. shareholders $ 136,604 $ 133,104 $ 135,207 See accompanying notes to consolidated financial statements. 42 Table of Contents PHOTRONICS, INC. Consolidated Statements of Equity Years Ended October 31, 2025, 2024 and 2023 (in thousands) Photronics, Inc. Shareholders Accumulated Additional Other Non- Common Stock Paid-In Retained Comprehensive Controlling Total Shares Amount Capital Earnings Income (Loss) Interests Equity Balance as of October 31, 2022 60,791 $ 608 $ 493,741 $ 435,634 $ ( 98,456 ) $ 230,562 $ 1,062,089 Net income - - - 125,485 - 74,149 199,634 Other comprehensive income (loss) - - - - 9,722 ( 4,110 ) 5,612 Shares issued under equity plans 519 5 268 - - - 273 Share-based compensation expense - - 8,001 - - - 8,001 Balance as of October 31, 2023 61,310 $ 613 $ 502,010 $ 561,119 $ ( 88,734 ) $ 300,601 $ 1,275,609 Net income - - 130,688 - 53,160 183,848 Other comprehensive income - - - - 2,415 6,134 8,549 Shares issued under equity plans 639 6 ( 1,143 ) - - - ( 1,137 ) Share-based compensation expense - - 13,890 - - - 13,890 Balance as of October 31, 2024 61,949 $ 619 $ 514,757 $ 691,807 $ ( 86,319 ) $ 359,895 $ 1,480,759 Net income - - - 136,405 - 53,829 190,234 Other comprehensive income - - - - 199 9,994 10,193 Shares issued under equity plans 672 6 149 - - - 155 Share-based compensation expense - - 13,388 - - - 13,388 Purchase and retirement of common stock through repurchase program ( 4,988 ) ( 49 ) ( 41,360 ) ( 56,013 ) - - ( 97,422 ) Balance as of October 31, 2025 57,633 $ 576 $ 486,934 $ 772,199 $ ( 86,120 ) $ 423,718 $ 1,597,307 43 Table of Contents PHOTRONICS, INC. Consolidated Statements of Cash Flows (in thousands) Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Cash flows from operating activities: Net income $ 190,234 $ 183,848 $ 199,634 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 77,258 82,433 80,473 Amortization of intangible assets 347 372 362 Share-based compensation 13,388 13,890 8,001 Deferred income taxes ( 17,168 ) ( 1,389 ) ( 927 ) Changes in assets, liabilities, and other: Accounts receivable 6,309 ( 2,541 ) 4,026 Inventories ( 4,942 ) ( 6,154 ) 1,236 Other current assets ( 4,715 ) 628 9,665 Accounts payable, accrued liabilities and other ( 12,913 ) ( 9,643 ) ( 294 ) Net cash provided by operating activities 247,798 261,444 302,176 Cash flows used in investing activities: Purchases of property, plant and equipment ( 188,137 ) ( 130,942 ) ( 131,295 ) Purchases of short-term investments ( 129,649 ) ( 100,558 ) ( 20,192 ) Proceeds from maturities of short-term investments 76,823 72,836 47,537 Government incentives 2,158 2,229 2,522 Purchases of intangible assets ( 94 ) ( 89 ) ( 117 ) Other - 59 - Net cash used in investing activities ( 238,899 ) ( 156,465 ) ( 101,545 ) Cash flows used in financing activities: Repayments of debt ( 17,972 ) ( 6,621 ) ( 18,439 ) Common stock repurchases ( 97,422 ) - - Proceeds from share-based arrangements 2,231 1,916 1,248 Net settlements of restricted stock awards ( 2,094 ) ( 3,025 ) ( 1,302 ) Net cash used in financing activities ( 115,257 ) ( 7,730 ) ( 18,493 ) Effects of exchange rate changes on cash, cash equivalents, and restricted cash 228 2,127 ( 2,680 ) Net change in cash, cash equivalents, and restricted cash ( 106,130 ) 99,376 179,458 Cash, cash equivalents, and restricted cash at beginning of year 601,243 501,867 322,409 Cash, cash equivalents, and restricted cash at end of year 495,113 601,243 501,867 Less: Ending restricted cash 2,857 2,758 2,575 Cash and cash equivalents at end of year $ 492,256 $ 598,485 $ 499,292 Supplemental disclosure of non-cash information: Accruals for property, plant and equipment not yet paid $ 12,173 $ 5,217 $ 18,607 Expected refundable federal investment tax credit $ 10,925 $ 5,013 $ - See accompanying notes to consolidated financial statements. 44 Table of Contents PHOTRONICS, INC. Notes to Consolidated Financial Statements Years Ended October 31, 2025, October 31, 2024 and October 31, 2023 (in thousands, except share amounts) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business and Basis of Presentation Description of Business 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 ), 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. GAAP”). 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. 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. Estimates and Assumptions 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. Subsequent actual results may differ from such estimates. 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 Photronics reporting currency is the U.S. dollar. 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. 45 Table of Contents 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 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. Restricted Cash 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. Investments The Company’s classification of investments is as follows: - Maturing within three months or less from the date of purchase Cash and cash equivalents - Maturing, as of the date of purchase, more than three months, but with remaining maturities of less than one year, from the balance sheet date Short-term investments - Maturing one year or more from the balance sheet date Long-term marketable investments 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, 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. 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. 46 Table of Contents Inventories 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 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 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 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. 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. 47 Table of Contents 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. 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. 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; 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. 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. 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. 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 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. 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. 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. 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. 48 Table of Contents 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 contracts. Historically, customer claims under warranties have been immaterial. Leases 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. 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. 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. 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; 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, net on the consolidated statements of income. 49 Table of Contents 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 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 $ 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 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. 50 Table of Contents Income Taxes 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. We are eligible for investment tax credits in U.S. and non-U.S. tax 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. 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. Earnings Per Share 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 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 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. 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. 51 Table of Contents 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. The 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 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): 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. October 31, October 31, 2025 2024 Accounts Receivable $ 166,511 $ 172,741 Unbilled Receivables 30,576 29,215 Allowance for Credit Losses ( 1,166 ) ( 1,126 ) $ 195,921 $ 200,830 NOTE 3 - OTHER CURRENT ASSETS Presented below are the components of Other current assets at the balance sheet dates. October 31, 2025 October 31, 2024 Contract assets $ 12,670 $ 11,532 Prepaid expenses 8,504 5,770 Recoverable value added taxes 3,104 2,684 Prepaid and refundable income taxes 4,385 1,875 Other (1) 15,536 11,175 $ 44,199 $ 33,036 (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. 52 Table of Contents NOTE 4 - INVENTORIES The components of Inventories at the balance sheet dates are presented below. October 31, October 31, 2025 2024 Raw materials $ 60,150 $ 56,128 Work in process 1,616 398 Finished goods 1 1 $ 61,767 $ 56,527 NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET Presented below are the components of Property, plant and equipment, net at the balance sheet dates. October 31, October 31, 2025 2024 Land $ 12,245 $ 11,419 Buildings and improvements 192,860 188,756 Machinery and equipment 2,109,456 1,990,610 Leasehold improvements 20,474 19,268 Furniture, fixtures, and office equipment 19,394 18,091 Construction in progress 134,880 91,213 2,489,309 2,319,357 Accumulated depreciation and amortization ( 1,634,873 ) ( 1,574,100 ) $ 854,436 $ 745,257 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. October 31, October 31, 2025 2024 Machinery and equipment $ 54 $ 42,815 Accumulated amortization ( 53 ) ( 10,522 ) $ 1 $ 32,293 The following table presents depreciation expense (including the amortization of ROU assets) related to property, plant and equipment incurred during the reporting periods. Years Ended October 31, October 31, October 31, 2025 2024 2023 Depreciation and amortization expense $ 77,258 $ 82,433 $ 80,472 53 Table of Contents NOTE 6 - PDMCX JOINT VENTURE In January 2018, Photronics, Inc., through its wholly-owned Photronics Singapore PTE. LTD. 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. Years Ended October 31, October 31, October 31, 2025 2024 2023 Net income from PDMCX $ 19,462 $ 20,074 $ 25,098 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; 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 following table presents the carrying amounts of PDMCX assets and liabilities included in the Company’s consolidated balance sheets. 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. October 31, October 31, 2025 2024 Classification Carrying Photronics Carrying Photronics Amount Interest Amount Interest Current assets $ 180,289 $ 90,163 $ 174,059 $ 87,047 Noncurrent assets 166,756 83,395 151,039 75,535 Total assets 347,045 173,558 325,098 162,582 Current liabilities 23,193 11,599 40,691 20,350 Noncurrent liabilities 2,970 1,485 3,320 1,660 Total liabilities 26,163 13,084 44,011 22,010 Net assets $ 320,882 $ 160,474 $ 281,087 $ 140,572 54 Table of Contents NOTE 7 - ACCRUED LIABILITIES Presented below are the components of Accrued liabilities at the balance sheet dates. October 31, 2025 October 31, 2024 Compensation related expenses $ 26,284 $ 31,188 Income taxes 21,094 24,200 Contract liabilities 9,491 12,375 Property, plant, and equipment 7,291 2,670 Value added and other taxes 3,799 2,837 Service contracts 2,226 1,448 Operating leases 1,975 1,925 Telecommunications and utilities 1,328 1,040 Other 8,165 9,439 Accrued liabilities $ 81,653 $ 87,122 NOTE 8 - DEBT 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: October 31, 2025 October 31, 2024 Principal due: Next 12 months $ 11 17,972 Months 13 – 24 $ 12 12 Months 25 – 36 1 12 Months 37 – 48 - 1 Months 49 – 60 - - Long-term debt 13 25 Total debt $ 24 17,997 Interest rate at balance sheet date N/A N/A Basis spread on interest rates N/A N/A Interest rate reset N/A N/A Maturity date N/A N/A Periodic payment amount Varies as Lease matures Varies as Lease matures Periodic payment frequency Monthly Monthly Loan collateral (carrying amount) $ 1 (1) 32,293 (1) (1) Represents the carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests. 55 Table of Contents Finance Leases In February 2021, the Company entered into a five-year $ 7.2 million finance lease for a high-end inspection tool. 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 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 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. Interest Paid for Debt 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. October 31, 2025 October 31, 2024 Unrecognized tax benefit $ 11,379 $ 14,720 Post employment benefit 13,218 12,993 Contract liabilities 5,041 8,910 Tax payable 4,530 4,310 Operating lease 3,960 3,037 Other 3,213 3,494 Other liabilities $ 41,341 $ 47,464 56 Table of Contents NOTE 10 - REVENUE 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. Year Ended October 31, October 31, October 31, Revenue by Product Type 2025 2024 2023 IC High-end $ 238,865 $ 228,469 $ 194,939 Mainstream 376,239 409,682 456,340 Total IC $ 615,104 $ 638,151 $ 651,279 FPD High-end $ 195,520 $ 195,365 $ 200,842 Mainstream 38,670 33,430 39,955 Total FPD $ 234,190 $ 228,795 $ 240,797 $ 849,294 $ 866,946 $ 892,076 Year Ended Revenue by Geographic Origin* October 31, October 31, October 31, 2025 2024 2023 Taiwan $ 283,844 $ 288,275 $ 316,889 China 221,005 232,941 245,378 South Korea 158,524 158,017 162,235 United States 148,915 146,652 128,879 Europe 34,075 39,244 36,579 Other 2,931 1,817 2,116 $ 849,294 $ 866,946 $ 892,076 * This table disaggregates revenue by the location in which it was earned. Year Ended Revenue by Timing of Recognition October 31, October 31, October 31, 2025 2024 2023 Over time $ 818,404 $ 831,500 $ 838,628 At a point in time 30,890 35,446 53,448 $ 849,294 $ 866,946 $ 892,076 57 Table of Contents Contract Assets and Contract Liabilities The following table provides information about the Company’s contract balances at the balance sheet dates. October 31, October 31, Classification 2025 2024 Contract Assets Other current assets $ 12,670 $ 11,532 Contract Liabilities Accrued liabilities $ 9,491 $ 12,375 Other liabilities 5,041 8,910 $ 14,532 $ 21,285 The following table presents revenue recognized from contract liabilities that existed at the beginning of the reporting periods. October 31, October 31, October 31, 2025 2024 2023 Revenue recognized from beginning liability $ 9,414 $ 12,222 $ 13,966 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. 58 Table of Contents NOTE 11 - LEASES The following table provides information on operating and finance leases included in the Company’s consolidated balance sheets. Classification October 31, 2025 October 31, 2024 ROU Assets – Operating Leases Other assets $ 5,976 $ 5,010 ROU Assets – Finance Leases Property, plant and equipment, net $ 1 $ 32,293 Lease Liabilities – Operating Leases Accrued liabilities $ 1,975 $ 1,925 Other liabilities 3,960 3,037 $ 5,935 $ 4,962 Lease Liabilities – Finance Leases Current portion of long-term debt $ 11 $ 17,972 Long-term debt 13 25 $ 24 $ 17,997 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. Fiscal Year Operating Leases Finance Leases 2026 $ 2,109 12 2027 1,686 12 2028 532 1 2029 216 - 2030 and thereafter 2,088 - Total lease payments $ 6,631 25 Imputed interest ( 696 ) ( 1 ) Lease liabilities $ 5,935 24 59 Table of Contents The following table presents lease costs for 2025, 2024, and 2023. Year Ended October 31, October 31, October 31, 2025 2024 2023 Operating lease costs $ 2,348 $ 2,255 $ 2,278 Short-term lease costs $ 1,280 $ 1,273 $ 462 Variable lease costs $ 599 $ 595 $ 656 Interest on finance lease $ 2 $ 330 $ 426 Amortization of ROU assets $ 19 $ 2,950 $ 2,870 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. October 31, 2025 October 31, 2024 Classification Weighted- average remaining lease term (in years) Weighted- average discount rate Weighted- average remaining lease term (in years) Weighted- average discount rate Operating leases 8.1 3.1 % 2.8 3.2 % Finance leases 2.1 5.9 % 0.2 1.5 % The following table presents the effects of leases on the Company’s 2025, 2024, and 2023 consolidated statements of cash flows, and provides leases-related non-cash information for those years. Year Ended October 31, October 31, October 31, 2025 2024 2023 Operating cash flows used for operating leases $ 2,341 $ 2,241 $ 2,271 Operating cash flows used for finance leases $ 2 $ 330 $ 429 Financing cash flows used for finance leases $ 11 $ 6,621 $ 6,521 ROU assets obtained in exchange for operating lease obligations $ 2,824 $ 842 $ 5,116 60 Table of Contents 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. Year Ended October 31, October 31, October 31, 2025 2024 2023 Expense reported in: Cost of goods sold $ 3,233 $ 2,704 $ 1,259 Selling, general, and administrative 8,954 10,124 5,962 Research and development 1,201 1,062 780 Total expense incurred $ 13,388 $ 13,890 $ 8,001 Expense by award type: Restricted stock awards * $ 11,966 $ 13,868 $ 7,909 Restricted stock units 1,216 - - Stock options - - 1 Employee stock purchase plan 206 22 91 Total expense incurred $ 13,388 $ 13,890 $ 8,001 Income tax benefits of share-based compensation $ 3,002 $ 1,156 $ 715 * 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 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. A summary of restricted stock award activity during 2025 and the status of the Company’s restricted stock awards as of October 31, 2025, is presented below. Restricted Stock Number of Shares Weighted-Average Fair Value at Grant Date Outstanding at October 31, 2024 1,423,602 $ 23.23 Granted 583,238 23.42 Vested ( 527,292 ) 21.43 Cancelled ( 73,876 ) 24.14 Outstanding at October 31, 2025 1,405,672 $ 23.93 Expected to vest as of October 31, 2025 1,303,385 $ 23.89 61 Table of Contents The table below presents additional information on the Company’s restricted stock awards for the three most recent fiscal years. Year Ended October 31, October 31, October 31, 2025 2024 2023 Number of shares granted 583,238 865,050 791,925 Weighted-average grant-date fair value of awards (in dollars per share) $ 23.42 $ 29.50 $ 16.84 Compensation costs not yet recognized $ 21,862 $ 21,303 $ 12,760 Weighted-average amortization period (in years) 2.6 2.8 2.8 Fair value of awards for which restrictions lapsed $ 11,302 $ 9,755 $ 6,256 Shares outstanding at balance sheet date 1,405,672 1,423,602 1,238,297 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 Number of Units Weighted-Average Fair Value at Grant Date Outstanding at October 31, 2024 - $ - Granted 178,166 21.09 Vested ( 41,514 ) 22.52 Cancelled - - Outstanding at October 31, 2025 136,652 $ 20.65 Expected to vest as of October 31, 2025 134,366 $ 20.59 The table below presents additional information on the Company’s restricted stock unit awards for the three most recent fiscal years. Year Ended October 31, October 31, October 31, 2025 2024 2023 Number of units granted 178,166 - - Weighted-average grant-date fair value of awards (in dollars per share) $ 21.09 $ - $ - Compensation costs not yet recognized $ 2,485 $ - $ - Weighted-average amortization period (in years) 3.4 - - Fair value of awards for which restrictions lapsed $ 935 $ - $ - Restricted stock units outstanding at balance sheet date 136,652 - - 62 Table of Contents 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. 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 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 2025 and information on stock options outstanding at October 31, 2025. Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding at October 31, 2024 277,625 $ 10.39 Granted - $ - Exercised ( 162,550 ) $ 10.45 Cancellations, forfeitures, and adjustments ( 1,000 ) $ 11.35 Outstanding at October 31, 2025 114,075 $ 10.30 1.64 years $ 1,551 Exercisable at October 31, 2025 114,075 $ 10.30 1.64 years $ 1,551 Expected to vest as of October 31, 2025 - $ - - years $ - The table below presents additional information on stock option awards for the three most recent fiscal years. Year Ended October 31, October 31, October 31, 2025 2024 2023 Number of options granted in period - - - Total intrinsic value of options exercised $ 2,127 $ 2,981 $ 1,654 Cash received from option exercises $ 1,698 $ 1,888 $ 1,101 Compensation cost not yet recognized $ - $ - $ - Weighted-average amortization period for cost not yet recognized (in years) - - - 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 recognizes the ESPP expense over that same period. 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. 63 Table of Contents NOTE 13 - EMPLOYEE RETIREMENT PLANS 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. 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. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. 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: Year Ended October 31, 2025 October 31, 2024 October 31, 2023 United States $ 10,225 $ 20,145 $ ( 1,737 ) Foreign 211,559 227,270 271,683 $ 221,784 $ 247,415 $ 269,946 Income Tax Provision The components of our income tax provisions are presented below. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Current: Federal $ - $ - $ - State 60 95 14 Foreign 48,658 64,861 71,225 48,718 64,956 71,239 Deferred: Federal ( 14,320 ) - - State ( 731 ) 13 12 Foreign ( 2,117 ) ( 1,402 ) ( 939 ) ( 17,168 ) ( 1,389 ) ( 927 ) Total $ 31,550 $ 63,567 $ 70,312 64 Table of Contents 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. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 U.S. federal income tax at statutory rate $ 46,575 $ 51,957 $ 56,689 Changes in valuation allowance ( 19,858 ) ( 1,986 ) ( 256 ) Foreign rate differential 7,075 10,695 11,394 Tax credits ( 4,648 ) ( 5,209 ) ( 2,425 ) Uncertain tax positions, including reserves, settlements and resolutions ( 2,790 ) 6,226 3,328 Lease Buyout 3,402 - - Other, net 1,794 1,884 1,582 Income tax provision $ 31,550 $ 63,567 $ 70,312 Reporting Period U.S. Statutory Tax Rates Photronics Effective Tax Rates Primary Reasons for Differences 2025 21.0 % 14.2 % Non-U.S. pre-tax income being taxed at higher statutory rates in non-U.S. jurisdictions, the establishment of uncertain tax positions in non-U.S. jurisdiction and release of valuation allowance against certain U.S. Federal and state tax attributes that have been determined to be partially realizable 2024 21.0 % 25.7 % Non-U.S. pre-tax income being taxed at higher statutory rates in non-U.S. 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. 2023 21.0 % 26.0 % Non-U.S. pre-tax income being taxed at higher statutory rates in non-U.S. 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. 65 Table of Contents Deferred Income Tax Assets and Liabilities The net deferred income tax assets consist of the following: As of October 31, 2025 October 31, 2024 Deferred income tax assets Net operating losses $ 15,150 $ 18,941 Reserves not currently deductible 9,134 9,892 Tax credit carryforwards 12,658 12,550 Share-based compensation 3,327 3,102 Property, plant and equipment 5,402 10,710 Research intangibles 3,904 2,721 Lease liabilities 32 4,116 Other 2,999 1,857 52,606 63,889 Valuation allowances ( 10,777 ) ( 30,633 ) 41,829 33,256 Deferred income tax liabilities ROU assets ( 32 ) ( 7,351 ) Other ( 2,126 ) ( 3,315 ) ( 2,158 ) ( 10,666 ) Net deferred income tax assets $ 39,671 $ 22,590 Classification Deferred income tax assets $ 40,207 $ 23,059 Other liabilities ( 536 ) ( 469 ) $ 39,671 $ 22,590 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. subsidiaries. Our policy to indefinitely reinvest these earnings in non-U.S. operations remains unchanged for the purpose of determining deferred tax liabilities for U.S. 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 compute. 66 Table of Contents Tax Credits and Carryforwards The following tables present our available operating loss and credit carryforwards as of October 31, 2025, and their related expiration periods. Operating Loss Carryforwards Amount Expiration Period Federal $ 38,499 2030-Indefinite State 131,012 2026-Indefinite Foreign 1,023 2027-Indefinite Tax Credit Carryforwards Amount Expiration Period Federal research and development $ 5,943 2026-2045 CHIPS Act (Federal 48D credit) 2,273 2043 State 5,624 2026-2039 Uncertain Tax Positions We include unrecognized tax benefits in Other liabilities , and we include any applicable interest and penalties related to uncertain tax positions in our income tax provision. 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. audits. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Balance at beginning of year before interest and penalties $ 13,692 $ 8,332 $ 5,204 (Reductions) additions of tax positions in prior years ( 2,230 ) 86 209 Additions based on current year tax positions 3,918 6,139 3,361 Settlements ( 4,515 ) ( 835 ) ( 423 ) Lapses of statutes of limitations ( 37 ) ( 30 ) ( 19 ) Balance at end of year before interest and penalties 10,828 13,692 8,332 Interest and penalties 551 1,028 576 Balance at end of year including interest and penalties $ 11,379 $ 14,720 $ 8,908 The following table presents additional information on our uncertain tax positions, as of the balance sheet dates. October 31, 2025 October 31, 2024 Unrecognized tax benefits that, if recognized, would impact the effective tax rate $ 11,379 $ 14,720 Accrued interest and penalties related to uncertain tax positions $ 551 $ 1,028 67 Table of Contents 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. 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 The table below presents income taxes paid and refunds of income taxes received during the reporting periods. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Income taxes paid $ 60,374 $ 62,520 $ 70,362 Income tax refunds received $ 356 $ 2,519 $ 485 NOTE 15 - EARNINGS PER SHARE The calculation of basic and diluted earnings per share is presented below. Year Ended October 31, October 31, October 31, (in thousands, except for per share data) 2025 2024 2023 Net income attributable to Photronics, Inc. shareholders $ 136,405 $ 130,688 $ 125,485 Weighted-average common shares outstanding (in thousands): Basic 59,606 61,726 61,139 Effect of dilutive securities: Share-based payment awards 314 665 616 Potentially dilutive common shares 314 665 616 Weighted-average common shares-Diluted 59,920 62,391 61,755 Earnings per share: Net Income attributable to Photronics shareholders - Basic $ 2.29 $ 2.12 $ 2.05 Net Income attributable to Photronics shareholders - Diluted $ 2.28 $ 2.09 $ 2.03 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. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Share-based payment awards, in shares 792 371 136 Total potentially dilutive shares excluded 792 371 136 68 Table of Contents NOTE 16 - COMMITMENTS AND CONTINGENCIES 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, 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 Foreign Currency Translation Adjustments Other Total Balance at October 31, 2024 $ ( 85,587 ) $ ( 732 ) $ ( 86,319 ) Other comprehensive income (loss) 9,954 239 10,193 Other comprehensive income (loss) attributable to noncontrolling interests ( 9,880 ) ( 114 ) ( 9,994 ) Balance at October 31, 2025 $ ( 85,513 ) $ ( 607 ) $ ( 86,120 ) Year Ended October 31, 2024 Foreign Currency Translation Adjustments Other Total Balance at October 31, 2023 $ ( 88,044 ) $ ( 690 ) $ ( 88,734 ) Other comprehensive income (loss) 8,630 ( 81 ) 8,549 Other comprehensive income (loss) attributable to noncontrolling interests ( 6,173 ) 39 ( 6,134 ) Balance at October 31, 2024 $ ( 85,587 ) $ ( 732 ) $ ( 86,319 ) 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 . 69 Table of Contents 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, 2025 2024 2023 Revenues $ 849,294 $ 866,946 $ 892,076 Cost of goods sold ( 549,464 ) ( 551,000 ) ( 555,914 ) Gross Profit 299,830 315,946 336,162 Selling, general and administrative expense ( 75,625 ) ( 77,760 ) ( 69,458 ) Research and development expense ( 15,804 ) ( 16,576 ) ( 13,654 ) Other operating expense ( 240 ) ( 92 ) - Operating Income 208,161 221,518 253,050 Non-operating income, net 13,623 25,897 16,896 Income tax provision ( 31,550 ) ( 63,567 ) ( 70,312 ) Net income attributable to noncontrolling interests ( 53,829 ) ( 53,160 ) ( 74,149 ) Net income attributable to Photronics, Inc. shareholders 136,405 130,688 125,485 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. 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. October 31, 2025 October 31, 2024 Customer A 19.6 % 19.2 % Customer B 7.0 % 14.6 % 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. Year Ended October 31, 2025 October 31, 2024 October 31, 2023 Customer A 16 % 15 % 14 % Customer B 13 % 12 % 10 % Customer C 8 % 9 % 13 % 70 Table of Contents As of the balance sheet dates, the Company’s long-lived assets and net assets were, by geographic area, as presented below. October 31, 2025 October 31, 2024 Long-lived Assets Net Assets Long-lived Assets Net Assets China 263,950 $ 427,616 $ 256,072 $ 379,460 Europe and Other 9,709 ( 1,353 ) 7,010 ( 420 ) United States 200,815 158,402 144,634 217,890 South Korea 139,501 348,996 123,631 315,597 Taiwan 240,461 663,646 213,910 568,232 854,436 $ 1,597,307 $ 745,257 $ 1,480,759 NOTE 20 - RELATED PARTY TRANSACTIONS 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 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 parties. 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 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 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): October 31, 2025 October 31, 2024 Cash and cash equivalents Short-term investments Total Fair Value Cash and cash equivalents Short-term investments Total Fair Value Cash $ 222,166 $ - $ 222,166 $ 414,074 $ - $ 414,074 Level 1 U.S. Government Securities 3,789 25,157 28,946 - - - Money market funds 11,159 - 11,159 36,322 - 36,322 Level 2 Commercial paper 30,747 2,259 33,006 - - - Time deposits 224,395 68,493 292,888 148,089 42,184 190,273 $ 492,256 $ 95,909 $ 588,165 $ 598,485 $ 42,184 $ 640,669 Restricted Cash (1) 2,857 2,758 Cash, cash equivalents, and restricted cash $ 495,113 $ 601,243 (1) Restricted cash is included in other assets and primarily relates to customs requirements and land lease agreements. 71 Table of Contents The table below provides information on the Company’s available-for-sale short-term investments. October 31, 2025 October 31, 2024 Amortized Unrealized Unrealized Carrying Amortized Unrealized Unrealized Carrying Cost Gains Losses Value Cost Gains Losses Value U.S. Government Securities $ 25,148 $ 9 $ - $ 25,157 $ - $ - $ - $ - Commercial paper 2,259 - - 2,259 - - - - Time deposits 68,493 - - 68,493 42,184 - - 42,184 Total $ 95,900 $ 9 $ - $ 95,909 $ 42,184 $ - $ - $ 42,184 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. 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. 2025 Purchases 2024 Purchases 2023 Purchases Number of shares repurchased (in thousands) 4,988 - - Cost of shares repurchased (in millions) $ 97.4 $ - $ - Average price paid per share $ 19.52 $ - $ - 72 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.