PHOTRONICS: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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Overview

The Management’s Discussion and Analysis (“MD&A”) of the financial condition, results of operations and prospects of the Company should be read in conjunction with its condensed consolidated financial statements and accompanying notes. Various segments of this MD&A contain forward-looking statements, all of which are presented based on current expectations, which may be affected by uncertainties and risk factors (presented throughout this filing and in Form 10-K of the Company for fiscal 2020), which may cause actual results to differ materially from those expectations.

We sell substantially all of our photomasks to semiconductor designers and
manufacturers, and manufacturers of FPDs. Photomask technology is also being
applied to the fabrication of other higher-performance electronic products such
as photonics, microelectronic mechanical systems and certain nanotechnology
applications. Our selling cycle is tightly interwoven with the development and
release of new semiconductor and display designs and applications, particularly
as they relate to the semiconductor industry's migration to more advanced
product innovation, design methodologies, and fabrication processes. The demand
for photomasks primarily depends on design activity rather than sales volumes
from products manufactured using photomask technologies. Consequently, an
increase in semiconductor or display sales does not necessarily result in a
corresponding increase in photomask sales. However, the reduced use of
customized ICs, reductions in design complexity, other changes in the technology
or methods of manufacturing or designing semiconductors, or a slowdown in the
introduction of new semiconductor or display designs could reduce demand for
photomasks - even if the demand for semiconductors and displays increases.
Advances in semiconductor, display, and photomask design and production methods
that shift the burden of achieving device performance away from lithography
could also reduce the demand for photomasks. Historically, the microelectronic
industry has been volatile, experiencing periodic downturns and slowdowns in
design activity. These negative trends have been characterized by, among other
things, diminished product demand, excess production capacity, and accelerated
erosion of selling prices, with a concomitant effect on revenue and
profitability.

We are typically required to fulfill customer orders within a short period of
time after receipt of an order, sometimes within twenty-four hours. This results
in a minimal level of backlog orders, typically one to two weeks of backlog for
IC photomasks and two to three weeks of backlog for FPD photomasks.

The global semiconductor and FPD industries are driven by end markets which have
been closely tied to consumer-driven applications of high-performance devices,
including, but not limited to, mobile display devices, mobile communications,
and computing solutions. While we cannot predict the timing of the industry's
transition to volume production of next-generation technology nodes, or the
timing of up and down-cycles with precise accuracy, we believe that such
transitions and cycles will continue into the future, beneficially and adversely
affecting our business, financial condition, and operating results as they
occur. We believe our ability to remain successful in these environments is
dependent upon the achievement of our goals of being a service and technology
leader and efficient solutions supplier, which we believe should enable us to
continually reinvest in our global infrastructure.

Recent developments

In the second quarter of fiscal 2021, we 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, are $0.1 million per month. Upon the payment
of the fiftieth monthly payment and prior to payment of the fifty-first monthly
payment, we may exercise an early buyout option to purchase the tool at
33.684638% of its original cost. If we do not exercise the early buyout option,
then at the end of the five-year lease term, the lease shall continue to renew
on a month-to-month basis at the same rental terms; at our option, after the
original term or any renewal periods, we may return the tool, elect to extend
the lease, or purchase the tool at its fair market value. Since we are
reasonably certain that we will exercise the early buyout option, our lease
liability reflects such exercise and we have classified the lease as a finance
lease. The interest rate implicit in the lease is 1.08%.

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In the first quarter of fiscal 2021, we 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 after the first
three months to $0.6 million for the following nine months, followed by
forty-eight monthly payments of $0.5 million. As of the due date of the
forty-eighth monthly payment, we may exercise an early buyout option to purchase
the tool at 39.84% of the initial lease liability. If we do not exercise the
early buyout option, then at the end of the five-year lease term, at our option,
we may return the tool, elect to extend the lease term for a period and a lease
payment to be agreed with lessor at the time, or purchase the tool for its
then-fair market value as determined by the lessor. Since we are reasonably
certain that we will exercise the early buyout option, our lease liability
reflects such exercise and we have classified the lease as a finance lease. The
interest rate implicit in the lease is 1.58%. The lease agreement incorporates
the covenants included in our Corporate Credit Agreement, which are detailed in
Note 6, and includes a cross-default provision for any agreement or instrument
with an outstanding, committed balance greater than $5.0 million in which we are
the indebted party.

For more information, see section 7 of our Form 10-K for the year ended.
October 31, 2020.

Results of Operations

Three and nine months over August 1, 2021

The following table presents certain operating information expressed as a percentage of sales. Columns may not work due to rounding.

                                             Three Months Ended                    Nine Months Ended
                                   August 1,       May 2,       August 2,      August 1,       August 2,
                                     2021           2021           2020           2021           2020

Revenue                                 100.0 %       100.0 %        100.0 %        100.0 %         100.0 %
Cost of goods sold                       73.4          75.4           76.1           76.1            77.7

Gross profit                             26.6          24.6           23.9           23.9            22.3
Selling, general and
administrative expenses                   8.8           8.8            8.4            9.0             8.9
Research and development
expenses                                  3.1           2.7            2.9            3.0             2.8
Other operating income, net               2.1             -              -            0.7               -

Operating income                         16.7          13.0           12.6           12.7            10.6
Other non-operating income
(expense), net                            2.2          (0.5 )         (1.3 )          0.8             0.2

Income before income tax
provision                                18.9          12.5           11.3           13.4            10.8
Income tax provision                      4.6           2.3            3.2            3.0             3.9

Net income                               14.3          10.2            8.1           10.4             6.9
Net income attributable to
noncontrolling interests                  4.3           3.6        1.3 1.1            3.0             1.0

Net income attributable to
Photronics, Inc. shareholders            10.0 %         6.6 %          6.8 %          7.4 %           5.9 %



Note: All tabular comparisons included in the following discussions, unless
otherwise indicated, are for the three months ended August 1, 2021 (Q3 FY21),
May 2, 2021 (Q2 FY21) and August 2, 2020 (Q3 FY20), and for the nine months
ended August 1, 2021 (YTD FY21) and August 2, 2020 (YTD FY20), in millions of
dollars. The columns may not foot due to rounding.

Returned

 Our quarterly revenues can be affected by the seasonal purchasing practices of
our customers. As a result, demand for our products is typically reduced during
the first quarter of our fiscal year, by the North American, European, and Asian
holiday periods, as some of our customers reduce their development and,
consequently, their buying activities during those periods.

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The following tables present changes in disaggregated revenue in Q3 FY21 and YTD
FY21 from revenue in prior reporting periods.

Evolution of revenues by type of product

                                  Q3 FY21 from Q2 FY21                     Q3 FY21 from Q3 FY20                      YTD FY21 from YTD FY20
                        Revenue in       Increase        Percent         Increase          Percent         Revenue in        Increase        Percent
                         Q3 FY21        (Decrease)        Change        (Decrease)          Change          YTD FY21        (Decrease)        Change

IC
High-end *             $       42.4     $       1.1            2.6 %   $        3.7              9.5 %    $       120.4     $       2.4            2.0 %
Mainstream                     75.4             4.7            6.6 %            5.4              7.7 %            214.3            19.8           10.2 %

Total IC               $      117.8     $       5.8            5.2 %   $        9.1              8.4 %    $       334.7     $      22.2            7.1 %

FPD
High-end *             $       40.6     $       1.2            3.1 %   $        4.0             10.8 %    $       114.7     $       6.4            5.9 %
Mainstream                     12.2             3.9           46.1 %           (0.3 )           (2.6 )%            33.1            (6.6 )        (16.6 )%

Total FPD              $       52.9     $       5.1           10.7 %   $        3.6              7.4 %    $       147.8     $      (0.2 )         (0.1 )%

Total Revenue          $      170.6     $      10.9            6.8 %   $       12.7              8.1 %    $       482.5     $      22.1            4.8 %


* High-end photomasks generally have higher Average Sales Prices (ASP) than consumer products.

Evolution of revenues by geographic area **

                                  Q3 FY21 from Q2 FY21                      Q3 FY21 from Q3 FY20                      YTD FY21 from YTD FY20

                        Revenue in       Increase        Percent          Increase          Percent         Revenue in        Increase        Percent
                         Q3 FY21        (Decrease)        Change         (Decrease)          Change          YTD FY21        (Decrease)        Change

Taiwan                 $       63.8     $       4.8            8.2 %    $        3.0              5.0 %    $       179.4     $      (3.0 )         (1.7 )%
Korea                          39.6            (0.7 )         (1.7 )%            0.1              0.2 %            118.6             2.1            1.8 %
United States                  24.7            (2.5 )         (9.0 )%           (3.7 )          (12.9 )%            78.4             0.2            0.2 %
China                          32.7             8.9           37.6 %            11.7             55.6 %             77.4            19.0           32.6 %
Europe                          9.4             0.2            2.0 %             1.7             22.8 %             27.3             3.7           15.7 %
Other                           0.4             0.0           10.1 %            (0.1 )          (21.9 )%             1.3             0.1            6.7 %

Total Revenue          $      170.6     $      10.9            6.8 %    $       12.7              8.1 %    $       482.5     $      22.1            4.8 %


** This table breaks down income according to where it was earned.

Changes in revenue from products shipped to customers in China

                                  Q3 FY21 from Q2 FY21                     Q3 FY21 from Q3 FY20                    YTD FY21 from YTD FY20
                       Revenue in         Increase        Percent        Increase          Percent        Revenue in        Increase        Percent
                        Q3 FY21          (Decrease)       Change        (Decrease)          Change         YTD FY21        (Decrease)       Change


IC                    $       34.5      $        3.0           9.5 %   $       10.9             46.3 %   $        91.6     $      21.4          30.5 %
FPD                           28.1               2.3           8.8 %            0.6              2.0 %            77.9            (8.4 )        (9.8 )%

Total                 $       62.6      $        5.3           9.2 %   $       11.5             22.5 %   $       169.4     $      13.0           8.3 %



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Revenue in Q3 FY21 of $170.6 million represents an increase of 6.8% compared to
Q2 FY21 and 8.1% from Q3 FY20; on a year-to-date basis, revenue increased 4.8%
to $482.5 million, due to increased demand in both IC and FPD, as a robust
design environment led to growing photomask demand across our markets.

IC revenue increased 5.2% in Q3 FY21, compared with Q2 FY21, 8.4% compared with
Q3 FY20, and 7.1% on a year-to-date basis, mainly attributable to continued
growth in mainstream on strong demand driven by node migrations, as our
customers have looked to take advantage of lower device-lifetime cost and better
performance. This positive demand factor has enabled us to realize pricing
benefits in Asia on some nodes. High-end revenue growth was driven by strong
logic demand, especially in Taiwan and China. In addition, captive photomask
operations continue to dedicate more of their capacity to EUV production,
resulting in the increased outsourcing of their non-EUV production to merchant
photomask suppliers.

FPD revenue increased 10.7% in Q3 FY21, compared with Q2 FY21, driven by
increased demand for high-end AMOLED displays used in mobile applications, new
designs for G10.5+ panel manufacturing, and mainstream growth as a result of
recent capacity expansions. FPD revenue increased 7.4% in Q3 FY21, compared with
Q3 FY20, due to increased high-end, driven by growth in AMOLED displays for
mobile applications. On a year-to-date basis, FPD revenues were essentially flat
when compared to the same period last year, as increased high-end was offset by
a decline in mainstream, driven by an increase in AMOLED demand for mobile
displays being offset by a weak LCD market.

Gross Margin

                                                Percent                     Percent                                     Percent
                    Q3 FY21       Q2 FY21       Change        Q3 FY20       Change        YTD FY21       YTD FY20       Change


Gross profit       $    45.3     $    39.2          15.5 %   $    37.7          20.1 %   $    115.1     $    102.8          12.0 %
Gross margin            26.6 %        24.6 %                      23.9 %                       23.9 %         22.3 %



Gross margin increased by 2.0 percentage points in Q3 FY21, from Q2 FY21, as a
result of the increase in revenue from the prior quarter and higher pricing for
certain mainstream IC nodes. Material costs increased 4.3% from the prior
quarter, but decreased as a percentage of revenue by 70 basis points. Labor
costs increased 3.2% but, as a percentage of revenue, fell 40 basis points.
Equipment and other overhead costs increased 4.0%, but decreased 90 basis points
as a percentage of revenue, with higher outsourced manufacturing costs most
significantly contributing to the cost increase.

Gross margin increased by 2.7 percentage points in Q3 FY21, from Q3 FY20, as a
result of the increase in revenue from the prior year quarter and higher pricing
for certain mainstream IC nodes. Material costs increased 4.2% from the prior
year quarter, with the largest increase occurring at our China-based FPD
facility, where the increase was in line with that facility's increased revenue.
Globally, material costs, as a percentage of revenue, decreased 110 basis
points. Labor costs increased 9.1% from the prior year quarter, but only
represented a 10 basis point increase as a percent of revenue, while equipment
and other overhead costs rose moderately at 2.8%, but fell 170 basis points as a
percentage of revenue. Increased equipment service contract and equipment
maintenance costs were the most significant contributor to the rise in equipment
and other overhead costs.

Gross margin increased by 1.6 percentage points in YTD FY21, from YTD FY20,
primarily as a result of the increase in revenue from the prior year period and
higher pricing for certain mainstream IC nodes. Material costs increased 3.5%
from the prior year period, with a notable increase occurring at our China-based
IC facility, where the increase was in line with that facility's increased
revenue. Globally, material costs decreased 40 basis points as a percentage of
revenue. Labor costs increased 10.7% from the prior year, but only 70 basis
points when compared to revenue. Equipment and other overhead costs decreased by
0.4%, or 180 basis points as a percentage of revenue, with reduced outsourced
manufacturing costs most significantly contributing to the decline.

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As we operate in a high fixed cost environment, increases or decreases in our
revenues and capacity utilization will generally positively or negatively impact
our gross margin.

Selling, general and administrative expenses

Selling, general and administrative expenses were $15.1 million in Q3 FY21, an
increase of $1.0 million from Q2 FY21, and an increase of $1.8 million from Q3
FY20. The increases are primarily the result of increased compensation costs.
Selling, general and administrative expenses were $43.2 million in YTD FY21, as
compared with $40.8 million in YTD FY20, with the increase primarily being the
result of increased compensation costs.

Research and development costs

Research and development expenses, which primarily consist of development and
qualification efforts related to high-end process technologies for high-end IC
and FPD applications, were $5.3 million in Q3 FY21, compared with $4.4 million
in Q2 FY21 and $4.5 million in Q3 FY20. Increased development activities in the
U.S. was the primary driver of the increases from both comparative periods, with
decreased expenses at our China-based FPD facility partially offsetting the
increase from the prior year period. On a year-to-date basis, research and
development expenses increased $1.4 million, primarily due to an increase in
development activities in the U.S. exceeding a decline in such activities at our
China-based FPD facility.

Other Operating Income, Net

In the third quarter of fiscal 2021, we recorded a $ 3.5 million gain on the exchange of a lithography tool with a tool supplier in partial compensation for a more advanced tool.

Other non-operating income (expenses)

                                   Q3 FY21        Q2 FY21        Q3 FY20    

cumulative over fiscal year 21 over fiscal year 20

Foreign currency transactions
impact, net                       $      4.3     $     (2.1 )   $     (1.6 )   $      3.6     $      1.7
Interest expense, net                   (1.1 )          1.2           (0.6 )         (0.6 )         (1.6 )
Interest income and other
income (expense), net                    0.5              -              -            0.7            0.5

Other income (expenses), net $ 3.7 $ (0.8) $ (2.1) $ 3.6 0.6 $



Other income and expense changed favorably from a loss of $0.8 million in Q2
FY21 to income of $3.7 million in Q3 FY21, primarily as a result of favorable
foreign currency exchange movements in Korea and Taiwan against the U.S. dollar.
An unfavorable change in interest expense of $2.3 million was primarily the
result of subsidies (which we recognize at the time of their receipt) we
received in China in Q2 FY21, the occurrence which was not repeated in Q3 FY21,
which partially offset the $6.4 million net favorable impact of foreign currency
movements. The increase of $0.5 million in Interest income and other income
(expense), net is primarily due to the receipt of a $0.4 million subsidy in
China.

Other income and expense, net changed favorably from a loss of $2.1 million in
Q3 FY20 to income of $3.7 million in Q3 FY21. The $5.9 million positive impact
of foreign currency movements was primarily due to favorable movements against
the U.S. dollar in Korea and Taiwan. Increased interest expense of $0.5 million
from the prior year quarter reflects our increased average debt level in Q3
FY21. The increase of $0.5 million in Interest income and other income
(expense), net is primarily due to the receipt of a $0.4 million subsidy in
China.

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Other income and expense, net changed favorably from net other income of $0.6
million in YTD FY20 to net other income of $3.6 million in YTD FY21. The $1.9
million positive impact of foreign currency movements was primarily caused by
favorable movements against the U.S. dollar and the Japanese yen in China, which
were partially offset by unfavorable movements against the U.S. dollar in Korea
and Taiwan. Interest expense decreased, on a year-to-date basis by $1.0 million,
as result of subsidies we received on our debt in China, which we recognize at
the time of their receipt.

Income Tax Provision

                             Q3 FY21       Q2 FY21       Q3 FY20       YTD FY21       YTD FY20


Income tax provision        $     7.8     $     3.7     $     4.9     $     14.5     $     17.8
Effective income tax rate        24.4 %        18.5 %        27.7 %         22.4 %         35.9 %




The effective income tax rate is sensitive to the jurisdictional mix of
earnings, due, in part, to the non-recognition of tax benefits on losses in
jurisdictions with valuation allowances.
The effective income tax rate increase in Q3 FY21, compared with Q2 FY21, is
primarily due to changes in the period-to-period mix of jurisdictional earnings.

The decrease in the effective tax rate in Q3 of FY21, compared to Q3 of FY20, is mainly due to the advantages of investment loans in certainwe
jurisdictions in the third quarter of FY21, as well as changes in the distribution of income by jurisdiction.

The effective income tax rate decreased in YTD FY21, compared with YTD FY20,
primarily due to the establishment of a valuation allowance for a loss
carryforward in a non-U.S. jurisdiction in YTD-FY20, as well as changes in the
jurisdictional mix of earnings.

Net income attributable to non-controlling interests

Net income attributable to noncontrolling interests was $7.3 million in Q3 FY21,
compared with $5.8 million in Q2 FY21, and was primarily the result of increased
net income at our Taiwan-based IC facility, which partially offset decreased net
income at our China-based IC facility. Net income attributable to noncontrolling
interests increased $5.2 million in Q3 FY21 from Q3 FY20, and $10.1 million, on
a year-to-date basis, as a result of increased net income at both our
Taiwan-based and China-based IC facilities.

Liquidity and capital resources

Cash and cash equivalents totaled $283.2 million and $278.7 million as of August
1, 2021 and October 31, 2020 respectively. As of the most recent balance sheet
date, total cash and cash equivalents included $217.2 million held by foreign
subsidiaries. Our primary sources of liquidity are our cash on hand, cash we
generate from operations, and borrowing capacity we have available from
financial institutions. Our corporate credit agreement has a $50 million
borrowing limit, with an expansion capacity to $100 million. Although we have
not accessed funds under our corporate credit facilities since 2011, it
continues to afford us financial flexibility. In addition, in China, we
currently have approximately $22.9 million of borrowing capacity to support
local operations. See Item 1. Condensed Consolidated Financial Statements -
Notes to Condensed Consolidated Financial statements - Note 6 for additional
information.

We continually evaluate alternatives for efficiently funding our capital
expenditures and ongoing operations. These reviews may result in our engagement
in a variety of financing transactions, in the transfer of cash among
subsidiaries, and/or the repatriation of cash to the U.S. The transfer of funds
among subsidiaries could be subject to foreign withholding taxes; in certain
jurisdictions, repatriation of these funds to the U.S. may subject them to U.S.
state income taxes and/or local country withholding taxes. We believe that our
liquidity, including available financing, is sufficient to meet our requirements
through the next twelve months and thereafter for the foreseeable future.
Through the utilization of cash we generate from operations, our existing
liquidity, and (potentially) our borrowing capacity, we will continue to invest
in organic growth for our business, with our investments targeted to align with
our customers' technology road maps, and stand ready to invest in mergers,
acquisitions, or strategic partnerships should the right opportunity present
itself.

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We estimate capital expenditures for Q4 FY21 will be approximately $28 million;
these investments will be targeted towards high-end and mainstream point tools
that will increase our operating capacity and efficiency, and enable us to
support our customers' near-term demands. As of August 1, 2021, we had
outstanding capital commitments of approximately $56.9 million and recognized
liabilities related to capital equipment purchases of approximately $9.2
million. Although payment timing could vary, primarily as a result of the timing
of tool installation and testing, we currently estimate that we will fund $54
million of our total $66 million committed and recognized obligations for
capital expenditures over the next twelve months.

In September 2020, the Company's board of directors authorized the repurchase of
up to $100 million of its common stock, pursuant to a repurchase plan under Rule
10b5-1 of the Securities Act. This authorization does not obligate the Company
to repurchase any dollar amount or number of shares of common stock. As of
August 1, 2021, our current share repurchase program had approximately $46.8
million remaining under its authorization. Depending on market conditions, we
may utilize some or the entire remaining approved amount to reacquire additional
shares.

Cash Flows

                                                          Nine Months Ended
                                                      August 1,       August 2,
                                                         2021           2020


Net cash provided by operating activities             $    113.1     $      

78.3

Net cash used in investing activities                 $    (86.7 )   $     (31.6 )
Net cash (used in) provided by financing activities   $    (26.4 )   $      

4.1



Operating Activities: Net cash provided by operating activities reflects net
income adjusted for certain non-cash items, including depreciation and
amortization, share-based compensation, and the effects of changes in operating
assets and liabilities. The increase in net cash provided by operating
activities for the nine months ended August 1, 2021, compared with the nine
months ended August 2, 2020, was primarily due to increased net income and net
cash-positive changes in working capital in Asia.

Investing Activities:  Net cash flows used for investing activities primarily
consists of purchases of property, plant and equipment. For the nine months
ended August 1, 2021, purchases of property, plant and equipment were $92.3
million, compared with $36.7 million for the nine months ended August 2, 2020,
as we increased our tool purchases in the current year, primarily in response to
market demands in Asia.

Financing Activities: Net cash flows used in financing activities primarily
consist of share repurchases, proceeds from and repayments of debt, and
contributions from noncontrolling interests. The increase in net cash used in
financing activities during the nine months ended August 2, 2021, compared with
the same period ended August 2, 2020, was primarily driven by an $18.9 million
increase in share repurchases, a $17.6 million decrease in contributions from
noncontrolling interests, and a $7.4 million increase in debt repayments.
Increased borrowings of $15.2 million partially offset the aforementioned
cash-negative impacts.

In January 2018, Photronics, through its wholly owned Singapore subsidiary, 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 our IC
business in Xiamen, China. The joint venture, which we refer to as PDMCX, was
established to develop and manufacture photomasks for leading edge and advanced
generation semiconductors. Under the joint venture's operating agreement, DNP is
afforded, under certain circumstances, the right to put its interest in PDMCX to
Photronics. These circumstances include disputes regarding the strategic
direction of PDMCX that may arise after the initial two-year term of the
operating agreement that cannot be resolved between the two parties. As of the
date of issuance of this report, DNP had not indicated its intention to exercise
this right. In addition, both Photronics and DNP have the option to purchase, or
put, their interest from, or to, the other party, should their ownership
interest fall below 20% for a period of more than six consecutive months. Under
all such circumstances, 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. Should DNP exercise an option to put their, or purchase our, interest
in PDMCX we may, depending on the relationship of the fair and book value of
PDMCX's net assets, incur a loss. As of August 1, 2021, Photronics and DNP each
had net investments in PDMCX of $60.9 million.

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Business Outlook

When evaluating our views on our outlook, please consider them in the context of
our short backlog (which typically does not exceed three weeks), and the
significant effect that a variance in high-end orders can have on our results.
In addition, government actions to address health concerns, change trade
policies, or repatriate manufacturing may also affect our results. Overall, we
are encouraged by increased capital spending by both semiconductor and panel
makers, as their current investments are a leading indicator of increased demand
for photomasks. We believe that the recent favorable trends in IC driving an
increase in design activity, including the recovery in high-end logic demand,
and continued strength in mainstream demand will continue through the fourth
quarter and possibly beyond. In FPD, we expect to see growth from recent
capacity expansions, which benefitted us for only a portion of Q3 FY21. We
believe this increased capacity will support increased mobile demand, as more
smartphones, tablets, and laptops adopt high-value AMOLED technology. We are
also encouraged by the emergence of next-generation premium TV technologies
(such as Samsung Display Co. LTD's QD-OLED, and LG Display Co. LTD's WOLED)
which may provide growth in the future.

Effect of recent accounting positions

See "Item 1. Condensed Consolidated Financial Statements- Notes to Condensed
Consolidated Financial Statements - Note 16 - Recent Accounting Pronouncements"
for recent accounting pronouncements that may impact our financial reporting.

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