Press Release

• Quarterly sales of $131.7 million, up $4.4 million sequentially
• Diluted EPS of $0.17 (above guided range of $0.06 to $0.13)
• Sequential gross and operating margin improvement of 230 and 240 BPS, respectively
• Flat panel display sales increase 18% sequentially to $27.7 million
• Non-GAAP EBITDA of $42 million, up 20% sequentially
• Working capital of $179 million, up $28 million sequentially
• Net cash of $57 million, up $18 million sequentially

BROOKFIELD, Conn.--(BUSINESS WIRE)-- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for the fiscal 2015 third quarter ended August 2, 2015.

Peter Kirlin, Photronics' chief executive officer commented, "High-end flat panel display sales led by increased demand for AMOLED photomasks helped us achieve revenues near the high end of our expectations for the quarter. This was the second consecutive quarter with sales up on a sequential as well as a year-over-year basis. Our continuously improving manufacturing efficiencies enabled us to leverage our incremental revenue growth into bottom line performance above our guided range."

Sales for the third quarter of fiscal 2015 were $131.7 million, a sequential increase of 3% compared with $127.3 million for the second quarter of fiscal 2015. Sales for the third quarter of 2014 were $124.9 million. Sales of semiconductor photomasks were $104.0 million, or 79% of revenues, during the third quarter of fiscal 2015, and sales of flat panel display (FPD) photomasks were $27.7 million, or 21% of revenues.

GAAP and non-GAAP net income attributable to Photronics, Inc. shareholders for the third quarter of fiscal 2015 was $12.1 million, or $0.17 per diluted share. GAAP and non-GAAP net income attributable to Photronics, Inc. shareholders for the third quarter of fiscal 2014 was $4.2 million, or $0.07 per diluted share.

Sales for the first nine months of fiscal 2015 were $382.5 million, compared with $331.3 million for the first nine months of fiscal 2014. For the first nine months of fiscal 2015, sales of semiconductor photomasks were $309.3 million, or 81% of revenues, and sales of FPD photomasks were $73.2 million, or 19% of revenues. GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2015 was $26.0 million, or $0.37 per diluted share, compared with $21.7 million, or $0.34 per diluted share for the first nine months of fiscal 2014. Non-GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2015, which excludes financing expenses of $0.9 million, was $26.9 million, or $0.39 per diluted share. Non-GAAP net income attributable to Photronics, Inc. shareholders for the first nine months of fiscal 2014, which excludes a non-cash gain on acquisition of $16.4 million and transaction expenses of $2.5 million, was $7.8 million, or $0.13 per diluted share.

The section below entitled "Non-GAAP Financial Measures" provides a definition and information about the use of non-GAAP financial measures in this press release, and the attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.'s financial results under GAAP.

Non-GAAP Financial Measures

Non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. Photronics, Inc. believes that non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate Photronics, Inc.'s future on-going performance because they enable a more meaningful comparison of Photronics, Inc.'s projected earnings and performance with its historical results of prior periods. These non-GAAP metrics, in particular non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share are not intended to represent funds available for Photronics, Inc.'s discretionary use and are not intended to represent, or be used as a substitute for, operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance. Non-GAAP financial information is adjusted for the following items:

• Financing expenses in fiscal 2015 related to the exchange of convertible senior notes are excluded because they are not a part of ongoing operations.
• Non-cash acquisition gain and transaction expenses in fiscal 2014 related to the joint venture, PDMC, in Taiwan are excluded because they are not part of ongoing operations.

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States. The attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.'s financial results under GAAP.

A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, August 19, 2015. The call can be accessed by logging onto Photronics' web site at www.photronics.com. The live dial-in number is (408) 774-4601. The call will be archived for instant replay access until the Company reports its fiscal 2015 fourth quarter results.

About Photronics

Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of Photronics, Inc. and its subsidiaries (the Company). The forward-looking statements contained in this press release and other parts of Photronics' web site involve risks and uncertainties that may affect the Company's operations, markets, products, services, prices, and other factors. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors as well as decisions we may make in the future regarding our business, capital structure and other matters. These forward-looking statements generally can be identified by phrases such as "believes", "expects", "anticipates", "plans", "projects", and similar expressions. Accordingly, there is no assurance that the Company's expectations will be realized. For a fuller discussion of the factors that may affect the Company's operations, see "Forward Looking Statements" in the Company's Quarterly and Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K. The Company assumes no obligation to provide revisions to any forward-looking statements.

15-2015

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
								Three Months Ended																Nine Months Ended
								August 2,								August 3,								August 2,								August 3,
								2015								2014								2015								2014
Net sales								$			131,699					$			124,852					$			382,513					$			331,276
Costs and expenses:
Cost of sales											(94,456	)							(96,202	)							(283,991	)							(257,554	)
Selling, general and administrative											(12,430	)							(12,394	)							(36,795	)							(38,092	)
Research and development											(6,253	)							(5,199	)							(16,743	)							(16,111	)
Operating income											18,560								11,057								44,984								19,519
Gain on acquisition											-								-								-								16,372
Other income (expense), net											240								(1,168	)							(2,500	)							(3,264	)
Income before income taxes											18,800								9,889								42,484								32,627
Income tax provision											(3,390	)							(2,545	)							(7,775	)							(7,291	)
Net income											15,410								7,344								34,709								25,336
Net income attributable to noncontrolling interests											(3,304	)							(3,158	)							(8,706	)							(3,617	)
Net income attributable to Photronics, Inc. shareholders								$			12,106					$			4,186					$			26,003					$			21,719
Earnings per share:
Basic								$			0.18					$			0.07					$			0.39					$			0.35
Diluted								$			0.17					$			0.07					$			0.37					$			0.34
Weighted-average number of common shares outstanding:
Basic											66,454								61,436								66,250								61,336
Diluted											78,569								62,432								78,300								77,706

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
								August 2,							November 2,
								2015							2014
Assets
Current assets:
Cash and cash equivalents								$			191,562				$			192,929
Accounts receivable											104,701							94,515
Inventories											23,266							22,478
Other current assets											21,037							26,570
Total current assets											340,566							336,492
Property, plant and equipment, net											568,921							550,069
Investment in joint venture											93,040							93,122
Intangible assets, net											26,280							30,294
Other assets											17,284							19,206
								$			1,046,091				$			1,029,183
Liabilities and Equity
Current liabilities:
Current portion of long-term borrowings								$			16,577				$			10,381
Accounts payable and accrued liabilities											144,959							128,736
Total current liabilities											161,536							139,117
Long-term borrowings											118,457							131,805
Other liabilities											20,051							18,767
Photronics, Inc. shareholders' equity											628,771							628,050
Noncontrolling interests											117,276							111,444
Total equity											746,047							739,494
								$			1,046,091				$			1,029,183

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
									Nine Months Ended
									August 2,								August 3,
									2015								2014
Cash flows from operating activities:
Net income									$			34,709					$			25,336
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization												61,465								58,412
Gain on acquisition												-								(16,372	)
Changes in assets and liabilities and other												(4,347	)							(5,538	)
Net cash provided by operating activities												91,827								61,838
Cash flows from investing activities:
Purchases of property, plant and equipment												(80,107	)							(58,278	)
Cash from acquisition												-								4,508
Other												(283	)							(759	)
Net cash used in investing activities												(80,390	)							(54,529	)
Cash flows from financing activities:
Repayments of long-term borrowings												(7,152	)							(27,432	)
Payment of deferred financing fees												-								(336	)
Proceeds from share-based arrangements												2,375								1,043
Other												(171	)							(597	)
Net cash used in financing activities												(4,948	)							(27,322	)
Effect of exchange rate changes on cash												(7,856	)							736
Net decrease in cash and cash equivalents												(1,367	)							(19,277	)
Cash and cash equivalents, beginning of period												192,929								215,615
Cash and cash equivalents, end of period									$			191,562					$			196,338
Noncash net assets from acquisition									$			-					$			110,211

PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
					Three Months Ended														Nine Months Ended
					August 2,							August 3,							August 2,							August 3,
					2015							2014							2015							2014
Reconciliation of GAAP to Non-GAAP Net Income
Attributable to Photronics, Inc. Shareholders
GAAP net income attributable to Photronics, Inc. shareholders					$			12,106				$			4,186				$			26,003				$			21,719
(a) Financing expenses, net of tax								-							-							901							-
(b) Gain on acquisition, net of tax								-							-							-							(16,372)
(c) Acquisition transaction expenses, net of tax								-							-							-							2,455
Non-GAAP net income attributable to Photronics, Inc. shareholders					$			12,106				$			4,186				$			26,904				$			7,802
Reconciliation of GAAP to Non-GAAP Net Income
Applicable to Common Shareholders
Weighted average number of diluted shares outstanding
GAAP								78,569							62,432							78,300							77,706
Non-GAAP								78,569							62,432							78,300							62,283
Net income per diluted share
GAAP					$			0.17				$			0.07				$			0.37				$			0.34
Non-GAAP					$			0.17				$			0.07				$			0.39				$			0.13

(a)		Represents financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes, recorded in other expense, net
(b)		Represents gain on acquisition of DNP Photomask Technology Taiwan Co., Ltd (DPTT), a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd.
(c)		Represents transaction expenses in connection with the acquisition of DPTT

View source version on businesswire.com: http://www.businesswire.com/news/home/20150818006528/en/

Photronics, Inc.
Troy Dewar, 203-775-9000
Director, Investor Relations
tdewar@photronics.com

Source: Photronics, Inc.

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