Photronics Announces Record Second Quarter Revenues

Second Quarter Highlights:

-- Net revenues of $119.5 million set new quarterly record

-- Earnings of $0.12 per diluted share includes the impact of the $0.22 per diluted share charge related to North American restructuring charges and $0.04 from gains on sales of certain investments

Photronics, Inc. (Nasdaq:PLAB), a worldwide leader in supplyinginnovative imaging technology solutions for the global electronicsindustry, today reported fiscal 2006 second quarter and six monthresults for the period ended April 30, 2006.

Sales for the quarter were a record $119.5 million, up 5.8%,compared to $112.9 million for the second quarter of 2005. Net incomefor the second quarter of fiscal 2006 amounted to $5.3 million, or$0.12 per diluted share, compared to the prior year's second quarternet income of $10.6 million, or $0.28 per diluted share. Net incomefor the second quarter of 2006 included: a charge of $11.4 millionafter tax, or $0.22 per diluted share in connection with the Company'spreviously disclosed restructuring of its operations in North America;and a gain on sales of certain investments of $2.2 million after tax,or $0.04 per diluted share.

Sales for the first six months of 2006 were $231.4 million, up8.1% from the $214.1 million for the first half of fiscal 2005. Netincome for the first six months of fiscal 2006 amounted to $15.0million, or $0.34 per diluted share, compared to the prior year'sfirst six months net income of $15.1 million, or $0.41 per dilutedshare.

Michael J. Luttati, Chief Executive Officer commented, "We arevery pleased with our second quarter performance which builds on themomentum we started in Q1. Revenue growth coupled with continued costcontrol discipline resulted in solid bottom line performance despitethe restructuring charges we incurred as a result of our decision toclose our Austin facility. Our efforts in the second quarter go beyondjust the numbers as we initiated several key strategic actions thatare transforming the Company toward achieving our goal of profitabletechnology leadership. First, we held the grand opening of ourstate-of-the-art flat panel mask production facility in Taichung,Taiwan. With the display industry in Taiwan aggressively investing inadvanced large screen process technologies, Photronics hasstrengthened its competitive and leadership position there,complimenting our already strong position in serving customers inKorea."

"Next we acted on the closure of our Austin facility. In additionto the cost savings associated with closing this underutilizedfacility, the redeployment of advanced manufacturing systems willenable Photronics to support a larger number of our customersrequiring 90 nanometer process technologies. And finally, our mostrecent announcement regarding the MP Mask Technology Center, LLCrepresents the center piece of our 45 nanometer and below technologydevelopment strategy. This partnership with Micron Technology is onethat we believe will provide the best long-term solution in servingour technology development needs and puts us in a very attractivecompetitive position for share gains in the high-end integratedcircuit mask market."

A conference call with investors and the media to discuss theseresults can be accessed by logging onto Photronics' web site atwww.photronics.com, then clicking on the "Conference Calls" button inthe top right corner of the home page. The call is scheduled for 8:30a.m. Eastern Time on Wednesday, May 17th and will be archived forinstant replay access until the Company reports its fiscal thirdquarter results after the market closes on Tuesday, August 15, 2006.The live call dial-in number is (212)676-5290.

Photronics is a leading worldwide manufacturer of photomasks.Photomasks are high precision quartz plates that contain microscopicimages of electronic circuits. A key element in the manufacture ofsemiconductors and flat panel displays, photomasks are used totransfer circuit patterns onto semiconductor wafers and flat panelsubstrates during the fabrication of integrated circuits, a variety offlat panel displays and, to a lesser extent, other types of electricaland optical components. They are produced in accordance with productdesigns provided by customers at strategically located manufacturingfacilities in Asia, Europe, and North America. Additional informationon the Company can be accessed at www.photronics.com.

"Safe Harbor" Statement under the Private Securities LitigationReform Act of 1995: Certain statements in this release are considered"forward looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995. All forward lookingstatements involve risks and uncertainties. In particular, anystatement contained in this release regarding the consummation andbenefits of future acquisitions, expectations with respect to thejoint venture, the planned fabrication facility, future sales,financial performance, operating efficiencies and product expansion,are subject to known and unknown risks, uncertainties andcontingencies, many of which are beyond the control of the Company.These factors may cause actual results, performance or achievements todiffer materially from anticipated results, performances orachievements. Factors that might affect such forward lookingstatements include, but are not limited to, overall economic andbusiness conditions; the demand and receipt of orders for theCompany's products; competitive factors in the industries andgeographic markets in which the Company competes; changes in federal,state and foreign tax requirements (including tax rate changes, newtax laws and revised tax law interpretations); the Company's abilityto place new equipment in service on a timely basis; interest ratefluctuations and other capital market conditions, including foreigncurrency rate fluctuations; economic and political conditions ininternational markets; the ability to obtain a new bank facility orother financings; the ability to achieve anticipated synergies andother cost savings in connection with acquisitions and productivityprograms; uncertainties with respect to the integration and managementof a new joint venture, delays in the construction and equipping ofthe planned fabrication facility, the ability to transfer licensedapplications to other applications, the timing, impact and otheruncertainties of future acquisitions and investments; the seasonal andcyclical nature of the semiconductor industry; the availability ofcapital; management changes; damage or destruction to our facilitiesby natural disasters, labor strikes, political unrest or terroristactivity; the ability to fully utilize its tools; the ability of theCompany to receive desired yields, pricing, product mix, and marketacceptance of its products; changes in technology; and other risks anduncertainties set forth in the Company's SEC filings from time totime. Any forward-looking statements should be considered in light ofthese factors. The Company assumes no obligation to update theinformation in this release.
PHOTRONICS, INC. AND SUBSIDIARIES
---------------------------------
Condensed Consolidated Statements of Income
-------------------------------------------
(in thousands, except per share amounts)


Three Months Ended Six Months Ended
------------------- -------------------
April 30 May 1 April 30 May 1
2006 2005 2006 2005
--------- --------- --------- ---------

Net sales $119,471 $112,893 $231,419 $214,076

Costs and expenses:

Cost of sales 77,663 74,457 153,428 143,640

Selling, general and
administrative 15,726 13,521 30,914 26,239

Research and development 7,993 8,120 16,243 15,895

Consolidation, restructuring
and related charges 11,426 - 11,426 -
--------- --------- --------- ---------

Operating income 6,663 16,795 19,408 28,302

Other income (expense), net 3,792 (2,057) 5,564 (5,081)
--------- --------- --------- ---------

Income before income
taxes and minority
interest 10,455 14,738 24,972 23,221

Income tax provision 3,814 2,617 7,632 4,452
--------- --------- --------- ---------

Income before minority
interest 6,641 12,121 17,340 18,769

Minority interest (1,376) (1,547) (2,382) (3,650)
--------- --------- --------- ---------

Net income $5,265 $10,574 $14,958 $15,119
========= ========= ========= =========

Earnings per share:
Basic $0.13 $0.32 $0.36 $0.46
========= ========= ========= =========

Diluted $0.12 $0.28 $0.34 $0.41
========= ========= ========= =========

Weighted average number of
common shares outstanding:
Basic 41,334 32,817 41,325 32,760
========= ========= ========= =========

Diluted 50,987 42,398 50,966 42,346
========= ========= ========= =========



PHOTRONICS, INC. AND SUBSIDIARIES
---------------------------------
Condensed Consolidated Balance Sheets
-------------------------------------
(in thousands)

April 30 October 30
2006 2005
---------- -----------

Assets
------

Current assets:
Cash, cash equivalents and short-term
investments of $76,984 in 2006 and
$90,600 in 2005 $279,866 $286,649
Accounts receivable 76,891 70,006
Inventories 26,801 20,536
Other current assets 10,298 7,144
---------- -----------

Total current assets 393,856 384,335

Property, plant and equipment, net 445,804 412,429
Goodwill 133,813 136,334
Other assets 21,810 12,631
---------- -----------

$995,283 $945,729
========== ===========



Liabilities and Shareholders' Equity
------------------------------------

Current liabilities:
Current portion of long-term debt $86,612 $4,813
Accounts payable 44,773 42,923
Other accrued liabilities 40,447 36,042
---------- -----------

Total current liabilities 171,832 83,778

Long-term debt 162,287 238,949
Deferred income taxes and other liabilities 18,848 15,310
Minority interest 44,662 45,817

Shareholders' equity 597,654 561,875
---------- -----------

$995,283 $945,729
========== ===========



PHOTRONICS, INC. AND SUBSIDIARIES
---------------------------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(in thousands)

Six Months Ended
------------------
April 30 May 1
2006 2005
--------- --------


Cash flows from operating activities:
Net income $14,958 $15,119
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 44,921 42,967
Restructuring and related charges 11,426 -
Changes in assets and liabilities and other (21,150) 6,522
--------- --------

Net cash provided by operating activities 50,155 64,608
--------- --------

Cash flows from investing activities:
Purchases of property, plant and equipment (56,572) (38,091)
Purchases of short-term investments (32,819) (37,895)
Proceeds from sales of short-term investments
and other 47,877 54,019
Acquisition of additional interest in PK Ltd. (8,432) (40,350)
--------- --------

Net cash used in investing activities (49,946) (62,317)
--------- --------

Cash flows from financing activities:
Proceeds from (repayment of) long-term debt 4,564 (56,193)
Proceeds from issuance of common stock 730 2,199
--------- --------

Net cash provided by (used in) financing activities 5,294 (53,994)
--------- --------

Effect of exchange rate changes on cash flows 1,330 771
--------- --------

Net increase (decrease) in cash and cash equivalents 6,833 (50,932)
Cash and cash equivalents, beginning of period 196,049 142,300
--------- --------


Cash and cash equivalents, end of period $202,882 $91,368
========= ========

Supplemental disclosure of cash flow information:
Change in accrual for purchases of property, plant
and equipment $8,993 $(6,319)