2006 05 31 Citigroup Boston

Slide1: 

Eight Annual Analyst Meeting New York, NY Thursday April 6, 2006 Profitable Technology Leadership – Global Integration – Market Share Leadership Citigroup Seventh Annual Technology Conference Boston – May 31, 2006

Safe Harbor Statement: 

Under the Private Securities Litigation Reform Act of 1995: Except for historical information, the matters discussed in this presentation that may be considered forward-looking statements may be subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected, including uncertainties in the market, pricing, competition, procurement and manufacturing efficiencies, and other risks detailed from time to time in the Company’s SEC reports. The Company assumes no obligation to update the information in this presentation. Safe Harbor Statement PHOCUS

Slide3: 

Technology Leadership Photronics’ Top Priority

Capitalizing on Opportunities with a PHOCUS on Three Goals: 

Capitalizing on Opportunities with a PHOCUS on Three Goals Profitable Technology Leadership Strategic Customer & Supplier alignments to accelerate the development and roll-out of advanced technology Global Integration Process coordination between sites and functions Timely and accurate exchange of IP and process knowledge to improve metrics such as yield & defectivity Market Share Leadership in Served Markets Technical proficiency and service excellence provides differentiated value toward achieving primary supplier status with our customers PHOCUS

Photronics’ Global Network : 

Production Sites Under Construction/Planned North America Allen, TX - IC Brookfield, CT - IC Boise NanoFab (under construction) – IC MP Mask Technology Center Europe Bridgend, UK - IC Manchester, UK - IC Dresden, Germany - IC Asia Singapore Taiwan - Hsinchu – IC Taiwan - Taichung - FPD Korea – IC & FPD China (under construction) – IC Korea NanoFab (Planned) - IC High End Sites Photronics’ Global Network PHOCUS

State of the Business…: 

State of the Business… Revenues for the first six months of FY06 setting record pace Strategic actions underway Redeployment of critical assets Formation of MP Mask JV with Micron Global integration progress New leadership for Global Sales Company wide goal planning & metrics High-end revenue mix tracking positively Speeding learning cycles Accelerating and coordinating R&D PHOCUS

Goals & Objectives for MP Mask…: 

Goals & Objectives for MP Mask… To develop and produce prototypes for advanced next generation photomasks at and below the 45nm node. To achieve sustainable, leading edge photomask production capabilities for Micron and other Photronics customers. PHOCUS

Structure of MP Mask Technology Center: 

Structure of MP Mask Technology Center LLC Joint Venture Named MP Mask Technology Center, LLC Effective 50/50 (Micron with majority 50.01%, Photronics 49.99%) 10 year term, with 5 year renewable periods Investment $135M paid out as follows $120M at closing $7.5M each in years two and three New fully equipped Photronics copy exact facility in Boise Total estimated investment up to cost $150mn PHOCUS

Structure of MP Mask Technology Center: 

Micron to Photronics Supply Agreement Photronics subcontracts JV for production Royalty stream for Photronics Maintain capacity utilization at a minimum level of 75% 67% of excess JV capacity to flow through new facility or other “qualified” facility Management/Oversight 6 member Board of Managers (3-Micron, 3- Photronics, with Micron appointed Chairman) General Manager selected by Micron Technology Steering Committee consists of General Manager plus Three members each from Micron and Photronics PHOCUS Structure of MP Mask Technology Center

The MP Mask Technology Center & the Boise NanoFab Benefits Photronics’ Customers…: 

The MP Mask Technology Center & the Boise NanoFab Benefits Photronics’ Customers… Technology capabilities immediately become superior to those of other merchant suppliers A proven and robust source for 130nm/90nm/65nm technology Regional location within North America creates cycle time advantages over other mask suppliers No Customer - Supplier learning curve Strong and familiar customer support infrastructure and knowledge base PHOCUS

Bringing NanoFab to Photronics’ Network: 

Bringing NanoFab to Photronics’ Network Advanced Technology Teams own the transfer of process and Best Known Methods The common R&D Mission Development & Yield Ramp Qualifications NanoFab cross qualifications Copy Smart methodology facilitates rapid transition from NanoFab to Production Fab North American Start up in 2007 Asian Start up in 2008 Establishes Photronics with the best merchant technology in the industry PHOCUS

High End Deployment: 

High End Deployment Copy Smart 80% standard modules Rapid but controlled customization Industry leading product integration High-End Production at Other Sites High-End Production at Other Sites Customer & Supplier Alignments Photronics’ NanoFab Node + 1 Development PHOCUS

Fiscal 2006 Q2 – Summary of Results: 

Fiscal 2006 Q2 – Summary of Results Quarterly revenues of $119.5 million – a new quarterly record! Increased market share High-end revenues were 35%, up 4% sequentially Improving FPD sales Revenue increased 5.8% YoY and 6.8% sequentially Operating margins of 15.1% were up 370bp QoQ Quarterly net income, exclusive of restructuring charges and investment gains, was $14.5 million, or $0.30 per share Balance Sheet $280mn in cash Net cash (cash minus debt) totaled $31mn Strong working capital of $222mn PHOCUS

Slide14: 

Looking to the Future…

Opportunities in 2006….: 

Opportunities in 2006…. Expect fiscal 2006 to be a growth year Capitalize on strategic investments in MP Mask Monetize new facilities in Taiwan and China Redeploy Austin assets Asian growth driven by expanding IC mask market and share gains FPD – an emerging market, take additional share Increase profitability & generate free cash flow Financial execution and strategy is critical to achieving longer-term growth objectives PHOCUS

The Bottom Line: 

The Bottom Line Global markets for IC and FPD masks are growing New designs and applications Shorter product lifecycles Few players with both technology and global reach Solid, experienced and energetic management team The Company has a PHOCUS! Profitable Technology Leadership Global Integration Share Leadership in Served Markets PHOCUS

Slide17: 

Eight Annual Analyst Meeting New York, NY Thursday April 6, 2006 Profitable Technology Leadership – Global Integration – Market Share Leadership Citigroup Seventh Annual Technology Conference Boston – May 31, 2006