INCOME TAXES

12 Months Ended

Oct. 31, 2025

INCOME TAXES [Abstract]

INCOME TAXES

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

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.

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.

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

      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