Welcome to Photronics’ third quarter earnings call. (Operator Instructions). As a reminder this conference call is being recorded Wednesday August 20, 2014. I would now like to turn the conference over to Pete Broadbent, Vice President, Investor Relations and Marketing. Please go ahead, Mr. Broadbent.

Thank you, and good morning, everyone. We’d like to thank you for joining our third quarter 2014 conference call. Before we begin, I would like to remind all participants about the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995, and thus, any statement we make during this call, except for historical events, may be considered forward-looking and may be subject to certain risks and uncertainties that could cause actual events to differ materially from those projected, including uncertainties that may affect the company's operations, market, pricing, competition, procurement, manufacturing efficiencies, and other risks detailed from time to time in the company's SEC reports. These statements will contain words such as believe, anticipate, expect or similar expressions. This call will be archived on our website until we report our fourth quarter 2014 results. Joining us on the call today are Constantine Deno Macricostas, Chairman and Chief Executive Officer; Dr. Peter Kirlin, President; Sean T. Smith, Senior Vice President and Chief Financial Officer; Dr. Christopher Progler, Vice President, Chief Technology Officer and Strategic Planning. During our remarks this morning, we will be referring to slides posted on our website under the Investor Relations link. And now, I would like to turn the call over to Deno Macricostas. Deno?

Thank you Pete. Good morning everyone. It was a tough quarter for the company both strategically and financially. In a moment Peter and Sean will cover the details of our results and outlook but first few comments for the general trends in our business. To begin, we’re extremely pleased with our progress at PDMC, our joint venture in Taiwan. It's grown very well on the integration front and results are contributing better than expected on the top line. Our growth is helping us in operating metrics as well. Second, our strategic investment in our (indiscernible) are starting to pay off as our customer ramp of advanced nodes. We have deployed capital in three key areas, Korea, U.S. and Taiwan. We’re seeing improved activity across each region, this investment will allow us to capitalize for the high-end photomask demand we expect over the coming quarters. We have successfully outlined our footprint to match our customer’s roadmap. We’re beginning to see positive results of our strategy. In summary our business is healthy, it is strong at the high-end and growing. We’re optimistic about the coming quarter and the overall trends in the photomask business. We’re well positioned, we expect to trust EBITDA meaningful results for our customers and shareholders. My compliments to the entire Photronics worldwide team for the execution and results in this environment. Now I would like to turn the call over to Peter Kirlin who will offer some additional comments and details for our third quarter. Peter?

Thank you Deno. Good morning everyone. Sean will provide a detailed financial breakdown of our quarter but first a few highlights and some comments on our business. Please turn to our slide 3 in our slide presentation. In Q3, we achieved sales of 124.9 million up 19% sequentially at the high end of our guidance. IC sales were 100.6 million with high end sales up 19.4 million to 36.6 million, a new quarterly record for the company. Mainstream sales were up 8% sequentially with solid contribution from Taiwanese [ph] customers in Asia. Flat panel display sales were 24.3 million down 4 million sequentially but the general market trends in this business remain positive going forward. Increased revenue led to solid operating results with operating margin of 8.9% and EPS of $0.07 at the high end of our guidance compared with $0.02 in Q2. In our IC business we’re now seeing the ramp in the high end nodes where we have already qualified. With foundry logic it's 28 nanometer significantly in the quarter. We now have multiple customers tapping out of 28 nanometers. As the quarter progressed demand for memory (indiscernible) also began to build as we’re starting to see the move to next generation NAND and DRAM. Finally, we completed the 40 nanometer qualification of a key Asian foundry customer in June. We were the first merchant to qualify with this customer 40 nanometer and we expect this to drive high end sales early next year as they move towards volume production at 40 nanometer. As Deno mentioned we’re very pleased with the progress of our joint venture PDMC in Taiwan. Customer demand is strong and integration is preceding very well. In fact we’re hitting nearly a 100% of our integration objectives in unifying systems, processes and leveraging our scale, tools and process technology across both facilities. We are at a positive trajectory on our team in Taiwan deserve a lot of credit for executing our integration plan while also delivering on increased high-end and mainstream demand. Looking ahead we’re poised to capture the growing high-end demand across our business, in foundry logic, memory and flat panel display market. Our installed high-end IC capacity is strategically located for our customers and we’re successfully qualifying at an advance nodes. We expect 20 nanometer earning strong for us in the coming quarters while memory demand continues to build and 40 nanometer logic moves forward to production. As always we continue to drive cost efficiencies throughout our operations, improve our customer service and maintain a laser focus on capitalizing on growth opportunities. As we continue to execute our strategy and the high-end demand increases across our customer base given the leverage in our business model, we expect to translate that into strong returns for our shareholders. And now Sean will provide more details on our quarterly performance and outlook.

Thanks Peter. Good morning everyone. I will provide a brief analysis of our financial results for Q3 of 2014, review our balance sheet and cash flows and forecast going forward. As a reminder in April we formed the JV PDMC through a non-cash merger of our wholly sub PSMC with DNP Taiwan, a former Taiwanese subsidiary of DNP. Some of the basic tenants of the JV, include the following Photronics owns 50.01%, and consolidates PDMC in our financial statements. Photronics manages and controls PDMC, this is absolutely critical to our ability to be successful with our high-end strategy. Accordingly our Q3 results represent the first full quarter of PDMCs operating results. For competitive reasons we will not be providing a detailed breakout of the incremental revenue or expenses for PDMC in our Q3 results. On slide 4, for reference purposes we listed the impact of this acquisition that we discussed in our Q2 conference call. And as Peter and Deno have stated it will be fair to stay that PDMC initially will be performing better than expected. Please turn to slide 6, 7 and 8 which shows our sequential quarterly IC and FDP revenue performance. Third quarter revenue was approximately 124.9 million which was as Peter alluded to at the high end of our guidance. Revenues for IC photomask were a 100.9 million up 24 million or 31% sequentially. Revenues for high end IC photomask which are 45 nanometers and below were 36.6 million or 36% of total IC sales which represent as Peter stated a new record for Photronics. Sequentially high end IC revenue increased 19.4 million or a 113%, as a result of increased high end revenue in Taiwan, Korea and the United States. Additionally, mainstream IC sales increased 8% sequentially and as a reminder our mainstream business…

(Operator Instructions). Our first question comes from the line of Tom Diffely from D.A. Davidson. Your line is now open.

First question on the joint venture, you talked about $5 million to $7 million in cost synergies by early next year. I’m curious how much if any of those cost synergies were in the current quarter or in the outlook for the fourth quarter?

Maybe I can give you a brief update on what we talked about in Q2, we stated in our Q2 conference call that we would generate incremental revenue of at least 20 million per quarter and we believe we are certainly ahead of that plan. We also stated the majority of that revenue, or 75% will be at the high end and we believe we’re ahead of that plan. We also stated as you alluded to the JV would be accretive after two quarters certainly by 2015, but based upon on our first full quarter of operations we believe we’re ahead of that plan. We also stated that JV would be accretive to EBITDA and once again we’re ahead of that plan. Of course we need to continue to execute going forward in the future.

Okay, I’m curious if there is still more cost reductions coming that will make it even more accretive or if being ahead of the plan means that you’re faster than expected in getting those cost reductions?

I think it certainly it will be fair to say, and then Peter may have a follow-up comment is that we’re generally ahead of the plan, integration and cost savings and in top line. So we would without providing guidance for 2015 we may look to move the target as we move forward.

Okay comment to add some maybe extra color. The organization has 30, 60, 90 and a 180 day integration objectives by function and we’re beyond the 90 day mark. As I said in my remarks, we were on or ahead of our targets almost fully across all the functional areas. Operational execution drives financial performance, market is strong. If you look at this quarter, within a penny a share the JV is essentially neutral to earnings and we’re not done yet. So there is more to come there but in any event we’re about a quarter ahead where we expected to be both operationally and financially.

And then Sean when you look at the CapEx increase for flat panel is that for new capabilities or just increasing capacity?

It's primarily for both I would say new capabilities definitely and also some additional capacity. New capability primarily connected to advanced mobile displays, seeing a lot of interest in low temperature polysilicon, higher resolution displays, also AMOLED. So that’s driving tighter specifications, denser files of the mask. So some of these investment is for meeting those capability needs and then there is also some capacity connected with it as well.

Okay and then how long does it take that capital spending to turn into revenue?

I will give you a little historical perspective. In the latter part of 2010 we made a similar type of strategic investment, and if you recall 2011 was a record year for us on FPD because we hit I think the revenue went from 96 to 122 and I believe we stated at that point in time we monetize that investment with a nine months to three quarters. I think one other point in the display market, we’re the technology leader I think that’s -- I think everyone knows that and we will be the first merchant to have this capability. So we’re looking to take what is already a strength and expand on it essentially just as we’re doing in the IC space.

And then final question, it sounds like your four nice drivers of growth over the next several quarters between the Asian foundry at 14 and 20 nanometers memory, you’re still recovering joint venture in Taiwan and now flat panel. Which of those four do you think are the kind of -- is the biggest driver over the next few quarters?

Well I think we think near term really near term it's 28 nanometer foundry logic with more and more built-in for memory. As far as the memory -- as far as our memory is concerned. We’re really only in the first or second inning of the next node ramp. So right in front of it's 28 nanometer, building strongly on the back of that is advanced memory, then falling [ph] in behind it is the ramp in 40 nanometer logic in FPD.

Thank you. Our next question comes from the line of Patrick Ho from Stifel Nicolaus. Your line is open.

Sean, maybe a question about the high-end IC trends over the last couple of years. In your prepared comments you talked about, it looks like a much broader mix going forward. Can you discuss how that’s kind of changed over the last few years and how it will look like as we go into calendar ’15?

Sure, I will comment and then Peter and Chris will talk a little bit further but when we look at our customer base, we have a much improved high end customer base as a result of our technology investments and performance over the last few years and as we exited the third quarter we now a customer list which includes four 10% or more customers. An Asian based IC foundry and FPD supplier, a second Asian based logic foundry supplier, memory supplier and an additional FPD supplier. So we have a very good reach and diversity in our customer base and Peter maybe you want to, you just spoke about some of the trends going forward but do you have any additional color on that?

Yes, in my prepared remarks we went over to highlight the 40 nanometer logic qual. Historically looking backwards where we entered the high end market JV with Micron and it took us a few years to become the merchant market leader in memory. Once we achieved that we set upon a mission to do the same thing in logic. So, as the best of my knowledge anyways we are the first merchant to qualify at the 40 nanometer node, first time we can say that in the logic space. So I think that is that’s one piece of tangible concrete evidence that we’re duplicating in logic what we have already done in memory. The second reason why we hit upon that particular milestone is we were disappointed with this customer in our execution at the 28 nanometer node. We were asked a lot about that. We think we turned it into a learning experience and we applied what we have learned at the 28 nanometer node to do better at 14 and again given that we’re the first one to complete that node with that customer, we think it demonstrates that we did in fact learn from our mistakes and we have institutionalized that learning and we’re going to continue to do that going forward.

Patrick, I can just make one more comment on the node trends. I think for 28 nanometer it looks like it's going to be a very strong node. I think a lot of stronger than many felt, if you recall it's 32, people didn’t even think much about 28 nanometer maybe a transitional node. But I think it's going to be a very strong node and also a lot more interest in 20 nanometer now as well. So that could mean some delays in ’14, ’16 finFET industry wide but those three nodes all look fairly solid today and then over the next year or two.

Maybe on specifically to the memory side especially again at the high-end. Given your new joint venture in Taiwan and a lot of the transitions that are going on in the memory industry from other places into Taiwan. How do you see the mix of your PDMC joint venture in terms of memory versus logic?

Well clearly, Patrick, with the Micron acquisition of Elpida, Taiwan appears to be almost uniformly transitioning for the qual Micron, bit sell with Elpida [ph], it's origins were originally Elpida or Micron. So this represents a significant a market opportunity for us for sure and as I said earlier, as far as the memory ramp at the next node or nodes is concerned we are really only in the first or second inning of that ramp and really on one hand what I would describe the vanilla or mobile DRAM memory ramp will be what Micron describes as the 100 series node and as far as foundry memory in Taiwan is concerned it's really the 90 series node. Both of those ramps are really going to happen simultaneously here over the next several quarters. And given our JV with Micron, our processor record given our capacity in Boise and now in Taiwan we’re well positioned to take advantage of both of those nodes.

And final question from me in terms of the flat panel display, you saw the high end dip a little bit and you talked about pull-ins. Are you seeing any incremental demand maybe from the mobile side which gets you to the Gen-6 or Gen-5 and Gen-6 type of generations? Are you seeing any pull from that end?

Chris, can likely give more color but the FPD market for the first three quarters for us has been pretty consistent. If you look at our revenues this quarter they are essentially the same as they were in Q1. We saw an uptick in Q2 which was simply of a reflection of how the orders came in and how the shipments went out but the market basically is being consistently strong throughout the year and the investment we talked about is really being driven by the enhanced resolution that’s needed to deliver on the mobile display market opportunity. So our objective there is to be at the leading edge of that and to capture the early demand for next generation mobile displays. So that’s what we’re trying to accomplish.

Yes, Patrick, I can make just one additional comment. You know there is a lot of mid-range display, lot of price competition now in the mobile space but still resolution seems to be a premium all the smartphone and tablet makers are pushing resolution, you saw the first 4k resolution, smartphone come out, still bit of a novelty but a lot of effort to try differentiate with display resolution in mobile and it's very competitive. So that usually leads to a lot of design activity.

Thank you. (Operator Instructions). It looks like we have a question from the line Edwin Mok from Needham & Company. Your line is open. Edwin Mok - Needham & Company: So question I guess on 28 nanometer, it sounds like that the driver for growth right now for the -- at least for the near term for this quarter because of ramp there. I was wondering -- anyway you can talk about sustainability of the node [ph] right? I think Peter you mentioned that you’ve a broader mix of customer. Do you think that and is the level of sales will be sustainable for a few quarters in the coming? Or is it more in the near term trend? I’m just trying to get a sense of how sustainable that business would be?

If you look at the 20 nanometer logic node, obviously TSMC was out in front of the rest of the industry particularly in Taiwan and some of our other foundry customers particularly our large Taiwanese foundry customers are really just now starting to ramp that node strongly. And the way we see it is the next several quarters at 28 it's going to be a very vibrant market as the industry builds out around the original penetration by TSMC and Samsung. So the volume on that node, I think it's still in front of us. Edwin Mok - Needham & Company: And then second question I have is on the flat panel display business, it declined this quarter as you mentioned that the overall market is still healthy. Can you explain why -- what happened there on the high-end side of FPD and if you mentioned it, sorry about that. And then you mentioned that there is some new capability you’re adding with this CapEx. Will this new capability will allow you to expand your footprint into other markets such as Taiwan and potentially China?

Edwin, as far as the FPD market is concerned the orders as we get them particularly for the advanced sets -- the value of an order is $2 million to $3 million for the advanced nodes. So we book and build that business to the market need. So we have been running along this year essentially running the business to meet the customer requirements. So last quarter was up but it just happened to be a consequence of how the orders came in and how the shipment sell. Q1 and Q3 are identical, so literally within a $100,000 of one another on FPD revenues. So what you saw was a timing of bookings and shipments, really it's deceptive but business really has not changed materially over the last three quarters. And to answer your point and I think Sean might have a comment, to answer your question on what we’re trying to do with the advanced capability, the Korean customer is generally are the drivers of technology in the FPD space. So we’re making this investment to satisfy their demands and where they are pushing us from a resolution point of view. We’re starting to see more and more IC photomask technology creep into the display market. So the investment is really that we’re going to make is driven to do that. As far as the Taiwan market is concerned we already have a facility there and we already have a market position there but as Chris said it's much more a main stream FPD market where price and service win rather than technology. Edwin Mok - Needham & Company: And then my last question I guess this will be for Sean, when I calculate the incremental margin that we saw in the July quarter, I know it was only 30% or 32% incremental margin for the quarter. I think typically I said that you didn’t get 50% incremental growth margin. I was wondering what happened in the quarter, is it -- does that have to do with the joint venture or any color you can provide on that?

Certainly this was the first full quarter of PDMC the joint venture, we did talk about additional costs. So we didn’t expect nor did we project a 50% incremental margin on that revenue. Now that we have our base line if you will, our foundation, we get into Q4, we do expect our target is to have a 50% contrition margin and the growth in operating margin line on the incremental revenue. If we exceeded it means we took out additional cost quicker but that’s still our target. So this is just a little bit of an aberration because it's the first full quarter so from a comparable standpoint it's -- you really can’t compare Q2 to Q3.

Thank you. Our next question comes from the line of Tom Diffely from D.A. Davidson. Your line is open.

Sean, just a quick follow-up I just want to confirm that the EBITDA number you gave us, the $34 million up $9 million sequentially is a pure non-GAAP number, it's no onetime items in there?

It's a pure non-GAAP number as defined in our credit agreement. It's consistently how we have been defining that and disclosing that over the last 3 to 4 years.

Okay so you would assume that if you are already at a $136 million run-rate and you still have some cost reductions left to do when you have four pretty nice drivers of revenue that you’re going to have a nice growth in that over the next several quarters.

Absolutely, we do believe our EBITDA will continue especially on a trailing 12 month continue to rise and to the extent we -- our revenue goes up certainly with cost reductions. Our EBITDA will go up even more.

Okay and then finally just to confirm even with the new joint venture in place you still have normal seasonality where business in the first fiscal quarter is likely down a little bit sequentially?

We haven't guided towards that as of yet, we’re just providing guidance for Q4. So I think what we expect at this point in time, I will let Peter or Chris add -- obviously they may have their own comments as well. We expect growth going forward.

We didn’t -- no one really asked the question. It was I think in my prepared remarks and Sean’s, our mainstream business was up nicely in the quarter that also is the business that’s most susceptible to seasonality. So looking into the future, we expect the mainstream business to be seasonal as you mentioned. The high-end, there are so many drivers now in our high-end business we would expect those to continue through the next several quarters regardless of the season. So it's really going to be a blend of two.

Thank you. Ladies and gentlemen there are no further questions at this time.

As there are no other questions, I would like to thank everyone for participating in this morning’s call. Thank you everyone.