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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
 
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998  COMMISSION FILE NUMBER 0-20839
 
                            ------------------------
 
                            DUPONT PHOTOMASKS, INC.
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                             <C>
                   DELAWARE                                       74-2238819
         (State or Other Jurisdiction                          (I.R.S. Employer
      of Incorporation or Organization)                      Identification No.)
</TABLE>
 
                           131 OLD SETTLERS BOULEVARD
                            ROUND ROCK, TEXAS 78664
                    (Address of principal executive offices)
       Registrant's telephone number, including area code: (512) 310-6500
 
                            ------------------------
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  /X/  No  / /
 
    As of January 26, 1999, there were 15,303,082 shares of the registrant's
common stock, $.01 par value, outstanding.
 
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                               TABLE OF CONTENTS
 
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<CAPTION>
                                                                                                                PAGE
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<S>                                                                                                          <C>
PART I
 
  Item 1. Financial Statements
 
        Income Statement for the Three Months Ended December 31, 1997 and 1998.............................           3
 
        Income Statement for the Six Months Ended December 31, 1997 and 1998...............................           4
 
        Balance Sheet at June 30, 1998 and December 31, 1998...............................................           5
 
        Cash Flow Statement for the Six Months Ended December 31, 1997 and 1998............................           6
 
        Notes to Financial Statements......................................................................           7
 
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............           9
 
PART II
 
  Item 1. Legal Proceedings................................................................................          13
 
  Item 2. Changes in Securities............................................................................          13
 
  Item 3. Defaults Upon Senior Securities..................................................................          13
 
  Item 4. Submission of Matters to a Vote of Security Holders..............................................          13
 
  Item 5. Other Information................................................................................          14
 
  Item 6. Exhibits and Reports on Form 8-K.................................................................          14
 
Signatures.................................................................................................          15
</TABLE>
 
                                       2
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                                INCOME STATEMENT
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                            THREE MONTHS ENDED
                                                                                               DECEMBER 31,
                                                                                        --------------------------
                                                                                            1997          1998
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
 
Sales.................................................................................  $     67,328  $     61,877
 
Cost of goods sold....................................................................        44,832        44,530
 
Selling, general and administrative expense...........................................         7,745         7,914
 
Research and development expense......................................................         3,060         3,866
                                                                                        ------------  ------------
 
Operating profit......................................................................        11,691         5,567
 
Other (income) expense................................................................          (246)        1,035
                                                                                        ------------  ------------
 
Income before income taxes and minority interest......................................        11,937         4,532
 
Provision for income taxes............................................................         4,059         1,405
                                                                                        ------------  ------------
 
Income before minority interest.......................................................         7,878         3,127
 
Minority interest in loss of joint venture............................................          (383)
                                                                                        ------------  ------------
 
Net income............................................................................  $      8,261  $      3,127
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Basic earnings per share..............................................................  $       0.54  $       0.20
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Basic weighted average shares outstanding.............................................    15,165,132    15,296,222
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Diluted earnings per share............................................................  $       0.53  $       0.20
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Diluted weighted average shares outstanding...........................................    15,605,359    15,669,911
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                       3
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                                INCOME STATEMENT
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                             SIX MONTHS ENDED
                                                                                               DECEMBER 31,
                                                                                        --------------------------
                                                                                            1997          1998
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
 
Sales.................................................................................  $    136,137  $    122,872
 
Cost of goods sold....................................................................        89,004        88,478
 
Selling, general and administrative expense...........................................        15,623        15,895
 
Research and development expense......................................................         6,331         7,732
                                                                                        ------------  ------------
 
Operating profit......................................................................        25,179        10,767
 
Other (income) expense................................................................          (448)        1,482
                                                                                        ------------  ------------
 
Income before income taxes and minority interest......................................        25,627         9,285
 
Provision for income taxes............................................................         8,850         2,878
                                                                                        ------------  ------------
 
Income before minority interest.......................................................        16,777         6,407
 
Minority interest in loss of joint venture............................................          (687)
                                                                                        ------------  ------------
 
Net income............................................................................  $     17,464  $      6,407
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Basic earnings per share..............................................................  $       1.15  $       0.42
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Basic weighted average shares outstanding.............................................    15,165,132    15,285,674
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Diluted earnings per share............................................................  $       1.12  $       0.41
                                                                                        ------------  ------------
                                                                                        ------------  ------------
 
Diluted weighted average shares outstanding...........................................    15,662,657    15,641,751
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                       4
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                                 BALANCE SHEET
                (DOLLARS IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)
 
                                  (UNAUDITED)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                          JUNE 30,   DECEMBER 31,
                                                                                            1998         1998
                                                                                         ----------  ------------
<S>                                                                                      <C>         <C>
Current assets:
  Cash and cash equivalents............................................................  $   19,688   $   38,864
  Accounts receivable, trade...........................................................      47,471       44,457
  Accounts receivable, related parties.................................................       3,349        2,313
  Inventories..........................................................................      18,236       17,504
  Deferred income taxes................................................................       6,389        6,992
  Prepaid expenses and other current assets............................................       6,574        8,924
                                                                                         ----------  ------------
    Total current assets...............................................................     101,707      119,054
Property and equipment.................................................................     244,650      277,656
Accounts receivable, related parties...................................................       1,106        1,300
Deferred income taxes..................................................................       2,221        2,935
Other assets...........................................................................       2,295       25,177
                                                                                         ----------  ------------
    Total assets.......................................................................  $  351,979   $  426,122
                                                                                         ----------  ------------
                                                                                         ----------  ------------
 
                                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable, trade..............................................................  $   30,197   $   18,075
  Accounts payable, related parties....................................................      10,391        9,793
  Short-term borrowings................................................................       2,143          794
  Income taxes payable.................................................................       1,828        3,125
  Other accrued liabilities............................................................      24,096       47,317
                                                                                         ----------  ------------
    Total current liabilities..........................................................      68,655       79,104
Long-term borrowings...................................................................       7,519        7,233
Long-term borrowings, related parties..................................................       9,000       49,000
Deferred income taxes..................................................................      12,048       11,972
Other liabilities......................................................................       1,800        2,156
Minority interest in net assets of joint venture.......................................                   16,394
Commitments and contingencies
Stockholders' equity:
  Common stock, $.01 par value; 25,000,000 shares authorized;
    15,258,722 and 15,300,525 issued and outstanding...................................         152          153
  Additional paid-in capital...........................................................     160,269      161,167
  Retained earnings....................................................................      92,536       98,943
                                                                                         ----------  ------------
    Total liabilities and stockholders' equity.........................................  $  351,979   $  426,122
                                                                                         ----------  ------------
                                                                                         ----------  ------------
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                       5
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                            STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                               SIX MONTHS ENDED
                                                                                                 DECEMBER 31,
                                                                                            ----------------------
                                                                                               1997        1998
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
Cash flows from operating activities:
  Net income..............................................................................  $   17,464  $    6,407
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization.........................................................      15,375      18,780
    Other.................................................................................      (1,200)     (1,107)
    Cash provided (used) by changes in assets and liabilities:
      Accounts receivable.................................................................      (2,898)      5,535
      Inventories.........................................................................        (349)      1,573
      Prepaid expenses and other current assets...........................................        (984)     (1,244)
      Accounts payable....................................................................      20,386     (12,596)
      Other accrued liabilities...........................................................      (1,408)      1,755
                                                                                            ----------  ----------
        Net cash provided by operating activities.........................................      46,386      19,103
                                                                                            ----------  ----------
Cash flows from investing activities:
  Capital expenditures....................................................................     (68,414)    (32,417)
  Payment for acquisitions................................................................                 (20,547)
                                                                                            ----------  ----------
        Net cash used in investing activities.............................................     (68,414)    (52,964)
                                                                                            ----------  ----------
Cash flows from financing activities:
  Increase (decrease) in borrowings.......................................................        (160)     38,049
  Proceeds from issuance of common stock..................................................       1,055         687
  Increase in minority interest in net assets of joint venture............................                  16,394
                                                                                            ----------  ----------
        Net cash provided by financing activities.........................................         895      55,130
                                                                                            ----------  ----------
Effect of exchange rate changes on cash...................................................      (1,219)     (2,093)
                                                                                            ----------  ----------
Net increase (decrease) in cash and cash equivalents......................................     (22,352)     19,176
Cash and cash equivalents at beginning of period..........................................      51,351      19,688
                                                                                            ----------  ----------
Cash and cash equivalents at end of period................................................  $   28,999  $   38,864
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                       6
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                         NOTES TO FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
                                  (UNAUDITED)
 
NOTE 1--BASIS OF PRESENTATION
 
    The accompanying unaudited interim financial statements of DuPont
Photomasks, Inc. and its subsidiaries (the Company) have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with the audited financial statements and accompanying notes
thereto included in the Company's 1998 Annual Report on Form 10-K. The unaudited
interim financial statements include all adjustments, consisting only of normal
recurring adjustments, which management considers necessary for the fair
presentation of the interim periods. Results for interim periods are not
necessarily indicative of results for the year.
 
NOTE 2--INVENTORIES
 
    Inventories consist primarily of raw materials.
 
NOTE 3--ACQUISITION
 
    On November 2, 1998, the Company completed the acquisition of
Hewlett-Packard Company's photomask manufacturing organization, which was
previously part of Hewlett-Packard's Integrated Circuit Business Division. The
acquisition included the purchase of photomask production equipment, the
purchase of inventory, the execution of an agreement whereby the Company becomes
Hewlett-Packard's strategic photomask supplier, the execution of a technology
license agreement and the hiring of employees in the Hewlett-Packard photomask
manufacturing organization. Consideration for the acquisition was approximately
$39,000 in cash, one half of which was paid at closing and one half of which
will be paid in February 1999. The transaction was funded with a draw on the
Company's existing credit agreement. There can be no assurance that the
acquisition will yield results that are favorable to the Company.
 
NOTE 4--COMMITMENTS AND CONTINGENCIES
 
    The Company and United Microelectronics Corporation have established a joint
venture to produce photomasks in Taiwan. There can be no assurance that the
joint venture will yield results that are favorable to the Company. Furthermore,
the Company announced that it plans to build a new photomask production facility
in Singapore designed to service the growing number of semiconductor
manufacturers in Southeast Asia. Plans are to invest $50,000. The Company began
construction on, and subsequently announced a delay in completion of, a new
photomask production facility in Gresham, Oregon designed to service the growing
number of semiconductor manufacturers in the northwest United States. Plans are
to invest $75,000. There can be no assurance that construction on either
facility will be completed or that, if completed, either facility will yield
results that are favorable to the Company.
 
    The Company entered into an agreement with Etec to upgrade its existing
MEBES-Registered Trademark- electron-beam pattern generation tools. The hardware
and software upgrades will enhance the capability of the tools while
simultaneously increasing the speed at which they operate. As part of the
agreement, Etec purchased the use of technology developed by the Company. The
tools to be upgraded currently reside throughout the Company's integrated
network of production facilities. As part of the agreement, Etec is scheduled to
deliver, and the Company is committed to purchase, the initial upgraded
MEBES-Registered Trademark- tool in 1999, with additional tools scheduled for
upgrades over the course of the next four years. There can be no assurance
 
                                       7
<PAGE>
                    DUPONT PHOTOMASKS, INC. AND SUBSIDIARIES
 
                         NOTES TO FINANCIAL STATEMENTS
                       (DOLLARS IN THOUSANDS) (CONTINUED)
 
                                  (UNAUDITED)
 
NOTE 4--COMMITMENTS AND CONTINGENCIES (CONTINUED)
that the Company will be successful in upgrading its tools or that such upgraded
tools will yield results that are favorable to the Company.
 
    The Company has various purchase commitments incident to the normal course
of business including non-refundable deposits to purchase equipment. In the
aggregate, such commitments are not at prices in excess of current market. The
Company is subject to litigation in the normal course of business. Management
believes the effect, if any, of an unfavorable settlement of such litigation
would not have a material adverse effect on the financial position, results of
operations, cash flows or liquidity of the Company.
 
NOTE 5--RECLASSIFICATIONS AND RESTATEMENTS
 
    Certain prior year balances have been reclassified to conform to 1999
presentation.
 
                                       8
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
    The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with the Company's financial
statements and related notes thereto. References to years are to fiscal years
ended June 30. Results for interim periods are not necessarily indicative of
results for the year.
 
OVERVIEW
 
    Based on worldwide sales, the Company believes it is the largest photomask
manufacturer in the world. It sells its products to over 200 customers in 20
different countries. Essentially all sales are to customers in the semiconductor
manufacturing industry. The Company manufactures a broad range of photomasks
based on customer-supplied design data as well as photoblanks and pellicles, the
principal components of photomasks, primarily for internal consumption. The
Company operates globally with established manufacturing facilities in North
America, Europe and Asia.
 
    Due to the capital-intensive nature of photomask manufacturing operations,
at a given threshold of manufacturing capacity, a high proportion of the
Company's operating costs remain relatively constant as sales volume increases
or decreases. To the extent that the Company has under-utilized production
capacity, operating profit increases or decreases significantly as sales volume
increases or decreases. In the early 1990's, the Company had excess capacity.
Therefore, as sales increased in 1996 and 1997, costs associated with
manufacturing remained relatively unchanged and the Company's operating profit
during such periods benefited. As occurred during 1998, the Company anticipates
that operating costs will continue to increase as it adds capacity to position
itself for future growth.
 
RESULTS OF OPERATIONS
 
    SALES.  Sales are comprised primarily of photomask sales to semiconductor
manufacturers. Sales decreased 8.1% from $67.3 million in the quarter ended
December 31, 1997 to $61.9 million in the quarter ended December 31, 1998. Sales
in North America, Europe and Asia decreased from $37.1 million, $16.8 million
and $13.4 million in the quarter ended December 31, 1997 to $36.2 million, $12.4
million and $13.3 million in the quarter ended December 31, 1998. Sales
decreased 9.7% from $136.1 million in the six months ended December 31, 1997 to
$122.9 million in the six months ended December 31, 1998. Sales in North
America, Europe and Asia decreased from $76.5 million, $31.3 million and $28.3
million in the six months ended December 31, 1997 to $71.1 million, $26.1
million and $25.7 million in the six months ended December 31, 1998. Competitive
pricing pressure and decreased unit volume were the primary contributors to the
overall decrease in sales during these periods. Average selling price decreases
accounted for almost all of the revenue decrease in the quarter ended December
31, 1998. Average selling price decreases accounted for approximately 80% of the
revenue decrease in the six months ended December 31, 1998. The balance of the
revenue decrease came from decreased unit volume. However, the Company continues
to experience an increase in demand for advanced photomasks. This shift in
demand reflects what the Company believes to be a continued trend toward higher
utilization of complex semiconductor devices with finer line widths.
 
    COST OF GOODS SOLD.  Cost of goods sold consists of material, labor,
depreciation and overhead. Cost of goods sold decreased from $44.8 million in
the quarter ended December 31, 1997 to $44.5 million in the quarter ended
December 31, 1998 and decreased from $89.0 million in the six months ended
December 31, 1997 to $88.5 million in the six months ended December 31, 1998.
The decreases result primarily from higher costs associated with increased
manufacturing capacity which were more than offset by lower costs associated
with decreased sales and ongoing cost containment initiatives. As a percentage
of sales, cost of goods sold increased from 66.6% in the quarter ended December
31, 1997 to 72.0% in the quarter ended December 31, 1998 and increased from
65.4% in the six months ended December 31, 1997 to 72.0% in the
 
                                       9
<PAGE>
six months ended December 31, 1998. The percentage of sales increase was
primarily due to margin compression as a result of competitive pricing
pressures, the strength of the U.S. Dollar, costs related to new facilities and
costs related to continued capacity expansions at existing facilities. As the
Company adds capacity to position itself for future growth, it will incur
additional costs related to new facilities and costs related to capacity
expansions at existing facilities.
 
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  Selling, general and
administrative expense includes salaries of sales personnel, marketing expense,
general and administrative expense and product distribution expense. Selling,
general and administrative expense as a percentage of sales increased from 11.5%
in the quarter ended December 31, 1997 to 12.8% in the quarter ended December
31, 1998 and increased from 11.4% in the six months ended December 31, 1997 to
12.9% in the six months ended December 31, 1998. The increases are primarily the
result of lower sales. Selling, general and administrative expense increased
2.2% from $7.7 million in the quarter ended December 31, 1997 to $7.9 million in
the quarter ended December 31, 1998 and increased 1.7% from $15.6 million in the
six months ended December 31, 1997 to $15.9 million in the six months ended
December 31, 1998. The Company anticipates that selling, general and
administrative expense will increase in the future.
 
    RESEARCH AND DEVELOPMENT EXPENSE.  Research and development expense consists
primarily of employee costs, cost of material consumed, depreciation,
engineering related costs and the Company's share of costs of the limited
liability company discussed below. Research and development expense increased
from $3.1 million in the quarter ended December 31, 1997 to $3.9 million in the
quarter ended December 31, 1998 and increased from $6.3 million in the six
months ended December 31, 1997 to $7.7 million in the quarter ended December 31,
1998. The increases were due primarily to increased focus on research and
development at the Company's facility in Ichon and the Company's joint venture
participation with Advanced Micro Devices, Micron Technology and Motorola in a
limited liability company called the RTC which was formed to develop advanced
photomask technology and pilot line fabricate leading-edge photomasks. The
Company believes that, through its participation in the RTC, it will be able to
help meet the future technology needs of the semiconductor industry for advanced
photomasks. There can be no assurance that the RTC will yield results that are
favorable to the Company. The Company anticipates that research and development
expense will continue to increase in absolute dollars in the future reflecting
the Company's strategy of advancing its technological leadership. However, there
can be no assurance that such expenditures will enable the Company to develop
new technologies or to maintain its technological leadership.
 
    OTHER (INCOME) EXPENSE.  Other (income) expense was ($0.2 million) in the
quarter ended December 31, 1997 and $1.0 million in the quarter ended December
31, 1998 and was ($0.4 million) in the six months ended December 31, 1997 and
$1.5 million in the six months ended December 31, 1998. The increase relates
primarily to interest expense on the Company's credit agreement as discussed
below.
 
    PROVISION FOR INCOME TAXES.  The Company's tax expense has been determined
in accordance with FAS 109 and is based on the statutory rates in effect in the
countries in which the Company operates. The Company's operations in Korea are
subject to a government granted tax exemption.
 
    MINORITY INTEREST IN LOSS OF JOINT VENTURE.  The minority interest impact of
the Company's joint venture in China was ($0.7 million) in the six months ended
December 31, 1997. Minority interest reflects the partner's share of losses from
the joint venture.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The Company's working capital was $33.1 million at June 30, 1998 and $39.9
million at December 31, 1998. The increase in working capital is due principally
to higher cash resulting from partner funding of the Company's joint venture in
Taiwan and lower accounts payable as offset by higher other accrued liabilities
resulting form the Company's acquisition of Hewlett-Packard Company's photomask
manufacturing
 
                                       10
<PAGE>
organization. Cash and cash equivalents were $19.7 million at June 30, 1998 and
$38.9 million at December 31, 1998. Cash provided by operations was $46.4
million in the six months ended December 31, 1997 and $19.1 million in the six
months ended December 31, 1998.
 
    Cash used in investing activities (capital expenditures and payment for
acquisition) was $68.4 million in the six months ended December 31, 1997 and
$53.0 million in the six months ended December 31, 1998. Management expects
capital expenditures for the remainder of 1999 will be approximately $60 to $70
million. Capital expenditures have been and will be used primarily to expand the
Company's manufacturing capacity and advance the Company's technical capability.
The Company may in the future pursue additional acquisitions of businesses,
products and technologies, or enter into other joint venture arrangements that
could complement or expand the Company's business. Any material acquisition or
joint venture could result in a decrease to the Company's working capital
depending on the amount, timing and nature of the consideration to be paid.
 
    Cash provided by financing activities was $0.9 million in the six months
ended December 31, 1997 and $55.1 million in the six months ended December 31,
1998 and, for the six months ended December 31, 1998, primarily reflects net
borrowings on the Company's credit agreement. The Company and DuPont have
entered into a credit agreement (the "Credit Agreement") pursuant to which
DuPont has agreed to provide a credit facility to the Company in an aggregate
amount of $100.0 million. The Credit Agreement expires in 2001 and any loans
thereunder will bear interest at LIBOR plus 25 basis points. At the Company's
option, advances under the Credit Agreement are convertible into term loans with
maturities up to seven years. To date, the Company has borrowed a maximum of
$52.0 million under the credit facility and at December 31, 1998 borrowings of
$49.0 million were outstanding under the Credit Agreement. The Credit Agreement
contains, among other things, covenants restricting the Company's ability to
incur additional debt.
 
    The Company's ongoing cash requirements will be for capital expenditures,
acquisitions, research and development and working capital. The Company and
United Microelectronics Corporation have established a joint venture to produce
photomasks in Taiwan. Furthermore, the Company announced that it plans to build
a new photomask production facility in Singapore, begun construction on, and
subsequently delayed completion of, a new photomask production facility in
Gresham, Oregon, and entered into an agreement with Etec to upgrade its existing
MEBES-Registered Trademark- electron-beam pattern generation tools. These plans
reflect a significant capital investment over the next five years. Management
believes that cash provided by operations and the Credit Agreement will be
sufficient to meet the Company's cash requirements for at least the next 12
months. Based on its current operating plans, the Company will require external
financing from time to time to fund its capital expenditures. There can be no
assurance that the Company will be able to obtain the additional financing
required to fund these capital investments on reasonable terms, or at all.
 
    Furthermore, there can be no assurance that alternative sources of financing
will be available upon expiration of the Credit Agreement or that alternative
sources of funding will be available if the Company's borrowing requirements
exceed the facility. In addition, there can be no assurance that, even if
funding is available, the terms thereof will be attractive to the Company.
 
OTHER MATTERS
 
    In June 1997, the Financial Accounting Standards Board issued FAS 130 and
FAS 131. Neither FAS is expected to have a material impact on the Company. In
June 1998, the Financial Accounting Standards Board issued FAS 133 which is also
not expected to have a material impact on the Company.
 
    Non-U.S. operations are subject to certain risks inherent in conducting
business abroad, including price and currency exchange controls, fluctuation in
the relative value of currencies and restrictive governmental actions. Changes
in the relative value of currencies occur from time to time and may, in certain
instances, have a material effect on the Company's results of operations. The
Company's financial
 
                                       11
<PAGE>
statements reflect remeasurement of items denominated in non-U.S. currencies to
U.S. Dollars, the Company's functional currency. Exchange gains or losses are
included in income in the period in which
they occur. The Company monitors its exchange rate exposure and attempts to
reduce such exposure by hedging. The Company has entered into Korean Won, French
Franc and Japanese Yen forward contracts designed to reduce such exposure. There
can be no assurance that such forward contracts or any other hedging activity
will be available or adequate to eliminate, or even mitigate, the impact of the
Company's exchange rate exposure. There can be no assurance that such risks will
not have a material adverse impact on the Company's liquidity and results of
operations in the future.
 
    Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, in less than one year,
computer systems and/or software used by many companies in a wide variety of
applications will experience operating difficulties unless they are modified or
upgraded to adequately process information involving, related to or dependent
upon the century change. Significant uncertainty exists concerning the scope and
magnitude of problems associated with the century change.
 
    The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures and has established a project
team to address Year 2000 risks. The project team has coordinated the
identification of and is coordinating the implementation of changes to computer
hardware and software applications that will attempt to ensure availability and
integrity of the Company's information systems and the reliability of its
operational systems and manufacturing processes. The Company has also assessed
the potential overall impact of the impending century change on its business,
results of operations and financial position.
 
    The Company has reviewed its information and operational systems and
manufacturing processes in order to identify those products, services or systems
that are not Year 2000 compliant. As a result of this review, the Company has
determined that it will be required to modify or replace certain information and
operational systems so they will be Year 2000 compliant. These modifications and
replacements are being, and will continue to be, made in conjunction with the
Company's overall systems initiatives. The total cost of these Year 2000
compliance activities, estimated at less than $2.0 million, has not been, and is
not anticipated to be, material to the Company's financial position or its
results of operations. The Company expects to complete its Year 2000 project
during 1999. Based on available information, the Company does not believe any
material exposure to significant business interruption exist as a result of Year
2000 compliance issues. Accordingly, the Company has not adopted any formal
contingency plan in the event its Year 2000 project is not completed in a timely
manner. These costs and the timing in which the Company plans to complete its
Year 2000 modification and testing processes are based on management's best
estimates. However, there can be no assurance that the Company will timely
identify and remediate all significant Year 2000 problems, that remediation
efforts will not involve significant time and expense, or that such problems
will not have a material adverse effect on the Company's business, results of
operations or financial position.
 
    The Company also faces risk to the extent that suppliers of products,
services and systems purchased by the Company and others with whom the Company
transacts business on a worldwide basis do not comply with Year 2000
requirements. The Company has initiated formal communications with significant
suppliers and customers to determine the extent to which the Company is
vulnerable to these third parties failure to remediate their own Year 2000
issues. In the event these third parties cannot provide the Company with
products, services or systems that meet the Year 2000 requirements on a timely
basis, or in the event Year 2000 issues prevent such third parties from timely
delivery of products or services required by the Company, the Company's results
of operations could be materially adversely affected. To the extent Year 2000
issues cause significant delays in, or cancellation of, decisions to purchase
the Company's products or services, the Company's business, results of
operations and financial position would be materially adversely affected.
 
                                       12
<PAGE>
FORWARD LOOKING STATEMENTS
 
    Certain statements contained in this document that are not historical facts,
are "forward-looking statements," as that term is defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
that involve a number of risks and uncertainties. Such forward-looking
statements may concern growth and future operating results, potential
acquisitions and joint ventures, new manufacturing facilities, capital
expenditures, economic climate, new products and product enhancements, the
future importance of photomask technology, the demand for products, competitive
factors, research and development activities and expenditures, strategic
relationships with third parties, liquidity and the Company's strategy. Such
forward-looking statements are generally accompanied by words such as "plan,"
"estimate," "expect," "believe," "should," "would," "could," "anticipate" or
other words that convey uncertainty of future events or outcomes. Such
forward-looking statements are based upon management's current plans,
expectations, estimates and assumptions and are subject to a number of risks and
uncertainties that could significantly affect current plans, anticipated
actions, the timing of such actions and the Company's business, financial
position and results of operations. As a consequence, actual results may differ
materially from expectations, estimates or assumptions expressed in or implied
by any forward-looking statements made by or on behalf of the Company. Factors
which could cause or contribute to such differences include, but are not limited
to, those factors set forth below which are fully discussed under the caption
"Risk Factors" in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on September 18, 1998 as well as cautionary
statements and other factors set forth elsewhere herein. Risk Factors: (i)
Capital Intensive Industry; Significant Fixed Costs, (ii) Rapid Technological
Change, (iii) Relationship with and Dependence on Semiconductor Industry, (iv)
Fluctuations in Quarterly and Annual Earnings, (v) Competition, (vi) Significant
International Operations, (vii) Asian Market Volatility, (viii) Manufacturing
Risks, (ix) Concentration of Customers, (x) Concentration of and Dependence on
Suppliers, (xi) Dependence on Management and Technical Personnel, (xii) Control
by and Relationship with DuPont, (xiii) Volatility of Market Price, (xiv)
Potential Acquisitions, (xv) Intellectual Property, (xvi) Changes in
Governmental Laws and Regulations, (xvii) Year 2000 Compliance and (xviii)
Potential Effect of Shares Eligible for Future Sales; Registration Rights.
 
                                    PART II
 
ITEM 1. LEGAL PROCEEDINGS
 
    The Company is not currently involved in any material legal proceedings.
 
ITEM 2. CHANGES IN SECURITIES
 
    Not applicable
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
    Not applicable
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    The Company's Annual Meeting of Stockholders was held October 26, 1998 (the
"Annual Meeting"). At the Annual Meeting, (i) the Company's eight existing
directors were reelected to the Board of Directors, (ii) the Company's 1998
Employee Stock Purchase Plan was approved, (iii) the Company's Second Amended
and Restated Non-employee Directors Stock Option Plan was approved, and (iv) the
 
                                       13
<PAGE>
selection of PricewaterhouseCoopers LLP as the Company's independent accountants
for the year ended June 30, 1999 was ratified. Votes cast at the Annual Meeting
are as follows:
<TABLE>
<CAPTION>
                                                                FOR         WITHHELD
<S>                                                         <C>           <C>           <C>           <C>
J. Michael Hardinger......................................    13,865,986        81,560
John L. Doyle.............................................    13,865,841        81,705
John W. Himes.............................................    13,865,848        81,698
John C. Hodgson...........................................    13,865,803        81,743
Gary W. Pankonien.........................................    13,866,648        80,898
John C. Sargent...........................................    13,866,548        80,998
Marshall C. Turner........................................    13,866,103        81,443
Susan A. Vladuchick.......................................    13,866,548        80,998
 
<CAPTION>
 
                                                                FOR         AGAINST       ABSTAIN       NON-VOTE
<S>                                                         <C>           <C>           <C>           <C>
Approval of the 1998 Employee Stock Purchase Plan.........    13,767,849       123,948        55,749
Approval of the Second Amended and Restated Non-employee
  Directors Stock Option Plan.............................    13,233,144       656,955        57,447
Ratification of the selection of PricewaterhouseCoopers
  LLP.....................................................    13,779,790         9,276         3,434       155,046
</TABLE>
 
ITEM 5. OTHER INFORMATION
 
    STOCKHOLDER PROPOSALS.  Proposals of stockholders intended to be presented
at the Company's 1999 annual meeting of stockholders must be received at the
Company's principal executive offices not later than May 21, 1999 in order to be
included in the Company's proxy statement and form of proxy relating to the 1999
annual meeting. Pursuant to new amendments to Rule 14a-4(c) of the Securities
Exchange Act of 1934, if a stockholder who intends to present a proposal at the
1999 annual meeting does not notify the Company of such proposal on or prior to
August 14, 1999, then management proxies would be allowed to use their
discretionary voting authority to vote on the proposal, when the proposal is
raised at the 1999 annual meeting, even though there is no discussion of the
proposal in the 1999 proxy statement.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
    (A) Exhibits
      (11) Statement re Computation of Per Share Earnings
      (27) Financial Data Schedule
 
    (B) Reports on Form 8-K
 
Form 8-K, dated November 6, 1998, filed in connection with the Company's the
acquisition of Hewlett-Packard Company's photomask manufacturing organization.
 
                                       14
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
                                DUPONT PHOTOMASKS, INC.
                                (Registrant)
 
Date: February 12, 1999         By:           /s/ J. MICHAEL HARDINGER
                                     -----------------------------------------
                                                J. Michael Hardinger
                                     CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
                                       OFFICER (PRINCIPAL EXECUTIVE OFFICER)
 
Date: February 12, 1999         By:              /s/ DAVID S. GINO
                                     -----------------------------------------
                                                   David S. Gino
                                       EXECUTIVE VICE PRESIDENT--FINANCE AND
                                         CHIEF FINANCIAL OFFICER (PRINCIPAL
                                         FINANCIAL AND ACCOUNTING OFFICER)
</TABLE>
 
                                       15
<PAGE>
                                   EXHIBIT 11
 
                            DUPONT PHOTOMASKS, INC.
 
                         EARNINGS PER SHARE COMPUTATION
 
                DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                           QUARTER ENDED
                                                                                         DECEMBER 31, 1997
                                                                                     --------------------------
                                                                                        BASIC        DILUTED
                                                                                     ------------  ------------
<S>                                                                                  <C>           <C>
Weighted average shares outstanding................................................    15,165,132    15,165,132
Dilutive effect of stock performance plans.........................................                     440,227
                                                                                     ------------  ------------
                                                                                       15,165,132    15,605,359
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Net income.........................................................................  $      8,261  $      8,261
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Earnings per share.................................................................  $       0.54  $       0.53
                                                                                     ------------  ------------
                                                                                     ------------  ------------
 
<CAPTION>
 
                                                                                           QUARTER ENDED
                                                                                         DECEMBER 31, 1998
                                                                                     --------------------------
                                                                                        BASIC        DILUTED
                                                                                     ------------  ------------
<S>                                                                                  <C>           <C>
Weighted average shares outstanding................................................    15,296,222    15,296,222
Dilutive effect of stock performance plans.........................................                     373,689
                                                                                     ------------  ------------
                                                                                       15,296,222    15,669,911
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Net income.........................................................................  $      3,127  $      3,127
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Earnings per share.................................................................  $       0.20  $       0.20
                                                                                     ------------  ------------
                                                                                     ------------  ------------
<CAPTION>
 
                                                                                     SIX MONTHS ENDED DECEMBER
                                                                                              31, 1997
                                                                                     --------------------------
                                                                                        BASIC        DILUTED
                                                                                     ------------  ------------
<S>                                                                                  <C>           <C>
Weighted average shares outstanding................................................    15,165,132    15,165,132
Dilutive effect of stock performance plans.........................................                     497,525
                                                                                     ------------  ------------
                                                                                       15,165,132    15,662,657
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Net income.........................................................................  $     17,464  $     17,464
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Earnings per share.................................................................  $       1.15  $       1.12
                                                                                     ------------  ------------
                                                                                     ------------  ------------
<CAPTION>
 
                                                                                     SIX MONTHS ENDED DECEMBER
                                                                                              31, 1998
                                                                                     --------------------------
                                                                                        BASIC        DILUTED
                                                                                     ------------  ------------
<S>                                                                                  <C>           <C>
Weighted average shares outstanding................................................    15,285,674    15,285,674
Dilutive effect of stock performance plans.........................................                     356,077
                                                                                     ------------  ------------
                                                                                       15,285,674    15,641,751
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Net income.........................................................................  $      6,407  $      6,407
                                                                                     ------------  ------------
                                                                                     ------------  ------------
Earnings per share.................................................................  $       0.42  $       0.41
                                                                                     ------------  ------------
                                                                                     ------------  ------------
</TABLE>
 
    At December 31, 1998, the Company had outstanding anti-dilutive commitments
under its stock performance plans covering 125,650 shares.