FORMFACTOR INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, which are subject to risks and uncertainties. The forward-looking statements include statements concerning, among other things, our business strategy, financial and operating results, gross margins, liquidity and capital expenditure requirements and impact of accounting standards. In some cases, you can identify these statements by forward-looking words, such as “may,” “might,” “will,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend” and “continue,” the negative or plural of these words and other comparable terminology. The forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements. We have no obligation to update any of these statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to COVID-19 and the impact of our responses to it, the interpretation and impacts of changes in export controls and other trade barriers, our ability to execute our business strategy and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 26, 2020 and in this Quarterly Report on Form 10-Q. You should carefully consider the numerous risks and uncertainties described under these sections. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us” and “FormFactor” refer to FormFactor, Inc. and its subsidiaries. 24 Overview FormFactor, Inc., headquartered in Livermore, California, is a leading provider of test and measurement technologies. We provide a broad range of high-performance probe cards, analytical probes, probe stations, metrology systems, thermal systems and cryogenic systems to both semiconductor companies and scientific institutions. Our products provide electrical and physical information from a variety of semiconductor and electro-optical devices and integrated circuits from early research, through development, to high-volume production. Customers use our products and services to lower production costs, improve yields, and enable development of their complex next-generation products. We operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, metrology systems, and thermal and cryogenic systems are included in the Systems segment. We generated net income of $58.0 million in the first nine months of fiscal 2021 as compared to $59.3 million in the first nine months of fiscal 2020. The small decrease in net income was primarily due to increased revenues, partially offset by slightly lower margins on a lower mix of Foundry & Logic probe card sales and higher taxes on higher taxable income and a higher tax rate due to significant one-time tax benefits during 2020. Impact of COVID-19 The COVID-19 pandemic continues to cause serious illness and death in many of the regions that we, our customers and our suppliers operate. The COVID-19 pandemic has resulted in significant governmental actions designed to control the spread of the virus, including the imposition of safety requirements and other orders in locations where we have manufacturing and other activities. We currently continue to operate in all of our manufacturing sites at production levels comparable to those prior to the pandemic, albeit subject to certain safety and related constraints. Our other operations are similarly continuing with substantial work-from-home activities. If the provisions of governmental health orders or other safety requirements applicable to us or our customers or suppliers become more restrictive for an extended period of time, or if we have repeated occurrences of COVID-19 in any of our facilities, we may experience disruptions or delays in manufacturing, product design, product development, customer support, manufacturing and sales, and an overall loss of productivity and efficiency. While to date the disruptions in our operations, supply chain and customer demand as a result of the COVID-19 pandemic have been somewhat limited, we believe that the COVID-19 pandemic represents a sustained threat that may give rise to a variety of more significant adverse impacts on our business and financial results. For a further description of the uncertainties and business risks associated with the COVID-19 pandemic, see the risk factors discussed in our Annual Report on Form 10-K for the year ended December 26, 2020. Significant Accounting Policies and the Use of Estimates Management’s Discussion and Analysis and Note 2, Summary of Significant Accounting Policies , to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K describe the significant accounting estimates and significant accounting policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. During the nine months ended September 25, 2021, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 26, 2020, which was filed with the Securities and Exchange Commission on February 22, 2021. 25 Results of Operations The following table sets forth our operating results as a percentage of revenues for the periods indicated: Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Revenues 100.0 % 100.0 % 100.0 % 100.0 % Cost of revenues 57.8 56.9 58.7 57.6 Gross profit 42.2 43.1 41.3 42.4 Operating expenses: Research and development 13.7 12.9 13.4 13.1 Selling, general and administrative 16.3 17.9 16.2 16.6 Total operating expenses 30.0 30.8 29.6 29.7 Operating income 12.2 12.3 11.7 12.7 Interest income 0.1 0.1 0.1 0.3 Interest expense (0.1) (0.1) (0.1) (0.1) Other expense, net 0.1 0.2 — — Income before income taxes 12.3 12.5 11.7 12.9 Provision (benefit) for income taxes 1.5 (0.3) 1.4 0.9 Net income 10.8 % 12.8 % 10.3 % 12.0 % Revenues by Segment and Market Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 (In thousands) Probe Cards $ 154,850 $ 150,773 $ 467,389 $ 419,272 Systems 35,114 27,223 97,287 77,301 $ 189,964 $ 177,996 $ 564,676 $ 496,573 26 Three Months Ended September 25, 2021 % of Revenues September 26, 2020 % of Revenues $ Change % Change (Dollars in thousands) Probe Cards Markets: Foundry & Logic $ 104,640 55.1 % $ 108,411 60.9 % $ (3,771) (3.5) % DRAM 39,816 20.9 31,379 17.6 8,437 26.9 Flash 10,394 5.5 10,983 6.2 (589) (5.4) Systems Market: Systems 35,114 18.5 27,223 15.3 7,891 29.0 Total revenues $ 189,964 100.0 % $ 177,996 100.0 % $ 11,968 6.7 % Nine Months Ended September 25, 2021 % of Revenues September 26, 2020 % of Revenues $ Change % Change (Dollars in thousands) Probe Cards Markets: Foundry & Logic $ 321,776 57.0 % $ 323,503 65.1 % $ (1,727) (0.5) % DRAM 115,802 20.5 75,127 15.1 40,675 54.1 Flash 29,811 5.3 20,642 4.2 9,169 44.4 Systems Market: Systems 97,287 17.2 77,301 15.6 19,986 25.9 Total revenues $ 564,676 100.0 % $ 496,573 100.0 % $ 68,103 13.7 % The decrease in Foundry & Logic product revenue for the three months ended September 25, 2021, compared to the three months ended September 26, 2020, was driven by lower demand from two major customers, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers. The decrease for the nine months ended September 25, 2021, compared to the nine months ended September 26, 2020, was driven by lower demand from one major customer, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers. The relative stability of our overall revenue, despite these fluctuations, is the result of our long-term customer and market diversification initiatives. The increase in DRAM product revenue for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, was driven by increased sales to several customers and strong market-based demand for DRAM products through the first three quarters of fiscal 2021. Flash product revenue was down slightly for the three months ended September 25, 2021, compared to the three months ended September 26, 2020, with shifts between customers that are typical as our revenue in this market continues to be highly variable. The increase in Flash product revenue for the nine months ended September 25, 2021, compared to the nine months ended September 26, 2020, was driven by increased sales resulting from the acquisition of Baldwin Park offset by decreased sales as a result of decreased customer demand for our existing products. The increase in Systems product revenue for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, was driven by increased sales of cryogenic systems due to the acquisition of High Precision Devices, Inc. (“HPD”) and increased sales of thermal sub-systems and metrology systems. 27 Revenues by Geographic Region Three Months Ended Nine Months Ended September 25, 2021 % of Revenue September 26, 2020 % of Revenue September 25, 2021 % of Revenue September 26, 2020 % of Revenue (Dollars in thousands) Taiwan $ 41,574 21.9 % $ 36,935 20.8 % $ 139,038 24.6 % $ 101,886 20.5 % China 51,047 26.8 28,546 16.0 125,499 22.2 120,946 24.4 United States 25,468 13.4 36,328 20.4 87,604 15.5 96,365 19.4 South Korea 28,972 15.3 29,571 16.6 84,234 14.9 58,772 11.8 Asia-Pacific 1 19,881 10.5 8,954 5.0 63,127 11.2 23,317 4.7 Europe 10,486 5.5 16,979 9.5 32,495 5.8 52,154 10.5 Japan 10,728 5.6 17,145 9.6 27,753 4.9 35,574 7.2 Rest of the world 1,808 1.0 3,538 2.1 4,926 0.9 7,559 1.5 Total revenues $ 189,964 100.0 % $ 177,996 100.0 % $ 564,676 100.0 % $ 496,573 100.0 % 1 Asia-Pacific includes all countries in the region except China, Japan, South Korea and Taiwan, which are disclosed separately. Geographic revenue information is based on the location to which we ship the product. For example, if a certain South Korean customer purchases through their U.S. subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S. Changes in revenue by geographic region for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix. Cost of Revenues and Gross Margins Cost of revenues consists primarily of manufacturing materials, compensation and benefits, shipping and handling costs, manufacturing-related overhead and amortization of certain intangible assets. Our manufacturing operations rely on a limited number of suppliers to provide key components and materials for our products, some of which are a sole source. We order materials and supplies based on backlog and forecasted customer orders. Tooling and setup costs related to changing manufacturing lots at our suppliers are also included in the cost of revenues. We expense all warranty costs, inventory provisions and amortization of certain intangible assets as cost of revenues. Our gross profit and gross margin were as follows (dollars in thousands): Three Months Ended September 25, 2021 September 26, 2020 $ Change % Change Gross profit $ 80,219 $ 76,749 $ 3,470 4.5 % Gross margin 42.2 % 43.1 % Nine Months Ended September 25, 2021 September 26, 2020 $ Change % Change Gross profit $ 233,208 $ 210,306 $ 22,902 10.9 % Gross margin 41.3 % 42.4 % 28 Our gross profit and gross margin by segment were as follows (dollars in thousands): Three Months Ended September 25, 2021 September 26, 2020 Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total Gross profit $ 69,868 $ 17,553 $ (7,202) $ 80,219 $ 69,641 $ 13,565 $ (6,457) $ 76,749 Gross margin 45.1 % 50.0 % 42.2 % 46.2 % 49.8 % 43.1 % Nine Months Ended September 25, 2021 September 26, 2020 Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total Gross profit $206,783 $ 48,059 $ (21,634) $ 233,208 $191,907 $ 37,618 $ (19,219) $ 210,306 Gross margin 44.2 % 49.4 % 41.3 % 45.8 % 48.7 % 42.4 % Probe Cards For the three and nine months ended September 25, 2021, gross margins decreased compared to the three and nine months ended September 26, 2020, primarily due to higher material costs driven by fluctuations in commodity costs, somewhat offset by higher standard margins on Foundry & Logic sales. Systems For the three and nine months ended September 25, 2021, gross margins increased compared to the three and nine months ended September 26, 2020, primarily as a result of favorable product mix, largely related to increased sales of metrology systems and thermal sub-systems. Corporate and Other Corporate and Other includes unallocated expenses relating to share-based compensation and amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, and restructuring which are not used in evaluating the results of, or in allocating resources to, our reportable segments. Overall Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading and material costs. For the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, gross profit has increased on greater revenue levels while gross margins have decreased, primarily on higher material costs, partially offset by a more favorable product mix. Cost of revenues included stock-based compensation expense as follows (in thousands): Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Stock-based compensation $ 1,392 $ 962 $ 3,806 $ 2,800 29 Research and Development Three Months Ended September 25, 2021 September 26, 2020 $ Change % Change (Dollars in thousands) Research and development $ 26,026 $ 22,878 $ 3,148 13.8 % % of revenues 13.7 % 12.9 % Nine Months Ended September 25, 2021 September 26, 2020 $ Change % Change (Dollars in thousands) Research and development $ 75,526 $ 65,064 $ 10,462 16.1 % % of revenues 13.4 % 13.1 % The increase in research and development expenses in the three and nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs. Annual salary increases, higher stock-based compensation, and restructuring charges also contributed to the increase. A detail of the changes is as follows (in thousands): Three Months Ended September 25, 2021 compared to Three Months Ended September 26, 2020 Nine Months Ended September 25, 2021 compared to Nine Months Ended September 26, 2020 Employee compensation costs $ 1,330 $ 5,354 Stock-based compensation 684 1,208 Restructuring charges 289 694 Project material costs (129) 381 Depreciation (21) 239 Other general operations 995 2,586 $ 3,148 $ 10,462 Research and development included stock-based compensation expense as follows (in thousands): Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Stock-based compensation $ 2,010 $ 1,326 $ 5,362 $ 4,154 30 Selling, General and Administrative Three Months Ended September 25, 2021 September 26, 2020 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 30,940 $ 31,834 $ (894) (2.8) % % of revenues 16.3 % 17.9 % Nine Months Ended September 25, 2021 September 26, 2020 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 91,434 $ 82,282 $ 9,152 11.1 % % of revenues 16.2 % 16.6 % The decrease in selling, general and administrative expenses in the three months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by decreased information technology security remediation costs that were incurred during the three months ended September 26, 2020 that did not repeat. This decrease was partially offset by higher stock-based compensation. The increase in selling, general and administrative expenses in the nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs. Annual salary increases and higher stock-based compensation also contributed to the increases. These increases were partially offset by the benefit in the prior year related to adjustments to contingent consideration for the acquisition of FRT GmbH ("FRT") and information technology security remediation costs that both did not repeat. A detail of the changes is as follows (in thousands): Three Months Ended September 25, 2021 compared to Three Months Ended September 26, 2020 Nine Months Ended September 25, 2021 compared to Nine Months Ended September 26, 2020 Employee compensation costs $ 331 $ 5,235 Gain on contingent consideration 71 3,676 Consulting fees (3,368) (3,402) Stock-based compensation 1,297 2,597 General operating expenses 562 1,066 Travel related costs 156 (341) Amortization of intangibles 57 321 $ (894) $ 9,152 Selling, general and administrative included stock-based compensation expense as follows (in thousands): Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Stock-based compensation $ 4,518 $ 3,221 $ 12,417 $ 9,820 31 Interest Income and Interest Expense Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 (Dollars in thousands) Interest Income $ 121 $ 249 $ 463 $ 1,310 Weighted average balance of cash and investments $ 257,851 $ 243,615 $ 262,475 $ 230,098 Weighted average yield on cash and investments 0.26 % 0.57 % 0.32 % 1.03 % Interest Expense $ 151 $ 193 $ 447 $ 682 Average debt outstanding $ 27,810 $ 37,295 $ 30,214 $ 38,327 Weighted average interest rate on debt 1.59 % 1.65 % 1.58 % 2.05 % Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities. The decrease in interest income for the three and nine months ended September 25, 2021 compared with the corresponding period of the prior year was attributable to lower investment yields due to the low interest rate environment, despite higher invested balances. Interest expense primarily includes interest on our term loans, interest rate swap derivative contracts, and term loan issuance costs amortization charges. The decrease in interest expense for the three and nine months ended September 25, 2021 compared to the same period of the prior year was primarily due to lower outstanding debt balances due to the June 30, 2020 pay-off of the term loan originated to acquire Cascade Microtech, Inc, partially offset by the Building Term Loan originated in the second quarter of 2020. Interest expense was also lower due to lower average interest rates on the outstanding debt. Other Income (Expense), Net Other income (expense), net, primarily includes the effects of foreign currency impact and various other gains and losses. Provision for Income Taxes Three Months Ended Nine Months Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 (In thousands, except percentages) Provision (benefit) for income taxes $ 2,784 $ (499) $ 8,273 $ 4,479 Effective tax rate 12.0 % (2.2) % 12.5 % 7.0 % Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income (“FDII”) deduction. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, changes in ASC 718 stock-based compensation expense/benefit, future expansion into areas with varying country, state, and local income tax rates, and deductibility of certain costs and expenses by jurisdiction. We have utilized our previous net operating loss carryforwards, and expect the FDII deduction and corresponding benefit to be available, resulting in a decrease from the U.S. statutory rate and included in our worldwide effective tax rate for the year ending December 25, 2021. The increase in the effective tax rate in the nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by the cumulative effect of adjustments made related to final and proposed Treasury regulations during the third quarter ended September 26, 2020. The regulations under Sections 951A and 954 provided final global intangible low-taxed income (GILTI) high-tax exclusion and proposed changes to the existing subpart F income high-tax exception, respectively. The impact of those adjustments provided a significant one time tax benefit during 2020. Liquidity and Capital Resources Capital Resources Our working capital was $346.5 million at September 25, 2021, compared to $332.5 million at December 26, 2020. Cash and cash equivalents primarily consist of deposits held at banks, money market funds, and U.S. treasuries. Marketable securities primarily consist of U.S. treasuries, corporate bonds, and commercial paper. We typically invest in highly-rated 32 securities with low probabilities of default. Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment. Our cash, cash equivalents and marketable securities totaled approximately $264.7 million at September 25, 2021, compared to $255.0 million at December 26, 2020. We believe that we will be able to satisfy our working capital requirements and scheduled term loan repayments for at least the next twelve months with the liquidity provided by our existing cash, cash equivalents, marketable securities and cash provided by operations. To the extent necessary, we may consider entering into short and long-term debt obligations, raising cash through a stock issuance, or obtaining new financing facilities, which may not be available on terms favorable to us. Our future capital requirements may vary materially from those now planned. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition. If we are unsuccessful in maintaining or growing our revenues, maintaining or reducing our cost structure (in response to a potential reduction in demand due to an industry downturn, COVID-19, or other event), or increasing our available cash through debt or equity financings, our cash, cash equivalents and marketable securities may decline. We utilize a variety of tax planning and financing strategies to manage our worldwide cash and deploy funds to locations where needed. As part of these strategies, we indefinitely reinvest a portion of our foreign earnings. Should we require additional capital in the United States, we may elect to repatriate indefinitely-reinvested foreign funds or raise capital in the United States. Cash Flows The following table sets forth our net cash flows from operating, investing and financing activities: Nine Months Ended September 25, 2021 September 26, 2020 (In thousands) Net cash provided by operating activities $ 100,437 $ 124,209 Net cash used in investing activities $ (94,976) $ (56,195) Net cash used in financing activities $ (36,869) $ (28,970) Operating Activities Net cash provided by operating activities for the nine months ended September 25, 2021 was primarily attributable to net income of $58.0 million and net non-cash expenses of $77.4 million, further impacted by changes in operating assets and liabilities, as explained below. Inventories, net, increased $15.9 million to $115.1 million at September 25, 2021, compared to $99.2 million at December 26, 2020, as a result of anticipated projected customer demand. Due to provisions for excess and obsolete inventories of $11.6 million and non-cash restructuring charges to record inventory impairments of $1.3 million, the change in Inventories, net, was further impacted. Operating lease liabilities increased $5.7 million to $40.4 million at September 25, 2021, compared to $34.7 million at December 26, 2020 as a result of additional right-of-use assets obtained in exchange for lease obligations of $11.7 million offset by lease payments. Investing Activities Net cash used in investing activities for the nine months ended September 25, 2021 was primarily related to $51.4 million property, plant and equipment acquisitions, and $43.6 million net cash used to purchase marketable securities. Financing Activities Net cash used in financing activities for the nine months ended September 25, 2021 primarily related to $24.0 million used to purchase common stock under our stock repurchase program, $12.6 million related to tax withholding associated with the net share settlements of our equity awards, $7.0 million of principal payments made towards the repayment of our term loans, and $3.9 million paid to settle the contingent consideration from the acquisition of FRT, partially offset by $10.6 million of proceeds received from issuances of common stock under our employee stock purchase plan and stock option plans. 33 Debt FRT Term Loan On October 25, 2019, we entered into a $23.4 million three-year credit facility loan agreement (the “FRT Term Loan”), to fund the acquisition of FRT GmbH, which we acquired on October 9, 2019. The FRT Term Loan bears interest at a rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus 1.75% per annum and will be repaid in quarterly installments of approximately $2.0 million plus interest. The interest rate at September 25, 2021 was 1.20%. As of September 25, 2021, the balance outstanding pursuant to the FRT term loan was $10.3 million. Building Term Loan On June 22, 2020, we entered into an $18.0 million 15-year credit facility loan agreement (the “Building Term Loan”). The proceeds of the Building Term Loan were used to finance the purchase a building adjacent to our leased facilities in Livermore, California. The Building Term Loan bears interest at a rate equal to the applicable LIBOR rate plus 1.75% per annum. Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at September 25, 2021 was 1.84%. As of September 25, 2021, the balance outstanding pursuant to the Building Term Loan was $16.8 million. On March 17, 2020, we entered into a forward starting interest rate swap agreement to hedge the interest payments on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt. As future levels of LIBOR over the life of the loan are uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates. By entering into the agreement, we converted a floating rate interest at one-month LIBOR plus 1.75% into a fixed rate interest at 2.75%. As of September 25, 2021, the notional amount of the loan that is subject to this interest rate swap is $16.8 million. Stock Repurchase Program In October 2020, our Board of Directors authorized a program to repurchase up to $50.0 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the nine months ended September 25, 2021, we repurchased 620,200 shares of common stock for $24.0 million and, as of September 25, 2021, $26.0 million remained available for future repurchases. Contractual Obligations and Commitments The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of September 25, 2021: Payments Due In Fiscal Year Remainder 2021 2022 2023 2024 2025 Thereafter Total Operating leases $ 2,116 $ 8,536 $ 7,167 $ 6,744 $ 6,726 $ 14,815 $ 46,104 Term loans - principal payments 2,302 9,225 1,050 1,080 1,111 12,258 27,026 Term loans - interest payments (1) 109 361 280 261 239 1,142 2,392 Total $ 4,527 $ 18,122 $ 8,497 $ 8,085 $ 8,076 $ 28,215 $ 75,522 (1) Represents our minimum interest payment commitments at 1.84% per annum for the Building Term Loan and 1.20% per annum for the FRT Term Loan. This also excludes any amounts related to our interest rate swap. Off-Balance Sheet Arrangements Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of September 25, 2021, we were not involved in any such off-balance sheet arrangements. 34 Recent Accounting Pronouncements See Note 1, Basis of Presentation and New Accounting Pronouncements , of Notes to Condensed Consolidated Financial Statements.