What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 182 added, 92 removed, 458 unchanged (37% of the section changed)

47 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Revenues $ 203,907 $ 188,076 $ 401,081 $ 374,712

8 unchanged sentences

Interest expense ( 119 ) ( 116 ) ( 311 ) ( 296 )

Other income, net 192 172

Other income (expense), net 551 ( 194 ) 743 ( 22 )

Income before income taxes 33,378 20,188 67,700 43,019

11 unchanged sentences

(In thousands)

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Net income $ 30,242 $ 17,905 $ 60,114 $ 37,530

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Translation adjustments and other ( 3,856 ) 632 ( 6,554 ) ( 1,747 )

1 unchanged sentence

Unrealized gains (losses) on derivative instruments ( 116 ) ( 89 ) 758 ( 315 )

Other comprehensive loss, net of tax ( 3,028 ) ( 2,736 )

Other comprehensive income (loss), net of tax ( 4,519 ) 446 ( 7,547 ) ( 2,290 )

Comprehensive income $ 25,723 $ 18,351 $ 52,567 $ 35,240

3 unchanged sentences

(In thousands, except shares)

Stock Shares of

Stock Treasury

Stock Additional

3 unchanged sentences

Deficit Total

Three Months Ended March 26, 2022

Six Months Ended June 25, 2022

Balances, December 25, 2021 78,240,506 $ 78 $ 898,945 $ ( 1,449 ) $ ( 81,794 ) $ 815,780

6 unchanged sentences

Net income — — — — 60,114 60,114

Balances, June 25, 2022 77,194,733 $ 77 $ 860,584 $ ( 8,996 ) $ ( 21,680 ) $ 829,985

Three Months Ended June 25, 2022

Balances, March 26, 2022 78,166,212 $ 78 $ 902,994 $ ( 4,477 ) $ ( 51,922 ) $ 846,673

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 231,464 — ( 4,171 ) — — ( 4,171 )

Purchase and retirement of common stock through repurchase program ( 1,202,943 ) ( 1 ) ( 44,930 ) — — ( 44,931 )

Stock-based compensation — — 6,691 — — 6,691

Other comprehensive loss — — — ( 4,519 ) — ( 4,519 )

Net income — — — — 30,242 30,242

Balances, June 25, 2022 77,194,733 $ 77 $ 860,584 $ ( 8,996 ) $ ( 21,680 ) $ 829,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except shares)

Stock Shares of

5 unchanged sentences

Deficit Total

Three Months Ended March 27, 2021

Six Months Ended June 26, 2021

Balances, December 26, 2020 77,437,997 $ 78 — $ — $ 903,838 $ 5,886 $ ( 165,718 ) $ 744,084

2 unchanged sentences

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 308,219 — — — ( 5,261 ) — — ( 5,261 )

Purchase of common stock through repurchase program — — ( 136,402 ) ( 5,738 ) — — — ( 5,738 )

Purchase and retirement of common stock through repurchase program ( 620,200 ) ( 1 ) — — ( 23,950 ) — — ( 23,951 )

Stock-based compensation — — — — 13,526 — — 13,526

Other comprehensive income — — — — — ( 2,736 ) — ( 2,736 )

Other comprehensive loss — — — — — ( 2,290 ) — ( 2,290 )

Net income — — — — — — 37,530 37,530

Balances, June 26, 2021 77,454,800 $ 77 — $ — $ 894,062 $ 3,596 $ ( 128,188 ) $ 769,547

Three Months Ended June 26, 2021

Balances, March 27, 2021 77,758,530 $ 78 ( 136,402 ) $ ( 5,738 ) $ 915,136 $ 3,150 $ ( 146,093 ) $ 766,533

Issuance of common stock pursuant to exercise of options 50,000 — — — 422 — — 422

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 266,470 — — — ( 4,120 ) — — ( 4,120 )

Purchase and retirement of common stock through repurchase program ( 620,200 ) ( 1 ) 136,402 5,738 ( 23,950 ) — — ( 18,213 )

Stock-based compensation — — — — 6,574 — — 6,574

Other comprehensive income — — — — — 446 — 446

Net income — — — — — — 17,905 17,905

Balances, June 26, 2021 77,454,800 $ 77 — $ — $ 894,062 $ 3,596 $ ( 128,188 ) $ 769,547

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

2022 March 27,

Six Months Ended

2022 June 26,

Cash flows from operating activities:

7 unchanged sentences

Non-cash restructuring charges 710 —

Gain on contingent consideration — ( 95 )

Other adjustments to reconcile net income to net cash provided by operating activities ( 567 ) 1,211

12 unchanged sentences

Acquisition of property, plant and equipment ( 30,116 ) ( 31,322 )

Acquisition of business ( 3,121 ) —

Purchases of marketable securities ( 52,344 ) ( 71,186 )

Purchase of promissory note receivable ( 1,000 ) —

Proceeds from maturities and sales of marketable securities 45,470 42,695

4 unchanged sentences

Tax withholdings related to net share settlements of equity awards ( 4,243 ) ( 5,261 )

Payment of contingent consideration — ( 3,873 )

Principal repayments on term loans ( 4,379 ) ( 4,740 )

1 unchanged sentence

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 3,470 ) ( 1,558 )

Net increase (decrease) in cash, cash equivalents and restricted cash 15,919 ( 12,790 )

Net decrease in cash, cash equivalents and restricted cash ( 15,043 ) ( 27,132 )

Cash, cash equivalents and restricted cash, beginning of period 155,342 191,098

4 unchanged sentences

(In thousands)

Three Months Ended

2022 March 27,

Six Months Ended

2022 June 26,

Non-cash investing and financing activities:

21 unchanged sentences

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December.

Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the three months ended March 26, 2022 and March 27, 2021 each contained 13 weeks.

Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the six months ended June 25, 2022 and June 26, 2021 each contained 26 weeks.

Fiscal 2022 will end on December 31, 2022.

Significant Accounting Policies

Our significant accounting policies have not changed during the three months ended March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Our significant accounting policies have not changed during the six months ended June 25, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Reclassifications

9 unchanged sentences

The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, “Revenue from Contracts with Customers,” as if it had originated the contracts.

This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted.

The adoption impact of the new standard will depend on the magnitude of future acquisitions.

The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

The Company elected to early adopt on a prospective basis during the second quarter of fiscal 2022.

The adoption did not have a material effect on the Company's Consolidated Financial Statements.

Note 2 — Concentration of Credit and Other Risks

Each of the following customers accounted for 10 % or more of our revenues for the periods indicated:

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Intel Corporation 20.9 % 16.2 % 20.9 % 22.1 %

Samsung Electronics., LTD.

Taiwan Semiconductor Manufacturing Co., LTD.

1 unchanged sentence

20.9 % 41.9 % 20.9 % 33.3 %

At March 26, 2022, one customer accounted for 22.8 % of gross accounts receivable.

At June 25, 2022, one customer accounted for 20.0 % of gross accounts receivable.

At December 25, 2021, one customer accounted for 13.8 % of gross accounts receivable.

7 unchanged sentences

$ 143,475 $ 111,548

Note 4 — Acquisition

Woburn Acquisition

On June 9, 2022, we acquired the assets of the dilution refrigerator product line of American ULT Cryogenics, formerly d/b/a JanisULT (“Woburn”), for total consideration of $ 3.1 million.

This acquisition adds cryogen-free dilution refrigerators capable of cooling to sub-10 millikelvin to our product portfolio, which is required for operation of superconducting quantum computers.

As of the reporting date, we have not completed the valuation of assets acquired and liabilities assumed.

Upon the completion of purchase accounting, we expect certain amounts provisionally recorded as goodwill will be ultimately allocated to developed technologies, but at this time we do not have an estimate of the allocation of value between amortizing and non-amortizing intangible assets.

We do expect that some amount of intangible assets provisionally recorded as goodwill will ultimately be allocated to an amortizing intangible asset.

At the time such amount is estimable, we will record any amortization required between the acquisition date and the date at which the amounts become estimable.

While we do not yet have a reasonable basis on which to record any such amortization, the impact to the financial statements as a whole is not expected to be material assuming typical lives of these assets and ranges of potential allocation of value.

The amounts presented below represent provisional amounts of assets acquired and liabilities assumed, which are recorded based on the best information available, and are subject to revision as the fair value of the associated assets acquired and

liabilities assumed are finalized.

The total estimated purchase price has been provisionally allocated to the underlying assets acquired and liabilities assumed, as follows (in thousands):

Accounts receivable $ 178

Inventories 6,064

Property, plant and equipment 479

Prepaid expenses and other current assets 117

Other assets 28

Tangible assets acquired 6,866

Deferred revenue ( 5,513 )

Accounts payable and accrued liabilities ( 30 )

Total tangible assets acquired and liabilities assumed 1,323

Goodwill 1,798

Net Assets Acquired $ 3,121

Note 5 — Goodwill and Intangible Assets

6 unchanged sentences

Goodwill, as of December 25, 2021 178,424 33,875 212,299

Addition - Woburn Acquisition — 1,798 1,798

Foreign currency translation — ( 1,740 ) ( 1,740 )

Goodwill, as of March 26, 2022 $ 178,424 $ 33,129 $ 211,553

We have no t recorded goodwill impairments for the three months ended March 26, 2022.

Goodwill, as of June 25, 2022 $ 178,424 $ 33,933 $ 212,357

We have no t recorded goodwill impairments for the six months ended June 25, 2022.

Intangible assets were as follows (in thousands):

March 26, 2022 December 25, 2021

June 25, 2022 December 25, 2021

Intangible Assets Gross Accumulated

8 unchanged sentences

Amortization expense was included in our Condensed Consolidated Statements of Income as follows (in thousands):

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Cost of revenues $ 788 $ 5,505 $ 1,596 $ 10,595

17 unchanged sentences

On September 25, 2021, we adopted restructuring plans to improve our business effectiveness and streamline our operations by consolidating certain manufacturing facilities for both the Probe Cards segment and the Systems segment.

This includes plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia.

This included plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia.

As a result of these changes to certain work locations, we have incurred, and expect to incur, personnel related costs to sever, relocate, or retain select employees.

Additionally, we are undertaking actions to adjust capacity for certain product offerings.

As a result of these adjustments, contract termination costs include charges to satisfy contract obligations.

The liability was recognized using our best estimate and it is reasonably possible that the final amount will differ from the amount estimated in the near term.

Additionally, this included plans to adjust capacity for certain product offerings, which resulted in contract termination costs to satisfy contract obligations.

We expect the actions defined under these plans will be largely completed by the end of December 2022, except facilities charges which may extend beyond that time.

These plans are expected to result in FormFactor recording restructuring and other charges in the aggregate amount of approximately $ 5.0 million to $ 8.5 million, estimated to be comprised primarily of $ 1.0 million to $ 2.0 million of severance and employee-related costs, $ 1.5 million to $ 2.5 million in contract and lease termination costs, $ 2.0 million to $ 3.0 million in inventory impairments, and $ 0.5 million to $ 1.0 million of cost related to impairment of leasehold improvements, facility exits, and other costs.

Approximately $ 3.0 million to $ 4.5 million and $ 3.0 million to $ 4.5 million is expected within the Probe Cards segment and Systems segment, respectively.

Approximately $ 2.5 million to $ 4.5 million is expected within each of the Probe Cards and Systems segments, respectively.

The Company has recognized to date restructuring and other charges in the aggregate amount of $ 5.0 million, comprised of $ 1.2 million of severance and employee-related costs, $ 1.5 million in contract and lease termination costs, $ 2.0 million in inventory impairments, and $ 0.3 million of cost related to impairment of leasehold improvements, facility exits and other costs.

Restructuring charges by reportable segment included in our Condensed Consolidated Statements of Income were as follows (in thousands):

Three Months Ended

March 26, 2022

Probe Cards Systems Total

Three Months Ended Six Months Ended

June 25, 2022 June 25, 2022

Probe Cards Systems Total Probe Cards Systems Total

Cost of revenues $ 227 $ 227 $ 454 $ 266 $ 327 $ 593

2 unchanged sentences

$ 227 $ 354 $ 581 $ 269 $ 625 $ 894

Changes to the restructuring accrual in the three months ended March 26, 2022 were as follows (in thousands):

Changes to the restructuring accrual in the six months ended June 25, 2022 were as follows (in thousands):

Employee Severance

6 unchanged sentences

Non-cash settlement — ( 646 ) — ( 709 )

March 26, 2022 $ 890 $ — $ — $ 890

June 25, 2022 $ 592 $ — $ — $ 592

Note 8 — Fair Value and Derivative Instruments

4 unchanged sentences

• Level 3 valuations utilize unobservable inputs to the valuation methodology and include our own data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the three months ended March 26, 2022 or the year ended December 25, 2021.

We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the three and six months ended June 25, 2022 or the year ended December 25, 2021.

The carrying values of Cash, Accounts receivable, net, Restricted cash, Prepaid expenses and other current assets, Accounts payable, Accrued liabilities, and Term loans, net of unamortized issuance costs, approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first three months of fiscal 2022.

No changes were made to our valuation techniques during the first six months of fiscal 2022.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):

March 26, 2022 Level 1 Level 2 Total

June 25, 2022 Level 1 Level 2 Level 3 Total

Cash equivalents:

1 unchanged sentence

Commercial paper — 3,393 — 3,393

agency securities — 2,558 — 2,558

treasuries 1,995 — — 1,995

1 unchanged sentence

Marketable securities:

treasuries 40,039 — 40,039

Certificates of deposit — 951 951

agency securities — 1,939 1,939

Corporate bonds — 64,930 — 64,930

treasuries 35,894 — — 35,894

Commercial paper — 22,480 — 22,480

agency securities — 5,912 — 5,912

Certificates of deposit — 703 — 703

35,894 94,025 — 129,919

Promissory note receivable — — 1,007 1,007

Interest rate swap derivative contracts — 1,990 — 1,990

1 unchanged sentence

Foreign exchange derivative contracts $ — $ ( 1,146 ) $ — $ ( 1,146 )

December 25, 2021 Level 1 Level 2 Total

December 25, 2021 Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 9,526 $ — $ — $ 9,526

agency securities — 5,556 — 5,556

treasuries 2,500 — — 2,500

Commercial paper — 1,000 — 1,000

agency securities — 5,556 5,556

12,026 6,556 — 18,582

Marketable securities:

treasuries 38,985 — 38,985

Certificates of deposit — 1,199 1,199

Corporate bonds — 52,709 — 52,709

treasuries 38,985 — — 38,985

Commercial paper — 32,162 — 32,162

Certificates of deposit — 1,199 — 1,199

38,985 86,070 — 125,055

8 unchanged sentences

We classify our marketable securities as available-for-sale and value them utilizing a market approach.

Our investments are priced by pricing vendors who provide observable inputs for their pricing without applying significant judgment.

Our investments are

priced by pricing vendors who provide observable inputs for their pricing without applying significant judgment.

Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors or when a broker price is more reflective of fair value.

Our broker-priced investments are categorized as Level 2 investments because fair value is

based on similar assets without applying significant judgments.

Our broker-priced investments are categorized as Level 2 investments because fair value is based on similar assets without applying significant judgments.

In addition, all investments have a sufficient trading volume to demonstrate that the fair value is appropriate.

Unrealized gains and losses were immaterial and were recorded as a component of Accumulated other comprehensive income in our Condensed Consolidated Balance Sheets.

Unrealized gains and losses were immaterial and were recorded as a component of Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheets.

We did not have any other-than-temporary unrealized gains or losses at either period end included in these financial statements.

9 unchanged sentences

We do not use derivative financial instruments for speculative or trading purposes.

For accounting purposes, certain of our foreign currency forward contracts are not designated as hedging instruments and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded within Other income, net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses.

For accounting purposes, certain of our foreign currency forward contracts are not designated as hedging instruments and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded within Other income (expense), net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses.

Certain of our foreign currency forward contracts are designated as cash flow hedges, and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded as a component of Accumulated other comprehensive loss and reclassified into earnings in the same period in which the hedged transaction affects earnings, and in the same line item on the Condensed Consolidated Statements of Income as the impact of the hedge transaction.

The fair value of our foreign exchange derivative contracts was determined based on current foreign currency exchange rates and forward points.

All of our foreign exchange derivative contracts outstanding at March 26, 2022 will mature by the first quarter of fiscal 2023.

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2022 (in thousands):

All of our foreign exchange derivative contracts outstanding at June 25, 2022 will mature by the second quarter of fiscal 2023.

The following table provides information about our foreign currency forward contracts outstanding as of June 25, 2022 (in thousands):

Currency Contract Position Contract Amount

1 unchanged sentence

Euro Dollar Buy ( 21,445 ) $ ( 24,117 )

Euro Dollar Sell 2,065 2,269

Japanese Yen Sell 2,247,411 16,633

4 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure and report our non-financial assets such as Property, plant and equipment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition.

Other than as discussed in Note 6, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 26, 2022 or March 27, 2021.

Other than as discussed in Note 4, Acquisition , and Note 7, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended June 25, 2022 or June 26, 2021.

Note 9 — Warranty

7 unchanged sentences

Changes in our warranty liability were as follows (in thousands):

Three Months Ended

2022 March 27,

Six Months Ended

2022 June 26,

Balance at beginning of period $ 2,805 $ 3,918

17 unchanged sentences

Note 11 — Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program

On October 26, 2020, our Board of Directors authorized a program to repurchase up to $ 50 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 three months ended March 26, 2022, we repurchased and retired 240,548 shares of common stock for $ 9.4 million.

Common Stock Repurchase Programs

On October 26, 2020, our Board of Directors authorized a two-year program to repurchase up to $ 50 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation programs.

During fiscal 2021 we repurchased and retired 622,400 shares of common stock for $ 24.0 million.

As of March 26, 2022, $ 16.6 million remained available for future repurchases.

During the six months ended June 25, 2022, we repurchased and retired 676,408 shares of common stock for $ 26.0 million, utilizing the remaining funds available for repurchase.

On May 20, 2022, our Board of Directors authorized an additional program to repurchase up to $ 75 million of outstanding common stock, also with the primary purpose to offset potential dilution from issuances of common stock under our stock-based compensation programs.

The share repurchase program will expire on May 20, 2024.

During the three months ended June 25, 2022, we repurchased and retired 767,083 shares of common stock for $ 28.4 million under the program.

As of June 25, 2022, $ 46.6 million remained available for future repurchases.

Our policy related to repurchases of our common stock is to charge the excess of cost over par value to additional paid-in capital once the shares are retired.

7 unchanged sentences

Awards forfeited ( 51,941 ) 30.23

RSUs at March 26, 2022 2,155,618 28.69

RSUs at June 25, 2022 1,839,865 31.22

Performance Restricted Stock Units

We may grant Performance RSUs (“PRSUs”) to certain executives, which vest based upon us achieving certain market performance criteria.

There were no PRSUs granted during the three months ended March 26, 2022.

There were no PRSUs granted during the six months ended June 25, 2022.

PRSUs are included as part of the RSU activity above.

1 unchanged sentence

Information related to activity under our Employee Stock Purchase Plan (“ESPP”) was as follows:

Three Months Ended

March 26, 2022

Six Months Ended

June 25, 2022

Shares issued 157,642

3 unchanged sentences

Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands):

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Cost of revenues $ 734 $ 1,079 $ 1,812 $ 2,414

3 unchanged sentences

Unrecognized Compensation Costs

At March 26, 2022, the unrecognized stock-based compensation was as follows (dollars in thousands):

At June 25, 2022, the unrecognized stock-based compensation was as follows (dollars in thousands):

Unrecognized Expense Average Expected Recognition Period in Years

5 unchanged sentences

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Weighted-average shares used in computing basic net income per share 77,897 77,463 78,071 77,530

5 unchanged sentences

Contractual Obligations and Commitments

Our contractual obligations and commitments have not materially changed as of March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Our contractual obligations and commitments have not materially changed as of June 25, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.

As of March 26, 2022, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

As of June 25, 2022, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

Note 14 — Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for our corporate headquarters located in Livermore, California.

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for a portion of our corporate headquarters located in Livermore, California.

Our leases have remaining terms of 1 to 7 years, and some leases include options to extend up to 20 years.

1 unchanged sentence

We did not include any of our renewal options in our lease terms for calculating our lease liability as the renewal options allow us to maintain operational flexibility and we are not reasonably certain we will exercise these options at this time.

The weighted-average remaining lease term for our operating leases was 6 years as of March 26, 2022 and the weighted-average discount rate was 3.67 %.

The weighted-average remaining lease term for our operating leases was 6 years as of June 25, 2022 and the weighted-average discount rate was 3.69 %.

The components of lease expense were as follows (in thousands):

Three Months Ended

2022 March 27,

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Lease expense:

3 unchanged sentences

$ 2,936 $ 2,519 $ 5,655 $ 5,216

Future minimum payments under our non-cancelable operating leases were as follows as of March 26, 2022 (in thousands):

Future minimum payments under our non-cancelable operating leases were as follows as of June 25, 2022 (in thousands):

Fiscal Year Amount

8 unchanged sentences

Transaction price allocated to the remaining performance obligations:

On March 26, 2022, we had $ 7.7 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts and contracts with overtime revenue recognition that are not yet delivered.

On June 25, 2022, we had $ 9.7 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts and contracts with overtime revenue recognition that are not yet delivered.

We expect to recognize approximately 66.9 % of our remaining performance obligations as revenue in the remainder of fiscal 2022, approximately 27.7 % in fiscal 2023, and approximately 5.4 % in fiscal 2024 and thereafter.

5 unchanged sentences

A contract asset is recorded when we have performed under the contract but our right to consideration is conditional on something other than the passage of time.

Contract assets as of March 26, 2022 and December 25, 2021 were $ 0.9 million and $ 0.9 million, respectively, and are reported on the Condensed Consolidated Balance Sheets as a component of Prepaid expenses and other current assets.

Contract assets as of June 25, 2022 and December 25, 2021 were $ 2.0 million and $ 0.9 million, respectively, and are reported on the Condensed Consolidated Balance Sheets as a component of Prepaid expenses and other current assets.

Contract liabilities include payments received and payments due in advance of performance under a contract and are satisfied as the associated revenue is recognized.

Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of Deferred revenue and Other liabilities.

Contract liabilities as of March 26, 2022 and December 25, 2021 were $ 28.0 million and $ 24.2 million, respectively.

During the three months ended March 26, 2022, we recognized $ 11.0 million of revenue that was included in contract liabilities as of December 25, 2021.

Contract liabilities as of June 25, 2022 and December 25, 2021 were $ 32.2 million and $ 24.2 million, respectively.

During the six months ended June 25, 2022, we recognized $ 16.5 million of revenue that was included in contract liabilities as of December 25, 2021.

Costs to obtain a contract:

8 unchanged sentences

Three Months Ended

March 26, 2022 March 27, 2021

June 25, 2022 June 26, 2021

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

2 unchanged sentences

Gross margin 46.8 % 50.5 % 46.3 % 43.3 % 49.1 % 40.6 %

Six Months Ended

June 25, 2022 June 26, 2021

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

Revenues $ 327,691 $ 73,390 $ — $ 401,081 $ 312,539 $ 62,173 $ — $ 374,712

Gross profit $ 155,622 $ 37,683 $ ( 4,712 ) $ 188,593 $ 136,915 $ 30,506 $ ( 14,432 ) $ 152,989

Gross margin 47.5 % 51.3 % 47.0 % 43.8 % 49.1 % 40.8 %

Operating results provide useful information to our management for assessment of our performance and results of operations.

3 unchanged sentences

Three Months Ended

March 26, 2022 March 27, 2021

June 25, 2022 June 26, 2021

Probe Cards Systems Total Probe Cards Systems Total

11 unchanged sentences

China 40,578 9,157 49,735 23,996 7,831 31,827

United States 21,539 9,703 31,242 24,174 8,476 32,650

South Korea 27,418 1,337 28,755 35,426 751 36,177

Malaysia 16,157 87 16,244 3,034 161 3,195

United States 19,976 5,671 25,647 21,308 8,178 29,486

Japan 6,716 3,221 9,937 3,477 4,227 7,704

Europe 3,824 4,267 8,091 6,466 5,544 12,010

Singapore 5,131 1,977 7,108 8,602 1,360 9,962

Rest of the world 1,157 1,618 2,775 1,729 938 2,667

Total $ 167,708 $ 36,199 $ 203,907 $ 153,641 $ 34,435 $ 188,076

Six Months Ended

June 25, 2022 June 26, 2021

Probe Cards Systems Total Probe Cards Systems Total

Foundry & Logic $ 236,501 $ — $ 236,501 $ 217,136 $ — $ 217,136

DRAM 71,280 — 71,280 75,986 — 75,986

Flash 19,910 — 19,910 19,417 — 19,417

Systems — 73,390 73,390 — 62,173 62,173

Total $ 327,691 $ 73,390 $ 401,081 $ 312,539 $ 62,173 $ 374,712

Timing of revenue recognition:

Products transferred at a point in time $ 325,537 $ 68,497 $ 394,034 $ 311,605 $ 55,555 $ 367,160

Products and services transferred over time 2,154 4,893 7,047 934 6,618 7,552

Total $ 327,691 $ 73,390 $ 401,081 $ 312,539 $ 62,173 $ 374,712

Geographical region:

Taiwan $ 87,710 $ 15,379 $ 103,089 $ 91,471 $ 5,993 $ 97,464

China 73,369 14,765 88,134 61,827 12,625 74,452

United States 41,515 15,374 56,889 45,482 16,654 62,136

South Korea 52,299 3,957 56,256 53,427 1,835 55,262

Malaysia 37,674 769 38,443 22,922 203 23,125

Japan 11,501 7,818 19,319 8,726 8,299 17,025

Singapore 15,415 2,589 18,004 16,229 2,291 18,520

Europe 6,206 10,280 16,486 9,299 12,710 22,009

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements