What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-02 · 148 added, 124 removed, 516 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 24,

2022 December 25,

42 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Revenues $ 180,869 $ 189,964 $ 581,950 $ 564,676

8 unchanged sentences

Interest expense ( 152 ) ( 151 ) ( 463 ) ( 447 )

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

Other income, net 1,041 58 1,784 36

Income before income taxes 5,625 23,281 73,325 66,300

11 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Net income $ 4,351 $ 20,497 $ 64,465 $ 58,027

Other comprehensive income (loss), net of tax:

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

Other comprehensive loss, net of tax:

Translation adjustments ( 7,348 ) ( 1,511 ) ( 13,902 ) ( 3,258 )

Unrealized losses on available-for-sale marketable securities ( 674 ) ( 62 ) ( 2,425 ) ( 290 )

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

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

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

Unrealized losses on derivative instruments ( 881 ) ( 323 ) ( 123 ) ( 638 )

Other comprehensive loss, net of tax:

( 8,903 ) ( 1,896 ) ( 16,450 ) ( 4,186 )

Comprehensive income (loss) $ ( 4,552 ) $ 18,601 $ 48,015 $ 53,841

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

7 unchanged sentences

Deficit Total

Six Months Ended June 25, 2022

Nine Months Ended September 24, 2022

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

6 unchanged sentences

Net income — — — — 64,465 64,465

Balances, September 24, 2022 77,265,099 $ 77 $ 843,453 $ ( 17,899 ) $ ( 17,329 ) $ 808,302

Three Months Ended September 24, 2022

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 under the Employee Stock Purchase Plan 159,219 — 4,812 — — 4,812

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 479,478 1 ( 11,321 ) — — ( 11,320 )

3 unchanged sentences

Net income — — — — 4,351 4,351

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

Balances, September 24, 2022 77,265,099 $ 77 $ 843,453 $ ( 17,899 ) $ ( 17,329 ) $ 808,302

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

2 unchanged sentences

(In thousands, except shares)

Stock Shares of

Stock Treasury

Stock Additional

3 unchanged sentences

Deficit Total

Six Months Ended June 26, 2021

Nine Months Ended September 25, 2021

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

6 unchanged sentences

Net income — — — — 58,027 58,027

Balances, September 25, 2021 78,207,219 $ 78 $ 892,303 $ 1,700 $ ( 107,691 ) $ 786,390

Three Months Ended September 25, 2021

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 under the Employee Stock Purchase Plan 149,800 — 4,744 — — 4,744

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 602,619 1 ( 14,341 ) — — ( 14,340 )

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

Stock-based compensation — — 7,838 — — 7,838

1 unchanged sentence

Net income — — — — 20,497 20,497

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

Balances, September 25, 2021 78,207,219 $ 78 $ 892,303 $ 1,700 $ ( 107,691 ) $ 786,390

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

2 unchanged sentences

(In thousands)

Six Months Ended

2022 June 26,

Nine Months Ended

September 24,

2022 September 25,

Cash flows from operating activities:

5 unchanged sentences

Stock-based compensation expense 21,873 21,585

Deferred income tax benefit ( 6,881 ) ( 873 )

Provision for excess and obsolete inventories 16,078 11,621

35 unchanged sentences

(In thousands)

Six Months Ended

2022 June 26,

Nine Months Ended

September 24,

2022 September 25,

Non-cash investing and financing activities:

Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases $ ( 4,165 ) $ 2,906

Increase in accounts payable and accrued liabilities related to property, plant and equipment purchases $ 341 $ 4,684

Increase in accrued liabilities related to tax withholdings related to net share settlements of equity awards — 6,952

Operating lease, right-of-use assets obtained in exchange for lease obligations 3,457 11,699

19 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 six months ended June 25, 2022 and June 26, 2021 each contained 26 weeks.

Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the nine months ended September 24, 2022 and September 25, 2021 each contained 39 weeks.

Fiscal 2022 will end on December 31, 2022.

Significant Accounting Policies

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.

Our significant accounting policies have not changed during the nine months ended September 24, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Reclassifications

1 unchanged sentence

New Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, “Referenced Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform.

ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modifications made on or before December 31, 2022.

ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively for contract modifications made on or before December 31, 2022.

The Company has not yet applied the relief afforded by these standard amendments and is currently assessing contracts that will require modification due to reference rate reform to which these standard amendments may be applied.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

5 unchanged sentences

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

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Intel Corporation 17.0 % 20.8 % 19.7 % 21.7 %

SK Hynix Inc.

Samsung Electronics., LTD.

Taiwan Semiconductor Manufacturing Co., LTD.

* 12.9 % * 10.5 %

27.7 % 33.7 % 19.7 % 32.2 %

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

At September 24, 2022, one customer accounted for 18.1 % of gross accounts receivable.

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

2 unchanged sentences

Inventories, net, consisted of the following (in thousands):

September 24,

2022 December 25,

7 unchanged sentences

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):

The acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date of the acquisition based upon their respective fair values.

The fair values assigned to assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.

Goodwill represents the excess of purchase price over the fair value assigned to the assets acquired and liabilities assumed and is allocated to the HPD reporting unit within the Systems reportable segment.

The identified intangible asset, developed technology, has a useful life of three years.

Our purchase accounting remains open as of the reporting date, with the purchase price preliminarily allocated to acquired assets and liabilities assumed that are subject to change as more information becomes available.

The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of inventories, developed technology intangible asset, and residual goodwill.

The preliminary fair value of assets acquired, including goodwill and intangibles, and liabilities assumed for the purchase as follows (in thousands):

Accounts receivable $ 178

7 unchanged sentences

Total tangible assets acquired and liabilities assumed 2,300

Goodwill 1,798

Developed technology intangible asset 500

Net assets acquired $ 3,350

10 unchanged sentences

Goodwill, as of June 25, 2022 $ 178,424 $ 30,681 $ 209,105

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

We have no t recorded goodwill impairments for the nine months ended September 24, 2022.

Intangible assets were as follows (in thousands):

June 25, 2022 December 25, 2021

September 24, 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 Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Cost of revenues $ 824 $ 858 $ 2,420 $ 11,453

7 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

September 24,

2022 December 25,

9 unchanged sentences

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

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

Additionally, this included plans to adjust capacity for certain product offerings, which resulted in contract termination costs and receipt of inventories ultimately deemed to be impaired 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 $ 10.5 million to $ 12.6 million, estimated to be comprised primarily of $ 1.0 million to $ 1.2 million of severance and employee-related costs, $ 1.5 million to $ 1.9 million in contract and lease termination costs, $ 7.5 million to $ 8.5 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 $ 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.

Approximately $ 8.7 million to $ 9.7 million is expected within the Probe Cards segment and $ 1.8 million to $ 2.9 million is expected within the Systems segments.

The Company has recognized restructuring and other charges to date in the aggregate amount of $ 11.2 million, comprised of $ 1.2 million of severance and employee-related costs, $ 1.5 million in contract and lease termination costs, $ 8.0 million in inventory impairments, and $ 0.6 million of cost related to impairment of leasehold improvements, facility exits and other costs.

During the three months ended September 24, 2022 we reassessed the estimate for excess inventory received to satisfy our contract obligations from our adjustment of certain product offerings.

As a result of receiving additional clarity regarding future customer demand, we recorded an additional $ 5.9 million inventory impairment not included in our original estimate of restructuring charges.

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

Three Months Ended Six Months Ended

June 25, 2022 June 25, 2022

Three Months Ended

September 24, 2022 September 25, 2021

Probe Cards Systems Total Probe Cards Systems Total

3 unchanged sentences

$ 5,966 $ 208 $ 6,174 $ 4,070 $ 563 $ 4,633

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

Nine Months Ended

September 24, 2022 September 25, 2021

Probe Cards Systems Total Probe Cards Systems Total

Cost of revenues $ 6,194 $ 459 $ 6,653 $ 4,070 $ 420 $ 4,490

Research and development 38 228 266 — 694 694

Selling, general and administrative 3 146 149 — 83 83

$ 6,235 $ 833 $ 7,068 $ 4,070 $ 1,197 $ 5,267

Changes to the restructuring accrual in the nine months ended September 24, 2022 were as follows (in thousands):

Employee Severance

and Benefits Inventory

Impairments Contract

Impairments Property and Equipment Impairments and Move Costs Contract

Termination Costs Total

3 unchanged sentences

Non-cash settlement — ( 6,549 ) ( 64 ) — ( 6,613 )

June 25, 2022 $ 592 $ — $ — $ 592

September 24, 2022 $ — $ — $ — $ — $ —

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 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 six months of fiscal 2022.

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 nine months ended September 24, 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, and Accrued liabilities approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first nine 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):

June 25, 2022 Level 1 Level 2 Level 3 Total

September 24, 2022 Level 1 Level 2 Level 3 Total

Cash equivalents:

1 unchanged sentence

Commercial paper — 1,398 — 1,398

agency securities — 2,558 — 2,558

treasuries 1,995 — — 1,995

Corporate bonds — 2,995 — 2,995

27,581 4,393 — 31,974

32 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.

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 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.

12 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 (expense), 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, 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 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):

All of our foreign exchange derivative contracts outstanding at September 24, 2022 will mature by the third quarter of fiscal 2023.

The following table provides information about our foreign currency forward contracts outstanding as of September 24, 2022 (in thousands):

Currency Contract Position Contract Amount

7 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

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.

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 nine months ended September 24, 2022 or September 25, 2021.

Note 9 — Warranty

7 unchanged sentences

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

Six Months Ended

2022 June 26,

Nine Months Ended

September 24,

2022 September 25,

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

4 unchanged sentences

Property, plant and equipment, net consisted of the following (in thousands):

September 24,

2022 December 25,

14 unchanged sentences

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

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.

During the nine months ended September 24, 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.

During the nine months ended September 24, 2022, we repurchased and retired 1,335,414 shares of common stock for $ 47.5 million under the program.

As of September 24, 2022, $ 27.5 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 ( 66,279 ) 31.07

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

RSUs at September 24, 2022 2,305,151 35.27

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 six months ended June 25, 2022.

On August 1, 2022, we granted 204,903 PRSUs to certain senior executives for a total grant date fair value of $ 8.6 million which will be recognized ratably over the requisite service period.

The performance criteria are based on Total Shareholder Returns (“TSR”) for the period of July 1, 2022 - June 30, 2025, relative to the TSR of the companies identified as being part of the S&P Semiconductors Select Industry Index (FormFactor peer companies) as of the grant date.

Of the 273,000 PRSUs granted in fiscal 2019, 36,000 shares were forfeited, resulting in 237,000 shares vesting in 2022.

These shares achieved 147 % TSR performance, which resulted in an additional 110,605 shares issued in fiscal 2022 related to the fiscal 2019 PRSU grant.

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:

Six Months Ended

June 25, 2022

Nine Months Ended

September 24, 2022

Shares issued 316,861

3 unchanged sentences

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

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Cost of revenues $ 1,022 $ 1,392 $ 2,834 $ 3,806

3 unchanged sentences

Unrecognized Compensation Costs

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

At September 24, 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 Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Weighted-average shares used in computing basic net income per share 77,245 77,869 77,796 77,643

5 unchanged sentences

Contractual Obligations and Commitments

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.

Our contractual obligations and commitments have not materially changed as of September 24, 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 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.

As of September 24, 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

3 unchanged sentences

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 June 25, 2022 and the weighted-average discount rate was 3.69 %.

The weighted-average remaining lease term for our operating leases was 5 years as of September 24, 2022 and the weighted-average discount rate was 3.75 %.

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

Three Months Ended Six Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Three Months Ended Nine Months Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Lease expense:

3 unchanged sentences

$ 2,843 $ 2,679 $ 8,498 $ 7,895

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

Future minimum payments under our non-cancelable operating leases were as follows as of September 24, 2022 (in thousands):

Fiscal Year Amount

8 unchanged sentences

Transaction price allocated to the remaining performance obligations:

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.

On September 24, 2022, we had $ 8.3 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 40.0 % of our remaining performance obligations as revenue in the remainder of fiscal 2022, approximately 49.8 % in fiscal 2023, and approximately 10.2 % 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 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 assets as of September 24, 2022 and December 25, 2021 were $ 3.0 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 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.

Contract liabilities as of September 24, 2022 and December 25, 2021 were $ 33.1 million and $ 24.2 million, respectively.

During the nine months ended September 24, 2022, we recognized $ 19.0 million of revenue that was included in contract liabilities as of December 25, 2021.

Costs to obtain a contract:

4 unchanged sentences

Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.

We operate in two reportable segments consisting

of the Probe Cards segment and the Systems segment.

We operate in two reportable segments consisting of the Probe Cards segment and the Systems segment.

The following table summarizes the operating results by reportable segment (dollars in thousands):

Three Months Ended

June 25, 2022 June 26, 2021

September 24, 2022 September 25, 2021

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

2 unchanged sentences

Gross margin 34.6 % 53.7 % 34.4 % 45.1 % 50.0 % 42.2 %

Six Months Ended

June 25, 2022 June 26, 2021

Nine Months Ended

September 24, 2022 September 25, 2021

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

7 unchanged sentences

Three Months Ended

June 25, 2022 June 26, 2021

September 24, 2022 September 25, 2021

Probe Cards Systems Total Probe Cards Systems Total

9 unchanged sentences

Geographical region:

United States $ 25,909 $ 12,180 $ 38,089 $ 18,530 $ 6,938 $ 25,468

Taiwan 32,227 4,611 36,838 34,100 7,474 41,574

China 27,973 8,755 36,728 46,011 5,036 51,047

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

South Korea 28,118 819 28,937 27,895 1,077 28,972

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

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

Europe 3,682 8,116 11,798 3,595 6,891 10,486

Singapore 7,983 2,374 10,357 6,841 711 7,552

Japan 4,533 3,159 7,692 5,767 4,961 10,728

Malaysia 6,272 237 6,509 11,353 280 11,633

Rest of the world 2,668 1,253 3,921 758 1,746 2,504

Total $ 139,365 $ 41,504 $ 180,869 $ 154,850 $ 35,114 $ 189,964

Six Months Ended

June 25, 2022 June 26, 2021

Nine Months Ended

September 24, 2022 September 25, 2021

Probe Cards Systems Total Probe Cards Systems Total

14 unchanged sentences

Malaysia 43,946 1,006 44,952 34,275 483 34,758

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

Singapore 23,398 4,963 28,361 23,070 3,002 26,072

Europe 9,888 18,396 28,284 12,894 19,601 32,495

Japan 16,034 10,977 27,011 14,493 13,260 27,753

Rest of the world 4,670 3,712 8,382 3,914 3,309 7,223

Total $ 467,056 $ 114,894 $ 581,950 $ 467,389 $ 97,287 $ 564,676

Note 17 — Subsequent Events

On October 25, 2022, we adopted a restructuring plan to align our cost structure with reduced demand levels within the Probe Cards segment by streamlining and improving the efficiency and business effectiveness of our operations.

The plan includes lowering headcount by approximately 13 % of our workforce, which is expected to result in recognizing restructuring charges of approximately $ 6.6 million in cash, consisting of severance and employee-related costs.

We expect the actions defined under this plan will be largely completed by the end of the fourth quarter of fiscal 2022.

Upon completion, this action is expected to reduce our cost structure by approximately $ 25 to $ 30 million on an annualized basis.

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