What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 164 added, 101 removed, 518 unchanged (34% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2023 December 31,

6 unchanged sentences

Restricted cash 1,171 1,221

Assets held-for-sale 33,718 —

Prepaid expenses and other current assets 26,681 23,895

14 unchanged sentences

Deferred revenue 13,855 29,846

Liabilities held-for-sale 8,521 —

Operating lease liabilities 8,007 7,353

19 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Revenues $ 171,575 $ 180,869 $ 494,939 $ 581,950

5 unchanged sentences

Total operating expenses 66,578 58,186 189,160 179,949

Operating income (loss) ( 1,312 ) 32,646 ( 1,221 ) 66,830

Operating income 2,707 4,027 1,486 70,857

Interest income, net 1,662 557 4,420 684

1 unchanged sentence

Income before income taxes 5,157 5,625 7,167 73,325

Provision (benefit) for income taxes ( 208 ) 3,136 ( 160 ) 7,586

Provision for income taxes 786 1,274 626 8,860

Net income $ 4,371 $ 4,351 $ 6,541 $ 64,465

9 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Net income $ 4,371 $ 4,351 $ 6,541 $ 64,465

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Translation adjustments ( 3,351 ) ( 7,348 ) ( 2,641 ) ( 13,902 )

Unrealized gains (losses) on available-for-sale marketable securities 283 ( 674 ) 801 ( 2,425 )

Unrealized gains (losses) on derivative instruments ( 52 ) ( 116 ) ( 95 ) 758

Other comprehensive income (loss), net of tax:

Unrealized losses on derivative instruments ( 996 ) ( 881 ) ( 1,091 ) ( 123 )

Other comprehensive loss, net of tax:

( 4,064 ) ( 8,903 ) ( 2,931 ) ( 16,450 )

Comprehensive income $ 569 $ 25,723 $ 3,303 $ 52,567

Comprehensive income (loss) $ 307 $ ( 4,552 ) $ 3,610 $ 48,015

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

7 unchanged sentences

Deficit Total

Six Months Ended July 1, 2023

Nine Months Ended September 30, 2023

Balances, December 31, 2022 76,914,590 $ 77 $ 844,842 $ ( 5,578 ) $ ( 31,056 ) $ 808,285

2 unchanged sentences

Stock-based compensation — — 29,320 — — 29,320

Other comprehensive income — — — 1,133 — 1,133

Other comprehensive loss — — — ( 2,931 ) — ( 2,931 )

Net income — — — — 6,541 6,541

Balances, September 30, 2023 77,839,317 $ 78 $ 873,634 $ ( 8,509 ) $ ( 24,515 ) $ 840,688

Three Months Ended September 30, 2023

Balances, July 1, 2023 77,184,012 $ 77 $ 867,517 $ ( 4,445 ) $ ( 28,886 ) $ 834,263

Three Months Ended July 1, 2023

Balances, April 1, 2023 77,142,023 $ 77 $ 858,195 $ ( 4,186 ) $ ( 29,714 ) $ 824,372

Issuance of common stock under the Employee Stock Purchase Plan 153,135 — 3,798 — — 3,798

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 502,170 1 ( 8,894 ) — — ( 8,893 )

2 unchanged sentences

Net income — — — — 4,371 4,371

Balances, July 1, 2023 77,184,012 $ 77 $ 867,517 $ ( 4,445 ) $ ( 28,886 ) $ 834,263

Six Months Ended June 25, 2022

Balances, September 30, 2023 77,839,317 $ 78 $ 873,634 $ ( 8,509 ) $ ( 24,515 ) $ 840,688

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)

Six Months Ended

2023 June 25,

Nine Months Ended

September 30,

2023 September 24,

Cash flows from operating activities:

32 unchanged sentences

Principal repayments on term loans ( 781 ) ( 6,421 )

Net cash provided by (used in) financing activities 4,049 ( 57,263 )

Net cash used in financing activities ( 1,308 ) ( 84,964 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 3,324 ) ( 5,708 )

Net decrease in cash, cash equivalents and restricted cash ( 11,592 ) ( 15,043 )

Net increase (decrease) in cash, cash equivalents and restricted cash 726 ( 31,637 )

Cash, cash equivalents and restricted cash, beginning of period 112,982 155,342

4 unchanged sentences

(In thousands)

Six Months Ended

2023 June 25,

Nine Months Ended

September 30,

2023 September 24,

Non-cash investing and financing activities:

Decrease in accounts payable and accrued liabilities related to property, plant and equipment purchases $ 9,187 $ 4,165

Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases $ ( 6,222 ) $ 341

Operating lease, right-of-use assets obtained in exchange for lease obligations 4,728 3,457

7 unchanged sentences

Restricted cash, non-current 2,146 1,840

Cash and cash equivalents included in Assets held-for-sale 1,660 —

Total cash, cash equivalents and restricted cash $ 113,708 $ 123,705

10 unchanged sentences

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

Fiscal 2023 and 2022 contain 52 weeks and 53 weeks, respectively, and the six months ended July 1, 2023 and June 25, 2022 each contained 26 weeks.

Fiscal 2023 and 2022 contain 52 weeks and 53 weeks, respectively, and the nine months ended September 30, 2023 and September 24, 2022 each contained 39 weeks.

Fiscal 2023 will end on December 30, 2023.

Significant Accounting Policies

Our significant accounting policies have not changed during the six months ended July 1, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except for:

Our significant accounting policies have not changed during the nine months ended September 30, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except for:

Government Assistance

3 unchanged sentences

The Grant is included in our Condensed Consolidated Balance Sheets within Deferred grant and we have elected to recognize the Grant when earned as an offset to Cost of revenues and Operating expenses within our Condensed Consolidated Statements of Income.

We have elected to present the proceeds from the Grant as cash provided by operating activities within our Condensed Consolidated Statements of Cash Flows as the Grant is to offset operations.

We have presented the proceeds from the Grant as cash provided by operating activities within our Condensed Consolidated Statements of Cash Flows as the Grant is to offset operations.

New Accounting Pronouncements

11 unchanged sentences

Note 2 — Concentration of Credit and Other Risks

The following customer accounted for 10 % or more of our revenues for the periods indicated:

Three Months Ended Six Months Ended

2023 June 25,

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

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Intel Corporation 17.1 % 17.0 % 17.2 % 19.7 %

At July 1, 2023 and December 31, 2022, one customer accounted for 15.3 % and 13.8 % of gross accounts receivable, respectively.

Samsung Electronics., LTD.

SK Hynix Inc.

28.3 % 27.7 % 17.2 % 19.7 %

At September 30, 2023 and December 31, 2022, one customer accounted for 23.5 % and 13.8 % of gross accounts receivable, respectively.

Note 3 — Inventories, net

1 unchanged sentence

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

September 30,

2023 December 31,

3 unchanged sentences

$ 111,626 $ 123,157

Note 4 — Assets Held-For-Sale Divestiture

On September 18, 2023, the Company announced entry into a definitive agreement to sell its FRT Metrology (“FRT”) business to Camtek Ltd.

(“Camtek”) for $ 100 million in cash, subject to customary purchase price adjustments.

The Company acquired FRT in fiscal 2019 for total consideration of $ 24.4 million, net of cash acquired.

Headquartered in Bergisch Gladbach, Germany, FRT is a leading supplier of high-precision metrology solutions for the Advanced Packaging and Silicon Carbide markets, and is part of our Systems segment.

The related assets and liabilities have been classified as held-for-sale in the Company’s consolidated balance sheet and measured at the lower of their carrying amount or fair value less cost to sell.

We did not record an impairment from this event.

The planned disposition of the FRT business did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements since the disposition did not represent a strategic shift that had, or will have, a major effect on the Company’s operations and financial results.

The components of held-for-sale assets and liabilities at September 30, 2023 were as follows (in thousands):

Assets held-for-sale

Accounts receivable, net of allowance for credit losses $ 5,491

Inventories, net 7,092

Other current assets 2,131

Intangibles, net 7,069

Goodwill 10,668

Other assets 1,267

Total assets held-for-sale $ 33,718

Liabilities held-for-sale

Current liabilities $ 6,045

Other liabilities 2,476

Total liabilities held-for-sale $ 8,521

On November 1, 2023, we closed on the sale of FRT to Camtek and received cash proceeds of $ 103.8 million after preliminary adjustments with respect to cash, indebtedness, and working capital.

Note 5 — Goodwill and Intangible Assets

5 unchanged sentences

Goodwill, as of December 31, 2022 178,424 33,020 211,444

Reclassification - Assets held-for-sale — ( 10,668 ) ( 10,668 )

Foreign currency translation — ( 291 ) ( 291 )

Goodwill, as of July 1, 2023 $ 178,424 $ 33,505 $ 211,929

We have no t recorded goodwill impairments for the six months ended July 1, 2023.

Goodwill, as of September 30, 2023 $ 178,424 $ 22,061 $ 200,485

We have no t recorded goodwill impairments for the nine months ended September 30, 2023.

Intangible assets were as follows (in thousands):

July 1, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Intangible Assets Gross Accumulated

6 unchanged sentences

$ 215,146 $ 201,568 $ 13,578 $ 230,725 $ 203,974 $ 26,751

In the current quarter, $ 7.1 million of net Intangible assets were reclassified to Assets held-for-sale as described in Note 4 , Assets Held-For-Sale Divestiture.

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

Three Months Ended Six Months Ended

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Cost of revenues $ 837 $ 824 $ 2,506 $ 2,420

7 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

September 30,

2023 December 31,

Accrued compensation and benefits $ 22,684 $ 15,864

Accrued warranty 4,984 4,199

Employee stock purchase plan contributions withheld 1,576 4,585

Accrued income and other taxes 2,761 12,817

Accrued warranty 3,506 4,199

Accrued restructuring charges 29 1,249

4 unchanged sentences

The proceeds of the Building Term Loan were used to purchase a building adjacent to our leased facilities in Livermore, California.

On May 19, 2023, we amended the Building Term Loan, replacing the benchmark reference rate LIBOR with the term SOFR, with no change to the amount or timing of contractual cash flows.

On May 19, 2023, we amended the Building Term Loan, replacing the benchmark reference rate LIBOR with SOFR, with no change to the amount or timing of contractual cash flows.

The Building Term Loan bears interest at a rate equal to the applicable SOFR rate, plus 0.1148 %, plus 1.75 % per annum.

Interest payments are payable in monthly installments over a fifteen-year period.

The interest rate at July 1, 2023 was 5.17 %.

The interest rate at September 30, 2023 was 7.19 %.

On March 17, 2020, we entered into an interest rate swap agreement with Union Bank to hedge the interest payment on the Building Term Loan for the notional amount of $ 18.0 million.

1 unchanged sentence

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 %.

This agreement was amended on May 19, 2023 to replace the benchmark reference rate LIBOR with the term SOFR to match the Building Term Loan agreement (as amended).

This agreement was amended on May 19, 2023 to replace the benchmark reference rate LIBOR with SOFR to match the Building Term Loan agreement (as amended).

After the amendment, the interest rate swap continues to convert our floating-rate interest into a fixed-rate at 2.75 %.

10 unchanged sentences

Additionally, as part of these plans we have undertaken actions to adjust capacity for certain product offerings, which included contract termination costs to satisfy contract obligations.

The Company has recognized 2021 restructuring plans charges of approximately $ 13.3 million, with $ 10.1 million within the Probe Cards segment and $ 3.2 million within the Systems segment, which were comprised of $ 1.4 million of severance and employee-related costs, $ 2.0 million in contract and lease termination costs, $ 9.4 million in inventory impairments and other inventory related costs, and $ 0.5 million of cost related to impairment of leasehold improvements, facility exits and fixed asset related costs.

The Company has recognized 2021 restructuring plans charges of approximately $ 13.3 million, with $ 10.1 million within the Probe Cards segment and $ 3.2 million within the Systems segment, which were comprised of $ 1.4 million of severance and employee-related costs, $ 2.0 million in contract and lease termination costs, $ 9.4 million in inventory impairments and other inventory related costs, and $ 0.5 million of costs related to impairment of leasehold improvements, facility exits and fixed asset related costs.

We do not expect additional material costs related to the 2021 restructuring plan.

1 unchanged sentence

Three Months Ended

July 1, 2023 June 25, 2022

September 30, 2023 September 24, 2022

Probe Cards Systems Total Probe Cards Systems Total

3 unchanged sentences

$ — $ — $ — $ 5,966 $ 208 $ 6,174

Six Months Ended

July 1, 2023 June 25, 2022

Nine Months Ended

September 30, 2023 September 24, 2022

Probe Cards Systems Total Probe Cards Systems Total

3 unchanged sentences

$ 1,357 $ 478 $ 1,835 $ 6,235 $ 833 $ 7,068

Changes to the restructuring accrual in the six months ended July 1, 2023 were as follows (in thousands):

Changes to the restructuring accrual in the nine months ended September 30, 2023 were as follows (in thousands):

Employee Severance

9 unchanged sentences

Non-cash settlement — ( 295 ) ( 301 ) — ( 596 )

July 1, 2023 $ 207 $ — $ — $ — $ 207

September 30, 2023 $ 29 $ — $ — $ — $ 29

Note 9 — 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 July 1, 2023 or the year ended December 31, 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 30, 2023 or the year ended December 31, 2022.

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 six months of fiscal 2023.

No changes were made to our valuation techniques during the first nine months of fiscal 2023.

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):

July 1, 2023 Level 1 Level 2 Level 3 Total

September 30, 2023 Level 1 Level 2 Level 3 Total

Cash equivalents:

1 unchanged sentence

treasuries 2,290 — — 2,290

Commercial paper — 1,790 — 1,790

29,226 1,790 — 31,016

6 unchanged sentences

46,403 89,290 — 135,693

Foreign exchange derivative contracts — 549 — 549

Promissory note receivable — — 922 922

Interest rate swap derivative contracts — 2,263 — 2,263

Interest rate swap derivative contract — 2,536 — 2,536

Total assets $ 75,629 $ 93,616 $ 922 $ 170,167

16 unchanged sentences

Promissory note receivable — — 943 943

Interest rate swap derivative contracts — 2,374 — 2,374

Interest rate swap derivative contract — 2,374 — 2,374

Total assets $ 46,298 $ 112,990 $ 943 $ 160,231

12 unchanged sentences

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

Interest Rate Swaps

The fair value of our interest rate swap contracts is determined at the end of each reporting period based on valuation models that use interest rate yield curves as inputs.

For accounting purposes, our interest rate swap contracts qualify for, and are designated as, cash flow hedges.

Interest Rate Swap

The fair value of our interest rate swap contract is determined at the end of each reporting period based on valuation models that use interest rate yield curves as inputs.

For accounting purposes, our interest rate swap contract qualifies for, and is designated as a cash flow hedge.

The hedged risk is the interest rate exposure to changes in interest payments attributable to changes in our variable-rate interest over the interest rate swap term.

The changes in cash flows of the interest rate swap are expected to exactly offset changes in cash flows of the variable-rate debt.

Cash settlements, in the form of cash payments or cash receipts, of the interest rate swap, in the form of cash payments or cash receipts, are recognized as a component of interest expense.

The cash flows associated with the interest rate swaps are reported in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows and the fair value of the interest rate swap contracts are recorded within Prepaid expenses and other current assets and Other assets in our Condensed Consolidated Balance Sheets.

8 unchanged sentences

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 July 1, 2023 will mature by the second quarter of fiscal 2024.

The following table provides information about our foreign currency forward contracts outstanding as of July 1, 2023 (in thousands):

All of our foreign exchange derivative contracts outstanding at September 30, 2023 will mature by the third quarter of fiscal 2024.

The following table provides information about our foreign currency forward contracts outstanding as of September 30, 2023 (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 7, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended July 1, 2023 or June 25, 2022.

Other than as discussed in Note 8, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2023 or September 24, 2022.

Note 10 — Warranty

7 unchanged sentences

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

Six Months Ended

2023 June 25,

Nine Months Ended

September 30,

2023 September 24,

Balance at beginning of period $ 4,199 $ 2,805

1 unchanged sentence

Settlements ( 5,535 ) ( 4,652 )

Reclassification - Liabilities held-for-sale ( 106 ) —

Balance at end of period $ 4,984 $ 3,806

1 unchanged sentence

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

September 30,

2023 December 31,

10 unchanged sentences

Total $ 203,510 $ 189,848

In the current quarter, $ 0.9 million of net Property, plant and equipment were reclassified to Assets held-for-sale as described in Note 4 , Assets Held-For-Sale Divestiture.

Note 12 — Stockholders’ Equity and Stock-Based Compensation

1 unchanged sentence

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 the six months ended June 25, 2022, we repurchased 676,408 shares of common stock for $ 26.0 million.

During the nine months ended September 24, 2022, we repurchased 676,408 shares of common stock for $ 26.0 million.

We utilized the remaining funds available for repurchase under this program during fiscal 2022.

1 unchanged sentence

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

During the six months ended July 1, 2023, we did no t repurchase any common stock.

As of July 1, 2023, $ 18.6 million remained available for future repurchases.

During the nine months ended September 30, 2023, we did no t repurchase any common stock.

As of September 30, 2023, $ 18.6 million remained available for future repurchases.

On October 30, 2023, our Board of Directors authorized a new two -year program to repurchase up to $ 75 million of outstanding common stock to offset potential dilution from issuance of common stock under our stock-based compensation programs

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.

The net share repurchases are subject to a 1% excise tax under the Inflation Reduction Act.

The excise tax incurred reduces the amount available under the repurchase programs, as applicable, and is included in the cost of shares repurchased in the Condensed Consolidated Statement of Stockholders Equity.

All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

6 unchanged sentences

Awards forfeited ( 336,753 ) 30.14

RSUs at July 1, 2023 3,043,675 33.78

RSUs at September 30, 2023 2,462,494 35.74

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 market based PRSUs granted during the six months ended July 1, 2023.

On August 7, 2023, we granted 172,680 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, 2023 - June 30, 2026, 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 258,600 PRSUs granted in fiscal 2020, no ne of the 191,400 outstanding PRSU awards vested in 2023, at the end of the requisite service period, as the TSR performance was not met.

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

Nine Months Ended

September 30, 2023

Shares issued 363,190

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

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Cost of revenues $ 1,376 $ 1,022 $ 4,801 $ 2,834

3 unchanged sentences

Unrecognized Compensation Costs

At July 1, 2023, the unrecognized stock-based compensation was as follows (dollars in thousands):

At September 30, 2023, the unrecognized stock-based compensation was as follows (dollars in thousands):

Unrecognized Expense Average Expected

6 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

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Weighted-average shares used in computing basic net income per share 77,571 77,245 77,265 77,796

5 unchanged sentences

Contractual Obligations and Commitments

Our contractual obligations and commitments have not materially changed as of July 1, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Our contractual obligations and commitments have not materially changed as of September 30, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Legal Matters

6 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 5 years as of July 1, 2023 and the weighted-average discount rate was 4.28 %.

The weighted-average remaining lease term for our operating leases was 5 years as of September 30, 2023 and the weighted-average discount rate was 4.39 %.

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

Three Months Ended Six Months Ended

2023 June 25,

Three Months Ended Nine Months Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Lease expense:

3 unchanged sentences

$ 2,908 $ 2,843 $ 8,506 $ 8,498

Future minimum payments under our non-cancelable operating leases were as follows as of July 1, 2023 (in thousands):

Future minimum payments under our non-cancelable operating leases were as follows as of September 30, 2023 (in thousands):

Fiscal Year Amount

8 unchanged sentences

Transaction price allocated to the remaining performance obligations:

On July 1, 2023, we had $ 9.4 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 30, 2023, we had $ 13.8 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 23.2 % of our remaining performance obligations as revenue in the remainder of fiscal 2023, approximately 66.7 % in fiscal 2024, and approximately 10.1 % in fiscal 2025 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 July 1, 2023 and December 31, 2022 were $ 4.1 million and $ 1.9 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 30, 2023 and December 31, 2022 were $ 2.9 million and $ 1.9 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 July 1, 2023 and December 31, 2022 were $ 21.0 million and $ 30.9 million, respectively.

During the six months ended July 1, 2023, we recognized $ 21.5 million of revenue that was included in contract liabilities as of December 31, 2022.

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

Contract liabilities as of September 30, 2023 and December 31, 2022 were $ 18.0 million and $ 30.9 million, respectively.

During the nine months ended September 30, 2023, we recognized $ 26.0 million of revenue that was included in contract liabilities as of December 31, 2022.

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

July 1, 2023 June 25, 2022

September 30, 2023 September 24, 2022

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

2 unchanged sentences

Gross margin 38.5 % 51.8 % 40.4 % 34.6 % 53.7 % 34.4 %

Six Months Ended

July 1, 2023 June 25, 2022

Nine Months Ended

September 30, 2023 September 24, 2022

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

4 unchanged sentences

Certain components of our operating results are utilized to determine executive compensation along with other measures.

Corporate and Other includes unallocated expenses relating to amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, share-based compensation, and restructuring charges which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Corporate and Other includes unallocated expenses relating to amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, share-based compensation, divestiture related expenses, and restructuring charges which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Certain revenue category information by reportable segment was as follows (in thousands):

Three Months Ended

July 1, 2023 June 25, 2022

September 30, 2023 September 24, 2022

Probe Cards Systems Total Probe Cards Systems Total

19 unchanged sentences

Total $ 128,339 $ 43,236 $ 171,575 $ 139,365 $ 41,504 $ 180,869

Six Months Ended

July 1, 2023 June 25, 2022

Nine Months Ended

September 30, 2023 September 24, 2022

Probe Cards Systems Total Probe Cards Systems Total

11 unchanged sentences

Taiwan 103,368 9,448 112,816 119,937 19,990 139,927

China 34,992 15,615 50,607 73,369 14,765 88,134

South Korea 77,832 5,881 83,713 80,417 4,776 85,193

China 45,771 26,586 72,357 101,342 23,520 124,862

Europe 8,424 21,114 29,538 9,888 18,396 28,284

5 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