What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-06 · 160 added, 77 removed, 188 unchanged (56% of the section changed)

2 unchanged sentences

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, which are subject to known and unknown risks and uncertainties.

The forward-looking statements include statements concerning, among other things, our business strategy (including the influence of anticipated trends and developments in our business and the markets in which we operate), financial and operating results, gross margins, liquidity, operating expenses, products, projected costs and capital expenditure requirements, research and development programs, sales and marketing initiatives, competition and impact of accounting standards.

In some cases, you can identify these statements by forward-looking words, such as “may,” “might,” “will,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “continue,” the negative or plural of these words and other comparable terminology.

The forward-looking statements include statements concerning, among other things, our business strategy (including the influence of anticipated trends and developments in our business and the markets in which we operate), financial and operating results, revenues, gross margins, liquidity, operating expenses, effective tax rate and deferred tax assets, products, projected costs and capital expenditure requirements, research and development programs, sales and marketing initiatives, competition and impact of accounting standards.

In some cases, you can identify these statements by forward-looking words, such as “may,” “might,” “will,” “could,” “should,” “expect,” “estimate,” “plan,” “anticipate,” “believe,” “continue,” the negative or plural of these words and other comparable terminology.

The forward-looking statements are only predictions based on our current expectations and our projections about future events.

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We have no obligation to update any of these statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to public health-related crises, the interpretation and impacts of changes in export controls, tariffs and other trade barriers, military conflicts, political volatility and similar factors, our ability to execute our business strategy and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 28, 2024 and in this Quarterly Report on Form 10-Q.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to public health-related crises, the interpretation and impacts of changes in export controls, tariffs and other trade barriers, military conflicts, political volatility and similar factors, our ability to execute our business strategy including any plans of expansion, and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 28, 2024 and in this Quarterly Report on Form 10-Q.

You should carefully consider the numerous risks and uncertainties described under these sections.

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Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment.

We generated net income of $6.4 million in the first three months of fiscal 2025 as compared to $21.8 million in the first three months of fiscal 2024.

The decline in net income is mainly attributable to the $20.3 million gain recognized during the first quarter of fiscal 2024 from the sale of our China operations that also established an exclusive distribution and partnership agreement to continue sales and support of our products to that region (the “China Transaction”).

We generated net income of $15.5 million in the first six months of fiscal 2025 as compared to $41.2 million in the first six months of fiscal 2024.

The decline in net income is mainly attributable to the $20.3 million gain recognized during the first half of fiscal 2024 from the sale of our China operations that also established an exclusive distribution and partnership agreement to continue sales and support of our products to that region (the “China Transaction”).

In June 2025, we purchased a manufacturing site in Farmers Branch, Texas.

The site, which comprises four structures and includes 50,0000 square feet of clean room space, was purchased for $55 million dollars.

This manufacturing facility enabled us to acquire a scarce, fit-for-purpose asset that aligned with our strategic roadmap and provided significant operational flexibility.

Located in a lower-operating cost region, it was one of a handful of existing available facilities in the U.S.

that had a clean room and came equipped with the infrastructure to meet our future manufacturing needs.

Critical Accounting Estimates

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Actual results in these areas could differ from management’s estimates.

During the three months ended March 29, 2025, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 28, 2024 except for the addition of a policy related to Equity Investments.

During the six months ended June 28, 2025, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 28, 2024 except for the addition of a policy related to Equity Investments.

Equity Investment

On February 21, 2025, Frontier Investments Co., Ltd (“HoldCo”), a joint holding company in which we hold a 20% share of the equity and an affiliate of MBK Partners holds an 80% share of the equity, through HoldCo’s wholly-owned subsidiary, FM Holdings Co., Ltd., acquired 100% of the shares of FICT Limited (“FICT”) from Advantage Partners Inc.

Our investment of $67.2 million, comprises the funding of our share of the purchase price of $59.6 million, subject to changes in foreign currency fluctuations, and acquisition costs of $7.5 million.

Our initial investment of $67.2 million is comprised of the funding of our share of the purchase price of $59.6 million, subject to changes in foreign currency fluctuations, and acquisition costs of $7.5 million.

Headquartered in Nagano, Japan, FICT is a provider of semiconductor test and high-performance computing industries with complex multi-layer organic substrates, printed circuit boards, and related leading-edge technologies and services.

This investment is accounted for as an equity method investment and recorded in Equity investment on our Condensed Consolidated Balance Sheets.

We will report our share of the earnings or losses of the HoldCo on a one-quarter lag as its results are not expected to be available in time to be recorded in the concurrent period.

This investment is accounted for as an equity method investment, with the income or loss from our pro-rata share of the HoldCo's financial results changing our carrying value of the investment.

We report our pro-rata share of the HoldCo's financial results on a one-quarter lag as their results are not available in time to be recorded in the concurrent period.

During the three and six months ended June 28, 2025, we recorded a $3.5 million loss of our equity share of the HoldCo using lag reporting, that primarily related to costs incurred from the acquisition that are not indicative of its ongoing operating performance.

As of June 28, 2025, the carrying value of our investment was $67.3 million, and recorded in Equity investment on our Condensed Consolidated Balance Sheets.

As of June 28, 2025, we had a $7.3 million basis difference between the carrying value of our investment and our proportionate share of the underlying net assets of the Holdco.

The basis difference is accounted for as equity method goodwill that is not amortized.

Results of Operations

The following table sets forth our operating results as a percentage of revenues for the periods indicated:

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Revenues 100.0 % 100.0 % 100.0 % 100.0 %

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Interest income, net 1.3 1.7 1.6 1.8

Other income, net 0.5 0.3

Other income (expense), net — 0.2 0.2 0.2

Income before income taxes 7.6 10.9 6.0 12.7

Provision for income taxes 1.2 1.1 0.9 1.5

Loss from equity investment 1.8 — 0.9 —

Net income 4.6 % 9.8 % 4.2 % 11.2 %

Revenues by Segment and Market

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

(In thousands)

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Three Months Ended

2025 % of Revenues March 30,

2025 % of Revenues June 29,

2024 % of Revenues $ Change % Change

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Total revenues $ 195,798 100.0 % $ 197,474 100.0 % $ (1,676) (0.8) %

Foundry & Logic — The decrease in Foundry & Logic product revenue for the three months ended March 29, 2025, compared to the three months ended March 30, 2024, was driven by weaker probe-card demand for client PC and server microprocessor designs.

DRAM — The increase in DRAM product revenue for the three months ended March 29, 2025, compared to the three months ended March 30, 2024, was driven by increased demand for HBM designs utilized in generative artificial intelligence applications as well as increased demand for other non-HBM DRAM designs, particularly DDR5.

Flash — The decrease in Flash product revenue for the three months ended March 29, 2025, compared to the three months ended March 30, 2024, was driven by decreased customer production activity and demand for our products.

Systems — The increase in Systems market revenue for the three months ended March 29, 2025, compared to the three months ended March 30, 2024, was driven by increased sales of probe stations, cryogenic systems, and thermal systems.

Six Months Ended

2025 % of Revenues June 29,

2024 % of Revenues $ Change % Change

(Dollars in thousands)

Probe Cards Markets:

Foundry & Logic $ 184,785 50.3 % $ 190,428 52.0 % $ (5,643) (3.0) %

DRAM 105,915 28.8 103,938 28.4 1,977 1.9

Flash 7,928 2.2 9,127 2.5 (1,199) (13.1)

Systems Market:

68,526 18.7 62,706 17.1 5,820 9.3

Total revenues $ 367,154 100.0 % $ 366,199 100.0 % $ 955 0.3 %

Foundry & Logic — The decrease in Foundry & Logic product revenue for the three and six months ended June 28, 2025, compared to the three and six months ended June 29, 2024, was driven by weaker probe-card demand for client PC and server microprocessor designs.

DRAM — The increase in DRAM product revenue for the six months ended June 28, 2025, compared to the six months ended June 29, 2024, was driven by increased demand for high-bandwidth memory (“HBM”) designs utilized in generative artificial intelligence applications, partially offset by lower demand for other non-HBM DRAM designs, particularly DDR5, due to volatility from trade restrictions with China.

The decrease in DRAM product revenue for the three months ended June 28, 2025, compared to the three months ended June 29, 2024, was driven by timing of customer designs and re-orders that lowered demand for HBM designs utilized in generative artificial intelligence applications, partially offset by increased demand for other non-HBM DRAM designs, particularly DDR5.

Flash — The decrease in Flash product revenue for the six months ended June 28, 2025, compared to the six months ended June 29, 2024, was driven by decreased customer production activity and demand for our products.

The increase in Flash product revenue for the three months ended June 28, 2025, compared to the three months ended June 29, 2024, was driven by increased customer production activity and demand for our products.

Systems — The increase in Systems market revenue for the six months ended June 28, 2025, compared to the six months ended June 29, 2024, was driven by increased sales of cryogenic systems, probe stations, and thermal systems.

The increase in Systems market revenue for the three months ended June 28, 2025, compared to the three months ended June 29, 2024, was driven by increased sales of cryogenic systems and thermal systems, slightly offset by a decline in probe stations.

Revenues by Geographic Region

Three Months Ended

2025 % of Revenues March 30,

2024 % of Revenues

Three Months Ended Six Months Ended

2025 % of Revenues June 29,

2024 % of Revenues June 28,

Revenue June 29,

(Dollars in thousands)

Taiwan $ 45,362 26.5 % $ 29,877 17.7 %

South Korea $ 57,129 29.2 % $ 49,107 24.9 % $ 100,300 27.3 % $ 99,824 27.3 %

Taiwan 52,879 27.0 44,813 22.7 98,241 26.8 74,690 20.4

United States 40,924 20.9 47,891 24.3 81,249 22.1 93,657 25.6

China 13,615 7.9 15,613 9.3

Japan 14,666 7.5 7,611 3.9 24,985 6.8 16,153 4.4

China 9,400 4.8 25,087 12.7 23,015 6.3 40,700 11.1

Europe 7,248 3.7 8,815 4.5 15,029 4.1 17,664 4.8

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subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S.

Changes in revenue by geographic region for the three months ended March 29, 2025, compared to the three months ended March 30, 2024, were primarily attributable to changes in customer demand, product sales mix, and impacts from trade restrictions.

Changes in revenue by geographic region for the three and six months ended June 28, 2025, compared to the three and six months ended June 29, 2024, were primarily attributable to changes in customer demand, product sales mix, and impacts from trade restrictions.

Cost of Revenues and Gross Margins

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Three Months Ended

2025 March 30,

2025 June 29,

2024 $ Change % Change

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Gross margin 37.3 % 44.0 %

Six Months Ended

2025 June 29,

2024 $ Change % Change

Gross profit $ 137,461 $ 149,638 $ (12,177) (8.1) %

Gross margin 37.4 % 40.9 %

Our gross profit and gross margin by segment were as follows (dollars in thousands):

Three Months Ended

March 29, 2025 March 30, 2024

June 28, 2025 June 29, 2024

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

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Gross margin 38.3 % 39.4 % 37.3 % 45.1 % 46.2 % 44.0 %

Probe Cards — For the three months ended March 29, 2025, gross profit and gross margins increased compared to the three months ended March 30, 2024, primarily due to a more favorable product mix.

Systems — For the three months ended March 29, 2025, gross profit increased while gross margins decreased compared to the three months ended March 30, 2024, primarily as a result of greater revenues with a more favorable absorption of costs on higher production volumes, more than offset by an increase in manufacturing spending.

Six Months Ended

June 28, 2025 June 29, 2024

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

Gross profit $ 113,683 $ 28,786 $ (5,008) $ 137,461 $ 126,030 $ 28,683 $ (5,075) $ 149,638

Gross margin 38.1 % 42.0 % 37.4 % 41.5 % 45.7 % 40.9 %

Probe Cards — For the six months ended June 28, 2025, gross profit and gross margins decreased compared to the six months ended June 29, 2024, primarily due to higher manufacturing costs, which included increased costs for tariffs.

For the three months ended June 28, 2025, gross profit and gross margins decreased compared to the three months ended June 29, 2024, primarily due to higher manufacturing costs, which included increased costs for tariffs, and an unfavorable DRAM product mix.

Systems — For the six months ended June 28, 2025, gross profit increased while gross margins decreased compared to the six months ended June 29, 2024, primarily as a result of greater revenues that was offset by an unfavorable product mix as a greater percentage of segment revenues were from lower margin products.

For the three months ended June 28, 2025, gross profit and gross margins decreased compared to the three months ended June 29, 2024, primarily as a result of an unfavorable product mix as a greater percentage of segment revenues were from lower margin products and an increase in manufacturing spending.

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

Overall — Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading, and material costs.

For the three months ended March 29, 2025, compared to the three months ended March 30, 2024, gross profit and gross margins have increased primarily as a result of greater revenues with a more favorable absorption of costs on higher production volumes, a more favorable product mix, partially offset by an increase in manufacturing spending, as described above.

For the six months ended June 28, 2025, compared to the six months ended June 29, 2024, gross profit and gross margins have decreased due to higher manufacturing costs, which included increased costs for tariffs.

For the three months ended June 28, 2025, compared to the three months ended June 29, 2024, gross profit and gross margins have decreased due to higher manufacturing costs, which included increased costs for tariffs, and an unfavorable product mix as described above.

Cost of revenues included stock-based compensation expense as follows (in thousands):

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Stock-based compensation $ 1,690 $ 1,932 $ 3,695 $ 3,860

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Three Months Ended

2025 March 30,

2025 June 29,

2024 $ Change % Change

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% of revenues 14.7 % 16.0 %

Research and development expenses in the three months ended March 29, 2025 decreased compared to the corresponding period in the prior year primarily due to slightly lower project material costs and general operational costs on higher revenues.

Six Months Ended

2025 June 29,

2024 $ Change % Change

(Dollars in thousands)

Research and development $ 56,593 $ 60,191 $ (3,598) (6.0) %

% of revenues 15.4 % 16.4 %

Research and development expenses in the three and six months ended June 28, 2025 decreased compared to the corresponding period in the prior year primarily due to lower employee compensation costs from lower performance-based compensation that was partially offset by an increase in employee compensation costs from an increase in headcount and annual pay increases.

The decrease was further impacted from slightly lower project material costs and general operational costs.

A detail of the changes is as follows (in thousands):

Three Months Ended March 29, 2025 compared to Three Months Ended March 30, 2024

Three Months Ended June 28, 2025 compared to Three Months Ended June 29, 2024 Six Months Ended June 28, 2025 compared to Six Months Ended June 29, 2024

Employee compensation costs $ (2,084) (2,169)

Project material costs (259) (933)

General operational costs (350) (451)

Employee compensation costs (85)

Stock-based compensation expense (78) (45)

$ (2,771) $ (3,598)

Research and development included stock-based compensation expense as follows (in thousands):

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Stock-based compensation expense

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Three Months Ended

2025 March 30,

2025 June 29,

2024 $ Change % Change

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% of revenues 16.3 % 19.2 %

Selling, general and administrative expenses increased in total for the three months ended March 29, 2025 compared to the corresponding period in the prior year, but decreased slightly as a percent of revenues.

The drivers of the increase for the three month period were increased restructuring charges from operating efficiency initiatives and increased commissions expense from increased revenues, partially offset by lower general operating expenses from decreased headcount, lower consulting fees from the China Transaction in the first quarter of fiscal 2024 and lower stock-based compensation expense.

Six Months Ended

2025 June 29,

2024 $ Change % Change

(Dollars in thousands)

Selling, general and administrative $ 65,293 $ 70,953 $ (5,660) (8.0) %

% of revenues 17.8 % 19.4 %

Selling, general and administrative expenses decreased for the three and six months ended June 28, 2025 compared to the corresponding period in the prior year.

The decrease for the three month period was primarily due to decreased employee compensation costs from lower performance-based compensation that was partially offset by an increase in employee costs from an increase from annual pay increases that were slightly offset by lowered headcount.

The decrease was further driven by lower general operating costs, lower consulting fees, and lower stock-based compensation expense.

The decrease for the six month period is consistent with the three month period except the six month period decrease was partially offset by increased restructuring charges from operating efficiency initiatives.

A detail of the changes is as follows (in thousands):

Three Months Ended March 29, 2025 compared to Three Months Ended March 30, 2024

Three Months Ended June 28, 2025 compared to Three Months Ended June 29, 2024 Six Months Ended June 28, 2025 compared to Six Months Ended June 29, 2024

Employee compensation costs $ (4,126) $ (4,205)

Restructuring charges — 2,677

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Stock-based compensation expense (498) (1,217)

Commission expenses 524

Employee compensation costs (80)

$ (6,035) $ (5,660)

Selling, general and administrative included stock-based compensation expense as follows (in thousands):

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Stock-based compensation expense

1 unchanged sentence

Interest Income, Net

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

(Dollars in thousands)

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Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities.

The increase in interest income for the three months ended March 29, 2025, compared with the corresponding period of the prior year, was attributable to higher invested balances.

The decrease in interest income for the three and six months ended June 28, 2025, compared with the corresponding periods in the prior year, was attributable to lower invested balances and lower yields.

Interest expense primarily includes interest on our term loan, interest rate swap derivative contracts, and term loan issuance costs amortization charges.

The interest expense for the three months ended March 29, 2025 was effectively flat compared to the corresponding periods in the prior year.

The interest expense for the three and six months ended June 28, 2025 was effectively flat compared to the corresponding periods in the prior year.

This stability is due to our interest rate swap, which fixes the interest rate on our long-term debt.

Other Income, Net

Other income, net, primarily includes the effects of foreign currency and various other gains and losses.

Other Income (Expense), Net

Other income (expense), net, primarily includes the effects of foreign currency and various other gains and losses.

We partially mitigate our risks from currency movements by hedging certain balance sheet exposures, which minimizes the impacts during periods of foreign exchange volatility.

Provision for Income Taxes

Three Months Ended

2025 March 30,

Three Months Ended Six Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

(In thousands, except percentages)

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federal, state or foreign tax laws, changes in stock-based compensation expense/benefit, future expansion into areas with varying country, state, and local income tax rates, and deductibility of certain costs and expenses by jurisdiction.

The increase in our effective tax rate for the three months ended March 29, 2025 compared to the corresponding period in the prior year was primarily driven by effective tax rate impacts the China Transaction had on the prior year.

The increase in our effective tax rate for the three and six months ended June 28, 2025 compared to the corresponding periods in the prior year was primarily driven by changes in the estimated taxable income by jurisdiction.

One Big Beautiful Bill

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions that may affect our financial results, was signed into law in the United States.

As the effects of tax law changes are recognized in the period of enactment, which occurred in the third quarter, the impacts are not included in our operating results for the six months ended June 28, 2025.

Among other provisions, the OBBB repealed the capitalization of domestic Research and Development (“R&D”) expenditures and includes a reduced deduction rate on Foreign-derived Deduction Eligible Income and income from non-U.S.

subsidiaries.

While we are evaluating the impact of these provisions on our effective tax rate and deferred tax assets in 2025 and future periods, and will continue to do so up until the time an election needs to be made, we currently anticipate an increase in our annual effective tax rate range, which may result in a discrete tax charge within the third quarter.

Furthermore, due to the repealed capitalization of R&D expenditures, we expect to reduce our cash tax payments within the United States for 2025 to zero for the remainder of year.

Liquidity and Capital Resources

Capital Resources

Our working capital decreased to $427.2 million at March 29, 2025, compared to $473.8 million at December 28, 2024.

Our working capital decreased to $401.3 million at June 28, 2025, compared to $473.8 million at December 28, 2024.

Cash and cash equivalents primarily consist of deposits held at banks and money market funds.

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Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment.

Our cash, cash equivalents and marketable securities totaled approximately $299.0 million at March 29, 2025, compared to $360.0 million at December 28, 2024.

Our cash, cash equivalents and marketable securities totaled approximately $249.3 million at June 28, 2025, compared to $360.0 million at December 28, 2024.

Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, and the cash we expect to generate from operations, will be sufficient to fund our short-term and long-term liquidity requirements primarily arising from:

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The following table sets forth our net cash flows from operating, investing and financing activities:

Three Months Ended

2025 March 30,

Six Months Ended

2025 June 29,

(In thousands)

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Net cash provided by operating activities consists of net income for the period, adjusted for certain non-cash items and changes in certain operating assets and liabilities.

Net cash provided by operating activities for the three months ended March 29, 2025 was attributable to net income of $6.4 million and net non-cash expenses of $23.7 million, partially offset by the increase in net working capital of $6.6 million.

The cash used in net working capital mainly related to increased inventories of $10.2 million and lowered accrued liabilities of $7.9 million, partially offset by increased accounts payable of $10.5 million and decreased accounts receivable, net, of $6.3 million.

The non-cash expenses consisted of depreciation, amortization, stock-based compensation, and the provision for excess and obsolete inventories.

Net cash provided by operating activities for the six months ended June 28, 2025 was attributable to net income of $15.5 million and net non-cash expenses of $49.3 million, partially offset by the increase in net working capital of $22.4 million.

The cash used in net working capital was primarily driven by increased inventories of $12.4 million, increased accounts receivable, net, of $9.6 million, increased prepaid expenses and other current assets of $5.7 million, and lowered accrued liabilities of $4.4 million, partially offset by increased accounts payable of $9.6 million.

The non-cash expenses consisted of depreciation, amortization, stock-based compensation, the provision for excess and obsolete inventories, non cash restructuring, and loss from equity investment.

Investing Activities

Net cash used in investing activities for the three months ended March 29, 2025 primarily related to $67.2 million used to acquire our equity investment in FICT and $18.6 million of property, plant and equipment purchases, partially offset by $1.1 million in net proceeds from the maturities and sales of marketable securities.

Net cash used in investing activities for the six months ended June 28, 2025 primarily related to $84.8 million of property, plant and equipment purchases, with $55.0 million of the property, plant and equipment purchases relating to our new Farmers Branch manufacturing facility in Texas, $67.2 million used to acquire our equity investment in FICT, and $11.3 million in net purchases of marketable securities.

Financing Activities

Net cash used in financing activities for the three months ended March 29, 2025 primarily related to $22.1 million used to purchase common stock under our stock repurchase program, $2.1 million used to pay tax withholdings for net share settlements of employee stock awards, partially offset by $21.6 million received from issuances of common stock in a private placement and under our employee stock purchase plan.

Net cash used in financing activities for the six months ended June 28, 2025 primarily related to $24.6 million used to purchase common stock under our stock repurchase program, $3.6 million used to pay tax withholdings for net share settlements of employee stock awards, partially offset by $21.6 million received from issuances of common stock through a private placement of $15.0 million and under our employee stock purchase plan of $6.6 million.

Building Term Loan and Interest Rate Swap

On June 22, 2020, we entered into an $18.0 million 15-year credit facility loan agreement (the “Building Term Loan”).

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

The interest rate at March 29, 2025, before consideration of the interest rate swap discussed in the next paragraph, was 6.19%.

As of March 29, 2025, the balance outstanding pursuant to the Building Term Loan was $13.1 million.

The interest rate at June 28, 2025, before consideration of the interest rate swap discussed in the next paragraph, was 6.19%.

As of June 28, 2025, the balance outstanding pursuant to the Building Term Loan was $12.8 million.

On March 17, 2020, we entered into an interest rate swap agreement to hedge the interest payment on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt.

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

As of March 29, 2025, the notional amount of the loan that is subject to this interest rate swap is $13.1 million.

As of June 28, 2025, the notional amount of the loan that is subject to this interest rate swap is $12.8 million.

Revolving Credit Agreement

On July 29, 2025, following the quarter-end, we entered into a Revolving Credit Agreement (the “Credit Agreement”) by and among the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders party thereto, providing us with a $150 million revolving credit facility (the “Facility”) with an option to draw additional Incremental Term Loans in $25 million increments.

The Facility has a maturity date of July 29, 2030.

The Facility may be used for working capital and other general corporate purposes, subject to the terms and conditions set forth in the Credit Agreement.

Borrowings under the Facility will bear interest at a fluctuating rate per annum equal to, at our option, (i) the forward-looking secured overnight financing rate term, (ii) a base rate set forth in the Credit Agreement, or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on our leverage ratio.

Voluntary prepayments are permissible without penalty, subject to certain conditions pertaining to minimum notice and minimum prepayment and reduction amounts as described in the Term Loan Agreement.

Stock Repurchase Programs

On October 30, 2023, our Board of Directors authorized a two-year program to repurchase up to $75.0 million of outstanding common stock, with the primary purpose of offsetting potential dilution from issuance of common stock under our stock-based compensation programs.

On March 29, 2025, our Board of Directors approved an increase to the repurchase program, authorizing the repurchase of an additional $1.6 million shares.

During fiscal 2024, we repurchased and retired 1,309,635 shares

of common stock for $53.3 million.

During the three months ended March 29, 2025, we repurchased and retired 665,000 shares of common stock for $22.1 million, utilizing the remaining shares available for repurchase under the program.

On April 24, 2025, our Board of Directors authorized an additional program to repurchase up to $75.0 million of outstanding common stock, also with the primary purpose of offsetting potential dilution from issuance of common stock under our stock-based compensation programs.

The share repurchase program will expire on April 24, 2027.

During fiscal 2024 we repurchased and retired 1,309,635 shares of common stock for $53.3 million.

On March 29, 2025, our Board of Directors approved an increase to the repurchase program, authorizing the repurchase of an additional $1.6 million in shares of common stock.

During the first fiscal quarter of 2025, we repurchased and retired 665,000 shares of common stock for $22.1 million, utilizing the remaining shares available for repurchase under the program.

On April 24, 2025, our Board of Directors authorized a new two-year program to repurchase up to $75.0 million of outstanding common stock to offset potential dilution from issuance of common stock under our stock-based compensation programs.

This share repurchase program will expire on April 24, 2027.

During the six months ended June 28, 2025, we repurchased and

retired 75,000 shares of common stock for $2.4 million under this plan, and as of June 28, 2025, $72.6 million remained available for future repurchases.

Contractual Obligations and Commitments

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of March 29, 2025:

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of June 28, 2025:

Payments Due In Fiscal Year

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The table above excludes our gross liability for unrecognized tax benefits and our deferred grant.

The gross liability for unrecognized tax benefits was $52.1 million as of March 29, 2025.

The gross liability for unrecognized tax benefits was $52.1 million as of June 28, 2025.

The timing of any payments which could result from these unrecognized tax benefits will depend upon a number of factors and, accordingly, the timing of payment cannot be estimated.

The deferred grant was $18.0 million as of March 29, 2025, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development.

The deferred grant was $18.0 million as of June 28, 2025, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development.

The timing of any potential repayments is dependent upon a number of factors, including the number of employees and capital investments within California over the 5-year term.

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Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of March 29, 2025, we were not involved in any such off-balance sheet arrangements.

As of June 28, 2025, we were not involved in any such off-balance sheet arrangements.

Recent Accounting Standards

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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 2. Management’s Discussion and Analysis