FORMFACTOR INC 10-Q

Item 1. Financial Statements FORMFACTOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) June 27, 2026 December 27, 2025 ASSETS Current assets: Cash and cash equivalents $ 109,761 $ 103,330 Marketable securities 235,879 171,842 Accounts receivable, net of allowance for credit losses of $ 6 and $ 29 155,777 125,416 Inventories, net 121,409 110,884 Restricted cash 765 1,063 Prepaid expenses and other current assets 45,918 44,519 Total current assets 669,509 557,054 Restricted cash 2,621 2,654 Operating lease, right-of-use-assets 15,089 17,202 Property, plant and equipment, net of accumulated depreciation 265,402 259,068 Equity investment 65,891 64,096 Goodwill 212,557 216,029 Intangible assets, net 17,961 16,302 Deferred tax assets 90,916 89,524 Other assets 2,534 2,433 Total assets $ 1,342,480 $ 1,224,362 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 77,427 $ 47,436 Accrued liabilities 53,292 47,535 Current portion of long-term debt, net of unamortized issuance costs 1,153 1,137 Deferred revenue 23,976 20,091 Operating lease liabilities 8,317 7,662 Total current liabilities 164,165 123,861 Long-term debt, less current portion, net of unamortized issuance costs 10,491 11,071 Deferred tax liabilities 2,382 1,600 Long-term operating lease liabilities 9,951 12,488 Deferred grant 18,000 18,000 Other liabilities 26,131 21,939 Total liabilities 231,120 188,959 Stockholders’ equity: Common stock, $ 0.001 par value: 250,000,000 shares authorized; 78,120,725 and 77,647,935 shares issued and outstanding 78 78 Additional paid-in capital 870,028 863,547 Accumulated other comprehensive loss ( 10,643 ) ( 3,528 ) Accumulated income 251,897 175,306 Total stockholders’ equity 1,111,360 1,035,403 Total liabilities and stockholders’ equity $ 1,342,480 $ 1,224,362 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Revenues $ 258,242 $ 195,798 $ 484,386 $ 367,154 Cost of revenues 127,320 122,860 266,670 229,693 Gross profit 130,922 72,938 217,716 137,461 Operating expenses: Research and development 31,099 28,793 61,879 56,593 Selling, general and administrative 37,165 31,482 69,457 64,936 Factory start-up costs 4,859 357 11,933 357 Total operating expenses 73,123 60,632 143,269 121,886 Operating income 57,799 12,306 74,447 15,575 Interest income, net 2,683 2,642 4,857 5,959 Other income (expense), net 212 ( 6 ) 653 884 Income before income taxes and equity investment 60,694 14,942 79,957 22,418 Provision for income taxes 6,729 2,372 7,125 3,447 Income (loss) from equity investment 2,242 ( 3,484 ) 3,759 ( 3,484 ) Net income $ 56,207 $ 9,086 $ 76,591 $ 15,487 Net income per share: Basic $ 0.72 $ 0.12 $ 0.98 $ 0.20 Diluted $ 0.71 $ 0.12 $ 0.96 $ 0.20 Weighted-average number of shares used in per share calculations: Basic 78,036 77,107 77,930 77,226 Diluted 79,607 77,527 79,546 77,721 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income $ 56,207 $ 9,086 $ 76,591 $ 15,487 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 1,833 ) 8,363 ( 5,312 ) 11,702 Unrealized gains (losses) on available-for-sale marketable securities ( 340 ) ( 110 ) ( 1,039 ) 260 Unrealized gains (losses) on derivative instruments ( 812 ) 1,234 ( 764 ) 2,328 Other comprehensive income (loss), net of tax: ( 2,985 ) 9,487 ( 7,115 ) 14,290 Comprehensive income $ 53,222 $ 18,573 $ 69,476 $ 29,777 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except shares) (Unaudited) Shares of Common Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Income Total Three Months Ended June 27, 2026 Balances, March 28, 2026 77,954,440 $ 78 $ 870,689 $ ( 7,658 ) $ 195,690 $ 1,058,799 Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 166,285 — ( 9,243 ) — — ( 9,243 ) Stock-based compensation — — 8,582 — — 8,582 Other comprehensive loss — — — ( 2,985 ) — ( 2,985 ) Net income — — — — 56,207 56,207 Balances, June 27, 2026 78,120,725 $ 78 $ 870,028 $ ( 10,643 ) $ 251,897 $ 1,111,360 Six Months Ended June 27, 2026 Balances, December 27, 2025 77,647,935 $ 78 $ 863,547 $ ( 3,528 ) $ 175,306 $ 1,035,403 Issuance of common stock under the Employee Stock Purchase Plan 176,570 — 5,836 — — 5,836 Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 296,220 — ( 15,994 ) — — ( 15,994 ) Stock-based compensation — — 16,639 — — 16,639 Other comprehensive loss — — — ( 7,115 ) — ( 7,115 ) Net income — — — — 76,591 76,591 Balances, June 27, 2026 78,120,725 $ 78 $ 870,028 $ ( 10,643 ) $ 251,897 $ 1,111,360 Three Months Ended June 28, 2025 Balances, March 29, 2025 77,075,636 $ 77 $ 844,488 $ ( 6,037 ) $ 127,346 $ 965,874 Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 110,794 — ( 1,487 ) — — ( 1,487 ) Purchase and retirement of common stock through repurchase program ( 75,000 ) — ( 2,402 ) — — ( 2,402 ) Stock-based compensation — — 9,465 — — 9,465 Other comprehensive income — — — 9,487 — 9,487 Net income — — — — 9,086 9,086 Balances, June 28, 2025 77,111,430 $ 77 $ 850,064 $ 3,450 $ 136,432 $ 990,023 Six Months Ended June 28, 2025 Balances, December 28, 2024 77,114,633 $ 77 $ 837,586 $ ( 10,840 ) $ 120,945 $ 947,768 Issuance of common stock under the Employee Stock Purchase Plan 197,051 — 6,576 — — 6,576 Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 204,775 — ( 3,619 ) — — ( 3,619 ) Issuance of common stock pursuant to private placement 334,971 — 15,000 — — 15,000 Purchase and retirement of common stock through repurchase program ( 740,000 ) — ( 24,609 ) — — ( 24,609 ) Stock-based compensation — — 19,130 — — 19,130 Other comprehensive income — — — 14,290 — 14,290 Net income — — — — 15,487 15,487 Balances, June 28, 2025 77,111,430 $ 77 $ 850,064 $ 3,450 $ 136,432 $ 990,023 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 27, 2026 June 28, 2025 Cash flows from operating activities: Net income $ 76,591 $ 15,487 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,143 18,390 Reduction in the carrying amount of right-of-use assets 3,286 3,593 Stock-based compensation expense 16,721 19,187 Deferred income tax benefit ( 1,640 ) ( 2,639 ) Provision for excess and obsolete inventories 7,938 6,695 Non-cash restructuring charges 15,736 2,160 Loss (income) from equity investment ( 3,759 ) 3,484 Other adjustments to reconcile net income to net cash provided by operating activities ( 320 ) ( 1,559 ) Changes in assets and liabilities: Accounts receivable ( 30,705 ) ( 9,570 ) Inventories ( 19,617 ) ( 12,367 ) Prepaid expenses and other current assets 461 ( 5,717 ) Other assets ( 147 ) 460 Accounts payable 14,510 9,649 Accrued liabilities 5,190 ( 4,409 ) Other liabilities 4,843 2,487 Deferred revenues 3,441 1,133 Operating lease liabilities ( 3,908 ) ( 4,032 ) Net cash provided by operating activities 106,764 42,432 Cash flows from investing activities: Acquisition of property, plant and equipment ( 24,791 ) ( 84,840 ) Proceeds from sale of assets 576 103 Purchase of equity investment — ( 67,156 ) Purchases of marketable securities ( 128,665 ) ( 73,823 ) Proceeds from maturities and sales of marketable securities 64,169 62,503 Net cash used in investing activities ( 88,711 ) ( 163,213 ) Cash flows from financing activities: Proceeds from issuances of common stock 5,836 21,576 Purchase of common stock through stock repurchase program — ( 24,586 ) Tax withholdings related to net share settlements of equity awards ( 15,994 ) ( 3,619 ) Payments on term loan ( 564 ) ( 549 ) Net cash used in financing activities ( 10,722 ) ( 7,178 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,231 ) 1,658 Net increase (decrease) in cash, cash equivalents and restricted cash 6,100 ( 126,301 ) Cash, cash equivalents and restricted cash, beginning of year 107,047 197,206 Cash, cash equivalents and restricted cash, end of period $ 113,147 $ 70,905 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 27, 2026 June 28, 2025 Non-cash investing and financing activities: Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases $ 15,817 $ ( 13,010 ) Operating lease, right-of-use assets obtained in exchange for lease obligations 2,685 733 Supplemental disclosure of cash flow information: Cash paid for income taxes, net $ 3,040 $ 5,443 Cash paid for interest 168 187 Operating cash outflows from operating leases 4,632 4,893 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 109,761 $ 67,380 Restricted cash, current 765 1,061 Restricted cash 2,621 2,464 Total cash, cash equivalents and restricted cash $ 113,147 $ 70,905 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 FORMFACTOR, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 — Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial information of FormFactor, Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2025 Annual Report on Form 10-K filed with the SEC on February 20, 2026. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. Fiscal Year We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2026 and 2025 each contain 52 weeks and the six months ended June 27, 2026 and June 28, 2025 each contained 26 weeks. Fiscal 2026 will end on December 26 , 2026. Significant Accounting Policies Our significant accounting policies have not changed during the six months ended June 27, 2026 from those disclosed in our Annual Report on Form 10-K for the year ended December 27, 2025. New Accounting Pronouncements ASU 2024-03 In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “ Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses .” This ASU requires an entity to disclose, in tabular format in the notes to the financial statements, specific information about certain costs and expenses. Although the ASU does not change the expense captions an entity presents on the face of the income statement, it requires disaggregation of certain expense captions into specified categories. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. This ASU will impact only our disclosures and not our financial condition and results of operations. We are currently evaluating the effect the adoption of this ASU may have on our disclosures. Reclassifications Certain immaterial reclassifications were made to prior-year amounts to conform to the current-year presentation. These reclassifications included presenting factory start-up costs separately from selling, general and administrative expenses in the Condensed Consolidated Statements of Income, combining depreciation and amortization into a single line item in the Condensed Consolidated Statements of Cash Flows, and presenting accrued restructuring charges separately from other accrued liabilities in Note 6, Accrued Liabilities . These reclassifications had no impact on previously reported results of operations, financial position, or cash flows. Note 2 — Concentration of Credit and Other Risks Each of the following customers accounted for 10 % or more of our revenues for the periods indicated: Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 SK hynix Inc. 24.3 % 25.0 % 26.8 % 24.2 % Intel Corporation * 12.4 % * 12.2 % Taiwan Semiconductor Manufacturing Company Ltd. 11.0 % 10.4 % 10.3 % * 35.3 % 47.8 % 37.1 % 36.4 % * Less than 10% of revenues. 9 At June 27, 2026, three customers accounted for 17.1 %, 16.9 %, and 12.9 % of gross accounts receivable, compared with two customers that accounted for 15.8 % and 10.8 % at December 27, 2025. Note 3 — Inventories, net Inventories are stated at the lower of cost (principally standard cost, which approximates actual cost on a first in, first out basis) or net realizable value. Inventories, net, consisted of the following (in thousands): June 27, 2026 December 27, 2025 Raw materials $ 55,920 $ 47,969 Work-in-progress 45,305 42,812 Finished goods 20,184 20,103 $ 121,409 $ 110,884 Note 4 — Acquisition On December 15, 2025, we acquired 100 % of the shares of Keystone Photonics for total consideration of $ 20.6 million, net of cash acquired of $ 1.7 million. Keystone Photonics provides optical probing technology used in the testing of silicon photonics (“SiPh”) and co‑packaged optics (“CPO”) devices. The acquisition expands the Company’s testing capabilities in these areas and supports customers as SiPh and CPO technologies transition from development into high‑volume manufacturing, including applications related to artificial intelligence data-center infrastructure. The acquisition was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated balance sheets at their fair values as of the acquisition date. The purchase price was initially allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on management's estimates of their fair values as of the acquisition date, including goodwill representing the excess of consideration transferred over the fair value of identifiable net assets acquired. During the measurement period, the Company finalized certain valuation analyses and recorded adjustments to the purchase price allocation. See Note 5, Goodwill and Intangible Assets , for information regarding changes to identifiable intangible assets and goodwill resulting from these adjustments. No portion of the goodwill is expected to be deductible for tax purposes. 10 The preliminary purchase price allocation, measurement period adjustments, and adjusted fair values of the assets acquired, including goodwill and intangibles, and liabilities assumed is as follows (in thousands): Preliminary Measurement Period Adjustments As Adjusted Cash and cash equivalents $ 1,674 $ — $ 1,674 Other current assets 728 — 728 Property, plant and equipment 518 — 518 Operating lease, right-of-use-assets 888 — 888 Other non-current assets 19 — 19 Tangible assets acquired 3,827 — 3,827 Accounts payable and accrued liabilities ( 1,650 ) — ( 1,650 ) Operating lease liabilities ( 888 ) — ( 888 ) Deferred tax liabilities ( 2,471 ) ( 1,068 ) ( 3,539 ) Total net tangible assets acquired and liabilities assumed ( 1,182 ) ( 1,068 ) ( 2,250 ) Intangible assets 8,385 3,623 12,008 Goodwill 15,050 ( 2,555 ) 12,495 Net assets acquired $ 22,253 $ — $ 22,253 The intangible assets as of the acquisition date included (in thousands, except years): Amount Weighted Average Useful Life (in years) Developed technologies $ 10,447 10.0 Customer relationships 1,526 4.0 Trade names 35 2.0 Total intangible assets $ 12,008 9.2 Note 5 — Goodwill and Intangible Assets Goodwill by reportable segment was as follows (in thousands): Probe Cards Systems Total Goodwill, as of December 28, 2024 $ 177,369 $ 21,802 $ 199,171 Acquisition - Keystone — 15,050 15,050 Foreign currency translation — 1,808 1,808 Goodwill, as of December 27, 2025 177,369 38,660 216,029 Acquisition - Keystone measurement period adjustment — ( 2,555 ) ( 2,555 ) Foreign currency translation — ( 917 ) ( 917 ) Goodwill, as of June 27, 2026 $ 177,369 $ 35,188 $ 212,557 We have no t recorded goodwill impairments for the six months ended June 27, 2026. 11 Intangible assets were as follows (in thousands): June 27, 2026 December 27, 2025 Intangible Assets Gross Accumulated Amortization Net Gross Accumulated Amortization Net Existing developed technologies $ 170,495 $ 153,855 $ 16,640 $ 169,165 $ 152,863 $ 16,302 Trade name 7,883 7,858 25 7,894 7,894 — Customer relationships 49,612 48,316 1,296 48,249 48,249 — $ 227,990 $ 210,029 $ 17,961 $ 225,308 $ 209,006 $ 16,302 Amortization expense was included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Cost of revenues $ 745 $ 474 $ 1,395 $ 957 Selling, general and administrative 196 191 196 382 $ 941 $ 665 $ 1,591 $ 1,339 The estimated future amortization of definite-lived intangible assets is as follows (in thousands): Fiscal Year Amount Remainder of 2026 $ 1,582 2027 3,142 2028 3,014 2029 3,014 2030 2,056 Thereafter 5,153 $ 17,961 Note 6 — Accrued Liabilities Accrued liabilities consisted of the following (in thousands): June 27, 2026 December 27, 2025 Accrued compensation and benefits $ 37,069 $ 31,495 Accrued employee stock purchase plan contributions withheld 5,602 5,190 Accrued restructuring charges 4,282 464 Accrued warranty 2,422 2,503 Accrued income and other taxes 881 3,098 Other accrued expenses 3,036 4,785 $ 53,292 $ 47,535 Note 7 — Restructuring Charges On January 5, 2026, we adopted restructuring plans (the “2026 Restructuring Plans”) that are intended to better align our cost structure and support gross margin improvement to the Company’s target financial model, while also aligning manufacturing capabilities with current and anticipated business needs and the Company's strategic priorities. As part of this restructuring plan, the Company is consolidating the manufacturing facilities located in Carlsbad, California and Baldwin Park, California, to other manufacturing facilities. The restructuring plans are expected to result in the Company recording restructuring charges in the aggregate amount of approximately $ 32.0 million to $ 40.0 million, estimated to be comprised primarily of $ 17.5 million to $ 20.0 million of cost related to the impairment and accelerated depreciation of property and equipment, $ 10.0 million to $ 12.5 million of costs relating to employee severance and benefits, $ 1.0 million to $ 2.0 million of impairment and accelerated amortization of right- 12 of-use assets, and $ 3.5 million to $ 5.5 million of other costs. These restructuring charges relate primarily to the Company’s Probe Cards segment, and the Company expects the majority of charges to be incurred in fiscal 2026. Total restructuring charges included in our Condensed Consolidated Statements of Income for the three and six months ended June 27, 2026 were as follows (in thousands): Three Months Ended Six months ended June 27, 2026 June 27, 2026 Cost of revenues $ 4,292 $ 25,790 Research and development ( 33 ) $ 1,341 Selling, general and administrative 234 683 $ 4,493 $ 27,814 Changes to the restructuring accrual in the six months ended June 27, 2026 were as follows (in thousands): Employee Severance and Benefits Stock-based Compensation Property and Equipment Leases Other Costs Total December 27, 2025 $ 464 $ — $ — $ — $ — $ 464 Restructuring charges 7,964 128 16,251 1,206 2,265 27,814 Cash payments ( 4,146 ) — — ( 37 ) ( 2,265 ) ( 6,448 ) Non-cash settlement — ( 128 ) ( 16,251 ) ( 1,169 ) — ( 17,548 ) June 27, 2026 $ 4,282 $ — $ — $ — $ — $ 4,282 Note 8 — Debt Revolving Credit Agreement On July 29, 2025, we entered into a Revolving Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, and the lenders party thereto, providing us with a $ 150 million revolving credit facility (the “Facility”). 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. No amounts were outstanding under the Facility as of June 27, 2026. 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 (“SOFR”) 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 Credit Agreement. The Facility also bears a quarterly commitment fee ranging from 0.15 % to 0.25 % on the daily amount by which the commitments under the Facility exceed the outstanding amount. The commitment fee as of June 27, 2026 was 0.15 %. The Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default, including limitations on subsidiary indebtedness and liens, and the requirement to maintain specified financial ratios including the requirement to maintain a consolidated total net leverage ratio not exceeding 3.50 to 1.00 as of the last day of each fiscal quarter with an increase to 4.00 to 1.00 for four quarters following a permitted acquisition. 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”). 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 London Interbank Offered Rate (“LIBOR”) with the term 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 1.86 % per annum. Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at June 27, 2026, before consideration of interest rate swap discussed in the next paragraph, was 5.48 %. As of June 27, 2026, the balance outstanding pursuant to the Building Term Loan was $ 11.7 million. 13 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. As future levels of LIBOR over the life of the loan were uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates. 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 %. As of June 27, 2026, the notional amount of the loan that is subject to this interest rate swap is $ 11.7 million. Note 9 — Fair Value and Derivative Instruments Whenever possible, the fair values of our financial assets and liabilities are determined using quoted market prices of identical securities or quoted market prices of similar securities from active markets. The three levels of inputs that may be used to measure fair value are as follows: • Level 1 valuations are obtained from real-time quotes for transactions in active exchange markets involving identical securities; • Level 2 valuations utilize significant observable inputs, such as quoted prices for similar assets or liabilities, quoted prices near the reporting date in markets that are less active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • 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 six months ended June 27, 2026 or the year ended December 27, 2025. 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. The carrying value of debt approximates fair value due to its variable interest rate. No changes were made to our valuation techniques during the first six months of fiscal 2026. 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 27, 2026 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 63,613 $ — $ — $ 63,613 U.S. treasuries 998 — — 998 Commercial paper — 2,985 — 2,985 64,611 2,985 — 67,596 Marketable securities: U.S. treasuries 107,080 — — 107,080 U.S. agency securities — 15,572 — 15,572 Corporate bonds — 100,630 — 100,630 Commercial paper — 12,597 — 12,597 107,080 128,799 — 235,879 Promissory note receivable — — 1,526 1,526 Interest rate swap derivative contract — 1,434 — 1,434 Total assets $ 171,691 $ 133,218 $ 1,526 $ 306,435 Liabilities: Foreign exchange derivative contracts $ — $ ( 776 ) $ — $ ( 776 ) Total liabilities $ — $ ( 776 ) $ — $ ( 776 ) 14 December 27, 2025 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 62,017 $ — $ — $ 62,017 Commercial paper — 500 — 500 62,017 500 — 62,517 Marketable securities: U.S. treasuries 76,626 — — 76,626 U.S. agency securities — 12,905 — 12,905 Corporate bonds — 74,897 — 74,897 Commercial paper — 7,414 — 7,414 76,626 95,216 — 171,842 Promissory note receivable — — 1,522 1,522 Interest rate swap derivative contract — 1,422 — 1,422 Total assets $ 138,643 $ 97,138 $ 1,522 $ 237,303 Cash Equivalents The fair value of our cash equivalents is determined based on quoted market prices for similar or identical securities. Marketable Securities 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 broker-priced investments are categorized as Level 2 investments because fair value is based on similar assets without applying significant judgments. In addition, all investments have a sufficient trading volume to demonstrate that the fair value is appropriate. Unrealized gains and losses were immaterial and were recorded as a component of Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheets. We did not have any other-than-temporary unrealized gains or losses at either period end included in these financial statements. 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, 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. Foreign Exchange Derivative Contracts We operate and sell our products in various global markets. As a result, we are exposed to changes in foreign currency exchange rates. We utilize foreign currency forward contracts to hedge against future movements in foreign exchange rates that affect certain existing foreign currency denominated assets and liabilities and forecasted foreign currency revenue and expense transactions. Under this program, our strategy is to have increases or decreases in our foreign currency exposures mitigated by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with foreign currency transaction gains or losses. 15 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. 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 27, 2026 will mature by the first quarter of fiscal 2027. The following table provides information about our foreign currency forward contracts outstanding as of June 27, 2026 (in thousands): Currency Contract Position Contract Amount (Local Currency) Contract Amount (U.S. Dollars) Euro Sell 28,070 32,940 Japanese Yen Sell 2,413,114 14,944 Taiwan Dollar Sell 124,401 3,892 Korean Won Buy 5,640,798 3,656 Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs. 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, Equity investment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition. Other than as discussed in Note 4, Acquisition, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended June 27, 2026 or June 28, 2025. Note 10 — Warranty We offer warranties on certain products and record a liability for the estimated future costs associated with warranty claims at the time revenue is recognized. The warranty liability is based upon historical experience and our estimate of the level of future costs. While we engage in product quality programs and processes, our warranty obligation is affected by product failure rates, material usage and service delivery costs. We regularly monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified failures. As we sell new products to our customers, we must exercise considerable judgment in estimating the expected failure rates. This estimating process is based on historical experience of similar products, as well as various other assumptions that we believe to be reasonable under the circumstances. We provide for the estimated cost of product warranties at the time revenue is recognized as a component of Cost of revenues in our Condensed Consolidated Statement of Income. Changes in our warranty liability were as follows (in thousands): Six Months Ended June 27, 2026 June 28, 2025 Balance at beginning of year $ 2,503 $ 3,558 Accruals 2,296 3,076 Settlements ( 2,377 ) ( 3,362 ) Balance at end of period $ 2,422 $ 3,272 16 Note 11 — Property, Plant and Equipment, net Property, plant and equipment, net consisted of the following (in thousands): June 27, 2026 December 27, 2025 Land $ 35,274 $ 35,274 Building and building improvements 46,508 46,502 Machinery and equipment 313,516 317,024 Computer equipment and software 45,308 45,135 Furniture and fixtures 7,060 7,043 Leasehold improvements 102,682 104,262 Sub-total 550,348 555,240 Less: Accumulated depreciation and amortization ( 400,567 ) ( 390,323 ) Net property, plant and equipment 149,781 164,917 Construction-in-progress 115,621 94,151 Total $ 265,402 $ 259,068 We incurred non-cash asset impairment and depreciation charges of $ 0.6 million and $ 16.3 million during the three and six months ended June 27, 2026, respectively, as a direct result of the 2026 Restructuring Plans (see Note 7, Restructuring Charges ). Note 12 — 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 initial $ 67.2 million equity investment 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. During the three and six months ended June 27, 2026, we recorded income of $ 2.2 million and $ 3.8 million, respectively, from our equity share of the HoldCo using lag reporting. As of June 27, 2026, the carrying value of our investment was $ 65.9 million. We engage in transactions with FICT, a related party and a supplier, in the normal course of business. Total related party purchases of inventory from FICT during the three and six months ended June 27, 2026 was $ 5.2 million and $ 8.2 million, respectively. Note 13 — Stockholders’ Equity and Stock-Based Compensation Common 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 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 fiscal 2025, we repurchased and retired 135,000 shares of common stock for $ 4.1 million. During the six months ended June 27, 2026, we did not repurchase shares of common stock under this plan, and as of June 27, 2026, $ 70.9 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. Share repurchases are subject to an excise tax enabled by the Inflation Reduction Act that is generally 1% of the fair market value of the shares repurchased at the time of the repurchase, net of the fair market value of 17 certain new stock issuances during the same taxable year. Certain exceptions apply to the excise tax. The excise tax incurred, if applicable, 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. Restricted Stock Units Restricted stock unit (“RSU”) activity under our equity incentive plan was as follows: Units Weighted Average Grant Date Fair Value RSUs at December 27, 2025 1,874,319 $ 35.10 Awards granted 31,254 108.11 Awards vested ( 437,002 ) 32.85 Awards forfeited ( 141,215 ) 36.94 RSUs at June 27, 2026 1,327,356 37.37 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 27, 2026. PRSUs are included as part of the RSU activity above. Employee Stock Purchase Plan Information related to activity under our Employee Stock Purchase Plan (“ESPP”) was as follows: Six Months Ended June 27, 2026 Shares issued 176,570 Weighted average per share purchase price $ 33.06 Weighted average per share discount from the fair value of our common stock on the date of issuance $ 37.49 Stock-Based Compensation Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Cost of revenues $ 1,726 $ 1,690 $ 3,567 $ 3,695 Research and development 1,966 2,536 4,370 5,182 Selling, general and administrative 4,966 5,165 8,784 10,310 Total stock-based compensation $ 8,658 $ 9,391 $ 16,721 $ 19,187 Unrecognized Compensation Costs At June 27, 2026, the unrecognized stock-based compensation was as follows (dollars in thousands): Unrecognized Expense Average Expected Recognition Period (in years) Restricted stock units $ 29,276 1.86 Performance restricted stock units 6,419 1.74 Employee stock purchase plan 353 0.09 Total unrecognized stock-based compensation expense $ 36,048 1.82 18 Note 14 — Net Income per Share 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 June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Weighted-average shares used in computing basic net income per share 78,036 77,107 77,930 77,226 Add potentially dilutive securities 1,571 420 1,616 495 Weighted-average shares used in computing diluted net income per share 79,607 77,527 79,546 77,721 Securities not included as they would have been antidilutive 3 620 3 558 Note 15 — Commitments and Contingencies Legal Matters From time to time, we are subject to legal proceedings and claims in the ordinary course of business, the outcomes of which cannot be estimated with certainty. Our ability to estimate the outcomes may change in the near term and the effect of any such change could have a material adverse effect on our financial position, results of operations or cash flows. Note 16 — Leases We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for a portion of our corporate headquarters located in Livermore, California. Our leases have remaining terms of one to nine years , and some leases include options to extend up to 20 years. We also have operating leases for automobiles with remaining lease terms of one year . 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 three years as of June 27, 2026 and the weighted-average discount rate was 5.2 %. The components of lease expense were as follows (in thousands): Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Lease expense: Operating lease expense $ 2,000 $ 2,186 $ 5,031 $ 4,337 Short-term lease expense 131 132 299 236 Variable lease expense 346 932 1,100 1,712 $ 2,477 $ 3,250 $ 6,430 $ 6,285 19 Future minimum payments under our non-cancelable operating leases were as follows as of June 27, 2026 (in thousands): Fiscal Year Amount Remainder of 2026 $ 4,658 2027 8,891 2028 5,212 2029 687 2030 452 Thereafter 961 Total minimum lease payments 20,861 Less: interest ( 2,593 ) Present value of net minimum lease payments 18,268 Less: current portion ( 8,317 ) Total long-term operating lease liabilities $ 9,951 Note 17 — Revenue Transaction price allocated to the remaining performance obligations: On June 27, 2026, we had $ 10.8 million of remaining performance obligations, which were comprised of deferred service contracts, extended warranty contracts, and contracts with overtime revenue recognition that are not yet delivered. We expect to recognize approximately 56.4 % of our remaining performance obligations as revenue in the remainder of fiscal 2026, approximately 38.4 % in fiscal 2027, and approximately 5.2 % in fiscal 2028 and thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation. Contract balances: The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable is recorded at the invoiced amount, net of an allowance for credit losses. A receivable is recognized in the period we deliver goods or provide services or when our right to consideration is unconditional. 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 27, 2026 and December 27, 2025 were $ 5.2 million and $ 2.3 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 27, 2026 and December 27, 2025 were $ 24.8 million and $ 21.4 million, respectively. During the six months ended June 27, 2026, we recognized $ 14.0 million of revenue that was included in contract liabilities as of December 27, 2025. Costs to obtain a contract: We generally expense sales commissions when incurred as a component of Selling, general and administrative expense, as the amortization period is typically less than one year. Revenue by category: Refer to Note 18, Operating Segments and Enterprise-Wide Information , for further details. Note 18 — Operating Segments and Enterprise-Wide Information We operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. Our chief operating decision maker (“CODM”) is our President and Chief Executive Officer, who assesses the reportable segments' performance by using each reportable segment's net contribution to make decisions about allocating resources and assessing performance for the entire company. The CODM uses net contribution for each reportable segment predominantly in the annual budget and forecasting process, as well as consideration of budget-to-actual variances on a quarterly basis when making decisions for assessment of our performance and results of operations. Certain components of net contribution are utilized to determine executive compensation along with other measures. 20 The following table provides net contribution by reportable segment and includes a reconciliation to net income before income taxes (dollars in thousands): Three Months Ended June 27, 2026 June 28, 2025 Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total Revenues $ 209,695 $ 48,547 $ — $ 258,242 $ 162,108 $ 33,690 $ — $ 195,798 Cost of revenues 95,639 24,984 6,697 127,320 100,040 20,419 2,401 122,860 Gross profit 114,056 23,563 ( 6,697 ) 130,922 62,068 13,271 ( 2,401 ) 72,938 Gross margin 54.4 % 48.5 % 50.7 % 38.3 % 39.4 % 37.3 % Research and development 22,961 6,205 1,933 31,099 20,974 5,261 2,558 28,793 Selling 8,601 4,910 1,431 14,942 7,181 3,424 1,369 11,974 Marketing 1,869 1,924 1,357 5,150 1,598 1,882 1,327 4,807 Net contribution $ 80,625 $ 10,524 $ ( 11,418 ) 79,731 $ 32,315 $ 2,704 $ ( 7,655 ) 27,364 General and administrative 17,073 14,701 Factory start-up costs 4,859 357 Operating income 57,799 12,306 Interest income, net 2,683 2,642 Other income (expense), net 212 ( 6 ) Income before income taxes and equity investment $ 60,694 $ 14,942 Six Months Ended June 27, 2026 June 28, 2025 Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total Revenues $ 407,952 $ 76,434 $ — $ 484,386 $ 298,628 $ 68,526 $ — $ 367,154 Cost of revenues 193,765 42,269 30,636 266,670 184,945 39,740 5,008 229,693 Gross profit 214,187 34,165 ( 30,636 ) 217,716 113,683 28,786 ( 5,008 ) 137,461 Gross margin 52.5 % 44.7 % 44.9 % 38.1 % 42.0 % 37.4 % Research and development 44,733 11,436 5,710 61,879 42,030 9,229 5,334 56,593 Selling 16,324 8,748 2,746 27,818 13,747 7,084 4,170 25,001 Marketing 3,491 3,744 2,992 10,227 3,178 3,623 2,453 9,254 Net contribution $ 149,639 $ 10,237 $ ( 42,084 ) 117,792 $ 54,728 $ 8,850 $ ( 16,965 ) 46,613 General and administrative 31,412 30,681 Factory start-up costs 11,933 357 Operating income 74,447 15,575 Interest income, net 4,857 5,959 Other income (expense), net 653 884 Income before income taxes and equity investment $ 79,957 $ 22,418 Corporate and Other includes unallocated expenses relating to restructuring charges, amortization of stock-based compensation expense, intangible assets, acquisition-related costs, including charges related to fixed assets stepped up to fair value, and other costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses. Net contribution represents Operating income excluding general and administrative expenses and factory start-up costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments. 21 Certain revenue category information by reportable segment was as follows (in thousands): Three Months Ended June 27, 2026 June 28, 2025 Probe Cards Systems Total Probe Cards Systems Total Market: Foundry & Logic $ 121,839 $ — $ 121,839 $ 99,513 $ — $ 99,513 DRAM 84,999 — 84,999 57,057 — 57,057 Flash 2,857 — 2,857 5,538 — 5,538 Systems — 48,547 48,547 — 33,690 33,690 Total $ 209,695 $ 48,547 $ 258,242 $ 162,108 $ 33,690 $ 195,798 Timing of revenue recognition: Products transferred at a point in time $ 208,065 $ 46,501 $ 254,566 $ 160,552 $ 30,243 $ 190,795 Products and services transferred over time 1,630 2,046 3,676 1,556 3,447 5,003 Total $ 209,695 $ 48,547 $ 258,242 $ 162,108 $ 33,690 $ 195,798 Geographical region: Taiwan $ 78,408 $ 16,013 $ 94,421 $ 46,814 $ 6,065 $ 52,879 South Korea 73,208 216 73,424 55,836 1,293 57,129 United States 26,499 11,719 38,218 32,849 8,075 40,924 China 8,372 8,519 16,891 4,633 4,767 9,400 Europe 3,771 5,694 9,465 3,224 4,024 7,248 Malaysia 8,295 776 9,071 5,112 43 5,155 Singapore 5,132 1,605 6,737 5,489 1,190 6,679 Rest of World 2,230 2,980 5,210 1,071 647 1,718 Japan 3,780 1,025 4,805 7,080 7,586 14,666 Total $ 209,695 $ 48,547 $ 258,242 $ 162,108 $ 33,690 $ 195,798 22 Six Months Ended June 27, 2026 June 28, 2025 Probe Cards Systems Total Probe Cards Systems Total Market: Foundry & Logic $ 233,027 $ — $ 233,027 $ 184,785 $ — $ 184,785 DRAM 167,932 — 167,932 105,915 — 105,915 Flash 6,993 — 6,993 7,928 — 7,928 Systems — 76,434 76,434 — 68,526 68,526 Total $ 407,952 $ 76,434 $ 484,386 $ 298,628 $ 68,526 $ 367,154 Timing of revenue recognition: Products transferred at a point in time $ 404,350 $ 71,221 $ 475,571 $ 295,273 $ 61,578 $ 356,851 Products and services transferred over time 3,602 5,213 8,815 3,355 6,948 10,303 Total $ 407,952 $ 76,434 $ 484,386 $ 298,628 $ 68,526 $ 367,154 Geographical region: Taiwan $ 146,653 $ 18,608 $ 165,261 $ 87,561 $ 10,680 $ 98,241 South Korea 152,974 1,012 153,986 98,045 2,255 100,300 United States 48,321 19,307 67,628 60,633 20,616 81,249 China 16,178 12,075 28,253 12,785 10,230 23,015 Europe 6,891 10,348 17,239 6,759 8,270 15,029 Singapore 12,214 4,798 17,012 10,360 2,568 12,928 Japan 8,862 4,225 13,087 12,259 12,726 24,985 Malaysia 11,954 831 12,785 7,664 91 7,755 Rest of the world 3,905 5,230 9,135 2,562 1,090 3,652 Total $ 407,952 $ 76,434 $ 484,386 $ 298,628 $ 68,526 $ 367,154 23