What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 115 added, 79 removed, 383 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

6 unchanged sentences

Interest income, net

Other income (expense), net

Other (expense) income, net

Income before provision for income taxes

7 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive loss, net of tax:

Change in net unrealized gains (losses) on

Change in net unrealized (losses) gains on

available-for-sale marketable securities

Change in currency translation adjustments

Total other comprehensive (loss) income, net of tax

Total other comprehensive loss, net of tax

Total comprehensive income

33 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

11 unchanged sentences

Purchases of property, plant and equipment

Net cash and cash equivalents (used in) provided by investing activities

Net cash and cash equivalents used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Tax payments related to shares withheld for share-based compensation plans

Payment of contingent consideration for acquired business

Issuance of shares through share-based compensation plans

19 unchanged sentences

Balance at March 30, 2024

Share-based compensation

Issuance of shares through

share-based compensation

Share-based compensation plan

Currency translation

Unrealized loss on investments

Balance at June 29, 2024

Comprehensive

8 unchanged sentences

Balance at April 1, 2023

Share-based compensation

Issuance of shares through

share-based compensation

Share-based compensation plan

Currency translation

Unrealized loss on investments

Balance at July 1, 2023

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

7 unchanged sentences

Actual amounts could differ materially from reported amounts.

The interim results for the three months ended March 30, 2024 are not necessarily indicative of results to be expected for the entire year or any future periods.

The interim results for the three and six months ended June 29, 2024 are not necessarily indicative of results to be expected for the entire year or any future periods.

This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023 (the “2023 Form 10-K”) filed with the Securities and Exchange Commission on February 26, 2024.

2 unchanged sentences

Our fiscal year ending December 28, 2024 (“fiscal year 2024”) is a 52-week fiscal year.

The first quarter of the Company’s fiscal year 2024 ended on March 30, 2024, the second quarter ends on June 29, 2024 and the third quarter ends on September 28, 2024.

The first quarter of the Company’s fiscal year 2024 ended on March 30, 2024, the second quarter ended on June 29, 2024 and the third quarter ends on September 28, 2024.

Our fiscal year ended December 30, 2023 was a 52-week fiscal year.

The first quarter of the fiscal year ended December 30, 2023 ended on April 1, 2023.

The second quarter of the fiscal year ended December 30, 2023 ended on July 1, 2023.

Use of Estimates

9 unchanged sentences

Recently Adopted or Effective

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 30, 2024, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, that are of significance, or potential significance to the Company.

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three and six months ended June 29, 2024, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, that are of significance, or potential significance, to the Company.

Updates Not Yet Effective

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information

in assessing segment performance and allocating resources.

Improvements to Reportable Segment Disclosures,” which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment including information about the reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker

uses reported segment profit or loss information in assessing segment performance and allocating resources.

The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is required to adopt this standard in the fiscal year 2024 for the annual reporting period ending December 28, 2024, with retrospective disclosure of prior periods presented.

The Company is required to adopt this standard in fiscal year 2024 for the annual reporting period ending December 28, 2024, with retrospective disclosure of prior periods presented.

The Company is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements.

17 unchanged sentences

A financial asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at March 30, 2024 and December 30, 2023:

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 29, 2024 and December 30, 2023:

Fair Value Measurements Using

15 unchanged sentences

Marketable Securities

At March 30, 2024 and December 30, 2023, marketable securities are categorized as follows:

At June 29, 2024 and December 30, 2023, marketable securities are categorized as follows:

Amortized Cost

1 unchanged sentence

Gross Unrealized Holding Losses

March 30, 2024

June 29, 2024

Government notes and bonds

9 unchanged sentences

Total marketable securities

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, is as follows at March 30, 2024 and December 30, 2023:

March 30, 2024

June 29, 2024

December 30, 2023

7 unchanged sentences

The Company has evaluated its investment policies and determined that all of its marketable securities, which are comprised of debt securities, are to be classified as available-for-sale.

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ equity under the caption “Accumulated other comprehensive loss.” Gross realized gains and losses on available-for-sale securities are included in “Other income (expense), net” on the Condensed Consolidated Statements of Operations and were not material during the three months ended March 30, 2024 and December 30, 2023.

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ equity under the caption “Accumulated other comprehensive loss.” Gross realized gains and losses on available-for-sale securities are included in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations and were not material during the three and six months ended June 29, 2024 and July 1, 2023.

The Company records credit losses for its available-for-sale debt securities when it intends to sell the securities, it is more-likely-than not that it will be required to sell the securities before a recovery, or when it does not expect to recover the entire amortized cost basis of the securities.

The cost of securities sold is based on the specific identification method.

The Company has determined that the gross unrealized losses on its marketable securities at March 30, 2024 and December 30, 2023 are temporary in nature.

The Company has determined that the gross unrealized losses on its marketable securities at June 29, 2024 and December 30, 2023 are temporary in nature.

The Company regularly reviews its investment portfolio to identify and evaluate marketable securities that have indications of possible impairment from credit losses or other factors.

Factors considered in determining whether an unrealized loss is considered to be a credit loss include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at March 30, 2024 and December 30, 2023:

In Unrealized Loss Position For

4 unchanged sentences

Gross Unrealized Losses

March 30, 2024

June 29, 2024

Government notes and bonds

10 unchanged sentences

The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions.

At March 30, 2024 and December 30, 2023, these contracts were denominated in euro, Chinese renminbi, Japanese yen, Korean won, Singapore dollars, and Taiwanese dollars.

Foreign currency forward contracts are not designated as hedges for accounting purposes, and therefore, the change in fair value is recorded in “Other income (expense), net,” in the Condensed Consolidated Statements of Operations.

At June 29, 2024 and December 30, 2023, these contracts were denominated in euro, Chinese renminbi, Japanese yen, Korean won, Singapore dollars, and Taiwanese dollars.

Foreign currency forward contracts are not designated as hedges for accounting purposes, and therefore, the change in fair value is recorded in “Other (expense) income, net,” in the Condensed Consolidated Statements of Operations.

The Company records its forward contracts at fair value in either prepaid expenses and other current assets or other current liabilities in the Condensed Consolidated Balance Sheets.

The dollar equivalent of the U.S.

dollar forward contracts and related fair values as of March 30, 2024 and December 30, 2023 were as follows:

March 30, 2024

dollar forward contracts and related fair values as of June 29, 2024 and December 30, 2023 were as follows:

June 29, 2024

December 30, 2023

3 unchanged sentences

Intangible Assets

Purchased intangible assets as of March 30, 2024 and December 30, 2023 are as follows:

Purchased intangible assets as of June 29, 2024 and December 30, 2023 are as follows:

Gross Carrying Amount

Accumulated Amortization

March 30, 2024

June 29, 2024

Finite-lived intangibles:

14 unchanged sentences

Inventories, net are comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

4 unchanged sentences

Property, plant and equipment, net is comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

7 unchanged sentences

Other assets are comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

3 unchanged sentences

Accrued liabilities are comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

3 unchanged sentences

Other current liabilities are comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

7 unchanged sentences

Other non-current liabilities are comprised of the following:

March 30, 2024

June 29, 2024

December 30, 2023

4 unchanged sentences

Commitments and Contingencies

The Company maintains arrangements under which eligible accounts receivable in Japan are sold without recourse to unrelated third-party financial institutions.

The Company sold $ 3,447 of receivables during the three months ended March 30, 2024.

These receivables were not included in the Condensed Consolidated Balance Sheets as the criteria for sale treatment had been met.

There were no material gains or losses on the sale of such receivables.

There were no amounts due from such third-party financial institutions at March 30, 2024.

Intellectual Property Indemnification Obligations

11 unchanged sentences

Changes in the Company’s warranty reserves are as follows:

Three Months Ended

Six Months Ended

Balance, beginning of the period

6 unchanged sentences

The Company has a credit agreement with a bank that provides for a line of credit which is secured by the marketable securities the Company has with the bank.

The Company is permitted to borrow up to 70 % of the value of eligible securities held at the time the line of credit is accessed.

The available line of credit as of March 30, 2024 was approximately $ 100 million with

an available interest rate of 7.1 %.

The Company is permitted to borrow up to 70 % of the value of eligible securities held at the time the line of credit is accessed, up to a maximum of $ 100 million.

The available line of credit as of June 29, 2024 was $ 100 million with an available interest rate of 7.1 %.

The credit agreement is available to the Company until such time that either party terminates the arrangement at their discretion.

2 unchanged sentences

Three Months Ended

Six Months Ended

Point-in-time

4 unchanged sentences

For contracts that have a duration of one year or less, these amounts are recorded as current deferred revenue in the Condensed Consolidated Balance Sheets.

As of March 30, 2024 and December 30, 2023, the Company carried a long-term deferred revenue balance of $ 2,529 and $ 2,462 , respectively, in “Other non-current liabilities” on the Condensed Consolidated Balance Sheets.

For contracts with a duration longer than one year, these amounts are recorded in other non-current liabilities in the Condensed Consolidated Balance Sheets.

As of June 29, 2024 and December 30, 2023, the Company carried a long-term deferred revenue balance of $ 3,114 and $ 2,462 , respectively.

Changes in deferred revenue were as follows:

Three Months Ended

Six Months Ended

Balance, beginning of the period

5 unchanged sentences

Restricted Stock Unit Activity

A summary of the Company’s restricted stock unit activity with respect to the three months ended March 30, 2024 is as follows:

A summary of the Company’s restricted stock unit activity with respect to the six months ended June 29, 2024 is as follows:

Number of Shares

2 unchanged sentences

Nonvested at December 30, 2023

Nonvested at March 30, 2024

Of the 536 nonvested shares outstanding at March 30, 2024, 454 are service-based RSUs and 82 are market-based PRSUs.

Nonvested at June 29, 2024

Of the 424 nonvested shares outstanding at June 29, 2024, 342 are service-based RSUs and 82 are market-based PRSUs.

The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the date of grant.

The fair value of the Company’s market-based PRSUs granted during fiscal years 2024 and 2023 was calculated

using a Monte Carlo simulation model at the date of the grant, resulting in a weighted average grant-date fair value per share of $ 251.51 and $ 100.79 , respectively.

As of March 30, 2024 and December 30 2023, there was $ 32,081 and $ 26,559 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.

That cost is expected to be recognized over a weighted average period of 1.5 years and 1.4 years for March 30, 2024 and December 30, 2023, respectively.

Other Income (Expense), Net

Other income (expense), net, is comprised of the following:

The fair value of the Company’s market-based PRSUs granted during fiscal years 2024 and 2023 was calculated using a Monte Carlo simulation model at the date of the grant, resulting in a weighted average grant-date fair value per share of $ 251.51 and $ 100.79 , respectively.

As of June 29, 2024 and December 30 2023, there was $ 39,921 and $ 26,559 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.

That cost is expected to be recognized over a weighted average period of 1.6 years and 1.4 years for June 29, 2024 and December 30, 2023, respectively.

Other (Expense) Income, Net

Other (expense) income, net, is comprised of the following:

Three Months Ended

Foreign currency exchange gains (losses), net

Total other income (expense), net

Six Months Ended

Foreign currency exchange (losses) gains, net

Total other (expense) income, net

The following table provides details of income taxes:

Three Months Ended

Six Months Ended

Income before income taxes

1 unchanged sentence

Effective tax rate

The income tax provision for the three months ended March 30, 2024 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.

The increase in the Company’s income tax provision for the three months ended March 30, 2024 as compared to the three months ended April 1, 2023 was primarily due to an increase in quarterly earnings, offset by an increase in the excess benefits associated with equity compensation.

The income tax provision for the three and six months ended June 29, 2024 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.

The increase in the Company’s income tax provision for the three and six months ended June 29, 2024 as compared to the three and six months ended July 1, 2023 was primarily due, in each case, to an increase in quarterly earnings, offset by an increase in the excess benefits associated with equity compensation.

The Company’s recorded effective tax rate for the periods presented is less than the U.S.

statutory rate primarily due to projected FDII deductions, federal research and development tax credits, and excess tax benefits associated with equity compensation.

The Company currently has a partial valuation allowance recorded against certain foreign and state net operating loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt.

statutory rate primarily due to projected Foreign Derived Intangible Income deductions, federal research and development tax credits, and excess tax benefits associated with equity compensation.

The Company currently has a partial valuation allowance recorded against certain foreign and state net operating loss and credit carryforwards where the unrealizability of such deferred tax assets is more likely than not.

Each quarter, the Company assesses the likelihood that it will be able to recover its deferred tax assets.

3 unchanged sentences

The Company continues to monitor available evidence and may reverse some or all of its remaining valuation allowance in future periods, if appropriate.

The Company has a recorded valuation allowance against a certain portion of its deferred tax assets of $ 13,960 at March 30, 2024 and December 30, 2023.

The Organization for Economic Co-operation and Development (“OECD”) has been working on a Base Erosion and Profits Shifting project that, upon implementation, would change various aspects of the existing framework under which the Company’s tax obligations are determined in many of the countries in which we operate.

In this regard, the OECD has proposed policies aiming to modernize global tax systems, including a country-by-country 15% minimum effective tax rate (“Pillar Two”) for multinational companies.

The Company has a recorded valuation allowance against a certain portion of its deferred tax assets of $ 13,960 at June 29, 2024 and December 30, 2023.

The Organization for Economic Co-operation and Development (“OECD”) has been working on a Base Erosion and Profits Shifting (“BEPS”) project that would change various aspects of the existing framework under which the Company’s tax obligations are determined in many of the countries in which we operate.

As part of the BEPS project, the OECD issued policies aimed to modernize global tax systems, including a country-by-country 15% minimum effective tax rate (“Pillar Two”) for multinational companies.

Numerous countries have enacted, or are in the process of enacting, legislation to implement the Pillar Two model rules with a subset of the rules becoming effective during the current year, and the remaining rules becoming effective in later periods.

At this point in time, the Company does not expect any material tax impact associated with Pillar Two rules in the countries where it operates.

As these rules continue to evolve with new legislation and guidance, the Company will

continue to monitor and account for the enactment of Pillar Two and the potential impacts such rules may have on its effective tax rate and cash flows in future years.

As these rules continue to evolve with new legislation and guidance, the Company will continue to monitor and account for the enactment of Pillar Two and the potential impacts such rules may have on its effective tax rate and cash flows in future years.

Earnings Per Share

3 unchanged sentences

Three Months Ended

Six Months Ended

Basic earnings per share - weighted average shares

5 unchanged sentences

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, at March 30, 2024, as well as the activity for the three months ended March 30, 2024, were as follows:

The components of accumulated other comprehensive loss, net of tax, were as follows:

Foreign currency

5 unchanged sentences

Net current period other comprehensive loss

Reclassifications

Balance at March 30, 2024

For the three months ended March 30, 2024, tax effects on net income of amounts recorded in other comprehensive loss for net unrealized gains on available-for-sale marketable securities and foreign currency translation adjustments was $ 181.

Balance at June 29, 2024

Foreign currency

Net unrealized (losses) gains on

available-for-sale marketable

Accumulated other

comprehensive loss

Balance at December 31, 2022

Net current period other comprehensive (loss) income

Balance at July 1, 2023

For the six months ended June 29, 2024 and July 1, 2023, tax effects on net income of amounts recorded in other comprehensive income (loss) were $ 236 and $( 264 ), respectively.

Segment Reporting and Geographic Information

3 unchanged sentences

Therefore, the Company has one reportable segment.

The Company’s chief operating decision maker is the Chief Executive Officer (the “CEO”).

The Company’s chief operating

decision maker is the Chief Executive Officer (the “CEO”).

The CEO allocates resources and assesses performance of the business and other activities at the reportable segment level.

1 unchanged sentence

Three Months Ended

Six Months Ended

Systems and software

4 unchanged sentences

Three Months Ended

Six Months Ended

Revenue from third parties:

United States

Southeast Asia

United States

Total revenue

The following customers accounted for 10% or more of total revenue for the indicated periods:

Three Months Ended

Samsung Semiconductor

Six Months Ended

Taiwan Semiconductor Manufacturing Co.

Samsung Semiconductor

SK Hynix Inc.

The customer accounted for less than 10% of total revenue during the period.

One customer’s net accounts receivable balance, Taiwan Semiconductor Manufacturing Co.

was individually greater than 10 % of net accounts receivable at June 29, 2024, approximately 21 % of the Company’s total net accounts receivable.

Two customers’ net accounts receivable balances, Taiwan Semiconductor Manufacturing Co.

and Samsung Semiconductor, were individually greater than 10 % of net accounts receivable at December 30, 2023, in the aggregate approximately 29 % of the Company’s total net accounts receivable.

Substantially all of the Company’s long-lived assets are located within the United States of America.

Share Repurchase Authorization

In February 2024, the Onto Innovation Board of Directors approved a new share repurchase authorization, which allows the Company to repurchase up to $ 200,000 worth of shares of its common stock.

Repurchases may be made through both public market and private transactions from time to time with shares purchased being subsequently retired.

Repurchases may be made through both public market and private transactions from time to time.

Any amount paid to repurchase the shares in excess of par value, including transaction costs, would be recorded directly as a decrease to additional paid-in capital and accumulated earnings.

During the three month period ended March 30, 2024, no shares of the Company’s common stock were repurchased under the share repurchase authorization.

At March 30, 2024, there was $ 200,000 available for future share repurchases under this share repurchase authorization.

During the three and six month periods ended June 29, 2024, no shares of the Company’s common stock were repurchased under the share

repurchase authorization.

At June 29, 2024, there was $ 200,000 available for future share repurchases under this share repurchase authorization.

Restructuring

From time to time, the Company approves restructuring plans, which includes workforce reductions, to streamline operations and align the Company’s cost structure with its business outlook.

Restructuring charges were $ 1,046 and $ 4,313 for the three months ended March 30, 2024 and April 1, 2023, respectively.

During the three months ended March 30, 2024, restructuring costs of $ 258 were recorded in operating expenses for employee severance and $ 788 were recorded in cost of goods sold for the streamlining of certain manufacturing activities.

During the three months ended April 1, 2023, restructuring costs of $ 2,034 were recorded in operating expense for employee severance and $ 2,279 was recorded in cost of goods sold for inventory write-downs primarily related to the exit of older product lines.

All employee severance costs were paid during the periods incurred.

From time to time, the Company approves restructuring plans, which include workforce reductions, to streamline operations and align the Company’s cost structure with its business outlook.

These restructuring plans may result in charges to cost of goods sold for streamlining of certain manufacturing activities or for inventory write-downs primarily related to the exit of older product lines.

Charges to operating expenses primarily include employee severance costs that are paid during the period incurred.

Restructuring expenses recorded in the Condensed Consolidated Statements of Operations are as follows:

Three Months Ended

Six Months Ended

Cost of goods sold

Operating expenses

Total restructuring expenses

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