What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-08 · 131 added, 75 removed, 423 unchanged (33% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Cost of revenue

16 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive loss, net of tax:

Change in net unrealized (losses) gains on

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Other comprehensive income (loss), net of tax:

Change in net unrealized gains on

available-for-sale marketable securities

Change in currency translation adjustments

Total other comprehensive loss, net of tax

Total other comprehensive income (loss), net of tax

Total comprehensive income

3 unchanged sentences

(In thousands)

September 28,

Current Assets:

28 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 28,

September 30,

Cash flows from operating activities:

44 unchanged sentences

Balance at June 29, 2024

Share-based compensation

Issuance of shares through

share-based compensation

Share-based compensation plan

Currency translation

Unrealized gain on investments

Balance at September 28, 2024

Comprehensive

15 unchanged sentences

Balance at July 1, 2023

Share-based compensation

Issuance of shares through

share-based compensation

Purchases and retirement of common stock

Share-based compensation plan

Currency translation

Unrealized loss on investments

Balance at September 30, 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 and six months ended June 29, 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 nine months ended September 28, 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 ended 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 ended on September 28, 2024.

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

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

The third quarter of the fiscal year ended December 30, 2023 ended on September 30, 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 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.

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 28, 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 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.

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 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.

The Company expects there will be no material impact on its Consolidated Financial Statements from the adoption of ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

16 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 June 29, 2024 and December 30, 2023:

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at September 28, 2024 and December 30, 2023:

Fair Value Measurements Using

1 unchanged sentence

Inputs (Level 2)

September 28,

Available-for-sale debt securities:

4 unchanged sentences

Foreign currency forward contracts

Total liabilities

5 unchanged sentences

Marketable Securities

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

At September 28, 2024 and December 30, 2023, marketable securities are categorized as follows:

Amortized Cost

1 unchanged sentence

Gross Unrealized Holding Losses

June 29, 2024

September 28, 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 June 29, 2024 and December 30, 2023:

June 29, 2024

September 28, 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 (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 June 29, 2024 and December 30, 2023 are temporary in nature.

The Company has determined that the gross unrealized losses on its marketable securities at September 28, 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 June 29, 2024 and December 30, 2023:

In Unrealized Loss Position For

4 unchanged sentences

Gross Unrealized Losses

June 29, 2024

September 28, 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 June 29, 2024 and December 30, 2023, these contracts were denominated in euro, Chinese renminbi, Japanese yen, Korean won, Singapore dollars, and Taiwanese dollars.

At September 28, 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.

1 unchanged sentence

The dollar equivalent of the U.S.

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

June 29, 2024

dollar forward contracts and related fair values as of September 28, 2024 and December 30, 2023 were as follows:

September 28, 2024

December 30, 2023

Notional amount

Fair value of asset (liability)

Fair value of liability

Purchased Intangible Assets

Intangible Assets

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

Purchased intangible assets as of September 28, 2024 and December 30, 2023 are as follows:

Gross Carrying Amount

Accumulated Amortization

June 29, 2024

September 28, 2024

Finite-lived intangibles:

14 unchanged sentences

Inventories, net are comprised of the following:

June 29, 2024

September 28, 2024

December 30, 2023

4 unchanged sentences

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

June 29, 2024

September 28, 2024

December 30, 2023

7 unchanged sentences

Other assets are comprised of the following:

June 29, 2024

September 28, 2024

December 30, 2023

3 unchanged sentences

Accrued liabilities are comprised of the following:

June 29, 2024

September 28, 2024

December 30, 2023

3 unchanged sentences

Other current liabilities are comprised of the following:

June 29, 2024

September 28, 2024

December 30, 2023

7 unchanged sentences

Other non-current liabilities are comprised of the following:

June 29, 2024

September 28, 2024

December 30, 2023

17 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 28,

September 30,

Balance, beginning of the period

5 unchanged sentences

Line of Credit

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 has a credit agreement with a bank that provides for a variable-rate 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, 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 available line of credit as of September 28, 2024 was $ 100 million with an available interest rate of 6.6 %.

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

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Point-in-time

5 unchanged sentences

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.

As of September 28, 2024 and December 30, 2023 , the Company carried a long-term deferred revenue balance of $ 3,197 and $ 2,462 , respectively.

Changes in deferred revenue were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

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 six months ended June 29, 2024 is as follows:

A summary of the Company’s restricted stock unit activity with respect to the nine months ended September 28, 2024 is as follows:

Number of Shares

2 unchanged sentences

Nonvested at December 30, 2023

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.

Nonvested at September 28, 2024

Of the 414 nonvested shares outstanding at September 28, 2024 , 332 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 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.

As of September 28, 2024 and December 30, 2023 , there was $ 34,231 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 1.4 years following both September 28, 2024 and December 30, 2023 , respectively.

Other (Expense) Income, Net

1 unchanged sentence

Three Months Ended

Six Months Ended

Foreign currency exchange (losses) gains, net

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Foreign currency exchange losses, net

Total other (expense) income, net

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Income before income taxes

1 unchanged sentence

Effective tax rate

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 income tax provision for the three and nine months ended September 28, 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 nine months ended September 28, 2024 as compared to the three and nine months ended September 30, 2023 was primarily due, in each case, to an increase in quarterly earnings, partially 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.

6 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 June 29, 2024 and December 30, 2023.

The Company has a recorded valuation allowance against a certain portion of its deferred tax assets of $ 13,960 at September 28, 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.

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Basic earnings per share - weighted average shares

7 unchanged sentences

Foreign currency

Net unrealized gains (losses) on

Net unrealized gains on

available-for-sale marketable

2 unchanged sentences

Balance at December 30, 2023

Net current period other comprehensive loss

Balance at June 29, 2024

Net current period other comprehensive income

Balance at September 28, 2024

Foreign currency

5 unchanged sentences

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.

Balance at September 30, 2023

For the nine months ended September 28, 2024 and September 30, 2023 , tax effects on net income of amounts recorded in other comprehensive income (loss) were $ 358 and $ 407 , respectively.

Segment Reporting and Geographic Information

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Systems and software

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Revenue from third parties:

Southeast Asia

United States

Southeast Asia

Total revenue

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

Six Months Ended

Taiwan Semiconductor Manufacturing Co.

Samsung Semiconductor

SK Hynix Inc.

Nine Months Ended

September 28,

September 30,

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.

Three customers’ net accounts receivable balances, were individually greater than 10 % of net accounts receivable at September 28, 2024 , representing, in the aggregate approximately 43 % of the Company’s total net accounts receivable.

Two customers’ net accounts receivable balances, were individually greater than 10 % of net accounts receivable at December 30, 2023 , representing, 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.

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

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 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.

During the three and nine months ended September 28, 2024 , no shares of the Company’s common stock were repurchased under the share repurchase authorization.

At September 28, 2024 , there was $ 200 million available for future share repurchases under this share repurchase authorization.

Restructuring

1 unchanged sentence

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.

Charges to operating expenses primarily include employee severance costs that are paid during the period incurred and charges for streamlining of certain operating activities.

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Cost of goods sold

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements