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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2019
 
Or 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
 
Commission file number: 000-50307
 
FormFactor, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
13-3711155
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
7005 Southfront Road, Livermore, California 94551
(Address of principal executive offices, including zip code)
 
(925) 290-4000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section12(b) of the Act:
 
Title of each class
 
 
Trading Symbol(s)
 
Name of each exchange on which registered
 
Common stock, $0.001 par value
 
 
FORM
 
Nasdaq Global Select Market

 ______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No 
 
Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of the Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
Accelerated Filer
 
 
 
 
Non-accelerated Filer
Smaller Reporting Company
(Do not check if a smaller reporting company)
 
Emerging Growth Company
 
 
 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  

As of July 31, 2019, 75,185,253 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.
 



FORMFACTOR, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 29, 2019
INDEX

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2



PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
June 29,
2019
 
December 29, 2018
ASSETS
 

 


Current assets:
 

 
 

Cash and cash equivalents
$
124,810

 
$
98,472

Marketable securities
52,071

 
50,531

Accounts receivable, net of allowance for doubtful accounts of $189 and $185
71,289

 
95,333

Inventories, net
83,852

 
77,706

Restricted cash
818

 
849

Refundable income taxes
524

 
1,260

Prepaid expenses and other current assets
14,282

 
13,669

Total current assets
347,646

 
337,820

Restricted cash
1,066

 
1,225

Operating lease, right-of-use-assets
33,274

 

Property, plant and equipment, net of accumulated depreciation of $270,566 and $263,102
54,436

 
54,054

Goodwill
189,121

 
189,214

Intangibles, net
53,404

 
67,640

Deferred tax assets
77,279

 
77,301

Other assets
1,343

 
968

Total assets
$
757,569

 
$
728,222

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 
Current liabilities:
 

 
 
Accounts payable
$
26,252

 
$
40,006

Accrued liabilities
29,500

 
27,731

Current portion of term loan, net of unamortized issuance cost of $93 and $160
33,657

 
29,840

Deferred revenue
7,198

 
4,941

Operating lease liabilities
6,203

 

Total current liabilities
102,810

 
102,518

Term loan, less current portion, net of unamortized issuance cost of $0 and $29
12,500

 
34,971

Deferred tax liabilities
2,339

 
2,355

Long-term operating lease liabilities
31,173

 

Other liabilities
4,645

 
8,214

Total liabilities
153,467

 
148,058


 

 
 
Stockholders’ equity:
 

 
 
Preferred stock, $0.001 par value:
 

 
 
10,000,000 shares authorized; no shares issued and outstanding

 

Common stock, $0.001 par value:
 

 
 
250,000,000 shares authorized; 74,691,781 and 74,139,712 shares issued and outstanding
75

 
74

Additional paid-in capital
875,024

 
862,897

Accumulated other comprehensive income
159

 
780

Accumulated deficit
(271,156
)
 
(283,587
)
Total stockholders’ equity
604,102

 
580,164

Total liabilities and stockholders’ equity
$
757,569

 
$
728,222

 
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 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Revenues
$
138,018

 
$
135,509

 
$
270,231

 
$
253,799

Cost of revenues
82,666

 
79,291

 
162,358

 
152,452

Gross profit
55,352

 
56,218

 
107,873

 
101,347

Operating expenses:
 

 
 

 
 

 
 

Research and development
20,074

 
19,675

 
39,797

 
37,721

Selling, general and administrative
26,283

 
25,232

 
51,467

 
48,681

Total operating expenses
46,357

 
44,907

 
91,264

 
86,402

Operating income
8,995

 
11,311

 
16,609

 
14,945

Interest income
684

 
326

 
1,264

 
583

Interest expense
(522
)
 
(910
)
 
(1,117
)
 
(1,877
)
Other income (expense), net
81

 
50

 
(3
)
 
(462
)
Income before income taxes
9,238

 
10,777

 
16,753

 
13,189

Provision for income taxes
2,290

 
1,654

 
4,322

 
1,941

Net income
$
6,948

 
$
9,123

 
$
12,431

 
$
11,248

Net income per share:
 

 
 
 
 
 
 
Basic
$
0.09

 
$
0.12

 
$
0.17

 
$
0.15

Diluted
$
0.09

 
$
0.12

 
$
0.16

 
$
0.15

Weighted-average number of shares used in per share calculations:
 

 
 

 
 
 
 

Basic
74,478

 
73,157

 
74,483

 
72,991

Diluted
76,189

 
74,533

 
76,061

 
74,427

 
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 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net income
$
6,948

 
$
9,123

 
$
12,431

 
$
11,248

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Translation adjustments and other
689

 
(3,449
)
 
(228
)
 
(1,283
)
Unrealized gains (losses) on available-for-sale marketable securities
142

 
40

 
293

 
(134
)
Unrealized gains (losses) on derivative instruments
(73
)
 
(85
)
 
(686
)
 
87

Other comprehensive income (loss), net of tax
758

 
(3,494
)
 
(621
)
 
(1,330
)
Comprehensive income
$
7,706

 
$
5,629

 
$
11,810

 
$
9,918


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


5



FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
 
Shares
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income
 
Accumulated Deficit
 
Total
 
Six Months Ended June 29, 2019
Balances, December 29, 2018
74,139,712

 
$
74

 
$
862,897

 
$
780

 
$
(283,587
)
 
$
580,164

Issuance of common stock under the Employee Stock Purchase Plan
301,497

 

 
3,670

 

 

 
3,670

Issuance of common stock pursuant to exercise of options for cash
19,207

 

 
90

 

 

 
90

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax
231,365

 
1

 
(2,157
)
 

 

 
(2,156
)
Stock-based compensation

 

 
10,524

 

 

 
10,524

Other comprehensive loss

 

 

 
(621
)
 

 
(621
)
Net income

 

 

 

 
12,431

 
12,431

Balances, June 29, 2019
74,691,781

 
$
75

 
$
875,024

 
$
159

 
$
(271,156
)
 
$
604,102

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 29, 2019
Balances, March 30, 2019
74,488,498

 
$
74

 
$
871,617

 
$
(599
)
 
$
(278,104
)
 
$
592,988

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax
203,283

 
1

 
(1,855
)
 

 

 
(1,854
)
Stock-based compensation

 

 
5,262

 

 

 
5,262

Other comprehensive income

 

 

 
758

 

 
758

Net income

 

 

 

 
6,948

 
6,948

Balances, June 29, 2019
74,691,781

 
$
75

 
$
875,024

 
$
159

 
$
(271,156
)
 
$
604,102

 
Six Months Ended June 30, 2018
Balances, December 30, 2017
72,532,176

 
$
73

 
$
843,116

 
$
3,021

 
$
(387,573
)
 
$
458,637

Issuance of common stock under the Employee Stock Purchase Plan
341,670

 
1

 
3,704

 

 

 
3,705

Issuance of common stock pursuant to exercise of options for cash
105,610

 

 
1,049

 

 

 
1,049

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax
378,652

 

 
(2,453
)
 

 

 
(2,453
)
Stock-based compensation

 

 
7,862

 

 

 
7,862

Adoption of ASU 2017-12

 

 

 

 
(50
)
 
(50
)
Other comprehensive loss

 

 

 
(1,330
)
 

 
(1,330
)
Net income

 

 

 

 
11,248

 
11,248

Balances, June 30, 2018
73,358,108

 
$
74

 
$
853,278

 
$
1,691

 
$
(376,375
)
 
$
478,668

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
Balances, March 31, 2018
73,013,842

 
$
74

 
$
851,249

 
$
5,185

 
$
(385,498
)
 
$
471,010

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax
344,266

 

 
(2,096
)
 

 

 
(2,096
)
Stock-based compensation

 

 
4,125

 

 

 
4,125

Other comprehensive loss

 

 

 
(3,494
)
 

 
(3,494
)
Net income

 

 

 

 
9,123

 
9,123

Balances, June 30, 2018
73,358,108

 
$
74

 
$
853,278

 
$
1,691

 
$
(376,375
)
 
$
478,668


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 29, 2019
 
June 30, 2018
Cash flows from operating activities:
 

 
 

Net income
$
12,431

 
$
11,248

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation
8,289

 
6,893

Amortization
14,169

 
14,364

Amortization (accretion) of discount on investments
(180
)
 
36

Amortization of operating lease, right-of-use assets
2,620

 

Stock-based compensation expense
10,584

 
7,884

Amortization of debt issuance costs
96

 
235

Deferred income tax provision
38

 
70

Provision for excess and obsolete inventories
5,304

 
4,593

Loss on disposal of long-lived assets
262

 
48

Loss on derivative instruments
34

 

Foreign currency transaction gains
(423
)
 
(109
)
Changes in assets and liabilities:
 
 
 
Accounts receivable
24,177

 
(3,330
)
Inventories
(11,574
)
 
(13,687
)
Prepaid expenses and other current assets
(872
)
 
(4,760
)
Refundable income taxes
737

 
925

Other assets
(572
)
 
663

Accounts payable
(11,115
)
 
6,239

Accrued liabilities
(309
)
 
(3,541
)
Income tax payable
1,839

 
(281
)
Other liabilities
41

 
2,540

Deferred revenues
2,216

 
28

Operating lease liabilities
(2,416
)
 

Net cash provided by operating activities
55,376

 
30,058

Cash flows from investing activities:
 

 
 

Acquisition of property, plant and equipment
(11,460
)
 
(8,545
)
Proceeds from sale of a subsidiary
56

 
41

Purchases of marketable securities
(20,776
)
 
(10,715
)
Proceeds from maturities of marketable securities
19,710

 
12,257

Net cash used in investing activities
(12,470
)
 
(6,962
)
Cash flows from financing activities:
 

 
 

Proceeds from issuances of common stock
3,870

 
4,754

Tax withholdings related to net share settlements of equity awards
(2,157
)
 
(2,453
)
Principal repayments on term loan
(18,750
)
 
(21,250
)
Net cash used in financing activities
(17,037
)
 
(18,949
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
279

 
(58
)
Net increase in cash, cash equivalents and restricted cash
26,148

 
4,089

Cash, cash equivalents and restricted cash, beginning of period
100,546

 
92,726

Cash, cash equivalents and restricted cash, end of period
$
126,694

 
$
96,815

Non-cash investing and financing activities:
 

 
 

Change in accounts payable and accrued liabilities related to property, plant and equipment purchases
$
(2,497
)
 
$
982

Operating lease, right-of-use assets obtained in exchange for lease obligations
35,885

 

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for income taxes, net
$
1,700

 
$
1,182

Cash paid for interest
778

 
1,617

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

7



FORMFACTOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 — Basis of Presentation and New Accounting Pronouncements
 
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. 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 financial information as of December 29, 2018 is derived from our 2018 Annual Report on Form 10-K. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2018 Annual Report on Form 10-K. 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 2019 and 2018 each contain 52 weeks and the six months ended June 29, 2019 and June 30, 2018 each contained    26 weeks. Fiscal 2019 will end on December 28, 2019.

Reclassifications
Certain immaterial reclassifications were made to the prior period financial statements to conform to the current period presentation.

Critical Accounting Policies
Our critical accounting policies have not changed during the six months ended June 29, 2019 from those disclosed in our Annual Report on Form 10-K for the year ended December 29, 2018.

New Accounting Pronouncements

ASU 2018-15
In August 2018, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new guidance clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. ASU 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet determined the impact of this standard on our financial statements.

ASU 2016-02, ASU 2018-10, ASU 2018-11 and ASU 2019-01
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. ASU 2016-02 was amended in July 2018 by both ASU 2018-10, "Codification Improvements to Topic 842, Leases," and ASU 2018-11, "Leases (Topic 842): Targeted Improvements" and in March 2019 by ASU 2019-01, "Leases (Topic 842): Codification Improvements." ASU 2016-02 provides additional guidance on the measurement of the right-of-use assets and lease liabilities and requires enhanced disclosures about our leasing arrangements. We adopted Topic 842 and all related amendments on December 30, 2018, the first day of fiscal 2019, using the modified transition approach. The modified transition approach permits a company to use its effective date as the date of initial application to apply the standard to its leases, and, therefore, not restate comparative prior period financial information. Consequently, prior period financial information is not updated, and the disclosures required under the new standard will not be provided for dates and periods before December 30, 2018. The standard provides several optional practical expedients in transition. We elected the ‘package of practical expedients,’ which permits us to not reassess, under the new standard, our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption. This means, for those leases that qualify, we will not recognize a right-of-use asset or lease liability, and this includes not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all our leases. The adoption of the lease standard did not have any effect on our previously reported Condensed

8



Consolidated Statements of Income and did not result in a cumulative catch-up adjustment to opening equity. See Note 12 for additional information.

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 29, 2019
 
June 30, 2018
 
June 29, 2019
 
June 30, 2018
Intel Corporation
26.1
%
 
15.1
%
 
23.8
%
 
14.6
%
Samsung Electronics., LTD.
11.1

 
*

 
12.4

 
*

Micron Technology, Inc.
10.1

 
*

 
*

 
*

SK Hynix Inc.
*

 
11.5

 
*

 
10.9


47.3
%
 
26.6
%
 
36.2
%
 
25.5
%

*Represents less than 10% of total revenues.

At June 29, 2019, two customers accounted for 17.3% and 11.3% of gross accounts receivable, respectively. At December 29, 2018, two customers accounted for 27.8% and 13.0% of gross accounts receivable, respectively.

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 29,
2019
 
December 29,
2018
Raw materials
$
43,143

 
$
43,380

Work-in-progress
26,022

 
20,431

Finished goods
14,687

 
13,895

 
$
83,852

 
$
77,706



Note 4 Goodwill and Intangible Assets

Goodwill by reportable segment was as follows (in thousands):
 
Probe Cards
 
Systems
 
Total
Goodwill, gross, as of December 30, 2017
$
172,482

 
$
17,438

 
$
189,920

Foreign currency translation

 
(706
)
 
(706
)
Goodwill, gross, as of December 29, 2018
172,482

 
16,732

 
189,214

Foreign currency translation

 
(93
)
 
(93
)
Goodwill, gross, as of June 29, 2019
$
172,482

 
$
16,639

 
$
189,121



We have not recorded any goodwill impairments as of June 29, 2019.

9




Intangible assets were as follows (in thousands):
 
 
June 29, 2019
 
December 29, 2018
Other Intangible Assets
 
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Existing developed technologies 
 
$
143,334

 
$
106,513

 
$
36,821

 
$
143,408

 
$
97,111

 
$
46,297

Trade name
 
12,014

 
11,256

 
758

 
12,023

 
9,173

 
2,850

Customer relationships
 
40,123

 
24,298

 
15,825

 
40,146

 
21,653

 
18,493

 
 
$
195,471

 
$
142,067

 
$
53,404

 
$
195,577

 
$
127,937

 
$
67,640



Amortization expense was included in our Condensed Consolidated Statements of Income as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Cost of revenues
$
4,711

 
$
5,138

 
$
9,430

 
$
10,295

Selling, general and administrative
2,368

 
2,032

 
4,739

 
4,069

 
$
7,079

 
$
7,170

 
$
14,169

 
$
14,364



The estimated future amortization of intangible assets is as follows (in thousands):
Fiscal Year
Amount
Remainder of 2019
$
12,189

2020
23,358

2021
12,616

2022
3,493

2023
1,748

 
$
53,404



Note 5 Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):
 
June 29, 2019
 
December 29, 2018
Accrued compensation and benefits
$
16,374

 
$
15,600

Accrued employee stock purchase plan contributions withheld
3,210

 
3,174

Accrued warranty
1,827

 
2,102

Accrued income and other taxes
5,080

 
4,222

Other accrued expenses
3,009

 
2,633

 
$
29,500

 
$
27,731




10



Note 6 Restructuring Charges
 
Restructuring charges in the first two quarters of fiscal 2019 consisted of costs related to employee termination benefits, cost of long-lived asset abandonment and inventory write downs.

Restructuring charges were included in our Consolidated Statement of Income as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 29, 2019
 
June 30, 2018
 
June 29, 2019
 
June 30, 2018
Cost of revenues
$
138

 
$

 
$
257

 
$

Selling, general and administrative
88

 

 
175

 

 
$
226

 
$

 
$
432

 
$


Changes to the restructuring accrual in the six months ended June 29, 2019 were as follows (in thousands):
 
Employee Severance and Benefits
 
Other Costs
 
Total Accrual
December 29, 2018
$
20

 
$

 
$
20

Restructuring charges
162

 
270

 
432

Cash payments
(73
)
 

 
(73
)
Non-cash settlement

 
(270
)
 
(270
)
June 29, 2019
$
109

 
$

 
$
109



Note 7 — 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 three and six months ended June 29, 2019 or the year ended December 29, 2018.

The carrying values of Cash, Accounts receivable, net, Restricted cash, Prepaid expenses and other current assets, Accounts payable, Accrued liabilities, and Term loan approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first three and six months of fiscal 2019.


11



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 29, 2019
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
Money market funds
 
$
5,248

 
$

 
$
5,248

Commercial paper
 
324

 

 
324


 
5,572

 

 
5,572

Marketable securities:
 

 

 

 U.S. treasuries
 
17,072

 

 
17,072

 Certificates of deposit
 

 
540

 
540

 U.S. agency securities
 

 
14,299

 
14,299

 Corporate bonds
 

 
19,667

 
19,667

 Commercial paper
 

 
493

 
493


 
17,072

 
34,999

 
52,071

Foreign exchange derivative contracts
 

 
5

 
5

Interest rate swap derivative contracts
 

 
189

 
189

Total assets
 
$
22,644

 
$
35,193

 
$
57,837

Liabilities:
 
 
 
 
 
 
Foreign exchange derivative contracts
 
$

 
$
216

 
$
216

December 29, 2018
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
Money market funds
 
$
1,184

 
$

 
$
1,184

Marketable securities:
 
 
 
 
 
 
U.S. treasuries
 
7,997

 

 
7,997

Certificates of deposit