form-20201028
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 ____________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  October 28, 2020
 
FORMFACTOR, INC.
(Exact Name of Registrant as Specified in Charter)
 
Delaware000-5030713-3711155
(State or Other Jurisdiction of Incorporation)(Commission File Number)(IRS Employer Identification No.)
7005 Southfront Road
Livermore,
CA
94551
(Address of Principal Executive Offices)(Zip Code)
 
Registrant’s telephone number, including area code:  (925) 290-4000
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_____________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section12(b) of the Act:
Title of each classTrading Symbol(s) Name of each exchange on which registered
Common stock, $0.001 par valueFORM Nasdaq Global Market
 
 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

    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.



Item 2.02.  Results of Operations and Financial Condition.
 
On October 28, 2020, FormFactor, Inc. (“FormFactor”) issued a press release announcing its financial results for the third quarter of fiscal 2020 that ended on September 26, 2020. A copy of the press release is furnished as Exhibit 99.01 to this report and is incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits.
 
(d) Exhibits.

The following exhibit is filed herewith and this list is intended to constitute the exhibit index.
Exhibit NumberDescription
Press release dated October 28, 2020
 
The information in this report and the accompanying exhibit shall not be incorporated by reference into any filing of FormFactor with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. The information in this report, including the accompanying exhibit, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.





 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 

FORMFACTOR, INC.
Date:
October 28, 2020
By:/s/ SHAI SHAHAR
Name:Shai Shahar
Title:Chief Financial Officer
 



Document

EXHIBIT 99.01
https://cdn.kscope.io/d489eaead9dd5a6c3907261ff81ea49a-ffq118logorgbinlinea061.jpg                            
News Release
 
Investor Contact:
Stan Finkelstein
Investor Relations
(925) 290-4321
ir@formfactor.com
 


FORMFACTOR, INC. REPORTS 2020 THIRD QUARTER RESULTS
Company Delivers Q3 Revenue and Gross Margin at High End of Outlook Range, Expects Continued Momentum in Q4;
Acquires High Precision Devices, Inc., Expanding Cryogenic Thermal Control and Test Expertise

LIVERMORE, Calif. — October 28, 2020 —FormFactor, Inc. (Nasdaq: FORM) today announced its financial results for the third quarter of fiscal 2020 ended September 26, 2020. Quarterly revenues were $178.0 million, an increase of 12.8% compared to $157.8 million in the second quarter of fiscal 2020, an increase of 26.6% from $140.6 million in the third quarter of fiscal 2019.

Revenue at high end of outlook range, close to Company record; Non-GAAP EPS above outlook range
Demonstrated diversified revenue profile, with four semiconductor industry leaders comprising ten-percent customers
Continued to add production capacity and increase factory output to meet sustained strong demand

“Our third quarter results demonstrate FormFactor’s continuing progress, as we scale to meet customers’ robust demand for our products,” said Mike Slessor, CEO of FormFactor, Inc. “Despite the challenges posed by COVID-19, we steadily improved the efficiency of both our internal operations and external supply chain, allowing us to deliver results nearly matching our all-time-record fourth quarter of 2019.”

The Company also announced that it acquired High Precision Devices, Inc. (HPD) shortly after the end of the third quarter. Based in Boulder, Colorado, HPD brings world-class cryogenic thermal control and test expertise that augment FormFactor’s existing capabilities and products. The ability to control and manage testing from near absolute zero to hundreds of degrees centigrade is a differentiating capability in semiconductor testing, and HPD expands FormFactor’s leading portfolio of engineering system test and measurement capabilities.

“We are pleased to welcome to HPD’s team to FormFactor and are excited about adding their expertise, technologies, and products in cryogenic test and measurement, an area that is evolving rapidly with revolutionary applications like quantum computing” said Dr. Mike Slessor, CEO of FormFactor.

Third Quarter Highlights

On a GAAP basis, net income for the third quarter of fiscal 2020 was $22.9 million, or $0.29 per fully-diluted share, compared to net income for the second quarter of fiscal 2020 of $20.5 million, or $0.26 per fully-diluted share, and net income for the third quarter of fiscal 2019 of $8.3 million, or $0.11 per fully-diluted share. Gross margin for the third quarter of 2020 was 43.1%, compared with 41.9% in the second quarter of 2020, and 39.3% in the third quarter of 2019.
 
On a non-GAAP basis, net income for the third quarter of fiscal 2020 was $30.7 million, or $0.39 per fully-diluted share, compared to net income for the second quarter of fiscal 2020 of $25.8 million, or $0.33 per fully-diluted share, and net income for the third quarter of fiscal 2019 of $17.3 million, or $0.22 per fully-diluted share. On a non-GAAP basis, gross margin for the third quarter of 2020 was 46.7%, compared with 45.8% in the second quarter of 2020, and 43.5% in the third quarter of 2019.

A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below.




Free cash flow for the third quarter of fiscal 2020 was $37.2 million, compared to free cash flow for the second quarter of fiscal 2020 of $18.6 million, and free cash flow for the third quarter of 2019 of $25.6 million. A reconciliation of net cash provided by operating activities to free cash flow is provided in the schedules included below.

Stock Repurchase Program

The Company's Board of directors has authorized a $50.0 million share repurchase program to help offset dilution from share issuances related to stock-based compensation. The Company intends to purchase share in the open market. The share repurchase program will expire on October 28, 2022.

Outlook

Dr. Slessor added, “As reflected in our fourth-quarter outlook, we anticipate remaining on our current positive trajectory for a strong finish to 2020.”

For the fourth quarter ending December 26, 2020, FormFactor is providing the following outlook*:

GAAPReconciling Items**Non-GAAP
Revenue$178 million to $190 million$178 million to $190 million
Gross Margin40% to 43%$7 million44% to 47%
Net income per diluted share$0.19 to $0.27$0.16$0.35 to $0.43
*This outlook assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation, restructuring charges, acquisition related expenses and amortization of intangibles.

We posted our revenue breakdown by geographic region, by market segment and with customers with greater than 10% of total revenue on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:25 p.m. PDT, or 4:25 p.m. EDT, today.

The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available through November 4, 6:30 p.m. Pacific Time, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 4879487. Additionally, the replay will be available on the Investor Relations section of our website, www.formfactor.com.

Use of Non-GAAP Financial Information:

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP operating income, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three and nine months ended September 26, 2020 and for outlook provided before, as well as for the comparable periods of fiscal 2019, are provided below, and on the Investor Relations section of our website at www.formfactor.com. Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management's reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

About FormFactor:
 
FormFactor, Inc. (Nasdaq:FORM), is a leading provider of essential test and measurement technologies along the full IC life cycle - from characterization, modeling, reliability, and design de-bug, to qualification and production test. Semiconductor companies rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge. The Company serves customers through its network of facilities in Asia, Europe, and North America. For more information, visit the Company’s website at www.formfactor.com.




Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including with respect to the Company’s future financial and operating results, the Company’s plans, strategies and objectives for future operations. These statements are based on management’s current expectations and beliefs as of the date hereof, and are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to statements regarding future financial and operating results, customer demand, conditions in the semiconductor industry, and growth opportunities, and other statements regarding the Company’s business. Forward-looking statements may contain words such as “may,” “might,” “will,” “expect,” “plan,” “anticipate,” and “continue,” the negative or plural of these words and similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in demand for the Company’s products; customer-specific demand; the speed of customer implementation of new technologies; industry seasonality; risks to the Company’s realization of benefits from acquisitions and investments in capacity; changes macro-economic environments; events affecting global and regional economic conditions and stability such as Brexit, infectious diseases and pandemics (such as the current COVID-19 pandemic), military conflicts, political volatility and similar factors, operating separately or in combination; and other factors, including those set forth in the Company’s most current annual report on Form 10-K, quarterly reports on Form 10-Q and other filings by the Company with the U.S. Securities and Exchange Commission. We are operating in an environment with especially substantial uncertainties arising from the COVID-19 pandemic, including with respect to its current and future impact on our operations, workforce, manufacturing capacity, customer demand, supply chain, macroeconomic environment and other important aspects of our business. In addition, there are increasingly restrictive export regulations being adopted in the U.S., including recently published amendments to export regulations that may substantially restrict or condition our sales in China with considerable uncertainty regarding the ultimate interpretation and implementation of these rules. No assurances can be given that any of the events anticipated by the forward-looking statements within this press release will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of the Company. Unless required by law, the Company is under no obligation (and expressly disclaims any such obligation) to update or revise its forward-looking statements whether as a result of new information, future events, or otherwise.




FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months EndedNine Months Ended
 September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Revenues$177,996 $140,604 $496,573 $410,835 
Cost of revenues101,247 85,286 286,267 247,644 
Gross profit76,749 55,318 210,306 163,191 
Operating expenses:    
Research and development22,878 20,096 65,064 59,893 
Selling, general and administrative31,834 25,887 82,282 77,354 
Total operating expenses54,712 45,983 147,346 137,247 
Operating income22,037 9,335 62,960 25,944 
Interest income249 724 1,310 1,988 
Interest expense(193)(422)(682)(1,539)
Other income, net299 226 141 223 
Income before income taxes22,392 9,863 63,729 26,616 
Provision (benefit) for income taxes(499)1,584 4,479 5,906 
Net income$22,891 $8,279 $59,250 $20,710 
Net income per share:  
Basic $0.30 $0.11 $0.78 $0.28 
Diluted$0.29 $0.11 $0.75 $0.27 
Weighted-average number of shares used in per share calculations:  
Basic 77,029 75,280 76,436 74,749 
Diluted78,809 77,291 78,534 76,763 




FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
September 26,
2020
September 28,
2019
June 27,
2020
September 26,
2020
September 28,
2019
GAAP Gross Profit$76,749 $55,318 $66,167 $210,306 $163,191 
Adjustments:
Amortization of intangibles and inventory fair value adjustment due to acquisition5,495 4,707 5,174 16,419 14,137 
Stock-based compensation962 1,117 901 2,800 3,031 
Restructuring charges— — — — 258 
Non-GAAP Gross Profit$83,206 $61,142 $72,242 $229,525 $180,617 
GAAP Gross Margin43.1 %39.3 %41.9 %42.4 %39.7 %
Adjustments:
Amortization of intangibles and inventory fair value adjustment due to acquisition3.1 %3.3 %3.3 %3.3 %3.4 %
Stock-based compensation0.5 %0.9 %0.6 %0.6 %0.7 %
Restructuring charges— %— %— %— %0.1 %
Non-GAAP Gross Margin46.7 %43.5 %45.8 %46.3 %43.9 %
GAAP operating expenses$54,712 $45,983 $43,674 $147,346 $137,247 
Adjustments:
Amortization of intangibles and inventory fair value adjustment due to acquisition(1,547)(1,372)(1,528)(4,588)(6,111)
Stock-based compensation(4,547)(5,387)(4,741)(13,974)(14,057)
Restructuring charges— (22)— — (199)
Gain on contingent consideration 71 — 3,700 3,771 — 
Acquisition related expenses(334)(247)— (369)(247)
Non-GAAP operating expenses$48,355 $38,955 $41,105 $132,186 $116,633 
GAAP operating income$22,037 $9,335 $22,493 $62,960 $25,944 
Adjustments:
Amortization of intangibles and inventory fair value adjustment due to acquisition7,042 6,079 6,702 21,007 20,248 
Stock-based compensation5,509 6,504 5,642 16,774 17,088 
Restructuring charges— 22 — — 457 
Gain on contingent consideration(71)— (3,700)(3,771)— 
Acquisition related expenses334 247 — 369 247 
Non-GAAP operating income$34,851 $22,187 $31,137 $97,339 $63,984 








FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
September 26,
2020
September 28,
2019
June 27,
2020
September 26,
2020
September 28,
2019
GAAP net income $22,891 $8,279 $20,469 $59,250 $20,710 
Adjustments:
Amortization of intangibles and inventory fair value adjustment due to acquisition7,042 6,079 6,702 21,007 20,248 
Stock-based compensation5,509 6,504 5,642 16,774 17,088 
Restructuring charges— 22 — — 457 
Gain on contingent consideration(71)— (3,700)(3,771)— 
Acquisition related expenses334 247 — 369 247 
Income tax effect of non-GAAP adjustments(4,970)(3,812)(3,265)(10,994)(10,137)
Non-GAAP net income $30,735 $17,319 $25,848 $82,635 $48,613 
Non-GAAP net income per share:
Basic$0.40 $0.23 $0.34 $1.08 $0.65 
Diluted$0.39 $0.22 $0.33 $1.05 $0.63 








FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Nine Months Ended
September 26,
2020
September 28,
2019
Cash flows from operating activities:
Net income $59,250 $20,710 
Selected adjustments to reconcile net income to net cash provided by operating activities:
Depreciation14,491 12,644 
Amortization20,249 20,248 
Stock-based compensation expense16,774 17,088 
Provision for excess and obsolete inventories9,763 8,046 
Gain on contingent consideration(3,771)— 
Other activity impacting operating cash flows7,453 4,642 
Net cash provided by operating activities124,209 83,378 
Cash flows from investing activities:
Acquisition of property, plant and equipment(41,887)(14,242)
Acquisition of business, net of cash acquired(34,999)— 
Proceeds (purchases) of marketable securities, net20,609 (25,898)
Other activity impacting investing cash flows82 93 
Net cash used in investing activities(56,195)(40,047)
Cash flows from financing activities:
Proceeds from issuances of common stock9,588 7,672 
Proceeds from term loan debt18,000 — 
Payment of term loan debt issuance costs(78)— 
Tax withholdings related to net share settlements of equity awards(15,382)(7,898)
Principal repayments on term loans(41,098)(18,750)
Net cash used in financing activities(28,970)(18,976)
Effect of exchange rate changes on cash, cash equivalents and restricted cash1,262 (161)
Net increase in cash, cash equivalents and restricted cash40,306 24,194 
Cash, cash equivalents and restricted cash, beginning of period147,937 100,546 
Cash, cash equivalents and restricted cash, end of period$188,243 $124,740 







FORMFACTOR, INC. 
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)

Three Months EndedNine Months Ended
September 26,
2020
September 28,
2019
June 27,
2020
September 26,
2020
September 28,
2019
Net cash provided by operating activities$41,762 $28,002 $43,108 $124,209 $83,378 
Adjustments:
Cash paid for interest210 350 182 683 1,128 
Acquisition related payments in working capital 334 — — 369 — 
Capital expenditures(5,144)(2,782)(24,693)(41,887)(14,242)
Free cash flow$37,162 $25,570 $18,597 $83,374 $70,264 





FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) 
 September 26,
2020
December 28,
2019
ASSETS
Current assets:
Cash and cash equivalents$185,368 $144,545 
Marketable securities56,100 76,327 
Accounts receivable, net of allowance for doubtful accounts of $222 and $22296,946 97,868 
Inventories, net94,616 83,258 
Restricted cash1,477 1,981 
Prepaid expenses and other current assets21,687 15,064 
Total current assets456,194 419,043 
Restricted cash1,398 1,411 
Operating lease, right-of-use-assets29,320 31,420 
Property, plant and equipment, net of accumulated depreciation97,528 58,747 
Goodwill220,757 199,196 
Intangibles, net37,937 57,610 
Deferred tax assets71,464 71,252 
Other assets1,009 1,203 
Total assets$915,607 $839,882 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$62,903 $40,914 
Accrued liabilities44,026 36,439 
Current portion of term loans, net of unamortized issuance costs9,120 42,846 
Deferred revenue13,670 9,810 
Operating lease liabilities6,555 6,551 
Total current liabilities136,274 136,560 
Term loans, less current portion, net of unamortized issuance costs26,874 15,639 
Deferred tax liabilities5,682 6,986 
Long-term operating lease liabilities26,794 29,088 
Other liabilities5,841 10,612 
Total liabilities201,465 198,885 
 
Stockholders’ equity: 
Common stock, $0.001 par value: 
250,000,000 shares authorized; 77,383,494 and 75,764,990 shares issued and outstanding78 76 
Additional paid-in capital896,576 885,821 
Accumulated other comprehensive income (loss)2,479 (659)
Accumulated deficit(184,991)(244,241)
Total stockholders’ equity714,142 640,997 
Total liabilities and stockholders’ equity$915,607 $839,882 




About our Non-GAAP Financial Measures:
We believe that the presentation of non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and free cash flow provides supplemental information that is important to understanding financial and business trends and other factors relating to our financial condition and results of operations. Non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income are among the primary indicators used by management as a basis for planning and forecasting future periods, and by management and our board of directors to determine whether our operating performance has met certain targets and thresholds. Management uses non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income when evaluating operating performance because it believes that the exclusion of the items indicated herein, for which the amounts or timing may vary significantly depending upon our activities and other factors, facilitates comparability of our operating performance from period to period. We use free cash flow to conduct and evaluate our business as an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Many investors also prefer to track free cash flow, as opposed to only GAAP earnings. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures, and therefore it is important to view free cash flow as a complement to our entire consolidated statements of cash flows. We have chosen to provide this non-GAAP information to investors so they can analyze our operating results closer to the way that management does, and use this information in their assessment of our business and the valuation of our company. We compute non-GAAP net income, non-GAAP fully-diluted earnings per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, by adjusting GAAP net income, GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income to remove the impact of certain items and the tax effect, if applicable, of those adjustments. These non-GAAP measures are not in accordance with, or an alternative to, GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income, earnings per fully-diluted share, gross margin, operating expenses, or operating income in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We may expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income should not be construed as an inference that these costs are unusual, infrequent or non-recurring. For more information on the non-GAAP adjustments, please see the table captioned “Non-GAAP Financial Measure Reconciliations" and “Reconciliation of Cash Provided By Operating Activities to Free Cash Flow” included in this press release.

Source: FormFactor, Inc.
FORM-F