form-20210626
False0001039399December 252021Q26100010393992020-12-272021-06-26xbrli:shares00010393992021-07-27iso4217:USD00010393992021-06-2600010393992020-12-26iso4217:USDxbrli:shares00010393992021-03-282021-06-2600010393992020-03-292020-06-2700010393992019-12-292020-06-270001039399us-gaap:CommonStockMember2020-12-260001039399us-gaap:TreasuryStockMember2020-12-260001039399us-gaap:AdditionalPaidInCapitalMember2020-12-260001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-260001039399us-gaap:RetainedEarningsMember2020-12-260001039399us-gaap:CommonStockMember2020-12-272021-06-260001039399us-gaap:AdditionalPaidInCapitalMember2020-12-272021-06-260001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-272021-06-260001039399us-gaap:RetainedEarningsMember2020-12-272021-06-260001039399us-gaap:CommonStockMember2021-06-260001039399us-gaap:TreasuryStockMember2021-06-260001039399us-gaap:AdditionalPaidInCapitalMember2021-06-260001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-260001039399us-gaap:RetainedEarningsMember2021-06-260001039399us-gaap:CommonStockMember2021-03-270001039399us-gaap:TreasuryStockMember2021-03-270001039399us-gaap:AdditionalPaidInCapitalMember2021-03-270001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-270001039399us-gaap:RetainedEarningsMember2021-03-2700010393992021-03-270001039399us-gaap:CommonStockMember2021-03-282021-06-260001039399us-gaap:AdditionalPaidInCapitalMember2021-03-282021-06-260001039399us-gaap:TreasuryStockMember2021-03-282021-06-260001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-282021-06-260001039399us-gaap:RetainedEarningsMember2021-03-282021-06-260001039399us-gaap:CommonStockMember2019-12-280001039399us-gaap:TreasuryStockMember2019-12-280001039399us-gaap:AdditionalPaidInCapitalMember2019-12-280001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-280001039399us-gaap:RetainedEarningsMember2019-12-2800010393992019-12-280001039399us-gaap:CommonStockMember2019-12-292020-06-270001039399us-gaap:AdditionalPaidInCapitalMember2019-12-292020-06-270001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-292020-06-270001039399us-gaap:RetainedEarningsMember2019-12-292020-06-270001039399us-gaap:CommonStockMember2020-06-270001039399us-gaap:TreasuryStockMember2020-06-270001039399us-gaap:AdditionalPaidInCapitalMember2020-06-270001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-270001039399us-gaap:RetainedEarningsMember2020-06-2700010393992020-06-270001039399us-gaap:CommonStockMember2020-03-280001039399us-gaap:TreasuryStockMember2020-03-280001039399us-gaap:AdditionalPaidInCapitalMember2020-03-280001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-280001039399us-gaap:RetainedEarningsMember2020-03-2800010393992020-03-280001039399us-gaap:CommonStockMember2020-03-292020-06-270001039399us-gaap:AdditionalPaidInCapitalMember2020-03-292020-06-270001039399us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-292020-06-270001039399us-gaap:RetainedEarningsMember2020-03-292020-06-27xbrli:pure0001039399form:IntelMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-03-282021-06-260001039399form:IntelMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2020-03-292020-06-270001039399form:IntelMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2020-12-272021-06-260001039399form:IntelMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2019-12-292020-06-270001039399form:SamsungMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-03-282021-06-260001039399form:TaiwanSemiconductorManufacturingCoLTDMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-03-282021-06-260001039399form:TaiwanSemiconductorManufacturingCoLTDMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2020-12-272021-06-260001039399us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberform:CustomersRepresenting10OrMoreOfTotalRevenuesMember2021-03-282021-06-260001039399us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberform:CustomersRepresenting10OrMoreOfTotalRevenuesMember2020-03-292020-06-270001039399us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberform:CustomersRepresenting10OrMoreOfTotalRevenuesMember2020-12-272021-06-260001039399us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberform:CustomersRepresenting10OrMoreOfTotalRevenuesMember2019-12-292020-06-270001039399us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberform:MajorCustomer1Member2020-12-272021-06-260001039399us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberform:MajorCustomer1Member2020-12-272021-03-270001039399us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberform:MajorCustomer2Member2020-12-272021-03-270001039399form:HighPrecisionDevicesIncMember2020-10-190001039399form:HighPrecisionDevicesIncMember2020-10-192020-10-19form:millikelvin0001039399form:HighPrecisionDevicesIncMembersrt:MinimumMember2020-10-190001039399form:HighPrecisionDevicesIncMemberus-gaap:DevelopedTechnologyRightsMember2020-10-190001039399form:HighPrecisionDevicesIncMemberus-gaap:DevelopedTechnologyRightsMember2020-10-192020-10-190001039399us-gaap:CustomerRelationshipsMemberform:HighPrecisionDevicesIncMember2020-10-190001039399us-gaap:CustomerRelationshipsMemberform:HighPrecisionDevicesIncMember2020-10-192020-10-190001039399us-gaap:OrderOrProductionBacklogMemberform:HighPrecisionDevicesIncMember2020-10-190001039399us-gaap:OrderOrProductionBacklogMemberform:HighPrecisionDevicesIncMember2020-10-192020-10-190001039399us-gaap:TradeNamesMemberform:HighPrecisionDevicesIncMember2020-10-190001039399us-gaap:TradeNamesMemberform:HighPrecisionDevicesIncMember2020-10-192020-10-190001039399form:BaldwinParkMember2020-07-302020-07-300001039399form:BaldwinParkMember2020-07-300001039399form:BaldwinParkMemberus-gaap:DevelopedTechnologyRightsMember2020-07-300001039399form:BaldwinParkMemberus-gaap:DevelopedTechnologyRightsMember2020-07-302020-07-300001039399form:BaldwinParkMemberus-gaap:CustomerRelationshipsMember2020-07-300001039399form:BaldwinParkMemberus-gaap:CustomerRelationshipsMember2020-07-302020-07-300001039399form:BaldwinParkMemberus-gaap:InProcessResearchAndDevelopmentMember2020-07-300001039399form:ProbeCardsSegmentMember2019-12-280001039399form:SystemsSegmentMember2019-12-280001039399form:FRTGmbHMemberform:ProbeCardsSegmentMember2019-12-292020-12-260001039399form:FRTGmbHMemberform:SystemsSegmentMember2019-12-292020-12-260001039399form:FRTGmbHMember2019-12-292020-12-260001039399form:BaldwinParkMemberform:ProbeCardsSegmentMember2019-12-292020-12-260001039399form:BaldwinParkMemberform:SystemsSegmentMember2019-12-292020-12-260001039399form:BaldwinParkMember2019-12-292020-12-260001039399form:ProbeCardsSegmentMemberform:HighPrecisionDevicesIncMember2019-12-292020-12-260001039399form:SystemsSegmentMemberform:HighPrecisionDevicesIncMember2019-12-292020-12-260001039399form:HighPrecisionDevicesIncMember2019-12-292020-12-260001039399form:ProbeCardsSegmentMember2019-12-292020-12-260001039399form:SystemsSegmentMember2019-12-292020-12-2600010393992019-12-292020-12-260001039399form:ProbeCardsSegmentMember2020-12-260001039399form:SystemsSegmentMember2020-12-260001039399form:BaldwinParkMemberform:ProbeCardsSegmentMember2020-12-272021-06-260001039399form:BaldwinParkMemberform:SystemsSegmentMember2020-12-272021-06-260001039399form:BaldwinParkMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberform:HighPrecisionDevicesIncMember2020-12-272021-06-260001039399form:SystemsSegmentMemberform:HighPrecisionDevicesIncMember2020-12-272021-06-260001039399form:HighPrecisionDevicesIncMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMember2020-12-272021-06-260001039399form:SystemsSegmentMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMember2021-06-260001039399form:SystemsSegmentMember2021-06-260001039399form:ExistingDevelopedTechnologiesMember2021-06-260001039399form:ExistingDevelopedTechnologiesMember2020-12-260001039399us-gaap:CustomerRelationshipsMember2021-06-260001039399us-gaap:CustomerRelationshipsMember2020-12-260001039399us-gaap:TradeNamesMember2021-06-260001039399us-gaap:TradeNamesMember2020-12-260001039399us-gaap:OrderOrProductionBacklogMember2021-06-260001039399us-gaap:OrderOrProductionBacklogMember2020-12-260001039399us-gaap:InProcessResearchAndDevelopmentMember2021-06-260001039399us-gaap:InProcessResearchAndDevelopmentMember2020-12-260001039399us-gaap:CostOfSalesMember2021-03-282021-06-260001039399us-gaap:CostOfSalesMember2020-03-292020-06-270001039399us-gaap:CostOfSalesMember2020-12-272021-06-260001039399us-gaap:CostOfSalesMember2019-12-292020-06-270001039399us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-03-282021-06-260001039399us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-03-292020-06-270001039399us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-12-272021-06-260001039399us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-12-292020-06-270001039399us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2021-06-260001039399us-gaap:MoneyMarketFundsMember2021-06-260001039399us-gaap:USTreasuryBillSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryBillSecuritiesMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryBillSecuritiesMember2021-06-260001039399us-gaap:USTreasuryBillSecuritiesMember2021-06-260001039399us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2021-06-260001039399us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel3Member2021-06-260001039399us-gaap:CertificatesOfDepositMember2021-06-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2021-06-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-260001039399us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateBondSecuritiesMember2021-06-260001039399us-gaap:CorporateBondSecuritiesMember2021-06-260001039399us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2021-06-260001039399us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Member2021-06-260001039399us-gaap:CommercialPaperMember2021-06-260001039399us-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Member2021-06-260001039399us-gaap:FairValueInputsLevel3Member2021-06-260001039399us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-06-260001039399us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-06-260001039399us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-06-260001039399us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-06-260001039399us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Member2021-06-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeContractMember2021-06-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignExchangeContractMember2021-06-260001039399us-gaap:ForeignExchangeContractMember2021-06-260001039399us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2020-12-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2020-12-260001039399us-gaap:MoneyMarketFundsMember2020-12-260001039399us-gaap:USTreasuryBillSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryBillSecuritiesMember2020-12-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryBillSecuritiesMember2020-12-260001039399us-gaap:USTreasuryBillSecuritiesMember2020-12-260001039399us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2020-12-260001039399us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel3Member2020-12-260001039399us-gaap:CertificatesOfDepositMember2020-12-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-260001039399us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-260001039399us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2020-12-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateBondSecuritiesMember2020-12-260001039399us-gaap:CorporateBondSecuritiesMember2020-12-260001039399us-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Member2020-12-260001039399us-gaap:FairValueInputsLevel3Member2020-12-260001039399us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueInputsLevel1Member2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-260001039399us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-260001039399us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2020-12-260001039399us-gaap:FairValueInputsLevel2Memberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-260001039399us-gaap:FairValueInputsLevel3Memberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-260001039399us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-260001039399form:FRTMember2019-10-092019-10-09iso4217:EUR0001039399srt:MaximumMemberform:FRTMember2019-10-090001039399us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-03-282021-06-260001039399us-gaap:CashFlowHedgingMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-03-282021-06-260001039399us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-03-292020-06-270001039399us-gaap:CashFlowHedgingMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-03-292020-06-270001039399us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-272021-06-260001039399us-gaap:CashFlowHedgingMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-272021-06-260001039399us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2019-12-292020-06-270001039399us-gaap:CashFlowHedgingMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2019-12-292020-06-270001039399currency:EURus-gaap:LongMemberus-gaap:ForeignExchangeForwardMember2021-06-26iso4217:JPY0001039399us-gaap:ShortMemberus-gaap:ForeignExchangeForwardMembercurrency:JPY2021-06-26iso4217:KRW0001039399currency:KRWus-gaap:LongMemberus-gaap:ForeignExchangeForwardMember2021-06-260001039399us-gaap:ForeignExchangeForwardMember2021-06-260001039399us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-03-282021-06-260001039399us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNonoperatingIncomeExpenseMember2020-03-292020-06-270001039399us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNonoperatingIncomeExpenseMember2020-12-272021-06-260001039399us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNonoperatingIncomeExpenseMember2019-12-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-03-282021-06-260001039399us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-03-282021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-03-282021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-03-282021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-292020-06-270001039399us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2020-03-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-272021-06-260001039399us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-272021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-272021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2020-12-272021-06-260001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-292020-06-270001039399us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-292020-06-270001039399us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2019-12-292020-06-270001039399us-gaap:FairValueMeasurementsNonrecurringMember2020-06-270001039399us-gaap:FairValueMeasurementsNonrecurringMember2021-06-260001039399us-gaap:LandMember2021-06-260001039399us-gaap:LandMember2020-12-260001039399us-gaap:EquipmentMember2021-06-260001039399us-gaap:EquipmentMember2020-12-260001039399us-gaap:ComputerEquipmentMember2021-06-260001039399us-gaap:ComputerEquipmentMember2020-12-260001039399us-gaap:FurnitureAndFixturesMember2021-06-260001039399us-gaap:FurnitureAndFixturesMember2020-12-260001039399us-gaap:LeaseholdImprovementsMember2021-06-260001039399us-gaap:LeaseholdImprovementsMember2020-12-260001039399us-gaap:CommonStockMember2020-10-260001039399us-gaap:CommonStockMember2020-12-272021-06-260001039399us-gaap:CommonStockMember2021-06-260001039399form:EquityIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2020-12-260001039399form:EquityIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2020-12-272021-06-260001039399form:EquityIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-06-260001039399form:EquityIncentivePlanMemberform:PerformanceRestrictedStockUnitsMember2020-12-272021-06-260001039399form:EquityIncentivePlanMember2020-12-260001039399form:EquityIncentivePlanMember2020-12-272021-06-260001039399form:EquityIncentivePlanMember2021-06-260001039399us-gaap:EmployeeStockMember2020-12-272021-06-260001039399us-gaap:EmployeeStockMember2021-06-260001039399us-gaap:ResearchAndDevelopmentExpenseMember2021-03-282021-06-260001039399us-gaap:ResearchAndDevelopmentExpenseMember2020-03-292020-06-270001039399us-gaap:ResearchAndDevelopmentExpenseMember2020-12-272021-06-260001039399us-gaap:ResearchAndDevelopmentExpenseMember2019-12-292020-06-270001039399us-gaap:RestrictedStockMember2021-06-260001039399us-gaap:RestrictedStockMember2020-12-272021-06-260001039399form:PerformanceRestrictedStockUnitsMember2021-06-260001039399form:PerformanceRestrictedStockUnitsMember2020-12-272021-06-260001039399srt:MinimumMember2021-06-260001039399srt:MaximumMember2021-06-260001039399us-gaap:AutomobilesMembersrt:MinimumMember2021-06-260001039399srt:MaximumMemberus-gaap:AutomobilesMember2021-06-2600010393992021-06-272021-06-2600010393992022-01-012021-06-2600010393992023-01-012021-06-26form:segment0001039399us-gaap:OperatingSegmentsMemberform:ProbeCardsSegmentMember2021-03-282021-06-260001039399us-gaap:OperatingSegmentsMemberform:SystemsSegmentMember2021-03-282021-06-260001039399us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2021-03-282021-06-260001039399us-gaap:OperatingSegmentsMemberform:ProbeCardsSegmentMember2020-03-292020-06-270001039399us-gaap:OperatingSegmentsMemberform:SystemsSegmentMember2020-03-292020-06-270001039399us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2020-03-292020-06-270001039399us-gaap:OperatingSegmentsMemberform:ProbeCardsSegmentMember2020-12-272021-06-260001039399us-gaap:OperatingSegmentsMemberform:SystemsSegmentMember2020-12-272021-06-260001039399us-gaap:CorporateAndOtherMember2020-12-272021-06-260001039399us-gaap:OperatingSegmentsMemberform:ProbeCardsSegmentMember2019-12-292020-06-270001039399us-gaap:OperatingSegmentsMemberform:SystemsSegmentMember2019-12-292020-06-270001039399us-gaap:CorporateAndOtherMember2019-12-292020-06-270001039399form:FoundryLogicProductGroupMemberform:ProbeCardsSegmentMember2021-03-282021-06-260001039399form:FoundryLogicProductGroupMemberform:SystemsSegmentMember2021-03-282021-06-260001039399form:FoundryLogicProductGroupMember2021-03-282021-06-260001039399form:FoundryLogicProductGroupMemberform:ProbeCardsSegmentMember2020-03-292020-06-270001039399form:FoundryLogicProductGroupMemberform:SystemsSegmentMember2020-03-292020-06-270001039399form:FoundryLogicProductGroupMember2020-03-292020-06-270001039399form:ProbeCardsSegmentMemberform:DRAMProductGroupMember2021-03-282021-06-260001039399form:SystemsSegmentMemberform:DRAMProductGroupMember2021-03-282021-06-260001039399form:DRAMProductGroupMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMemberform:DRAMProductGroupMember2020-03-292020-06-270001039399form:SystemsSegmentMemberform:DRAMProductGroupMember2020-03-292020-06-270001039399form:DRAMProductGroupMember2020-03-292020-06-270001039399form:ProbeCardsSegmentMemberform:FlashProductGroupMember2021-03-282021-06-260001039399form:SystemsSegmentMemberform:FlashProductGroupMember2021-03-282021-06-260001039399form:FlashProductGroupMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMemberform:FlashProductGroupMember2020-03-292020-06-270001039399form:SystemsSegmentMemberform:FlashProductGroupMember2020-03-292020-06-270001039399form:FlashProductGroupMember2020-03-292020-06-270001039399form:SystemsProductGroupMemberform:ProbeCardsSegmentMember2021-03-282021-06-260001039399form:SystemsProductGroupMemberform:SystemsSegmentMember2021-03-282021-06-260001039399form:SystemsProductGroupMember2021-03-282021-06-260001039399form:SystemsProductGroupMemberform:ProbeCardsSegmentMember2020-03-292020-06-270001039399form:SystemsProductGroupMemberform:SystemsSegmentMember2020-03-292020-06-270001039399form:SystemsProductGroupMember2020-03-292020-06-270001039399form:ProbeCardsSegmentMember2021-03-282021-06-260001039399form:SystemsSegmentMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMember2020-03-292020-06-270001039399form:SystemsSegmentMember2020-03-292020-06-270001039399form:ProbeCardsSegmentMemberus-gaap:TransferredAtPointInTimeMember2021-03-282021-06-260001039399form:SystemsSegmentMemberus-gaap:TransferredAtPointInTimeMember2021-03-282021-06-260001039399us-gaap:TransferredAtPointInTimeMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMemberus-gaap:TransferredAtPointInTimeMember2020-03-292020-06-270001039399form:SystemsSegmentMemberus-gaap:TransferredAtPointInTimeMember2020-03-292020-06-270001039399us-gaap:TransferredAtPointInTimeMember2020-03-292020-06-270001039399form:ProbeCardsSegmentMemberus-gaap:TransferredOverTimeMember2021-03-282021-06-260001039399form:SystemsSegmentMemberus-gaap:TransferredOverTimeMember2021-03-282021-06-260001039399us-gaap:TransferredOverTimeMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMemberus-gaap:TransferredOverTimeMember2020-03-292020-06-270001039399form:SystemsSegmentMemberus-gaap:TransferredOverTimeMember2020-03-292020-06-270001039399us-gaap:TransferredOverTimeMember2020-03-292020-06-270001039399country:TWform:ProbeCardsSegmentMember2021-03-282021-06-260001039399country:TWform:SystemsSegmentMember2021-03-282021-06-260001039399country:TW2021-03-282021-06-260001039399country:TWform:ProbeCardsSegmentMember2020-03-292020-06-270001039399country:TWform:SystemsSegmentMember2020-03-292020-06-270001039399country:TW2020-03-292020-06-270001039399country:KRform:ProbeCardsSegmentMember2021-03-282021-06-260001039399country:KRform:SystemsSegmentMember2021-03-282021-06-260001039399country:KR2021-03-282021-06-260001039399country:KRform:ProbeCardsSegmentMember2020-03-292020-06-270001039399country:KRform:SystemsSegmentMember2020-03-292020-06-270001039399country:KR2020-03-292020-06-270001039399country:USform:ProbeCardsSegmentMember2021-03-282021-06-260001039399country:USform:SystemsSegmentMember2021-03-282021-06-260001039399country:US2021-03-282021-06-260001039399country:USform:ProbeCardsSegmentMember2020-03-292020-06-270001039399country:USform:SystemsSegmentMember2020-03-292020-06-270001039399country:US2020-03-292020-06-270001039399country:CNform:ProbeCardsSegmentMember2021-03-282021-06-260001039399country:CNform:SystemsSegmentMember2021-03-282021-06-260001039399country:CN2021-03-282021-06-260001039399country:CNform:ProbeCardsSegmentMember2020-03-292020-06-270001039399country:CNform:SystemsSegmentMember2020-03-292020-06-270001039399country:CN2020-03-292020-06-270001039399form:ProbeCardsSegmentMembersrt:AsiaPacificMember2021-03-282021-06-260001039399form:SystemsSegmentMembersrt:AsiaPacificMember2021-03-282021-06-260001039399srt:AsiaPacificMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMembersrt:AsiaPacificMember2020-03-292020-06-270001039399form:SystemsSegmentMembersrt:AsiaPacificMember2020-03-292020-06-270001039399srt:AsiaPacificMember2020-03-292020-06-270001039399srt:EuropeMemberform:ProbeCardsSegmentMember2021-03-282021-06-260001039399srt:EuropeMemberform:SystemsSegmentMember2021-03-282021-06-260001039399srt:EuropeMember2021-03-282021-06-260001039399srt:EuropeMemberform:ProbeCardsSegmentMember2020-03-292020-06-270001039399srt:EuropeMemberform:SystemsSegmentMember2020-03-292020-06-270001039399srt:EuropeMember2020-03-292020-06-270001039399country:JPform:ProbeCardsSegmentMember2021-03-282021-06-260001039399country:JPform:SystemsSegmentMember2021-03-282021-06-260001039399country:JP2021-03-282021-06-260001039399country:JPform:ProbeCardsSegmentMember2020-03-292020-06-270001039399country:JPform:SystemsSegmentMember2020-03-292020-06-270001039399country:JP2020-03-292020-06-270001039399form:ProbeCardsSegmentMemberform:RestOfTheWorldMember2021-03-282021-06-260001039399form:SystemsSegmentMemberform:RestOfTheWorldMember2021-03-282021-06-260001039399form:RestOfTheWorldMember2021-03-282021-06-260001039399form:ProbeCardsSegmentMemberform:RestOfTheWorldMember2020-03-292020-06-270001039399form:SystemsSegmentMemberform:RestOfTheWorldMember2020-03-292020-06-270001039399form:RestOfTheWorldMember2020-03-292020-06-270001039399form:FoundryLogicProductGroupMemberform:ProbeCardsSegmentMember2020-12-272021-06-260001039399form:FoundryLogicProductGroupMemberform:SystemsSegmentMember2020-12-272021-06-260001039399form:FoundryLogicProductGroupMember2020-12-272021-06-260001039399form:FoundryLogicProductGroupMemberform:ProbeCardsSegmentMember2019-12-292020-06-270001039399form:FoundryLogicProductGroupMemberform:SystemsSegmentMember2019-12-292020-06-270001039399form:FoundryLogicProductGroupMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMemberform:DRAMProductGroupMember2020-12-272021-06-260001039399form:SystemsSegmentMemberform:DRAMProductGroupMember2020-12-272021-06-260001039399form:DRAMProductGroupMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberform:DRAMProductGroupMember2019-12-292020-06-270001039399form:SystemsSegmentMemberform:DRAMProductGroupMember2019-12-292020-06-270001039399form:DRAMProductGroupMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMemberform:FlashProductGroupMember2020-12-272021-06-260001039399form:SystemsSegmentMemberform:FlashProductGroupMember2020-12-272021-06-260001039399form:FlashProductGroupMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberform:FlashProductGroupMember2019-12-292020-06-270001039399form:SystemsSegmentMemberform:FlashProductGroupMember2019-12-292020-06-270001039399form:FlashProductGroupMember2019-12-292020-06-270001039399form:SystemsProductGroupMemberform:ProbeCardsSegmentMember2020-12-272021-06-260001039399form:SystemsProductGroupMemberform:SystemsSegmentMember2020-12-272021-06-260001039399form:SystemsProductGroupMember2020-12-272021-06-260001039399form:SystemsProductGroupMemberform:ProbeCardsSegmentMember2019-12-292020-06-270001039399form:SystemsProductGroupMemberform:SystemsSegmentMember2019-12-292020-06-270001039399form:SystemsProductGroupMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMember2019-12-292020-06-270001039399form:SystemsSegmentMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMemberus-gaap:TransferredAtPointInTimeMember2020-12-272021-06-260001039399form:SystemsSegmentMemberus-gaap:TransferredAtPointInTimeMember2020-12-272021-06-260001039399us-gaap:TransferredAtPointInTimeMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberus-gaap:TransferredAtPointInTimeMember2019-12-292020-06-270001039399form:SystemsSegmentMemberus-gaap:TransferredAtPointInTimeMember2019-12-292020-06-270001039399us-gaap:TransferredAtPointInTimeMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMemberus-gaap:TransferredOverTimeMember2020-12-272021-06-260001039399form:SystemsSegmentMemberus-gaap:TransferredOverTimeMember2020-12-272021-06-260001039399us-gaap:TransferredOverTimeMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberus-gaap:TransferredOverTimeMember2019-12-292020-06-270001039399form:SystemsSegmentMemberus-gaap:TransferredOverTimeMember2019-12-292020-06-270001039399us-gaap:TransferredOverTimeMember2019-12-292020-06-270001039399country:KRform:ProbeCardsSegmentMember2020-12-272021-06-260001039399country:KRform:SystemsSegmentMember2020-12-272021-06-260001039399country:KR2020-12-272021-06-260001039399country:KRform:ProbeCardsSegmentMember2019-12-292020-06-270001039399country:KRform:SystemsSegmentMember2019-12-292020-06-270001039399country:KR2019-12-292020-06-270001039399country:CNform:ProbeCardsSegmentMember2020-12-272021-06-260001039399country:CNform:SystemsSegmentMember2020-12-272021-06-260001039399country:CN2020-12-272021-06-260001039399country:CNform:ProbeCardsSegmentMember2019-12-292020-06-270001039399country:CNform:SystemsSegmentMember2019-12-292020-06-270001039399country:CN2019-12-292020-06-270001039399country:USform:ProbeCardsSegmentMember2020-12-272021-06-260001039399country:USform:SystemsSegmentMember2020-12-272021-06-260001039399country:US2020-12-272021-06-260001039399country:USform:ProbeCardsSegmentMember2019-12-292020-06-270001039399country:USform:SystemsSegmentMember2019-12-292020-06-270001039399country:US2019-12-292020-06-270001039399country:TWform:ProbeCardsSegmentMember2020-12-272021-06-260001039399country:TWform:SystemsSegmentMember2020-12-272021-06-260001039399country:TW2020-12-272021-06-260001039399country:TWform:ProbeCardsSegmentMember2019-12-292020-06-270001039399country:TWform:SystemsSegmentMember2019-12-292020-06-270001039399country:TW2019-12-292020-06-270001039399country:JPform:ProbeCardsSegmentMember2020-12-272021-06-260001039399country:JPform:SystemsSegmentMember2020-12-272021-06-260001039399country:JP2020-12-272021-06-260001039399country:JPform:ProbeCardsSegmentMember2019-12-292020-06-270001039399country:JPform:SystemsSegmentMember2019-12-292020-06-270001039399country:JP2019-12-292020-06-270001039399srt:EuropeMemberform:ProbeCardsSegmentMember2020-12-272021-06-260001039399srt:EuropeMemberform:SystemsSegmentMember2020-12-272021-06-260001039399srt:EuropeMember2020-12-272021-06-260001039399srt:EuropeMemberform:ProbeCardsSegmentMember2019-12-292020-06-270001039399srt:EuropeMemberform:SystemsSegmentMember2019-12-292020-06-270001039399srt:EuropeMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMembersrt:AsiaPacificMember2020-12-272021-06-260001039399form:SystemsSegmentMembersrt:AsiaPacificMember2020-12-272021-06-260001039399srt:AsiaPacificMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMembersrt:AsiaPacificMember2019-12-292020-06-270001039399form:SystemsSegmentMembersrt:AsiaPacificMember2019-12-292020-06-270001039399srt:AsiaPacificMember2019-12-292020-06-270001039399form:ProbeCardsSegmentMemberform:RestOfTheWorldMember2020-12-272021-06-260001039399form:SystemsSegmentMemberform:RestOfTheWorldMember2020-12-272021-06-260001039399form:RestOfTheWorldMember2020-12-272021-06-260001039399form:ProbeCardsSegmentMemberform:RestOfTheWorldMember2019-12-292020-06-270001039399form:SystemsSegmentMemberform:RestOfTheWorldMember2019-12-292020-06-270001039399form:RestOfTheWorldMember2019-12-292020-06-27

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 26, 2021
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 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 (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 every Interactive Data File required to be submitted 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 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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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 27, 2021, 77,674,960 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 26, 2021
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 26,
2021
December 26,
2020
ASSETS 
Current assets:  
Cash and cash equivalents$160,273 $187,225 
Marketable securities95,962 67,810 
Accounts receivable, net of allowance for doubtful accounts of $217 and $248
108,265 107,603 
Inventories, net111,890 99,229 
Restricted cash1,857 1,904 
Prepaid expenses and other current assets19,244 23,303 
Total current assets497,491 487,074 
Restricted cash1,836 1,969 
Operating lease, right-of-use-assets38,485 30,756 
Property, plant and equipment, net of accumulated depreciation125,348 104,103 
Goodwill214,548 212,761 
Intangibles, net41,913 59,147 
Deferred tax assets66,945 66,242 
Other assets1,980 1,165 
Total assets$988,546 $963,217 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$62,445 $62,045 
Accrued liabilities51,487 55,342 
Current portion of term loans, net of unamortized issuance costs9,356 9,516 
Deferred revenue22,655 20,964 
Operating lease liabilities7,908 6,704 
Total current liabilities153,851 154,571 
Term loans, less current portion, net of unamortized issuance costs20,123 24,978 
Deferred tax liabilities4,613 5,346 
Long-term operating lease liabilities34,211 27,996 
Other liabilities6,201 6,242 
Total liabilities218,999 219,133 
 
Stockholders’ equity: 
Common stock, $0.001 par value:
 
250,000,000 shares authorized; 77,454,800 and 77,437,997 shares issued and outstanding
77 78 
Additional paid-in capital894,062 903,838 
Accumulated other comprehensive income3,596 5,886 
Accumulated deficit(128,188)(165,718)
Total stockholders’ equity769,547 744,084 
Total liabilities and stockholders’ equity$988,546 $963,217 
 
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 EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Revenues$188,076 $157,824 $374,712 $318,577 
Cost of revenues111,793 91,657 221,723 185,020 
Gross profit76,283 66,167 152,989 133,557 
Operating expenses:    
Research and development25,454 20,919 49,500 42,186 
Selling, general and administrative30,479 22,755 60,494 50,448 
Total operating expenses55,933 43,674 109,994 92,634 
Operating income20,350 22,493 42,995 40,923 
Interest income148 376 342 1,061 
Interest expense(116)(171)(296)(489)
Other expense, net(194)(67)(22)(158)
Income before income taxes20,188 22,631 43,019 41,337 
Provision for income taxes2,283 2,162 5,489 4,978 
Net income$17,905 $20,469 $37,530 $36,359 
Net income per share: 
Basic $0.23 $0.27 $0.48 $0.48 
Diluted$0.23 $0.26 $0.47 $0.46 
Weighted-average number of shares used in per share calculations:   
Basic 77,463 76,275 77,530 76,140 
Diluted79,466 78,861 79,621 78,710 
 
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 EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Net income $17,905 $20,469 $37,530 $36,359 
Other comprehensive income (loss), net of tax:
Translation adjustments and other632 763 (1,747)364 
Unrealized gains (losses) on available-for-sale marketable securities(97)524 (228)497 
Unrealized gains (losses) on derivative instruments(89)80 (315)256 
Other comprehensive income (loss), net of tax446 1,367 (2,290)1,117 
Comprehensive income$18,351 $21,836 $35,240 $37,476 

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

5


FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares)
(Unaudited)
 Shares of
Common
Stock
Common
Stock
Shares of
Treasury
Stock
Treasury
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
 Income (Loss)
Accumulated
Deficit
Total
Six Months Ended June 26, 2021
Balances, December 26, 202077,437,997 $78  $ $903,838 $5,886 $(165,718)$744,084 
Issuance of common stock under the Employee Stock Purchase Plan228,784 — — — 5,065 — — 5,065 
Issuance of common stock pursuant to exercise of options100,000 — — — 844 — — 844 
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax308,219 — — — (5,261)— — (5,261)
Purchase and retirement of common stock through repurchase program(620,200)(1)— — (23,950)— — (23,951)
Stock-based compensation— — — — 13,526 — — 13,526 
Other comprehensive loss— — — — — (2,290)— (2,290)
Net income— — — — — — 37,530 37,530 
Balances, June 26, 202177,454,800 $77  $ $894,062 $3,596 $(128,188)$769,547 
Three Months Ended June 26, 2021
Balances, March 27, 202177,758,530 $78 (136,402)$(5,738)$915,136 $3,150 $(146,093)$766,533 
Issuance of common stock pursuant to exercise of options50,000 — — — 422 — — 422 
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax266,470 — — — (4,120)— — (4,120)
Purchase and retirement of common stock through repurchase program(620,200)(1)136,402 5,738 (23,950)— — (18,213)
Stock-based compensation— — — — 6,574 — — 6,574 
Other comprehensive income— — — — — 446 — 446 
Net income— — — — — — 17,905 17,905 
Balances, June 26, 202177,454,800 $77  $ $894,062 $3,596 $(128,188)$769,547 

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


















6


FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares)
(Unaudited)
Shares of
Common
Stock
Common
Stock
Shares of
Treasury
Stock
Treasury
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
 Income (Loss)
Accumulated
Deficit
Total
Six Months Ended June 27, 2020
Balances, December 28, 201975,764,990 $76  $ $885,821 $(659)$(244,241)$640,997 
Issuance of common stock under the Employee Stock Purchase Plan311,591 — — — 4,066 — — 4,066 
Issuance of common stock pursuant to exercise of options105,769 1 — — 868 — — 869 
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax319,109 — — — (3,800)— — (3,800)
Stock-based compensation— — — — 11,114 — — 11,114 
Other comprehensive income— — — — — 1,117 — 1,117 
Net income— — — — — — 36,359 36,359 
Balances, June 27, 202076,501,459 $77  $ $898,069 $458 $(207,882)$690,722 
Three Months Ended June 27, 2020
Balances, March 28, 202076,158,251 $77 $ $ $895,600 $(909)$(228,351)$666,417 
Issuance of common stock pursuant to exercise of options50,000 — — — 422 — — 422 
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax293,208 — — — (3,415)— — (3,415)
Stock-based compensation— — — — 5,462 — — 5,462 
Other comprehensive income— — — — — 1,367 — 1,367 
Net income— — — — — — 20,469 20,469 
Balances, June 27, 202076,501,459 $77  $ $898,069 $458 $(207,882)$690,722 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7



FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended
 June 26,
2021
June 27,
2020
Cash flows from operating activities:  
Net income $37,530 $36,359 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation12,678 9,240 
Amortization13,900 13,717 
Reduction in the carrying amount of right-of-use assets3,652 2,419 
Stock-based compensation expense13,665 11,265 
Provision for excess and obsolete inventories6,898 6,407 
Gain on contingent consideration(95)(3,700)
Other adjustments to reconcile net income to net cash provided by operating activities1,211 1,327 
Changes in assets and liabilities:
Accounts receivable(1,194)11,364 
Inventories(20,388)(11,089)
Prepaid expenses and other current assets3,179 (3,271)
Other assets(344)248 
Accounts payable(2,028)5,247 
Accrued liabilities(235)1,529 
Other liabilities184 292 
Deferred revenues1,522 3,855 
Operating lease liabilities(3,980)(2,762)
Net cash provided by operating activities66,155 82,447 
Cash flows from investing activities:  
Acquisition of property, plant and equipment(31,322)(36,743)
Proceeds from sale of a subsidiary 82 
Purchases of marketable securities(71,186)(19,726)
Proceeds from maturities and sales of marketable securities42,695 35,410 
Net cash used in investing activities(59,813)(20,977)
Cash flows from financing activities:  
Proceeds from issuances of common stock5,909 4,935 
Purchase of common stock through stock repurchase program(23,951) 
Tax withholdings related to net share settlements of equity awards(5,261)(3,800)
Payment of contingent consideration(3,873) 
Proceeds from term loan debt 18,000 
Principal repayments on term loans(4,740)(26,322)
Payment of term loan debt issuance costs (78)
Net cash used in financing activities(31,916)(7,265)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,558)583 
Net increase (decrease) in cash, cash equivalents and restricted cash(27,132)54,788 
Cash, cash equivalents and restricted cash, beginning of period191,098 147,937 
Cash, cash equivalents and restricted cash, end of period$163,966 $202,725 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8



FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 26,
2021
June 27,
2020
Non-cash investing and financing activities:
Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases$2,906 $(2,274)
Operating lease, right-of-use assets obtained in exchange for lease obligations11,629 428 
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net$4,559 $4,133 
Cash paid for interest339 473 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$160,273 $199,926 
Restricted cash, current1,857 1,424 
Restricted cash, non-current1,836 1,375 
Total cash, cash equivalents and restricted cash$163,966 $202,725 

The accompanying notes are an integral part of these condensed consolidated financial statements.
9


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 (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on February 22, 2021. 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 2021 and 2020 each contain 52 weeks and the six months ended June 26, 2021 and June 27, 2020 each contained 26 weeks. Fiscal 2021 will end on December 25, 2021.

Significant Accounting Policies
Our significant accounting policies have not changed during the six months ended June 26, 2021 from those disclosed in our Annual Report on Form 10-K for the year ended December 26, 2020.

New Accounting Pronouncements
ASU 2019-12
In December 2019, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740),” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted ASU 2019-12 on a prospective basis on December 27, 2020, the first day of fiscal 2021. The adoption did not have a material effect on our consolidated financial position, results of operations or cash flows.

ASU 2020-04
In March 2020, the FASB issued ASU 2020-04, “Referenced Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modifications made on or before December 31, 2022. ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively for contract modifications made on or before December 31, 2022. The Company has not yet applied the relief afforded by these standard amendments and is currently assessing contracts that will require modification due to reference rate reform to which these standard amendments may be applied.

10


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 EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Intel Corporation16.2 %36.1 %22.1 %36.2 %
Samsung Electronics., LTD.14.7 %***
Taiwan Semiconductor Manufacturing Co., LTD.11.0 %*11.2 %*
41.9 %36.1 %33.3 %36.2 %
*Represents less than 10% of total revenues.

At June 26, 2021, one customer accounted for 20.6% of gross accounts receivable. At December 26, 2020, two customers accounted for 15.3% and 13.7% 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 26,
2021
December 26,
2020
Raw materials$56,138 $48,122 
Work-in-progress35,911 30,806 
Finished goods19,841 20,301 
$111,890 $99,229 

Note 4 Acquisition

High Precision Devices, Inc. Acquisition
On October 19, 2020, we acquired 100% of the shares of HPD for total consideration of $16.9 million, net of cash acquired of $1.7 million, which included an adjustment for changes in working capital. This acquisition brings highly specialized skills and know-how to address the unique test challenges within the emerging quantum computing, superconducting computing, and ultra-sensitive sensor markets which operate at temperatures as low as 30 millikelvin.

The acquisition was accounted for using the acquisition method of accounting, with FormFactor treated as the acquirer. The acquired assets and liabilities of HPD were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets.

Our Condensed Consolidated Statements of Income include the financial results of HPD subsequent to the acquisition date of October 19, 2020. Revenue in fiscal 2020 related to HPD subsequent to the acquisition date that was included in our Condensed Consolidated Statements of Income was not material.

The acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date of the acquisition based upon their respective fair values. The fair values assigned to assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.

We estimated the acquisition price and the allocation of fair value to assets acquired and liabilities assumed as of the acquisition date, October 19, 2020. We subsequently made certain immaterial adjustments within the measurement period to the preliminary acquisition price allocation. See Note 5, Goodwill and Intangible Assets, for changes in identified intangible values
11


and goodwill. Our purchase accounting remains open at June 26, 2021, subject to finalization of certain deferred tax items. The estimated fair value of assets acquired, including goodwill and intangibles, and liabilities assumed is as follows (in thousands):
Amount
Cash and cash equivalents$1,680 
Accounts receivable1,017 
Inventories3,047 
Property, plant and equipment669 
Operating lease, right of use assets2,554 
Prepaid expenses and other current assets599 
Tangible assets acquired9,566 
Deferred revenue(2,529)
Accounts payable and accrued liabilities(1,268)
Operating lease liabilities(2,554)
Deferred tax liabilities(2,840)
Total tangible assets acquired and liabilities assumed375 
Intangible assets11,520 
Goodwill6,665 
Net Assets Acquired$18,560 

The intangible assets as of the closing date of the acquisition included (in thousands):
AmountWeighted Average Useful Life (in years)
Developed technologies$7,500 10.0
Customer relationships3,600 5.0
Order backlog200 0.5
Trade names220 5.0
Total intangible assets$11,520 8.2

The fair value of the intangible assets acquired in connection with the acquisition was determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized.

Identifiable Intangible Assets
Valuation of intangible assets involves multiple assumptions. The key assumptions are described below.

Developed technology acquired primarily consists of existing technology related to cryogenic probe stations, Adiabatic Demagnetization Refrigerator (“ADR”), and continuous ADR cryostats and similar tools, and technology related to other cryogenic applications. We valued the developed technology using the multi-period excess earnings method under the income approach. Using this approach, the estimated fair values were calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return.

The value of customer relationships represents the fair value of future projected revenues that will be derived from the sale of products to HPD's existing customers. We valued customer relationships using the incremental cash flow method. This method estimates value based on the incremental cash flow afforded by having the customers relationships in place on the acquisition date versus having no relationships in place and needing to replicate or replace those relationships. The incremental cash flows are then discounted to a present value to arrive at an estimate of fair value for this asset class.

Order backlog represents the value of future sales under existing contracts as of the acquisition date. Expected cash flow from order backlog was valued on a discounted direct cash flow basis, net of returns on contributory assets such as working capital, property and equipment, trade name and assembled workforce.

12


The identified trade names intangibles relate to the estimated fair value of future cash flows related to the HPD brand. We valued trade names by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name.

Goodwill
The excess of purchase price over the fair value assigned to the assets acquired and liabilities assumed represents the amount of goodwill resulting from the acquisition. We believe the factors that contributed to goodwill include synergies that are specific to our consolidated business, such as cost savings and operational efficiencies, and the acquisition of a talented workforce that expands our expertise in business development and commercializing semiconductor test products, none of which qualify for recognition as a separate intangible asset. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition was recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment.

The goodwill arising from the acquisition was allocated to the HPD reporting unit within the Systems reportable segment.

We have not presented unaudited combined pro forma financial information as the HPD acquisition was not significant to our consolidated results of operations and financial position.

Baldwin Park Acquisition
On July 30, 2020, we acquired the probe card assets of Advantest Corporation for total cash consideration of $35.0 million. This acquisition brings important enabling technologies and capabilities for designing and manufacturing advanced probe cards, and adds a complementary 3D-NAND Flash probe-card product that is qualified and in production at one of the world's leading NAND Flash manufacturers.

The acquisition was accounted for using the acquisition method of accounting, with FormFactor treated as the acquirer. The acquired assets and liabilities of Baldwin Park were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets.

Our Condensed Consolidated Statements of Income include the financial results of Baldwin Park subsequent to the acquisition date of July 30, 2020. Revenue related to Baldwin Park since the acquisition date that was included in our Condensed Consolidated Statements of Income for fiscal 2020 was not material.

We estimated the acquisition price and the allocation of fair value to assets acquired and liabilities assumed as of the acquisition date, July 30, 2020. We subsequently made certain immaterial adjustments within the measurement period to the acquisition price allocation as a result of finalization of our valuation of identifiable assets and liabilities. See Note 5, Goodwill and Intangible Assets, for changes in identified intangible values and goodwill. The final allocation of the assets acquired, including goodwill and intangibles, and liabilities assumed for the purchase as follows (in thousands):
Amount
Accounts receivable$4,365 
Inventories2,727 
Property, plant and equipment9,053 
Operating lease, right of use assets519 
Prepaid expenses and other current assets56 
Tangible assets acquired16,720 
Accounts payable and accrued liabilities(743)
Operating lease liabilities(519)
Total tangible assets acquired and liabilities assumed15,458 
Intangible assets13,600 
Goodwill5,942 
Net assets acquired$35,000 

13


The intangible assets as of July 30, 2020 included (in thousands):
AmountWeighted Average Useful Life (in years)
Developed technologies$8,800 10.0
Customer relationships4,400 3.0
In-process research and development400 N/A
Total intangible assets$13,600 7.7

Indications of fair value of the intangible assets acquired in connection with the acquisition were determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized.

Identifiable Intangible Assets
Valuation of intangible assets involves multiple assumptions. The key assumptions are described below.

Developed technology acquired consists of existing technology related to 3D NAND Flash probe cards and the value expected to be derived from interconnect technology. We valued the developed technology related to 3D NAND Flash using the multi-period excess earnings method under the income approach. Using this approach, the estimated fair values were calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return. We valued the interconnect developed technology asset using the incremental cash flow method. This method estimates value based on the incremental cash flow afforded by having the interconnect capability in place on the acquisition date versus having no capability in place and needing to replicate or replace that capability. The incremental cash flows are then discounted to a present value to arrive at an estimate of fair value for this asset class.

The value of customer relationships represents the fair value of future projected revenues that will be derived from the sale of products to Baldwin Park's existing customers. We valued customer relationships using the incremental cash flow method. This method estimates value based on the incremental cash flow afforded by having the customers relationships in place on the acquisition date versus having no relationships in place and needing to replicate or replace those relationships. The incremental cash flows are then discounted to a present value to arrive at an estimate of fair value for this asset class.

In-process research and development (“IPR&D”) acquired primarily consists of research and development projects that were in process at the time of acquisition related to technologies used in DRAM probe cards. Once these projects are complete they will be amortized over their useful life. We valued the IPR&D using the multi-period excess earnings method under the income approach. Using this approach, the estimated fair values were calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return.

Goodwill
The excess of purchase price over the fair value assigned to the assets acquired and liabilities assumed represents the amount of goodwill resulting from the acquisition. We believe the factors that contributed to goodwill include synergies that are specific to our consolidated business, such as cost savings and operational efficiencies, and the acquisition of a talented workforce that expands our expertise in business development, none of which qualify for recognition as a separate intangible asset. We expect this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition was recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment.

The goodwill arising from the acquisition was allocated to the Probe Cards reporting unit within the Probe Cards reportable segment.

We have not presented unaudited combined pro forma financial information as the Baldwin Park acquisition was not significant to our consolidated results of operations and financial position.

14


Note 5 Goodwill and Intangible Assets

Goodwill by reportable segment was as follows (in thousands):
Probe CardsSystemsTotal
Goodwill, gross, as of December 28, 2019$172,482 $26,714 $199,196 
Addition - FRT GmbH Acquisition 975 975 
Addition - Baldwin Park Acquisition5,590  5,590 
Addition - HPD Acquisition 4,654 4,654 
Foreign currency translation 2,346 2,346 
Goodwill, gross, as of December 26, 2020178,072 34,689 212,761 
Addition - Baldwin Park Acquisition352  352 
Addition - HPD Acquisition 2,011 2,011 
Foreign currency translation (576)(576)
Goodwill, gross, as of July 26, 2021$178,424 $36,124 $214,548 

We have not recorded goodwill impairments for the six months ended June 26, 2021.

Intangible assets were as follows (in thousands):
June 26, 2021December 26, 2020
Intangible Assets GrossAccumulated
Amortization
NetGrossAccumulated
Amortization
Net
Developed technologies $173,627 $147,968 $25,659 $176,265 $137,754 $38,511 
Customer relationships51,641 36,437 15,204 52,488 33,378 19,110 
Trade names8,140 7,520 620 8,162 7,363 799 
Order backlog1,990 1,960 30 2,227 1,900 327 
In-process research and development400  400 400  400 
$235,798 $193,885 $41,913 $239,542 $180,395 $59,147 

Amortization expense was included in our Condensed Consolidated Statements of Income as follows (in thousands):
 Three Months EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Cost of revenues$5,505 $4,926 $10,595 $10,676 
Selling, general and administrative1,590 1,528 3,305 3,041 
$7,095 $6,454 $13,900 $13,717 

The estimated future amortization of definite-lived intangible assets, excluding in-process research and development, is as follows (in thousands):
Fiscal YearAmount
Remainder of 2021$4,885 
20229,647 
20237,271 
20244,652 
20254,389 
Thereafter10,669 
$41,513 

15


Note 6 Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):
June 26,
2021
December 26,
2020
Accrued compensation and benefits$31,210 $33,110 
Accrued income and other taxes6,049 6,976 
Accrued warranty4,258 3,918 
Employee stock purchase plan contributions withheld4,768 4,240 
Accrued contingent consideration  4,012 
Other accrued expenses5,202 3,086 
$51,487 $55,342 

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 26, 2021 or the year ended December 26, 2020.

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

No changes were made to our valuation techniques during the first six months of fiscal 2021.

16


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 26, 2021Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$25,917 $ $ $25,917 
Marketable securities:
 U.S. treasuries27,112   27,112 
 Certificates of deposit 1,207  1,207 
 U.S. agency securities 575  575 
 Corporate bonds 28,893  28,893 
 Commercial paper 38,175  38,175 
27,112 68,850  95,962 
Foreign exchange derivative contracts (Designated) 152  152 
Interest rate swap derivative contracts 571  571 
Total assets$53,029 $69,573 $ $122,602 
Liabilities:
Foreign exchange derivative contracts (Designated)$ $(53)$ $(53)
Interest rate swap derivative contracts (103) (103)
Total liabilities$ $(156)$ $(156)
December 26, 2020Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$43,019 $ $ $43,019 
Marketable securities:
U.S. treasuries40,726   40,726 
Certificates of deposit 2,179  2,179 
U.S. agency securities 575  575 
Corporate bonds 24,330  24,330 
40,726 27,084  67,810 
Foreign exchange derivative contracts 1,057  1,057 
Interest rate swap derivative contracts 57  57 
Total assets$83,745 $28,198 $ $111,943 
Liabilities:
Interest rate swap derivative contracts$ $(87)$ $(87)
Contingent consideration  (4,012)(4,012)
Total liabilities$ $(87)$(4,012)$(4,099)
 
Cash Equivalents
The fair value of our cash equivalents is determined based on quoted market prices for similar or identical securities.

Marketable Securities
We classify our marketable securities as available-for-sale and value them utilizing a market approach. Our investments are priced by pricing vendors who provide observable inputs for their pricing without applying significant judgment. Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors or when a broker price is more reflective of fair value. Our broker-priced investments are categorized as Level 2 investments because fair value is based on similar assets without applying significant judgments. In addition, all investments have a sufficient trading volume to demonstrate that the fair value is appropriate.

Unrealized gains and losses were immaterial and were recorded as a component of Accumulated other comprehensive income
17


in our Condensed Consolidated Balance Sheets. We did not have any other-than-temporary unrealized gains or losses at either period end included in these financial statements.

Contingent Consideration
Contingent consideration, arising from the acquisition of FRT, was a cash amount equal to 1.5x EBIT as defined in the purchase agreement, up to a maximum of €10.3 million, payable subject to the performance of the acquired business in calendar 2020. We estimated the fair value of contingent consideration using a probability weighted approach. Key assumptions in determining the fair value of contingent consideration included estimating EBIT levels that we believed as of the acquisition date were likely to be achieved during the performance period and discounting at an appropriate discount rate. We settled our contingent consideration in the current quarter for $3.9 million, resulting in a $0.1 million credit to Selling, general and administrative expense with the remaining change from December 26, 2020 resulting from foreign currency translation.

Interest Rate Swaps
The fair value of our interest rate swap contracts is determined at the end of each reporting period based on valuation models that use interest rate yield curves as inputs. For accounting purposes, our interest rate swap contracts qualify for, and are designated as, cash flow hedges. The cash flows associated with the interest rate swaps are reported in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows and the fair value of the interest rate swap contracts are recorded within Accrued liabilities and Other liabilities in our Condensed Consolidated Balance Sheets.

The impact of the interest rate swaps on our Condensed Consolidated Statements of Income was as follows (in thousands):
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three Months Ended June 26, 2021$(203)Interest expense$(39)Interest expense$— 
Three Months Ended June 27, 2020$(174)Interest expense$(10)Interest expense$— 
Six Months Ended June 26, 2021$421 Interest expense$(77)Interest expense$— 
Six Months Ended June 27, 2020$(270)Interest expense$12 Interest expense$— 

Foreign Exchange Derivative Contracts
We operate and sell our products in various global markets. As a result, we are exposed to changes in foreign currency exchange rates. We utilize foreign currency forward contracts to hedge against future movements in foreign exchange rates that affect certain existing foreign currency denominated assets and liabilities and forecasted foreign currency revenue and expense transactions. Under this program, our strategy is to have increases or decreases in our foreign currency exposures mitigated by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with foreign currency transaction gains or losses.

We do not use derivative financial instruments for speculative or trading purposes. For accounting purposes, certain of our foreign currency forward contracts are not designated as hedging instruments and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded within Other expense, net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses. Certain of our foreign currency forward contracts are designated as cash flow hedges, and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded as a component of Accumulated other comprehensive income and reclassified into earnings in the same period in which the hedged transaction affects earnings, and in the same line item on the Condensed Consolidated Statements of Income as the impact of the hedge transaction.

The fair value of our foreign exchange derivative contracts was determined based on current foreign currency exchange rates and forward points. All of our foreign exchange derivative contracts outstanding at June 26, 2021 will mature by the second quarter of fiscal 2022.

18


The following table provides information about our foreign currency forward contracts outstanding as of June 26, 2021 (in thousands):
CurrencyContract PositionContract Amount
(Local Currency)
Contract Amount
(U.S. Dollars)
Euro DollarBuy(12,678)$(15,124)
Japanese YenSell1,802,229 16,251 
Korean WonBuy(3,050,367)(2,703)
Total USD notional amount of outstanding foreign exchange contracts$(1,576)

Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs.

The impact of foreign exchange derivative contracts not designated as cash flow hedges on our Condensed Consolidated Statements of Income was as follows (in thousands):
Amount of Gain (Loss) Recognized on Derivatives
Three Months EndedSix Months Ended
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized on DerivativesJune 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Foreign exchange forward contractsOther expense, net$(69)$234 $1,220 $349 

The impact of foreign exchange derivative contracts designated as cash flow hedges on our Condensed Consolidated Statements of Income was as follows (in thousands):
Amount of Gain (Loss) Recognized in Accumulated OCI on Derivative Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Three Months Ended June 26, 2021$278 Cost of revenues$134 
Research and development16 
Selling, general and administrative52 
$202 
Three Months Ended June 27, 2020$52 Cost of revenues$(139)
Research and development(17)
Selling, general and administrative(35)
$(191)
Six Months Ended June 26, 2021$(248)Cost of revenues$384 
Research and development46 
Selling, general and administrative134 
$564 
Six Months Ended June 27, 2020$(126)Cost of revenues$(258)
Research and development(35)
Selling, general and administrative(79)
$(372)

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
We measure and report our non-financial assets such as Property, plant and equipment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition. Other than as discussed in Note 4, Acquisition, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three and six months ended June 26, 2021 or June 27, 2020.
19



Note 8 — Warranty
We offer warranties on certain products and record a liability for the estimated future costs associated with warranty claims at the time revenue is recognized. The warranty liability is based upon historical experience and our estimate of the level of future costs. While we engage in product quality programs and processes, our warranty obligation is affected by product failure rates, material usage and service delivery costs. We continuously monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified failures. As we sell new products to our customers, we must exercise considerable judgment in estimating the expected failure rates. This estimating process is based on historical experience of similar products, as well as various other assumptions that we believe to be reasonable under the circumstances. We provide for the estimated cost of product warranties at the time revenue is recognized as a component of Cost of revenues in our Condensed Consolidated Statement of Income.

Changes in our warranty liability were as follows (in thousands):
Six Months Ended
June 26,
2021
June 27,
2020
Balance at beginning of period$3,918 $1,942 
Accruals3,472 2,116 
Settlements(3,132)(1,997)
Balance at end of period$4,258 $2,061 

Note 9 — Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following (in thousands):
June 26,
2021
December 26,
2020
Land$4,751 $4,751 
Machinery and equipment 239,322 226,185 
Computer equipment and software44,273 36,361 
Furniture and fixtures 6,924 6,894 
Leasehold improvements 81,421 79,144 
Sub-total 376,691 353,335 
Less: Accumulated depreciation and amortization (305,356)(294,468)
Net, property, plant and equipment 71,335 58,867 
Construction-in-process54,013 45,236 
Total$125,348 $104,103 

Note 10 — Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program
On October 26, 2020, our Board of Directors authorized a program to repurchase up to $50 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the six months ended June 26, 2021, we repurchased and retired 620,200 shares of common stock for $24.0 million and, as of June 26, 2021, $26.0 million remained available for future repurchases.

Our policy related to repurchases of our common stock is to charge the excess of cost over par value to additional paid-in capital once the shares are retired. All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

20


Restricted Stock Units
Restricted stock unit (“RSU”) activity under our equity incentive plan was as follows:
 
UnitsWeighted Average Grant Date Fair Value
RSUs at December 26, 20202,840,922 $19.80 
Awards granted43,949 36.71 
Awards vested(451,957)15.95 
Awards forfeited(26,996)22.66 
RSUs at June 26, 20212,405,918 20.80 

Performance Restricted Stock Units
We may grant Performance RSUs (“PRSUs”) to certain executives, which vest based upon us achieving certain market performance criteria. There were no PRSUs granted during the six months ended June 26, 2021. PRSUs are included as part of the RSU activity above.

Stock Options
Stock option activity under our equity incentive plan was as follows:
Options OutstandingWeighted Average Exercise PriceWeighted Average Remaining Contractual Life in YearsAggregate Intrinsic Value
(in thousands)
Outstanding at December 26, 2020106,000 $8.35 
Options exercised(100,000)8.44 
Outstanding at June 26, 20216,000 $6.93 1.11$172 
Vested and expected to vest at June 26, 20216,000 $6.93 1.11$172 
Exercisable at June 26, 20216,000 $6.93 1.11$172 

Employee Stock Purchase Plan
Information related to activity under our Employee Stock Purchase Plan (“ESPP”) was as follows:
 Six Months Ended
 June 26, 2021
Shares issued228,784 
Weighted average per share purchase price$22.14 
Weighted average per share discount from the fair value of our common stock on the date of issuance$(18.73)

Stock-Based Compensation
Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Cost of revenues$1,079 $901 $2,414 $1,838 
Research and development1,663 1,389 3,352 2,828 
Selling, general and administrative3,846 3,352 7,899 6,599 
Total stock-based compensation$6,588 $5,642 $13,665 $11,265 
 
21


Unrecognized Compensation Costs
At June 26, 2021, the unrecognized stock-based compensation was as follows (dollars in thousands): 
Unrecognized ExpenseAverage Expected Recognition Period in Years
Restricted stock units$23,767 1.87
Performance restricted stock units6,369 1.77
Employee stock purchase plan243 0.11
Total unrecognized stock-based compensation expense$30,379 1.83

Note 11 — Net Income per Share

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Weighted-average shares used in computing basic net income per share77,463 76,275 77,530 76,140 
Add potentially dilutive securities2,003 2,586 2,091 2,570 
Weighted-average shares used in computing diluted net income per share79,466 78,861 79,621 78,710 
Securities not included as they would have been antidilutive128  118 13 

Note 12 — Commitments and Contingencies

Leases
See Note 13, Leases.

Contractual Obligations and Commitments
Our contractual obligations and commitments have not materially changed as of June 26, 2021 from those disclosed in our Annual Report on Form 10-K for the year ended December 26, 2020.

Legal Matters
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of June 26, 2021, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

Note 13 — Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for our corporate headquarters located in Livermore, California. Our leases have remaining terms of 1 to 8 years, and some leases include options to extend up to 20 years. We also have operating leases for automobiles with remaining lease terms of 1 to 4 years. We did not include any of our renewal options in our lease terms for calculating our lease liability as the renewal options allow us to maintain operational flexibility and we are not reasonably certain we will exercise these options at this time. The weighted-average remaining lease term for our operating leases was 6 years as of June 26, 2021 and the weighted-average discount rate was 3.70%.

22


The components of lease expense were as follows (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Lease expense:
Operating lease expense$2,048 $1,794 $4,170 $3,719 
Short-term lease expense45 27 83 66 
Variable lease expense426 399 963 782 
$2,519 $2,220 $5,216 $4,567 


Future minimum payments under our non-cancelable operating leases were as follows as of June 26, 2021 (in thousands):
Fiscal YearAmount
Remainder of 2021$4,264 
20228,527 
20237,172 
20246,766 
20256,742 
Thereafter14,850 
  Total minimum lease payments48,321 
Less: interest(6,202)
  Present value of net minimum lease payments42,119 
Less: current portion(7,908)
  Total long-term operating lease liabilities$34,211 

Note 14 — Revenue

Transaction price allocated to the remaining performance obligations: On June 26, 2021, we had $10.7 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts and contracts with overtime revenue recognition that are not yet delivered. We expect to recognize approximately 41.2% of our remaining performance obligations as revenue in the remainder of fiscal 2021, approximately 43.6% in fiscal 2022, and approximately 15.2% in fiscal 2023 and thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation.

Contract balances: The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable is recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is recognized in the period we deliver goods or provide services or when our right to consideration is unconditional. A contract asset is recorded when we have performed under the contract but our right to consideration is conditional on something other than the passage of time. Contract assets as of June 26, 2021 and December 26, 2020 were $3.6 million and $3.7 million, respectively, and are reported on the Condensed Consolidated Balance Sheets as a component of Prepaid expenses and other current assets.

Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of Deferred revenue and Other liabilities. Contract liabilities as of June 26, 2021 and December 26, 2020 were $23.9 million and $22.2 million, respectively. During the six months ended June 26, 2021, we recognized $12.8 million of revenue, that was included in contract liabilities as of December 26, 2020.

Costs to obtain a contract: We generally expense sales commissions when incurred as a component of Selling, general and administrative expense, as the amortization period is typically less than one year.

Revenue by Category: Refer to Note 15, Operating Segments and Enterprise-Wide Information, for further details.

23


Note 15 — Operating Segments and Enterprise-Wide Information

Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. We operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. The following table summarizes the operating results by reportable segment (dollars in thousands):
Three Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsCorporate and OtherTotalProbe CardsSystemsCorporate and OtherTotal
Revenues$153,641 $34,435 $ $188,076 $133,784 $24,040 $ $157,824 
Gross profit $66,600 $16,907 $(7,224)$76,283 $61,523 $10,719 $(6,075)$66,167 
Gross margin43.3 %49.1 %40.6 %46.0 %44.6 %41.9 %
Six Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsCorporate and OtherTotalProbe CardsSystemsCorporate and OtherTotal
Revenues$312,539 $62,173 $ $374,712 $268,499 $50,078 $ $318,577 
Gross profit $136,915 $30,506 $(14,432)$152,989 $122,266 $24,053 $(12,762)$133,557 
Gross margin43.8 %49.1 %40.8 %45.5 %48.0 %41.9 %

Operating results provide useful information to our management for assessment of our performance and results of operations. Certain components of our operating results are utilized to determine executive compensation along with other measures.

Corporate and Other includes unallocated expenses relating to amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, share-based compensation, and other, which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Certain revenue category information by reportable segment was as follows (in thousands):
Three Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsTotalProbe CardsSystemsTotal
Market:
Foundry & Logic$103,726 $ $103,726 $109,347 $ $109,347 
DRAM42,088  42,088 19,052  19,052 
Flash7,827  7,827 5,385  5,385 
Systems 34,435 34,435  24,040 24,040 
Total$153,641 $34,435 $188,076 $133,784 $24,040 $157,824 
Timing of revenue recognition:
Products transferred at a point in time$153,129 $30,884 $184,013 $133,208 $22,548 $155,756 
Products and services transferred over time512 3,551 4,063 576 1,492 2,068 
Total$153,641 $34,435 $188,076 $133,784 $24,040 $157,824 
Geographical region:
Taiwan$46,737 $5,147 $51,884 $29,806 $3,365 $33,171 
South Korea35,426 751 36,177 14,249 864 15,113 
United States24,174 8,476 32,650 22,368 5,753 28,121 
China23,996 7,831 31,827 45,625 3,133 48,758 
Asia-Pacific1
12,569 1,719 14,288 4,347 2,153 6,500 
Europe6,466 5,544 12,010 8,767 5,365 14,132 
Japan3,477 4,227 7,704 6,679 3,380 10,059 
Rest of the world796 740 1,536 1,943 27 1,970 
Total$153,641 $34,435 $188,076 $133,784 $24,040 $157,824 
24


Six Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsTotalProbe CardsSystemsTotal
Market:
Foundry & Logic$217,136 $ $217,136 $215,092 $ $215,092 
DRAM75,986  75,986 43,748  43,748 
Flash19,417  19,417 9,659  9,659 
Systems 62,173 62,173  50,078 50,078 
Total$312,539 $62,173 $374,712 $268,499 $50,078 $318,577 
Timing of revenue recognition:
Products transferred at a point in time$311,605 $55,555 $367,160 $267,277 $47,406 $314,683 
Products and services transferred over time934 6,618 7,552 1,222 2,672 3,894 
Total$312,539 $62,173 $374,712 $268,499 $50,078 $318,577 
Geographical region:
Taiwan$91,471 $5,993 $97,464 $60,245 $4,706 $64,951 
China61,827 12,625 74,452 82,905 9,495 92,400 
United States45,482 16,654 62,136 47,979 12,058 60,037 
South Korea53,427 1,835 55,262 27,941 1,260 29,201 
Asia-Pacific1
40,447 2,799 43,246 8,802 5,561 14,363 
Europe9,299 12,710 22,009 24,977 10,198 35,175 
Japan8,726 8,299 17,025 12,214 6,215 18,429 
Rest of the world1,860 1,258 3,118 3,436 585 4,021 
Total$312,539 $62,173 $374,712 $268,499 $50,078 $318,577 

1 Asia-Pacific includes all countries in the region except China, Japan, South Korea, and Taiwan, which are disclosed separately.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Cautionary Statement Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, which are subject to risks and uncertainties. The forward-looking statements include statements concerning, among other things, our business strategy, financial and operating results, gross margins, liquidity and capital expenditure requirements and impact of accounting standards. In some cases, you can identify these statements by forward-looking words, such as “may,” “might,” “will,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend” and “continue,” the negative or plural of these words and other comparable terminology.

The forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements. We have no obligation to update any of these statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, uncertainties related to COVID-19 and the impact of our responses to it, the interpretation and impacts of changes in export controls and other trade barriers, our ability to execute our business strategy and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 26, 2020 and in this Quarterly Report on Form 10-Q. You should carefully consider the numerous risks and uncertainties described under these sections.
 
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us” and “FormFactor” refer to FormFactor, Inc. and its subsidiaries.

25


Overview

FormFactor, Inc., headquartered in Livermore, California, is a leading provider of test and measurement technologies. We provide a broad range of high-performance probe cards, analytical probes, probe stations, metrology systems, thermal systems and cryogenic systems to both semiconductor companies and scientific institutions. Our products provide electrical and physical information from a variety of semiconductor and electro-optical devices and integrated circuits from early research, through development, to high-volume production. Customers use our products and services to lower production costs, improve yields, and enable development of their complex next-generation products.

We operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, metrology systems, and thermal and cryogenic systems are included in the Systems segment.

We generated net income of $37.5 million in the first six months of fiscal 2021 as compared to $36.4 million in the first six months of fiscal 2020. The increase in net income was primarily due to increased revenues, partially offset by slightly lower margins on a lower mix of Foundry & Logic probe card sales and higher operating expenses on higher operating levels.

Impact of COVID-19

The COVID-19 pandemic continues to cause serious illness and death in many of the regions that we, our customers and our suppliers operate. The COVID-19 pandemic has resulted in significant governmental actions designed to control the spread of the virus, including the imposition of safety requirements and other orders in locations where we have manufacturing and other activities.

We believe that we operate in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. This reduces the current and anticipated impacts of the COVID-19 pandemic on our major customers and suppliers, and upon our operations, as compared to companies that are not part of the critical infrastructure. We currently continue to operate in all of our manufacturing sites at production levels comparable to those prior to the pandemic, albeit subject to certain safety and related constraints. Our other operations are similarly continuing with substantial work-from-home activities.

If the provisions of governmental health orders or other safety requirements applicable to us or our customers or suppliers become more restrictive for an extended period of time, or if we have repeated occurrences of COVID-19 in any of our facilities, we may experience disruptions or delays in manufacturing, product design, product development, customer support, manufacturing and sales, and an overall loss of productivity and efficiency.

While to date the disruptions in our operations, supply chain and customer demand as a result of the COVID-19 pandemic have been somewhat limited, we believe that the COVID-19 pandemic represents a sustained threat that may give rise to a variety of more significant adverse impacts on our business and financial results. For a further description of the uncertainties and business risks associated with the COVID-19 pandemic, see the risk factors discussed in our Annual Report on Form 10-K for the year ended December 26, 2020.

Significant Accounting Policies and the Use of Estimates

Management’s Discussion and Analysis and Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K describe the significant accounting estimates and significant accounting policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. During the six months ended June 26, 2021, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 26, 2020, which was filed with the Securities and Exchange Commission on February 22, 2021.

26


Results of Operations
 
The following table sets forth our operating results as a percentage of revenues for the periods indicated:
 Three Months EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Revenues100.0 %100.0 %100.0 %100.0 %
Cost of revenues59.4 58.1 59.2 58.1 
Gross profit40.6 41.9 40.8 41.9 
Operating expenses:    
Research and development13.5 13.3 13.2 13.2 
Selling, general and administrative16.2 14.4 16.1 15.8 
Total operating expenses29.7 27.7 29.3 29.0 
Operating income10.9 14.2 11.5 12.9 
Interest income0.1 0.2 0.1 0.3 
Interest expense(0.1)(0.1)(0.1)(0.2)
Other expense, net(0.1)— — — 
Income before income taxes10.8 14.3 11.5 13.0 
Provision for income taxes1.2 1.4 1.5 1.6 
Net income9.6 %12.9 %10.0 %11.4 %

Revenues by Segment and Market
 Three Months EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
 (In thousands)
Probe Cards$153,641 $133,784 $312,539 $268,499 
Systems34,435 24,040 62,173 50,078 
$188,076 $157,824 $374,712 $318,577 
27


Three Months Ended
June 26,
2021
% of RevenuesJune 27,
2020
% of Revenues$ Change% Change
(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic$103,726 55.1 %$109,347 69.3 %$(5,621)(5.1)%
DRAM42,088 22.4 19,052 12.1 23,036 120.9 
Flash7,827 4.2 5,385 3.4 2,442 45.3 
Systems Market:
Systems34,435 18.3 24,040 15.2 10,395 43.2 
Total revenues$188,076 100.0 %$157,824 100.0 %$30,252 19.2 %
Six Months Ended
June 26,
2021
% of RevenuesJune 27,
2020
% of Revenues$ Change% Change
(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic$217,136 57.9 %$215,092 67.6 %$2,044 1.0 %
DRAM75,986 20.3 43,748 13.7 32,238 73.7 
Flash19,417 5.2 9,659 3.0 9,758 101.0 
Systems Market:
Systems62,173 16.6 50,078 15.7 12,095 24.2 
Total revenues$374,712 100.0 %$318,577 100.0 %$56,135 17.6 %

The decrease in Foundry & Logic product revenue for the three months ended June 26, 2021, compared to the three months ended June 27, 2020, was driven principally by lower demand from one major customer, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers, demonstrating success in diversifying across our strategic accounts. The increase in Foundry & Logic product revenue for the six months ended June 26, 2021, compared to the six months ended June 27, 2020, was driven principally by increased unit sales to large semiconductor foundries and integrated device manufacturers, partially offset by lower demand from one major customer.

The increase in DRAM product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by an increase in sales as a result of increased design wins and customer demand.

The increase in Flash product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by increased sales resulting from the acquisition of Baldwin Park. Our revenue in this market continues to be highly variable.

The increase in Systems product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by increased sales of cryogenic systems due to the acquisition of High Precision Devices, Inc. (“HPD”) and increased sales of thermal sub-systems and metrology systems.

Due to COVID-19, there were various impacts across our segments due to governmental mandates of social distancing. This resulted in a temporary factory shutdown for almost two weeks during our first fiscal quarter of 2020 in certain locations, limiting our manufacturing capacity. We believe these shutdowns negatively affected revenue and impacted our ability to maintain typical lead times, especially in our Probes segment. The plant shutdowns we experienced in the six months ended June 27, 2020 did not recur in the six months ended June 26, 2021, which presumably drove some of the increased sales, particularly in the Probe Cards segment where the plant shutdowns in 2020 were longer in duration than the shutdowns for the Systems segment.

28


Revenues by Geographic Region
Three Months EndedSix Months Ended
June 26,
2021
% of
Revenue
June 27,
2020
% of
Revenue
June 26,
2021
% of
Revenue
June 27,
2020
% of
Revenue
 (Dollars in thousands)
Taiwan$51,884 27.6 %$33,171 21.0 %$97,464 26.0 %$64,951 20.4 %
South Korea36,177 19.2 %15,113 9.6 %55,262 14.7 %29,201 9.2 %
United States32,650 17.4 %28,121 17.8 %62,136 16.6 %60,037 18.8 %
China31,827 16.9 %48,758 30.9 %74,452 19.9 %92,400 29.0 %
Asia-Pacific1
14,288 7.6 %6,500 4.1 %43,246 11.5 %14,363 4.5 %
Europe12,010 6.4 %14,132 9.0 %22,009 5.9 %35,175 11.0 %
Japan7,704 4.1 %10,059 6.4 %17,025 4.5 %18,429 5.8 %
Rest of the world1,536 0.8 %1,970 1.2 %3,118 0.9 %4,021 1.3 %
Total revenues$188,076 100.0 %$157,824 100.0 %$374,712 100.0 %$318,577 100.0 %

1 Asia-Pacific includes all countries in the region except China, Japan, South Korea and Taiwan, which are disclosed separately.
 
Geographic revenue information is based on the location to which we ship the product. For example, if a certain South Korean customer purchases through their U.S. subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S.

Changes in revenue by geographic region for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix.

Cost of Revenues and Gross Margins

Cost of revenues consists primarily of manufacturing materials, compensation and benefits, shipping and handling costs, manufacturing-related overhead and amortization of certain intangible assets. Our manufacturing operations rely on a limited number of suppliers to provide key components and materials for our products, some of which are a sole source. We order materials and supplies based on backlog and forecasted customer orders. Tooling and setup costs related to changing manufacturing lots at our suppliers are also included in the cost of revenues. We expense all warranty costs, inventory provisions and amortization of certain intangible assets as cost of revenues.

Our gross profit and gross margin were as follows (dollars in thousands):
 Three Months Ended
 June 26,
2021
June 27,
2020
$ Change% Change
Gross profit$76,283 $66,167 $10,116 15.3 %
Gross margin40.6 %41.9 %
Six Months Ended
June 26,
2021
June 27,
2020
$ Change% Change
Gross profit$152,989 $133,557 $19,432 14.5 %
Gross margin40.8 %41.9 %

29


Our gross profit and gross margin by segment were as follows (dollars in thousands):
Three Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsCorporate and OtherTotalProbe CardsSystemsCorporate and OtherTotal
Gross profit $66,600 $16,907 $(7,224)$76,283 $61,523 $10,719 $(6,075)$66,167 
Gross margin43.3 %49.1 %40.6 %46.0 %44.6 %41.9 %
Six Months Ended
June 26, 2021June 27, 2020
Probe CardsSystemsCorporate and OtherTotalProbe CardsSystemsCorporate and OtherTotal
Gross profit$136,915$30,506 $(14,432)$152,989 $122,266$24,053 $(12,762)$133,557 
Gross margin43.8 %49.1 %40.8 %45.5 %48.0 %41.9 %

Probe Cards
For the three and six months ended June 26, 2021, gross margins decreased compared to the three and six months ended June 27, 2020, primarily due to a lesser proportion of sales coming from higher gross margin Foundry & Logic probe card sales and a greater proportion of sales coming from lower gross margin DRAM sales, combined with higher materials costs.

Systems
For the three and six months ended June 26, 2021, gross margins increased compared to the three and six months ended June 27, 2020, primarily as a result of favorable product mix, largely related to increased sales of thermal sub-systems and metrology systems.

Corporate and Other
Corporate and Other includes unallocated expenses relating to share-based compensation and amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, and other which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Overall
Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading and material costs. For the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, gross profit has increased on greater revenue levels while gross margins have decreased, primarily on less favorable Probes segment product mix.

Cost of revenues included stock-based compensation expense as follows (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Stock-based compensation$1,079 $901 $2,414 $1,838 

30


Research and Development
Three Months Ended
June 26,
2021
June 27,
2020
$ Change% Change
(Dollars in thousands)
Research and development$25,454 $20,919 $4,535 21.7 %
% of revenues13.5 %13.3 %
Six Months Ended
June 26,
2021
June 27,
2020
$ Change% Change
(Dollars in thousands)
Research and development$49,500 $42,186 $7,314 17.3 %
% of revenues13.2 %13.2 %

The increase in research and development expenses in the three and six months ended June 26, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs. Annual salary increases and higher stock-based compensation also contributed to the increase. The increase is in alignment with current operating levels with no change as a percent of revenues for the six months ended June 26, 2021 when compared to the corresponding period in the prior year.

A detail of the changes is as follows (in thousands):
Three Months Ended June 26, 2021 compared to Three Months Ended June 27, 2020Six Months Ended June 26, 2021 compared to Six Months Ended June 27, 2020
Employee compensation costs$2,992 $4,429 
Stock-based compensation274 524 
Project material costs206 510 
Depreciation146 260 
Other general operations917 1,591 
$4,535 $7,314 

Research and development included stock-based compensation expense as follows (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Stock-based compensation$1,663 $1,389 $3,352 $2,828 

31


Selling, General and Administrative
Three Months Ended
June 26,
2021
June 27,
2020
$ Change% Change
(Dollars in thousands)
Selling, general and administrative$30,479 $22,755 $7,724 33.9 %
% of revenues16.2 %14.4 %
Six Months Ended
June 26,
2021
June 27,
2020
$ Change% Change
(Dollars in thousands)
Selling, general and administrative$60,494 $50,448 $10,046 19.9 %
% of revenues16.1 %15.8 %

The increase in selling, general and administrative expenses in the three and six months ended June 26, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs. Annual salary increases and higher stock-based compensation also contributed to the increase, together with a benefit in the prior year related to contingent consideration for the acquisition of FRT GmbH ("FRT") that did not repeat.

A detail of the changes is as follows (in thousands):
Three Months Ended June 26, 2021 compared to Three Months Ended June 27, 2020Six Months Ended June 26, 2021 compared to Six Months Ended June 27, 2020
Gain on contingent consideration$3,605 $3,605 
Employee compensation costs2,831 4,903 
Stock-based compensation494 1,300 
General operating expenses488 506 
Consulting fees145 (34)
Travel related costs100 (498)
Amortization of intangibles61 264 
$7,724 $10,046 

Selling, general and administrative included stock-based compensation expense as follows (in thousands):
Three Months EndedSix Months Ended
June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
Stock-based compensation$3,846 $3,352 $7,899 $6,599 

32


Interest Income and Interest Expense
 Three Months EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
 (Dollars in thousands)
Interest Income$148 $376 $342 $1,061 
Weighted average balance of cash and investments$263,363 $235,888 $215,232 $223,340 
Weighted average yield on cash and investments0.32 %0.81 %0.35 %1.26 %
Interest Expense$116 $171 $296 $489 
Average debt outstanding$30,453 $32,368 $31,358 $38,843 
Weighted average interest rate on debt1.58 %1.92 %1.58 %2.26 %
 
Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities. The decrease in interest income for the three and six months ended June 26, 2021 compared with the corresponding period of the prior year was attributable to lower investment yields due to the low interest rate environment, despite higher invested balances.

Interest expense primarily includes interest on our term loans, interest rate swap derivative contracts, and term loan issuance costs amortization charges. The decrease in interest expense for the three and six months ended June 26, 2021 compared to the same period of the prior year was primarily due to lower outstanding debt balances due to the pay-off of the term loan acquired when we purchased Cascade Microtech, Inc, and subsequently paid off on June 30, 2020, partially offset by the Building Term Loan that originated in the second quarter of 2020. Interest expense was also lower due to lower average interest rates on the outstanding debt.

Other Income (Expense), Net
Other income (expense), net, primarily includes the effects of foreign currency impact and various other gains and losses.

Provision for Income Taxes
 Three Months EndedSix Months Ended
 June 26,
2021
June 27,
2020
June 26,
2021
June 27,
2020
 (In thousands, except percentages)
Provision for income taxes$2,283 $2,162 $5,489 $4,978 
Effective tax rate11.3 %9.6 %12.8 %12.0 %

Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income (“FDII”) deduction. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, changes in ASC 718 stock-based compensation expense/benefit, future expansion into areas with varying country, state, and local income tax rates, and deductibility of certain costs and expenses by jurisdiction. We have utilized our previous net operating loss carryforwards, and expect the FDII deduction and corresponding benefit to be available, resulting in a decrease from the U.S. statutory rate and included in our worldwide effective tax rate for the year ending December 25, 2021.


Liquidity and Capital Resources

Capital Resources
Our working capital was $343.6 million at June 26, 2021, compared to $332.5 million at December 26, 2020.

Cash and cash equivalents primarily consist of deposits held at banks and money market funds. Marketable securities primarily consist of U.S. treasuries, corporate bonds, and commercial paper. We typically invest in highly-rated securities with low probabilities of default. Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment.

33


Our cash, cash equivalents and marketable securities totaled approximately $256.2 million at June 26, 2021, compared to $255.0 million at December 26, 2020. We believe that we will be able to satisfy our working capital requirements and scheduled term loan repayments for at least the next twelve months with the liquidity provided by our existing cash, cash equivalents, marketable securities and cash provided by operations. To the extent necessary, we may consider entering into short and long-term debt obligations, raising cash through a stock issuance, or obtaining new financing facilities, which may not be available on terms favorable to us. Our future capital requirements may vary materially from those now planned.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition.

If we are unsuccessful in maintaining or growing our revenues, maintaining or reducing our cost structure (in response to a potential reduction in demand due to an industry downturn, COVID-19, or other event), or increasing our available cash through debt or equity financings, our cash, cash equivalents and marketable securities may decline.

We utilize a variety of tax planning and financing strategies to manage our worldwide cash and deploy funds to locations where needed. As part of these strategies, we indefinitely reinvest a portion of our foreign earnings. Should we require additional capital in the United States, we may elect to repatriate indefinitely-reinvested foreign funds or raise capital in the United States.

Cash Flows
The following table sets forth our net cash flows from operating, investing and financing activities:
Six Months Ended
June 26,
2021
June 27,
2020
(In thousands)
Net cash provided by operating activities$66,155 $82,447 
Net cash used in investing activities(59,813)(20,977)
Net cash used in financing activities$(31,916)$(7,265)

Operating Activities 
Net cash provided by operating activities for the six months ended June 26, 2021 was primarily attributable to net income of $37.5 million and net non-cash expenses of $51.9 million, further impacted by changes in operating assets and liabilities, as explained below.

Inventories, net, increased $12.7 million to $111.9 million at June 26, 2021, compared to $99.2 million at December 26, 2020, as a result of anticipated projected customer demand. Due to provisions for excess and obsolete inventories of $6.9 million, the change in Inventories, net, was further impacted.

Operating lease liabilities increased $7.4 million to $42.1 million at June 26, 2021, compared to $34.7 million at December 26, 2020 as a result of additional right-of-use assets obtained in exchange for lease obligations of $11.6 million offset by lease payments.

Investing Activities
Net cash used in investing activities for the six months ended June 26, 2021 was primarily related to $31.3 million property, plant and equipment acquisitions, and $28.5 million net cash used to purchase marketable securities.

Financing Activities
Net cash used in financing activities for the six months ended June 26, 2021 primarily related to $24.0 million used to purchase common stock under our stock repurchase program, $5.3 million related to tax withholding associated with the net share settlements of our equity awards, and $4.7 million of principal payments made towards the repayment of our term loans, partially offset by $5.9 million of proceeds received from issuances of common stock under our employee stock purchase plan and stock option plans, and $3.9 million paid to settle the contingent consideration from the acquisition of FRT.

34


Debt

FRT Term Loan
On October 25, 2019, we entered into a $23.4 million three-year credit facility loan agreement (the “FRT Term Loan”), to fund the acquisition of FRT GmbH, which we acquired on October 9, 2019.

The FRT Term Loan bears interest at a rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus 1.75% per annum and will be repaid in quarterly installments of approximately $2.0 million plus interest. The interest rate at June 26, 2021 was 1.21%. As of June 26, 2021, the balance outstanding pursuant to the FRT term loan was $12.5 million.

Building Term Loan
On June 22, 2020, we entered into an $18.0 million 15-year credit facility loan agreement (the “Building Term Loan”). The proceeds of the Building Term Loan were used to finance the purchase a building adjacent to our leased facilities in Livermore, California.

The Building Term Loan bears interest at a rate equal to the applicable LIBOR rate plus 1.75% per annum. Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at June 26, 2021 was 1.84%. As of June 26, 2021, the balance outstanding pursuant to the Building Term Loan was $17.0 million.

On March 17, 2020, we entered into a forward starting interest rate swap agreement to hedge the interest payments on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt. As future levels of LIBOR over the life of the loan are uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates. By entering into the agreement, we convert a floating rate interest at one-month LIBOR plus 1.75% into a fixed rate interest at 2.75%. As of June 26, 2021, the notional amount of the loan that is subject to this interest rate swap is $17.0 million.

Stock Repurchase Program

In October 2020, our Board of Directors authorized a program to repurchase up to $50.0 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the six months ended June 26, 2021, we repurchased 620,200 shares of common stock for $24.0 million and, as of June 26, 2021, $26.0 million remained available for future repurchases.

Contractual Obligations and Commitments

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of June 26, 2021:
Payments Due In Fiscal Year
Remainder 20212022202320242025ThereafterTotal
Operating leases$4,264 $8,527 $7,172 $6,766 $6,742 $14,850 $48,321 
Term loans - principal payments4,677 9,376 1,050 1,080 1,111 12,259 29,553 
Term loans - interest payments (1)
228 364 281 262 240 1,146 2,521 
Total$9,169 $18,267 $8,503 $8,108 $8,093 $28,255 $80,395 

(1) Represents our minimum interest payment commitments at 1.84% per annum for the Building Term Loan and 1.21% per annum for the FRT Term Loan. This also excludes any amounts related to our interest rate swap.

Off-Balance Sheet Arrangements
 
Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of June 26, 2021, we were not involved in any such off-balance sheet arrangements.

35


Recent Accounting Pronouncements

See Note 1, Basis of Presentation and New Accounting Pronouncements, of Notes to Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
For financial market risks related to changes in interest rates and foreign currency exchange rates, reference is made to Item 7A “Quantitative and Qualitative Disclosures about Market Risk” contained in Part II of our Annual Report on Form 10-K for the fiscal year ended December 26, 2020. Our exposure to market risk has not changed materially since December 26, 2020.

Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting
 
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls
 
Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any control systems must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

CEO and CFO Certifications
 
We have attached as exhibits to this Quarterly Report on Form 10-Q the certifications of our Chief Executive Officer and Chief Financial Officer, which are required in accordance with the Exchange Act. We recommend that this Item 4 be read in conjunction with the certifications for a more complete understanding of the subject matter presented. 

PART II - OTHER INFORMATION
 
Item 1A. Risk Factors

There have been no material changes during the six months ended June 26, 2021 to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 26, 2020. If any of the identified risks actually occur, our business, financial condition and results of operations could suffer. The trading price of our common stock could decline and you may lose all or part of your investment in our common stock. The risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 26, 2020 are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations.
36



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchase of Common Stock

The following table summarizes our repurchases of outstanding common stock for the three months ended June 26, 2021:
Period (fiscal months)Total Number of Shares PurchasedAverage Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Amount that May Yet Be Purchased Under the Plans or Programs
March 28, 2021 - April 24, 2021— $— — $44,261,726 
April 25, 2021 - May 22, 2021438,798 $38.07 438,798 $27,558,329 
May 23, 2021 - June 26, 202145,000 $33.53 45,000 $26,049,418 
483,798 37.64 483,798 

1 In October 2020, our Board of Directors authorized a program to repurchase up to $50.0 million of outstanding common stock to offset potential dilution from issuances of our common stock under our employee stock purchase plan and equity incentive plan. Under the authorized stock repurchase program, we may repurchase shares from time to time on the open market. The pace of repurchase activity will depend on levels of cash generation, current stock price and other factors. The program may be modified or discontinued at any time. The share repurchase program will expire on October 28, 2022.

37


Item 6. Exhibits

The following exhibits are filed herewith and this list constitutes the exhibit index.
Exhibit Incorporated by Reference Filed
NumberExhibit DescriptionFormDate Number Herewith
3.1

S-1October 20, 20033.01
3.2

8-KJuly 22, 20163.2
31.01     X
31.02     X
32.01     *
101
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 26, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags
X
101.INSXBRL Instance Document     X
101.SCHXBRL Taxonomy Extension Schema Document     X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document     X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document     X
101.LABXBRL Taxonomy Extension Label Linkbase Document     X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document     X
104
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 26, 2021, formatted in Inline XBRL (included as Exhibit 101)
X
 ______________________________________
*    This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

38


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 thereunto duly authorized.
 
 FormFactor, Inc.
   
Date:July 30, 2021By:/s/ SHAI SHAHAR
   
  Shai Shahar
  Chief Financial Officer
  (Duly Authorized Officer, Principal Financial Officer, and Principal Accounting Officer)

39
Document

Exhibit 31.01

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 15 U.S.C. SECTION 7241, AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Michael D. Slessor, certify that:
 
1.I have reviewed the quarterly report on Form 10-Q of FormFactor, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in the quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:July 30, 2021/s/ MICHAEL D. SLESSOR
Michael D. Slessor
Chief Executive Officer
(Principal Executive Officer and Director)


Document

Exhibit 31.02

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 15 U.S.C. SECTION 7241,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shai Shahar, certify that:
 
1.I have reviewed the quarterly report on Form 10-Q of FormFactor, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in the quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:July 30, 2021/s/ SHAI SHAHAR
Shai Shahar
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)


Document

Exhibit 32.01


CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of FormFactor, Inc., a Delaware corporation, for the period ended June 26, 2021, as filed with the Securities and Exchange Commission, each of the undersigned officers of FormFactor, Inc. certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his respective knowledge:
 
1.The quarterly report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of FormFactor, Inc. for the periods presented therein.
Date:July 30, 2021/s/ MICHAEL D. SLESSOR
Michael D. Slessor
Chief Executive Officer
(Principal Executive Officer and Director)
Date:July 30, 2021/s/ SHAI SHAHAR
Shai Shahar
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)