form-20211027
false000103939900010393992021-10-272021-10-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 ____________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  October 27, 2021
 
FORMFACTOR, INC.
(Exact Name of Registrant as Specified in Charter)
 
Delaware000-5030713-3711155
(State or Other Jurisdiction of Incorporation)(Commission File Number)(IRS Employer Identification No.)
7005 Southfront Road
Livermore,
CA
94551
(Address of Principal Executive Offices)(Zip Code)
 
Registrant’s telephone number, including area code:  (925) 290-4000
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_____________________________

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

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

    Emerging growth company

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



Item 2.02.  Results of Operations and Financial Condition.
 
On October 27, 2021, FormFactor, Inc. (“FormFactor”) issued a press release announcing its financial results for the third quarter of fiscal 2021 that ended on September 25, 2021. A copy of the press release is furnished as Exhibit 99.01 to this report and is incorporated herein by reference.

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

The following exhibit is filed herewith and this list is intended to constitute the exhibit index.
Exhibit NumberDescription
Press release dated October 27, 2021
 
The information in this report and the accompanying exhibit shall not be incorporated by reference into any filing of FormFactor with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. The information in this report, including the accompanying exhibit, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.





 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
FORMFACTOR, INC.
Date:
October 27, 2021
By:/s/ SHAI SHAHAR
Name:Shai Shahar
Title:Chief Financial Officer
 



Document

EXHIBIT 99.01
https://cdn.kscope.io/3abbe79d7c046abf57b17487910daaf1-ffq118logorgbinlinea06.jpg                            
News Release
 
Investor Contact:
Stan Finkelstein
Investor Relations
(925) 290-4321
ir@formfactor.com
 


FORMFACTOR, INC. REPORTS 2021 THIRD QUARTER RESULTS
Company Delivers Strong Results, Benefiting from Accelerating Demand and Output as Additional Capacity Comes Online

LIVERMORE, Calif. — October 27, 2021 —FormFactor, Inc. (Nasdaq: FORM) today announced its financial results for the third quarter of fiscal 2021 ended September 25, 2021. Quarterly revenues were $190.0 million, an increase of 1.0% compared to $188.1 million in the second quarter of fiscal 2021, and an increase of 6.7% from $178.0 million in the third quarter of fiscal 2020.

Strong demand in all our businesses produced revenue at the high-end of the outlook range
Gross margin improvement of 160 basis points, driven primarily by more-favorable product mix within specific markets
New Livermore Manufacturing Center on-track to deliver initial customer shipments in the fourth quarter

“FormFactor delivered solid results in the third quarter, again recording the second-highest revenue in company history, with gross margins at the high end of our outlook range,” said Mike Slessor, CEO of FormFactor, Inc. “Together with sustained operating expense control, these factors resulted in non-GAAP earnings per share above the high end of our outlook range.”

Third Quarter Highlights

On a GAAP basis, net income for the third quarter of fiscal 2021 was $20.5 million, or $0.26 per fully-diluted share, compared to net income for the second quarter of fiscal 2021 of $17.9 million, or $0.23 per fully-diluted share, and net income for the third quarter of fiscal 2020 of $22.9 million, or $0.29 per fully-diluted share. Gross margin for the third quarter of 2021 was 42.2%, compared with 40.6% in the second quarter of 2021, and 43.1% in the third quarter of 2020.
 
On a non-GAAP basis, net income for the third quarter of fiscal 2021 was $31.6 million, or $0.40 per fully-diluted share, compared to net income for the second quarter of fiscal 2021 of $28.4 million, or $0.36 per fully-diluted share, and net income for the third quarter of fiscal 2020 of $30.7 million, or $0.39 per fully-diluted share. On a non-GAAP basis, gross margin for the third quarter of 2021 was 46.0%, compared with 44.4% in the second quarter of 2021, and 46.7% in the third quarter of 2020.

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

Free cash flow for the third quarter of fiscal 2021 was $14.4 million, compared to free cash flow for the second quarter of fiscal 2021 of $16.2 million, and free cash flow for the third quarter of 2020 of $37.2 million. A reconciliation of net cash provided by operating activities to free cash flow is provided in the schedules included below.





Outlook

Dr. Slessor added, “We continue to benefit from strong demand for FormFactor’s diversified set of market-leading semiconductor test and measurement products, and with our added production capacity now coming online, we are well-positioned in the current quarter to deliver sequential growth.”

For the fourth quarter ending December 25, 2021, FormFactor is providing the following outlook*:

GAAPReconciling Items**Non-GAAP
Revenue$192 million to $204 million$192 million to $204 million
Gross Margin42% to 45%$3.3 million44% to 47%
Net income per diluted share$0.25 to $0.33$0.12$0.37 to $0.45
*This outlook assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation, restructuring charges, and amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions.

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

The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available through October 29, 2021, 4:25 p.m. Pacific Time, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 5775795. Additionally, the replay will be available on the Investor Relations section of our website, www.formfactor.com.

Use of Non-GAAP Financial Information:

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP revenue, Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP operating income, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three and nine months ended September 25, 2021 and for outlook provided before, as well as for the comparable periods of fiscal 2020, are provided below, and on the Investor Relations section of our website at www.formfactor.com. Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management's reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

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




Forward-looking Statements:

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



FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months EndedNine Months Ended
 September 25,
2021
June 26,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Revenues$189,964 $188,076 $177,996 $564,676 $496,573 
Cost of revenues109,745 111,793 101,247 331,468 286,267 
Gross profit80,219 76,283 76,749 233,208 210,306 
Operating expenses:    
Research and development26,026 25,454 22,878 75,526 65,064 
Selling, general and administrative30,940 30,479 31,834 91,434 82,282 
Total operating expenses56,966 55,933 54,712 166,960 147,346 
Operating income23,253 20,350 22,037 66,248 62,960 
Interest income121 148 249 463 1,310 
Interest expense(151)(116)(193)(447)(682)
Other income (expense), net58 (194)299 36 141 
Income before income taxes23,281 20,188 22,392 66,300 63,729 
Provision (benefit) for income taxes2,784 2,283 (499)8,273 4,479 
Net income$20,497 $17,905 $22,891 $58,027 $59,250 
Net income per share:  
Basic $0.26 $0.23 $0.30 $0.75 $0.78 
Diluted$0.26 $0.23 $0.29 $0.73 $0.75 
Weighted-average number of shares used in per share calculations: 
Basic 77,869 77,463 77,029 77,643 76,436 
Diluted79,029 79,466 78,809 79,190 78,534 




FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
September 25,
2021
June 26,
2021
September 26,
2020
September 25,
2021
September 26,
2020
GAAP Revenue$189,964 $188,076 $177,996 $564,676 $496,573 
Adjustments:
Amortization of deferred revenue fair value adjustments due to acquisitions57 78 — 260 — 
Non-GAAP Revenue$190,021 $188,154 $177,996 $564,936 $496,573 
GAAP Gross Profit$80,219 $76,283 $76,749 $233,208 $210,306 
Adjustments:
Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions1,545 6,055 5,495 13,598 16,419 
Stock-based compensation1,392 1,079 962 3,806 2,800 
Restructuring charges4,322 168 — 4,490 — 
Non-GAAP Gross Profit$87,478 $83,585 $83,206 $255,102 $229,525 
GAAP Gross Margin42.2 %40.6 %43.1 %41.3 %42.4 %
Adjustments:
Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions0.8 %3.1 %3.1 %2.4 %3.3 %
Stock-based compensation0.7 %0.6 %0.5 %0.7 %0.5 %
Restructuring charges2.3 %0.1 %— %0.8 %— %
Non-GAAP Gross Margin46.0 %44.4 %46.7 %45.2 %46.2 %
GAAP operating expenses$56,966 $55,933 $54,712 $166,960 $147,346 
Adjustments:
Amortization of intangibles(1,604)(1,590)(1,547)(4,909)(4,588)
Stock-based compensation(6,528)(5,509)(4,547)(17,779)(13,974)
Restructuring charges(311)(466)— (777)— 
Gain on contingent consideration — 95 71 95 3,771 
Acquisition related expenses— (43)(334)(209)(369)
Non-GAAP operating expenses$48,523 $48,420 $48,355 $143,381 $132,186 
GAAP operating income$23,253 $20,350 $22,037 $66,248 $62,960 
Adjustments:
Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions3,149 7,645 7,042 18,507 21,007 
Stock-based compensation7,920 6,588 5,509 21,585 16,774 
Restructuring charges4,633 634 — 5,267 — 
Gain on contingent consideration— (95)(71)(95)(3,771)
Acquisition related expenses— 43 334 209 369 
Non-GAAP operating income$38,955 $35,165 $34,851 $111,721 $97,339 





FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
September 25,
2021
June 26,
2021
September 26,
2020
September 25,
2021
September 26,
2020
GAAP net income $20,497 $17,905 $22,891 $58,027 $59,250 
Adjustments:
Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions3,149 7,645 7,042 18,507 21,007 
Stock-based compensation7,920 6,588 5,509 21,585 16,774 
Restructuring charges4,633 634 — 5,267 — 
Gain on contingent consideration— (95)(71)(95)(3,771)
Acquisition related expenses— 43 334 209 369 
Income tax effect of non-GAAP adjustments(4,571)(4,273)(4,970)(12,650)(10,994)
Non-GAAP net income $31,628 $28,447 $30,735 $90,850 $82,635 
GAAP net income per share:
Basic$0.26 $0.23 $0.30 $0.75 $0.78 
Diluted$0.26 $0.23 $0.29 $0.73 $0.75 
Non-GAAP net income per share:
Basic$0.41 $0.37 $0.40 $1.17 $1.08 
Diluted$0.40 $0.36 $0.39 $1.15 $1.05 








FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 25,
2021
September 26,
2020
Cash flows from operating activities:
Net income $58,027 $59,250 
Selected adjustments to reconcile net income to net cash provided by operating activities:
Depreciation19,256 14,491 
Amortization16,362 20,249 
Stock-based compensation expense21,585 16,774 
Provision for excess and obsolete inventories11,621 9,763 
Non-cash restructuring charges1,592 — 
Gain on contingent consideration(95)(3,771)
Other activity impacting operating cash flows(27,911)7,453 
Net cash provided by operating activities100,437 124,209 
Cash flows from investing activities:
Acquisition of property, plant and equipment(51,353)(41,887)
Proceeds (purchases) of marketable securities, net(43,623)20,609 
Other activity impacting investing cash flows— (34,917)
Net cash used in investing activities(94,976)(56,195)
Cash flows from financing activities:
Purchase of common stock through stock repurchase program(23,951)— 
Proceeds from issuances of common stock10,647 9,588 
Tax withholdings related to net share settlements of equity awards(12,643)(15,382)
Payment of contingent consideration(3,873)— 
Proceeds from term loan debt— 18,000 
Payment of term loan debt issuance costs— (78)
Principal repayments on term loans(7,049)(41,098)
Net cash used in financing activities(36,869)(28,970)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(2,216)1,262 
Net increase (decrease) in cash, cash equivalents and restricted cash(33,624)40,306 
Cash, cash equivalents and restricted cash, beginning of period191,098 147,937 
Cash, cash equivalents and restricted cash, end of period$157,474 $188,243 








FORMFACTOR, INC. 
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 25,
2021
June 26,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Net cash provided by operating activities$34,282 $33,799 $41,762 $100,437 $124,209 
Adjustments:
Cash paid for interest157 166 210 496 683 
Acquisition related payments in working capital — 43 334 209 369 
Capital expenditures(20,031)(17,852)(5,144)(51,353)(41,887)
Free cash flow$14,408 $16,156 $37,162 $49,789 $83,374 





FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) 
 September 25,
2021
June 26,
2021
December 26,
2020
ASSETS
Current assets:
Cash and cash equivalents$153,781 $160,273 $187,225 
Marketable securities110,898 95,962 67,810 
Accounts receivable, net of allowance for doubtful accounts105,807 108,265 107,603 
Inventories, net115,104 111,890 99,229 
Restricted cash2,019 1,857 1,904 
Prepaid expenses and other current assets18,892 19,244 23,303 
Total current assets506,501 497,491 487,074 
Restricted cash1,674 1,836 1,969 
Operating lease, right-of-use-assets36,669 38,485 30,756 
Property, plant and equipment, net of accumulated depreciation140,098 125,348 104,103 
Goodwill213,293 214,548 212,761 
Intangibles, net39,195 41,913 59,147 
Deferred tax assets67,231 66,945 66,242 
Other assets1,930 1,980 1,165 
Total assets$1,006,591 $988,546 $963,217 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$64,925 $62,445 $62,045 
Accrued liabilities54,625 51,487 55,342 
Current portion of term loans, net of unamortized issuance costs9,213 9,356 9,516 
Deferred revenue23,275 22,655 20,964 
Operating lease liabilities7,962 7,908 6,704 
Total current liabilities160,000 153,851 154,571 
Term loans, less current portion, net of unamortized issuance costs17,742 20,123 24,978 
Deferred tax liabilities4,264 4,613 5,346 
Long-term operating lease liabilities32,401 34,211 27,996 
Other liabilities5,794 6,201 6,242 
Total liabilities220,201 218,999 219,133 
Stockholders’ equity: 
Common stock78 77 78 
Additional paid-in capital892,303 894,062 903,838 
Accumulated other comprehensive income1,700 3,596 5,886 
Accumulated deficit(107,691)(128,188)(165,718)
Total stockholders’ equity786,390 769,547 744,084 
Total liabilities and stockholders’ equity$1,006,591 $988,546 $963,217 




About our Non-GAAP Financial Measures:

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

Source: FormFactor, Inc.
FORM-F