SEC Filing | FormFactor, Inc.

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form-20220625

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 25, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-50307

FormFactor, Inc.

(Exact name of registrant as specified in its charter)


Delaware						13-3711155
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

7005 Southfront Road, Livermore, California 94551

(Address of principal executive offices, including zip code)

(925) 290-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value

FORM

Nasdaq Global 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 Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of July 27, 2022, 77,132,681 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 25, 2022

INDEX


Part I.	Financial Information

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of June 2 5 , 2022 and December 25, 2021	3

	Condensed Consolidated Statements of Income for the three a nd six months ended June 2 5 , 2022 and June 26 , 2021	4

	Condensed Consolidated Statements of Comprehensive Income for the three an d si x months ended June 2 5 , 2022 and June 2 6 , 2021	5

	Condensed Consolidated Statement of Stockholders' Equity for the three and six months ended June 2 5 , 2022 and June 2 6 , 2021	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 2 5 , 2022 and June 2 6 , 2021	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

Part II.	Other Information	33



Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and use of proceeds	33







Item 6.	Exhibits	34

Signatures		35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FORMFACTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	June 25, 2022		December 25, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	136,395	$	151,010
Marketable securities	129,919		125,055
Accounts receivable, net of allowance for credit losses of $193 and $195	107,726		115,541
Inventories, net	143,475		111,548
Restricted cash	2,102		2,233
Prepaid expenses and other current assets	17,447		18,652
Total current assets	537,064		524,039
Restricted cash	1,802		2,099
Operating lease, right-of-use-assets	33,499		35,210
Property, plant and equipment, net of accumulated depreciation	157,814		146,555
Goodwill	212,357		212,299
Intangibles, net	30,872		36,342
Deferred tax assets	65,059		61,995
Other assets	3,980		1,981
Total assets	$	1,042,447	$	1,020,520

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	60,927	$	57,862
Accrued liabilities	54,835		50,836
Current portion of term loans, net of unamortized issuance costs	4,725		8,931
Deferred revenue	31,255		23,224
Operating lease liabilities	7,843		7,901
Total current liabilities	159,585		148,754
Term loans, less current portion, net of unamortized issuance costs	14,915		15,434
Deferred tax liabilities	2,909		3,623
Long-term operating lease liabilities	29,511		31,009
Other liabilities	5,542		5,920
Total liabilities	212,462		204,740

Stockholders’ equity:


Common stock, $0.001 par value:
250,000,000 shares authorized; 77,194,733 and 78,240,506 shares issued and outstanding	77		78

Additional paid-in capital	860,584		898,945
Accumulated other comprehensive loss	(8,996)		(1,449)
Accumulated deficit	(21,680)		(81,794)
Total stockholders’ equity	829,985		815,780
Total liabilities and stockholders’ equity	$	1,042,447	$	1,020,520

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021
Revenues	$	203,907	$	188,076	$	401,081	$	374,712
Cost of revenues	109,538		111,793		212,488		221,723
Gross profit	94,369		76,283		188,593		152,989
Operating expenses:
Research and development	28,317		25,454		55,451		49,500
Selling, general and administrative	33,406		30,479		66,312		60,494
Total operating expenses	61,723		55,933		121,763		109,994
Operating income	32,646		20,350		66,830		42,995
Interest income	300		148		438		342
Interest expense	(119)		(116)		(311)		(296)
Other income (expense), net	551		(194)		743		(22)
Income before income taxes	33,378		20,188		67,700		43,019
Provision for income taxes	3,136		2,283		7,586		5,489
Net income	$	30,242	$	17,905	$	60,114	$	37,530
Net income per share:
Basic	$	0.39	$	0.23	$	0.77	$	0.48
Diluted	$	0.38	$	0.23	$	0.76	$	0.47
Weighted-average number of shares used in per share calculations:
Basic	77,897		77,463		78,071		77,530
Diluted	79,210		79,466		79,423		79,621

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021
Net income	$	30,242	$	17,905	$	60,114	$	37,530
Other comprehensive income (loss), net of tax:
Translation adjustments and other	(3,856)		632		(6,554)		(1,747)
Unrealized losses on available-for-sale marketable securities	(547)		(97)		(1,751)		(228)
Unrealized gains (losses) on derivative instruments	(116)		(89)		758		(315)
Other comprehensive income (loss), net of tax	(4,519)		446		(7,547)		(2,290)
Comprehensive income	$	25,723	$	18,351	$	52,567	$	35,240

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except shares)

(Unaudited)


	Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total

	Six Months Ended June 25, 2022
Balances, December 25, 2021	78,240,506	$	78	$	898,945	$	(1,449)	$	(81,794)	$	815,780
Issuance of common stock under the Employee Stock Purchase Plan	157,642	—		5,645		—		—		5,645
Issuance of common stock pursuant to exercise of options	6,000	—		42		—		—		42
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	234,076	—		(4,243)		—		—		(4,243)
Purchase and retirement of common stock through repurchase program	(1,443,491)	(1)		(54,327)		—		—		(54,328)
Stock-based compensation	—	—		14,522		—		—		14,522
Other comprehensive loss	—	—		—		(7,547)		—		(7,547)
Net income	—	—		—		—		60,114		60,114
Balances, June 25, 2022	77,194,733	$	77	$	860,584	$	(8,996)	$	(21,680)	$	829,985

	Three Months Ended June 25, 2022
Balances, March 26, 2022	78,166,212	$	78	$	902,994	$	(4,477)	$	(51,922)	$	846,673


Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	231,464	—		(4,171)		—		—		(4,171)
Purchase and retirement of common stock through repurchase program	(1,202,943)	(1)		(44,930)		—		—		(44,931)
Stock-based compensation	—	—		6,691		—		—		6,691
Other comprehensive loss	—	—		—		(4,519)		—		(4,519)
Net income	—	—		—		—		30,242		30,242
Balances, June 25, 2022	77,194,733	$	77	$	860,584	$	(8,996)	$	(21,680)	$	829,985

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

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, 2020	77,437,997	$	78	—	$	—	$	903,838	$	5,886	$	(165,718)	$	744,084
Issuance of common stock under the Employee Stock Purchase Plan	228,784	—		—	—		5,065		—		—		5,065
Issuance of common stock pursuant to exercise of options	100,000	—		—	—		844		—		—		844
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	308,219	—		—	—		(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, 2021	77,454,800	$	77	—	$	—	$	894,062	$	3,596	$	(128,188)	$	769,547

	Three Months Ended June 26, 2021
Balances, March 27, 2021	77,758,530	$	78	(136,402)	$	(5,738)	$	915,136	$	3,150	$	(146,093)	$	766,533

Issuance of common stock pursuant to exercise of options	50,000	—		—	—		422		—		—		422
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	266,470	—		—	—		(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, 2021	77,454,800	$	77	—	$	—	$	894,062	$	3,596	$	(128,188)	$	769,547

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 25, 2022		June 26, 2021
Cash flows from operating activities:
Net income	$	60,114	$	37,530
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	14,146		12,678
Amortization	4,702		13,900
Reduction in the carrying amount of right-of-use assets	4,414		3,652
Stock-based compensation expense	13,878		13,665

Provision for excess and obsolete inventories	4,726		6,898
Non-cash restructuring charges	710		—
Gain on contingent consideration	—		(95)
Other adjustments to reconcile net income to net cash provided by operating activities	(567)		1,211
Changes in assets and liabilities:
Accounts receivable	5,530		(1,194)
Inventories	(32,268)		(20,388)
Prepaid expenses and other current assets	1,295		3,179
Other assets	(40)		(344)
Accounts payable	7,521		(2,028)
Accrued liabilities	4,102		(235)
Other liabilities	73		184
Deferred revenues	2,727		1,522
Operating lease liabilities	(4,262)		(3,980)
Net cash provided by operating activities	86,801		66,155
Cash flows from investing activities:
Acquisition of property, plant and equipment	(30,116)		(31,322)
Acquisition of business	(3,121)		—
Purchases of marketable securities	(52,344)		(71,186)
Purchase of promissory note receivable	(1,000)		—
Proceeds from maturities and sales of marketable securities	45,470		42,695
Net cash used in investing activities	(41,111)		(59,813)
Cash flows from financing activities:
Proceeds from issuances of common stock	5,687		5,909
Purchase of common stock through stock repurchase program	(54,328)		(23,951)
Tax withholdings related to net share settlements of equity awards	(4,243)		(5,261)
Payment of contingent consideration	—		(3,873)

Principal repayments on term loans	(4,379)		(4,740)

Net cash used in financing activities	(57,263)		(31,916)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,470)		(1,558)
Net decrease in cash, cash equivalents and restricted cash	(15,043)		(27,132)
Cash, cash equivalents and restricted cash, beginning of period	155,342		191,098
Cash, cash equivalents and restricted cash, end of period	$	140,299	$	163,966

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 25, 2022		June 26, 2021
Non-cash investing and financing activities:
Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases	$	(4,165)	$	2,906

Operating lease, right-of-use assets obtained in exchange for lease obligations	3,438		11,629

Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	6,473	$	4,559
Cash paid for interest	294		339
Operating cash outflows from operating leases	4,379		4,352

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	136,395	$	160,273
Restricted cash, current	2,102		1,857
Restricted cash, non-current	1,802		1,836
Total cash, cash equivalents and restricted cash	$	140,299	$	163,966

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

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 2021 Annual Report on Form 10-K filed with the SEC on February 18, 2022. 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 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the six months ended June 25, 2022 and June 26, 2021 each contained 26 weeks. Fiscal 2022 will end on December 31, 2022.

Significant Accounting Policies

Our significant accounting policies have not changed during the six months ended June 25, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Reclassifications

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

New Accounting Pronouncements

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.

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, “Revenue from Contracts with Customers,” as if it had originated the contracts. The Company elected to early adopt on a prospective basis during the second quarter of fiscal 2022. The adoption did not have a material effect on the Company's Consolidated Financial Statements.

Note 2 — Concentration of Credit and Other Risks

Each of the following customers accounted for 10% or more of our revenues for the periods indicated:


	Three Months Ended				Six Months Ended
	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021
Intel Corporation	20.9	%	16.2	%	20.9	%	22.1	%
Samsung Electronics., LTD.	*		14.7	%	*		*
Taiwan Semiconductor Manufacturing Co., LTD.	*		11.0	%	*		11.2	%


	20.9	%	41.9	%	20.9	%	33.3	%

At June 25, 2022, one customer accounted for 20.0% of gross accounts receivable. At December 25, 2021, one customer accounted for 13.8% of gross accounts receivable.

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 25, 2022		December 25, 2021
Raw materials	$	68,247	$	57,673
Work-in-progress	52,619		35,935
Finished goods	22,609		17,940
	$	143,475	$	111,548

Note 4 — Acquisition

Woburn Acquisition

On June 9, 2022, we acquired the assets of the dilution refrigerator product line of American ULT Cryogenics, formerly d/b/a JanisULT (“Woburn”), for total consideration of $3.1 million. This acquisition adds cryogen-free dilution refrigerators capable of cooling to sub-10 millikelvin to our product portfolio, which is required for operation of superconducting quantum computers.

As of the reporting date, we have not completed the valuation of assets acquired and liabilities assumed. Upon the completion of purchase accounting, we expect certain amounts provisionally recorded as goodwill will be ultimately allocated to developed technologies, but at this time we do not have an estimate of the allocation of value between amortizing and non-amortizing intangible assets. We do expect that some amount of intangible assets provisionally recorded as goodwill will ultimately be allocated to an amortizing intangible asset. At the time such amount is estimable, we will record any amortization required between the acquisition date and the date at which the amounts become estimable. While we do not yet have a reasonable basis on which to record any such amortization, the impact to the financial statements as a whole is not expected to be material assuming typical lives of these assets and ranges of potential allocation of value.

The amounts presented below represent provisional amounts of assets acquired and liabilities assumed, which are recorded based on the best information available, and are subject to revision as the fair value of the associated assets acquired and

liabilities assumed are finalized. The total estimated purchase price has been provisionally allocated to the underlying assets acquired and liabilities assumed, as follows (in thousands):


	Amount
Accounts receivable	$	178
Inventories	6,064
Property, plant and equipment	479
Prepaid expenses and other current assets	117
Other assets	28
Tangible assets acquired	6,866
Deferred revenue	(5,513)
Accounts payable and accrued liabilities	(30)
Total tangible assets acquired and liabilities assumed	1,323

Goodwill	1,798
Net Assets Acquired	$	3,121

Note 5 — Goodwill and Intangible Assets

Goodwill by reportable segment was as follows (in thousands):


	Probe Cards		Systems		Total
Goodwill, as of December 26, 2020	$	178,072	$	34,689	$	212,761

Addition - Baldwin Park Acquisition	352		—		352
Addition - HPD Acquisition	—		1,254		1,254
Foreign currency translation	—		(2,068)		(2,068)
Goodwill, as of December 25, 2021	178,424		33,875		212,299

Addition - Woburn Acquisition	—		1,798		1,798
Foreign currency translation	—		(1,740)		(1,740)
Goodwill, as of June 25, 2022	$	178,424	$	33,933	$	212,357

We have not recorded goodwill impairments for the six months ended June 25, 2022.

Intangible assets were as follows (in thousands):


	June 25, 2022						December 25, 2021
Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	170,627	$	149,338	$	21,289	$	172,259	$	148,784	$	23,475
Customer relationships	50,827		41,966		8,861		51,270		39,254		12,016
Trade name	7,952		7,630		322		8,054		7,603		451
Backlog	—		—		—		1,896		1,896		—
In-process research and development	400		—		400		400		—		400
	$	229,806	$	198,934	$	30,872	$	233,879	$	197,537	$	36,342

Amortization expense was included in our Condensed Consolidated Statements of Income as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021
Cost of revenues	$	788	$	5,505	$	1,596	$	10,595
Selling, general and administrative	1,545		1,590		3,106		3,305
	$	2,333	$	7,095	$	4,702	$	13,900

The estimated future amortization of definite-lived intangible assets, excluding in-process research and development, is as follows (in thousands):


Fiscal Year	Amount
Remainder of 2022	$	4,650
2023	6,968
2024	4,390
2025	4,142
2026	3,134
Thereafter	7,188
	$	30,472

Note 6 — Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	June 25, 2022		December 25, 2021
Accrued compensation and benefits	$	32,001	$	29,706
Accrued income and other taxes	9,468		8,086
Accrued warranty	3,978		2,805
Employee stock purchase plan contributions withheld	4,789		4,693
Accrued restructuring charges	592		2,478
Other accrued expenses	4,007		3,068
	$	54,835	$	50,836

Note 7 — Restructuring Charges

On September 25, 2021, we adopted restructuring plans to improve our business effectiveness and streamline our operations by consolidating certain manufacturing facilities for both the Probe Cards segment and the Systems segment. This included plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia. As a result of these changes to certain work locations, we have incurred, and expect to incur, personnel related costs to sever, relocate, or retain select employees. Additionally, this included plans to adjust capacity for certain product offerings, which resulted in contract termination costs to satisfy contract obligations. We expect the actions defined under these plans will be largely completed by the end of December 2022, except facilities charges which may extend beyond that time.

These plans are expected to result in FormFactor recording restructuring and other charges in the aggregate amount of approximately $5.0 million to $8.5 million, estimated to be comprised primarily of $1.0 million to $2.0 million of severance and employee-related costs, $1.5 million to $2.5 million in contract and lease termination costs, $2.0 million to $3.0 million in inventory impairments, and $0.5 million to $1.0 million of cost related to impairment of leasehold improvements, facility exits, and other costs. Approximately $2.5 million to $