10-Q

UNITED STATES

SECURITIES AND EXCHANGECOMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

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

For the quarterly period ended September 29, 2018

Or

o 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)

______________________________________

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 ý  No o

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of the Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o

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 x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o

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.  o

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

As of October 31, 2018, 74,102,335 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 SEPTEMBER 29, 2018 INDEX
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of September 29, 2018 and December 30, 2017	3
	Condensed Consolidated Statements of Income for the three and nine months ended September 29, 2018 and September 30, 2017	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 29, 2018 and September 30, 2017	5
	Condensed Consolidated Statement of Stockholders' Equity for the three and nine months ended September 29, 2018 and September 30, 2017	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 29, 2018 and September 30, 2017	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
Part II.	Other Information	35
Item 1A.	Risk Factors	35
Item 6.	Exhibits	35
Signatures		36

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FORMFACTOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited)
	September 29, 2018			December 30, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	91,990		$	91,184
Marketable securities	50,109			48,988
Accounts receivable, net of allowance for doubtful accounts of $200 and $200	88,869			81,515
Inventories, net	81,538			67,848
Restricted cash	129			372
Refundable income taxes	1,320			2,242
Prepaid expenses and other current assets	15,716			13,705
Total current assets	329,671			305,854
Restricted cash	1,034			1,170
Property, plant and equipment, net of accumulated depreciation of $260,607 and $255,755	52,857			46,754
Goodwill	189,427			189,920
Intangibles, net	75,278			97,484
Deferred tax assets	3,042			3,133
Other assets	1,163			2,259
Total assets	$	652,472		$	646,574
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	49,668		$	35,046
Accrued liabilities	24,877			33,694
Current portion of term loan, net of unamortized issuance cost of $189 and $307	26,061			18,443
Deferred revenue	4,795			4,978
Total current liabilities	105,401			92,161
Term loan, less current portion, net of unamortized issuance cost of $57 and $272	46,193			87,228
Deferred tax liabilities	3,290			3,379
Deferred rent and other liabilities	7,537			5,169
Total liabilities	162,421			187,937
Stockholders’ equity:
Preferred stock, $0.001 par value:
10,000,000 shares authorized; no shares issued and outstanding	—			—
Common stock, $0.001 par value:
250,000,000 shares authorized; 74,101,623 and 72,532,176 shares issued and outstanding	75			73
Additional paid-in capital	857,505			843,116
Accumulated other comprehensive income	1,158			3,021
Accumulated deficit	(368,687		)	(387,573		)
Total stockholders’ equity	490,051			458,637
Total liabilities and stockholders’ equity	$	652,472		$	646,574

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

3

FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Revenues	$	134,989		$	143,735		$	388,788		$	416,540
Cost of revenues	82,019			86,105			234,471			249,572
Gross profit	52,970			57,630			154,317			166,968
Operating expenses:
Research and development	18,857			19,338			56,578			55,294
Selling, general and administrative	24,745			24,010			73,426			70,441
Restructuring	—			16			—			329
Total operating expenses	43,602			43,364			130,004			126,064
Operating income	9,368			14,266			24,313			40,904
Interest income	369			123			952			283
Interest expense	(777		)	(1,109		)	(2,654		)	(3,446		)
Other income (expense), net	121			311			(341		)	19
Income before income taxes	9,081			13,591			22,270			37,760
Provision for income taxes	1,393			1,028			3,334			2,435
Net income	$	7,688		$	12,563		$	18,936		$	35,325
Net income per share:
Basic	$	0.10		$	0.17		$	0.26		$	0.49
Diluted	$	0.10		$	0.17		$	0.25		$	0.48
Weighted-average number of shares used in per share calculations:
Basic	73,837			72,651			73,273			72,103
Diluted	74,962			73,885			74,628			73,540

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

4

FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited)
	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Net income	$	7,688		$	12,563		$	18,936		$	35,325
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(449		)	1,540			(1,732		)	5,769
Unrealized gains (losses) on available-for-sale marketable securities	50			(15		)	(84		)	(37		)
Unrealized gains (losses) on derivative instruments	(134		)	(36		)	(47		)	4
Other comprehensive income (loss), net of tax	(533		)	1,489			(1,863		)	5,736
Comprehensive income	$	7,155		$	14,052		$	17,073		$	41,061

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

5

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Nine-Month Period Ended September 29, 2018
	Shares	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balances, December 30, 2017	72,532,176	73		843,116			3,021			(387,573		)	458,637
Issuance of common stock under the Employee Stock Purchase Plan	610,297	1		6,661			—			—			6,662
Issuance of common stock pursuant to exercise of options for cash	105,610	—		1,049			—			—			1,049
Issuance of common stock pursuant to vesting of restricted stock units	853,540	1		(5,694		)	—			—			(5,693		)
Stock-based compensation	—	—		12,373			—			—			12,373
ASU2017-12 Adoption	—	—		—			—			(50		)	(50		)
Components of other comprehensive income (loss):
Unrealized loss on marketable securities, net of tax	—	—		—			(84		)	—			(84		)
Currency translation adjustments	—	—		—			(1,732		)				(1,732		)
Unrealized gain on derivative instruments, net of tax	—	—		—			(47		)	—			(47		)
Net income	—	—		—			—			18,936			18,936
Balances, September 29, 2018	74,101,623	75		857,505			1,158			(368,687		)	490,051
	Three-Month Period Ended September 29, 2018
	Shares	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balances, June 30, 2018	73,358,108	74		853,278			1,691			(376,375		)	478,668
Issuance of common stock under the Employee Stock Purchase Plan	268,627	—		2,957			—			—			2,957
Issuance of common stock pursuant to vesting of restricted stock units	474,888	1		(3,241		)	—			—			(3,240		)
Stock-based compensation	—	—		4,511			—			—			4,511
Components of other comprehensive income (loss):
Unrealized gain on marketable securities, net of tax	—	—		—			50			—			50
Currency translation adjustments	—	—		—			(449		)	—			(449		)
Unrealized loss on derivative instruments, net of tax	—	—		—			(134		)	—			(134		)
Net income	—	—		—			—			7,688			7,688
Balances, September 29, 2018	74,101,623	$	75	$	857,505		$	1,158		$	(368,687	)	$	490,051

6

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Nine-Month Period Ended September 30, 2017
	Shares		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balances, December 31, 2016	70,907,847		71			833,341			(3,740		)	(428,616		)	401,056
Issuance of common stock under the Employee Stock Purchase Plan	655,961		1			5,694			—			—			5,695
Issuance of common stock pursuant to exercise of options for cash	1,431,767		1			13,412			—			—			13,413
Issuance of common stock pursuant to vesting of restricted stock units	845,063		1			(6,619		)	—			—			(6,618		)
Purchase and retirement of common stock	(867,620	)	(1		)	(10,963		)	—			—			(10,964		)
Stock-based compensation	—		—			11,207			—			—			11,207
ASU2016-09 Adoption	—		—			(130		)	—			130			—
Components of other comprehensive income (loss):
Unrealized loss on marketable securities, net of tax	—		—			—			(37		)	—			(37		)
Currency translation adjustments	—		—			—			5,769						5,769
Unrealized gain on derivative instruments, net of tax	—		—			—			4			—			4
Net income	—		—			—			—			35,325			35,325
Balances, September 30, 2017	72,973,018		73			845,942			1,996			(393,161		)	454,850
	Three-Month Period Ended September 30, 2017
	Shares		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balances, July 1, 2017	72,346,116		73			839,751			507			(405,724		)	434,607
Issuance of common stock under the Employee Stock Purchase Plan	258,937		—			2,795			—			—			2,795
Issuance of common stock pursuant to exercise of options for cash	178,250		—			1,827			—			—			1,827
Issuance of common stock pursuant to vesting of restricted stock units	257,015		—			(2,156		)	—			—			(2,156		)
Purchase and retirement of common stock	(67,300	)	—			(831		)	—			—			(831		)
Stock-based compensation	—		—			4,556			—			—			4,556
Components of other comprehensive income (loss):
Unrealized loss on marketable securities, net of tax	—		—			—			(15		)	—			(15		)
Currency translation adjustments	—		—			—			1,540			—			1,540
Unrealized loss on derivative instruments, net of tax	—		—			—			(36		)	—			(36		)
Net income	—		—			—			—			12,563			12,563
Balances, September 30, 2017	72,973,018		$	73		$	845,942		$	1,996		$	(393,161	)	$	454,850

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)
	Nine Months Ended
	September 29, 2018			September 30, 2017
Cash flows from operating activities:
Net income	$	18,936		$	35,325
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	10,494			10,046
Amortization	21,876			23,509
Accretion of discount on investments	21			22
Stock-based compensation expense	12,421			11,279
Amortization of debt issuance costs	333			482
Deferred income tax provision	70			122
Recovery of doubtful accounts receivable	—			(97		)
Provision for excess and obsolete inventories	7,414			6,899
Acquired inventory step-up amortization	—			484
Loss on disposal of long-lived assets	264			101
(Gain) loss on derivative instruments	—			(18		)
Foreign currency transaction losses (gains)	409			(1,957		)
Changes in assets and liabilities:
Accounts receivable	(7,569		)	(17,097		)
Inventories	(21,806		)	(14,270		)
Prepaid expenses and other current assets	(1,874		)	1,140
Refundable income taxes	933			(440		)
Other assets	697			823
Accounts payable	10,425			3,040
Accrued liabilities	(8,882		)	(1,048		)
Income tax payable	(248		)	(97		)
Deferred rent and other liabilities	2,445			101
Deferred revenues	(221		)	1,517
Net cash provided by operating activities	46,138			59,866
Cash flows from investing activities:
Acquisition of property, plant and equipment	(12,326		)	(13,918		)
Proceeds from sale of a subsidiary	67			48
Proceeds from sale of property, plant and equipment	23			—
Purchases of marketable securities	(18,984		)	(27,373		)
Proceeds from maturities of marketable securities	17,757			3,000
Net cash used in investing activities	(13,463		)	(38,243		)
Cash flows from financing activities:
Proceeds from issuances of common stock	7,712			19,108
Purchase and retirement of common stock	—			(10,963		)
Tax withholdings related to net share settlements of equity awards	(5,694		)	(6,617		)
Principal repayments on term loan	(33,750		)	(24,375		)
Net cash used in financing activities	(31,732		)	(22,847		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(516		)	2,481
Net increase in cash, cash equivalents and restricted cash	427			1,257
Cash, cash equivalents and restricted cash, beginning of period	92,726			102,596
Cash, cash equivalents and restricted cash, end of period	$	93,153		$	103,853
Non-cash investing and financing activities:
Change in accounts payable and accrued liabilities related to property, plant and equipment purchases	$	4,724		$	(283	)
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	2,513		$	2,847
Cash paid for interest	2,299			2,974

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

8

FORMFACTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying condensed consolidated financial information of FormFactor, Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 30, 2017 is derived from our 2017 Annual Report on Form 10-K. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2017 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2018 and 2017 each contain 52 weeks and the nine months ended September 29, 2018 and September 30, 2017 each contained 39 weeks. Fiscal 2018 will end on December 29, 2018.

Reclassifications

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

Critical Accounting Policies

Except as described below, our critical accounting policies have not changed during the nine months ended September 29, 2018 from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2017.

Revenue Recognition

Revenue is recognized upon transferring control of products and services, and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. An arrangement may include some or all of the following products and services: probe cards, systems, accessories, installation services, service contracts and extended warranty contracts. We sell our products and services direct to customers and to partners in two distribution channels: global direct sales force and through a combination of manufacturers’ representatives and distributors.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined and accounted for as one unit of account. Generally, the performance obligations in a contract are considered distinct within the context of the contract and are accounted for as separate units of account.

Our products may be customized to our customers’ specifications, however, control of our product is typically transferred to the customer at the point in time the product is either shipped or delivered, depending on the terms of the arrangement, as the criteria for overtime recognition is not met. In limited circumstances, substantive acceptance by the customer exists which results in the deferral of revenue until acceptance is formally received from the customer. Judgment may be required in determining if the acceptance clause is substantive.

Installation services are routinely provided to customers purchasing our systems. Installation services are a distinct performance obligation apart from the systems and recognized in the period they are performed. Service contracts, which include repair and maintenance service contracts, and extended warranty contracts are also distinct performance obligations and recognized as our performance obligations are satisfied. This is typically the contractual service period, which ranges from one to two years. For these service contracts recognized over time, we use an input measure, days elapsed, to measure progress.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In determining the transaction price, we evaluate whether the price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled. We generally do not grant return privileges, except

9

for defective products during the warranty period. Sales incentives and other programs that we may make available to these customers are considered to be a form of variable consideration, which is estimated in determining the contract’s transaction price to be allocated to the performance obligations. We have elected the practical expedient under Accounting Standards Codification (“ASC”) 606-10-32-18 to not assess whether a contract has a significant financing component as our standard payment terms are less than one year.

For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which we separately sell these products. For items that are not sold separately, we estimate the stand-alone selling prices using our best estimate of selling price.

Transaction price allocated to the remaining performance obligations: On September 29, 2018, we had $3.5 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. We expect to recognize approximately 54.4% of our remaining performance obligations as revenue in fiscal 2019, and approximately 13.2% in fiscal 2020 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 September 29, 2018 and December 30, 2017 were $1.4 million and $1.6 million, respectively, and are reported on the Condensed Consolidated Balance Sheet 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 on a contract-by-contract basis at the end of each reporting period as a component of Deferred revenue and Deferred rent and other liabilities. Contract liabilities as of September 29, 2018 and December 30, 2017 were $5.4 million and $5.7 million. During the three and nine months ended September 29, 2018, we recognized $0.2 million and $3.9 million of revenue, respectively, that was included in contract liabilities as of December 30, 2017.

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 12 of Notes to Consolidated Financial Statements for further details.

New Accounting Pronouncements

ASU 2016-10, ASU 2015-14 and ASU 2014-09

In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," and, in August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard permits the use of either the retrospective or modified retrospective transition methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which was issued to clarify ASC Topic 606, “Revenue from Contracts with Customers” related to (i) identifying performance obligations; and (ii) the licensing implementation guidance. We adopted ASC 606, Revenue from Contracts with Customers and all related amendments (collectively “ASC 606”), on December 31, 2017, the first day of fiscal 2018, using the modified retrospective method. We applied ASC 606 to all contracts not completed as of the date of adoption in order to determine any adjustment to the opening balance of retained earnings. Under the modified retrospective adoption method, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods, ASC 605, "Revenue Recognition", which is also referred to herein as "legacy GAAP."

10

The adoption of ASC 606 did not have a material impact on our consolidated financial statements as of December 31, 2017. No adjustment was recorded to accumulated deficit as of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption of the revenue standard to have a material impact to our net income on an ongoing basis.

ASU 2017-12

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and changing the presentation to include all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for applying hedge accounting to additional hedging strategies, measuring the hedged item in fair value hedges of interest rate risk, reducing the cost and complexity of applying hedge accounting and reducing the risk of material error correction if a company applies the shortcut method inappropriately. ASU 2017-12 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018, on a prospective basis. We early adopted ASU 2017-12 on December 31, 2017, the first day of fiscal 2018, resulting in an immaterial adjustment in our accumulated deficit on December 30, 2017.

ASU 2017-09

In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting," which provides clarity and reduces both diversity in practice and the cost and complexity when accounting for a change to the terms of a stock-based award. ASU 2017-09 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, on a prospective basis. We adopted ASU 2017-09 on December 31, 2017, the first day of fiscal 2018. There were no modifications to any stock-based awards during the three or nine months ended September 29, 2018.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment," which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We early adopted ASU 2017-04 on July 1, 2018, the first day of the third quarter. The adoption did not have an effect on our financial position, results of operations or cash flows.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash," which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, an entity should include amounts generally described as restricted cash or restricted cash equivalents within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to this ASU, there was no guidance to address how to classify and present changes in restricted cash or restricted cash equivalents. The updated guidance is effective for interim and annual periods beginning after December 15, 2017. We adopted ASU 2016-18 as of December 31, 2017, the first day of fiscal 2018 and retrospectively applied such guidance to our Condensed Consolidated Statements of Cash Flows.

The following table provides a reconciliation of Cash and cash equivalents as previously reported within the Condensed Consolidated Statements of Cash Flows to Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows (in thousands):

11

	December 30, 2017		September 30, 2017		December 31, 2016
Cash and cash equivalents as previously reported in the Condensed Consolidated Statements of Cash Flows	$	91,184	$	103,083	$	101,408
Current assets - Restricted cash	372		4		106
Restricted cash	1,170		766		1,082
Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows	$	92,726	$	103,853	$	102,596

As of September 29, 2018 and December 30, 2017, Restricted cash was comprised primarily of funds held by our foreign subsidiaries for employee obligations, office leases and customer deposits.

ASU 2016-02, ASU 2018-10 and ASU 2018-11

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. ASU 2016-02 was amended in July 2018 by both ASU 2018-10, "Codification Improvements to Topic 842, Leases," and ASU 2018-11, "Leases (Topic 842): Targeted Improvements." ASU 2016-02 provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced disclosures about our leasing arrangements. Under current accounting standards, substantially all of our leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This new standard is effective for us beginning on December 30, 2018, with early adoption permitted. As initially issued, the standard required a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. As amended, the standard allows an additional transition method that permits a company to use its effective date as the date of initial application, and therefore, not restate comparative prior period financial information. Upon adoption we will use the modified transition method. We are currently assessing the impact on our Consolidated Financial Statements and expect that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases to our Consolidated Balance Sheets resulting in the recording of right-of-use assets and lease liabilities.

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Intel	24.5	%	30.6	%	18.0	%	27.4	%
Micron	12.0		*		10.1		*
SK Hynix	*		*		10.2		*
Total revenues attributable to 10% or greater customers	36.5	%	30.6	%	38.3	%	27.4	%

*Represents less than 10% of total revenues.

At September 29, 2018, two customers accounted for 25.4% and 10.2% of gross accounts receivable, respectively. At December 30, 2017, two customers accounted for 24.1% and 13.6% of gross accounts receivable, respectively. No other customers accounted for 10% or more of gross accounts receivable at either of these fiscal period ends.

12

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):

	September 29, 2018		December 30, 2017
Raw materials	$	44,793	$	33,101
Work-in-progress	21,922		20,134
Finished goods	14,823		14,613
	$	81,538	$	67,848

Note 4— Goodwill and Intangible Assets

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

	Probe Cards		Systems			Total
Goodwill, gross, as of December 31, 2016	$	172,482	$	15,528		$	188,010
Foreign currency translation	—		1,910			1,910
Goodwill, gross, as of December 30, 2017	172,482		17,438			189,920
Foreign currency translation	—		(493		)	(493		)
Goodwill, gross, as of September 29, 2018	$	172,482	$	16,945		$	189,427

We have not recorded any goodwill impairments as of September 29, 2018.

Intangible assets were as follows (in thousands):

	September 29, 2018						December 30, 2017
Other Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	143,577	$	92,074	$	51,503	$	143,966	$	76,826	$	67,140
Trade name	12,042		8,136		3,906		12,086		5,735		6,351
Customer relationships	40,196		20,327		19,869		40,313		16,320		23,993
Backlog	—		—		—		15,811		15,811		—
	$	195,815	$	120,537	$	75,278	$	212,176	$	114,692	$	97,484

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

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	5,123	$	5,473	$	15,418	$	17,411
Selling, general and administrative	2,389		2,043		6,458		6,098
	$	7,512	$	7,516	$	21,876	$	23,509

13

The estimated future amortization of intangible assets is as follows (in thousands):

Fiscal Year	Amount
Remainder of 2018	$	7,509
2019	26,432
2020	23,421
2021	12,655
2022	3,215
Thereafter	2,046
	$	75,278

Note 5— Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	September 29, 2018		December 30, 2017
Accrued compensation and benefits	$	14,002	$	18,141
Accrued warranty	2,457		3,662
Accrued withholding for employee stock purchase plan	1,430		3,279
Accrued income and other taxes	3,397		3,965
Other accrued expenses	3,591		4,647
	$	24,877	$	33,694

Note 6— Restructuring Charges

Restructuring charges are comprised of costs related to employee termination benefits as well as contract termination costs, and are included in Restructuring in the Consolidated Statements of Income.

Restructuring charges in the first three quarters of fiscal 2017 related to the consolidation of an acquired subsidiary into our operations.

There were no restructuring charges in the first three quarters of fiscal 2018. Changes to the restructuring accrual in the nine months ended September 29, 2018 were as follows (in thousands):

	Accrual
December 30, 2017	$	399
Cash payments	(399		)
September 29, 2018	$	—

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 nine months ended September 29, 2018 or the year ended December 30, 2017.

14

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

No changes were made to our valuation techniques during the first nine months of fiscal 2018.

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): 

September 29, 2018	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	265	$	—	$	265
Commercial paper	—		999		999
Total cash equivalents	265		999		1,264
Marketable securities:
U.S. Treasuries	4,453		—		4,453
Certificates of deposit	—		1,197		1,197
Agency securities	—		8,994		8,994
Corporate bonds	—		32,186		32,186
Commercial paper	—		3,279		3,279
Total marketable securities	4,453		45,656		50,109
Interest rate swap derivative contracts	—		951		951
Total assets	$	4,718	$	47,606	$	52,324

December 30, 2017	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	1,064	$	—	$	1,064
Corporate bonds	—		774		774
Total cash equivalents	1,064		774		1,838
Marketable securities:
U.S. Treasuries	3,963		—		3,963
Certificates of deposit	—		957		957
Agency securities	—		10,432		10,432
Corporate bonds	—		30,636		30,636
Commercial paper	—		3,000		3,000
Total marketable securities	3,963		45,025		48,988
Foreign exchange derivative contracts	—		31		31
Interest rate swap derivative contracts	—		1,043		1,043
Total assets	$	5,027	$	46,873	$	51,900

We did not have any liabilities measured at fair value on a recurring basis at September 29, 2018 or December 30, 2017.

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

15

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 of our investments have a sufficient level of 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 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.

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 Prepaid expenses and other current assets and Other assets 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		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three Months Ended September 29, 2018	$	62	Interest expense	$	196		Interest expense
Three Months Ended September 30, 2017	$	18	Interest expense	$	54		Interest expense
Nine Months Ended September 29, 2018	$	418	Interest expense	$	514		Interest expense
Nine Months Ended September 30, 2017	$	8	Interest expense	$	(32	)	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, 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 income (expense), net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses.

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 September 29, 2018 will mature in the third quarter of fiscal 2018.

16

The following table provides information about our foreign currency forward contracts outstanding as of September 29, 2018 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Japanese Yen	Sell	(2,241,544	)	$	19,783
Taiwan Dollar	Buy	49,404		(1,626		)
Korean Won	Buy	4,508,988		(4,082		)
Euro Dollar	Sell	(15,050	)	17,574
Total USD notional amount of outstanding foreign exchange contracts				$	31,649

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 location and amount of net income (loss) related to non-designated derivative instruments in the Condensed Consolidated Statements of Income were as follows (in thousands):

		Three Months Ended					Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized on Derivatives	September 29, 2018		September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange forward contracts	Other income (expense), net	$	706	$	(556	)	$	923	$	(2,364	)

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure and report 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. There were no assets or liabilities measured at fair value on a nonrecurring basis during the three or nine months ended September 29, 2018 or September 30, 2017.

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 incurred in correcting a product failure. We continuously monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified field 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):

	Nine Months Ended
	September 29, 2018			September 30, 2017
Balance at beginning of period	$	3,662		$	2,972
Accruals	3,168			4,888
Settlements	(4,373		)	(5,009		)
Balance at end of period	$	2,457		$	2,851

17

Note 9 — Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program

In February 2017, our Board of Directors authorized a program to repurchase up to $25 million of outstanding common stock to offset potential dilution from issuances of common stock under our employee stock purchase plan and equity incentive plan. The share repurchase program will expire on February 1, 2020. Repurchased shares are retired upon the settlement of the related transactions with the excess of cost over par value charged to additional paid-in capital. All repurchases are made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

During the nine months ended September 29, 2018, we did not repurchase any shares. As of September 29, 2018, $6.0 million remained available for future repurchases.

Restricted Stock Units

Restricted stock unit ("RSU") activity under our equity incentive plan was as follows:

	Units		Weighted Average Grant Date Fair Value
RSUs at December 30, 2017	3,148,061		$	11.22
Awards granted	1,551,770		13.79
Awards vested	(1,271,132	)	10.45
Awards forfeited	(293,969	)	11.60
RSUs at September 29, 2018	3,134,730		$	12.77

The total fair value of RSUs vested during the nine months ended September 29, 2018 was $17.3 million.

Performance Restricted Stock Units

We may grant Performance RSUs ("PRSUs") to certain executives, which vest based upon us achieving certain market performance criteria.

On August 16, 2018, we granted a total of 318,100 PRSUs to nine senior executives for a total grant date fair value of $4.7 million, which will be recognized ratably over the requisite service period. The performance criteria are based on a metric called Total Shareholder Return ("TSR") for the period from July 1, 2018 to June 30, 2021, relative to the TSR of the companies identified as being part of the S&P Semiconductor Select Industry Index (FormFactor peer companies) as of June 30, 2018.

There were no other PRSUs granted during the nine months ended September 29, 2018.

Stock Options

Stock option activity under our equity incentive plan was as follows:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
Outstanding at December 30, 2017	659,334		$	8.12
Options exercised	(105,610	)	9.93
Outstanding at September 29, 2018	553,724		$	7.77	3.56	$	3,308,931
Exercisable at September 29, 2018	430,104		$	7.67	3.54	$	2,620,928

18

Employee Stock Purchase Plan

Information related to activity under our Employee Stock Purchase Plan ("ESPP") was as follows:

	Nine Months Ended
	September 29, 2018
Shares issued	610,297
Weighted average per share purchase price	$	12.84
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	2.82

Stock-Based Compensation

Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	832	$	894	$	2,565	$	2,540
Research and development	1,312		1,437		3,870		3,768
Selling, general and administrative	2,393		2,255		5,986		4,971
Total stock-based compensation	$	4,537	$	4,586	$	12,421	$	11,279

Unrecognized Compensation Costs

At September 29, 2018, the unrecognized stock-based compensation was as follows (in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Stock options	$	167	0.36
Restricted stock units	28,035		2.76
Performance restricted stock units	6,580		2.38
Employee stock purchase plan	974		0.34
Total unrecognized stock-based compensation expense	$	35,756	1.76

Note 10 — 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 Ended		Nine Months Ended
	September 29, 2018	September 30, 2017	September 29, 2018	September 30, 2017
Weighted-average shares used in computing basic net income per share	73,837	72,651	73,273	72,103
Add potentially dilutive securities	1,125	1,234	1,355	1,437
Weighted-average shares used in computing diluted net income per share	74,962	73,885	74,628	73,540
Securities not included as they would have been antidilutive	5	—	21	77

19

Note 11 — Commitments and Contingencies

Contractual Commitments and Purchase Obligations

During the second quarter of 2018, we amended our lease for our Beaverton, Oregon facility, which extended the lease through 2027. During the third quarter of 2018, we amended our lease for our Livermore, California facility, which extended the lease through 2028. Our purchase obligations and other contractual obligations have not materially changed as of September 29, 2018 from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2017. Future minimum payments under our non-cancelable operating leases were as follows as of September 29, 2018 (in thousands):

Fiscal Year	Amount
Remainder of 2018	$	1,698
2019	5,944
2020	5,861
2021	5,663
2022	4,784
Thereafter	24,737
Total	$	48,687

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of September 29, 2018, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

Note 12 — 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
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	111,606		$	23,383		$	—		$	134,989		$	119,439		$	24,296		$	—		$	143,735
Gross profit	$	47,675		$	11,250		$	(5,955	)	$	52,970		$	51,438		$	12,571		$	(6,379	)	$	57,630
Gross margin	42.7		%	48.1		%	—		%	39.2		%	43.1		%	51.7		%	—		%	40.1		%
Operating income (loss)	$	25,609		$	4,228		$	(20,469	)	$	9,368		$	17,894		$	5,277		$	(8,905	)	$	14,266

	Nine Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	318,120		$	70,668		$	—		$	388,788		$	347,559		$	68,981		$	—		$	416,540
Gross profit	$	138,182		$	34,118		$	(17,983	)	$	154,317		$	151,204		$	36,176		$	(20,412	)	$	166,968
Gross margin	43.4		%	48.3		%	—		%	39.7		%	43.5		%	52.4		%	—		%	40.1		%
Operating income (loss)	$	71,326		$	12,634		$	(59,647	)	$	24,313		$	54,289		$	14,363		$	(27,748	)	$	40,904

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 general and administrative costs, amortization of intangible assets, share-based compensation, acquisition-related costs, including charges related to inventory stepped up to fair value and other

20

costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses.

Certain revenue category information by reportable segment was as follows (in thousands):

	Three Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	61,270	$	—	$	61,270	$	81,914	$	—	$	81,914
DRAM	37,359		—		37,359		32,373		—		32,373
Flash	12,977		—		12,977		5,151		—		5,151
Systems	—		23,383		23,383		—		24,297		24,297
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Timing of revenue recognition:
Products transferred at a point in time	$	111,020	$	22,422	$	133,442	$	118,995	$	23,372	$	142,367
Services transferred over time	586		961		1,547		443		925		1,368
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Geographical region:
United States	$	34,398	$	5,729	$	40,127	$	48,544	$	8,712	$	57,256
Taiwan	18,904		777		19,681		15,951		1,863		17,814
South Korea	19,664		1,437		21,101		21,217		545		21,762
Asia-Pacific1	22,388		6,825		29,213		19,136		4,664		23,800
Europe	5,499		3,629		9,128		6,015		6,079		12,094
Japan	10,462		4,273		14,735		8,419		2,037		10,456
Rest of the world	291		713		1,004		156		397		553
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735

21

	Nine Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	181,819	$	—	$	181,819	$	244,952	$	—	$	244,952
DRAM	105,716		—		105,716		92,798		—		92,798
Flash	30,585		—		30,585		9,809		—		9,809
Systems	—		70,668		70,668		—		68,981		68,981
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Timing of revenue recognition:
Products transferred at a point in time	$	316,495	$	67,794	$	384,289	$	346,191	$	66,388	$	412,579
Services transferred over time	1,625		2,874		4,499		1,368		2,593		3,961
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Geographical region:
United States	$	89,960	$	16,861	$	106,821	$	126,110	$	21,384	$	147,494
Taiwan	71,300		5,680		76,980		61,568		5,593		67,161
South Korea	58,250		4,317		62,567		60,306		2,909		63,215
Asia-Pacific1	50,956		16,263		67,219		53,620		16,606		70,226
Europe	15,181		14,969		30,150		17,664		13,808		31,472
Japan	31,426		10,523		41,949		27,219		7,847		35,066
Rest of the world	1,047		2,055		3,102		1,072		834		1,906
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540

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

22

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, impact of accounting standards and our share repurchase plan. 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, 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 30, 2017 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.

Overview

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

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 and thermal sub-systems are included in the Systems segment.

We generated net income of $18.9 million in the first nine months of fiscal 2018 as compared to $35.3 million in the first nine months of fiscal 2017. The decrease in net income was primarily due to decreased revenue from our Probe Cards segment and increased operating expenses.

Critical Accounting Policies and the Use of Estimates

Management’s Discussion and Analysis and Note 2 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K describe the significant accounting estimates and critical accounting policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. During the nine months ended September 29, 2018, other than the adoption of new revenue recognition guidance as described in Note 1, there were no significant changes in our critical accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 30, 2017, which was filed with the Securities and Exchange Commission on February 27, 2018.

23

Results of Operations

The following table sets forth our operating results as a percentage of revenues for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	60.8		59.9		60.3		59.9
Gross profit	39.2		40.1		39.7		40.1
Operating expenses:
Research and development	14.0		13.5		14.6		13.3
Selling, general and administrative	18.3		16.7		18.9		16.9
Restructuring	—		—		—		0.1
Total operating expenses	32.3		30.2		33.5		30.3
Operating income	6.9		9.9		6.2		9.8
Interest income	0.3		0.1		0.2		0.1
Interest expense	(0.6	)	(0.8	)	(0.7	)	(0.8	)
Other income (expense), net	0.2		0.2		(0.2	)	—
Income before income taxes	6.7		9.6		5.5		9.1
Provision for income taxes	1.1		0.7		0.9		0.6
Net income	5.7	%	8.8	%	4.6	%	8.6	%

Revenues by Segment and Market

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
	(In thousands)
Probe Cards	$	111,606	$	119,439	$	318,120	$	347,559
Systems	23,383		24,296		70,668		68,981
	$	134,989	$	143,735	$	388,788	$	416,540

24

	Three Months Ended
	September 29, 2018		% of Revenues		September 30, 2017		% of Revenues		$ Change			% Change
	(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic	$	61,270	45.4	%	$	81,914	57.0	%	$	(20,644	)	(25.2	)%
DRAM	37,359		27.7		32,373		22.5		4,986			15.4
Flash	12,977		9.6		5,151		3.6		7,826			151.9
Systems Market:
Systems	23,383		17.3		24,297		16.9		(914		)	(3.8	)
Total revenues	$	134,989	100.0	%	$	143,735	100.0	%	$	(8,746	)	(6.1	)%
	Nine Months Ended
	September 29, 2018		% of Revenues		September 30, 2017		% of Revenues		$ Change			% Change
	(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic	$	181,819	46.7	%	$	244,952	58.8	%	$	(63,133	)	(25.8	)%
DRAM	105,716		27.2		92,798		22.3		12,918			13.9
Flash	30,585		7.9		9,809		2.4		20,776			211.8
Systems Market:
Systems	70,668		18.2		68,981		16.5		1,687			2.4
Total revenues	$	388,788	100.0	%	$	416,540	100.0	%	$	(27,752	)	(6.7	)%

The decreases in Foundry & Logic product revenue for the three and nine months ended September 29, 2018, compared to the three and nine months ended September 30, 2017, were primarily the result of lower demand from one major customer. This major customer accounted for 24.5% and 18.0%, respectively, of total revenues for the three and nine months ended September 29, 2018, compared to 30.6% and 27.4%, respectively, for the comparable periods of 2017.

The increases in DRAM and Flash product revenue for the three and nine months ended September 29, 2018, compared to the three and nine months ended September 30, 2017, were driven by increased unit sales as a result of increased design wins and customer demand.

The decrease in Systems product revenue for the three months ended September 29, 2018, compared to the three months ended September 30, 2017, was driven by decreased unit sales of thermal sub-systems due to customer demand. The increase in Systems product revenue for the nine months ended September 29, 2018, compared to the nine months ended September 30, 2017, was driven by increased unit sales of thermal sub-systems due to increased customer demand, partially offset by lower revenue from probe stations due to changes in product sales mix which decreased the average selling price of units sold.

25

Revenues by Geographic Region

	Three Months Ended								Nine Months Ended
	September 29, 2018		% of Revenue		September 30, 2017		% of Revenue		September 29, 2018		% of Revenue		September 30, 2017		% of Revenue
	(Dollars in thousands)
United States	$	40,127	29.7	%	$	57,256	39.8	%	$	106,821	27.5	%	$	147,494	35.4	%
Taiwan	19,681		14.6		17,814		12.4		76,980		19.8		67,161		16.1
South Korea	21,101		15.6		21,762		15.1		62,567		16.1		63,215		15.2
Asia-Pacific1	29,213		21.7		23,800		16.6		67,219		17.3		70,226		16.9
Europe	9,128		6.8		12,094		8.4		30,150		7.8		31,472		7.6
Japan	14,735		10.9		10,456		7.3		41,949		10.8		35,066		8.4
Rest of the world	1,004		0.7		553		0.4		3,102		0.8		1,906		0.5
Total revenues	$	134,989	100.0	%	$	143,735	100.0	%	$	388,788	100.0	%	$	416,540	100.0	%

¹Asia-Pacific includes all countries in the region except Taiwan, South Korea and Japan, 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 U.S.

Changes in revenue by geographic region for the three and nine months ended September 29, 2018 compared to the three and nine months ended September 30, 2017 were primarily attributable to changes in customer demand 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
	September 29, 2018			September 30, 2017			$ Change			% Change
Gross profit	$	52,970		$	57,630		$	(4,660	)	(8.1	)%
Gross margin	39.2		%	40.1		%
	Nine Months Ended
	September 29, 2018			September 30, 2017			$ Change			% Change
Gross profit	$	154,317		$	166,968		$	(12,651	)	(7.6	)%
Gross margin	39.7		%	40.1		%

26

Our gross profit and gross margin by segment were as follows (dollars in thousands):

	Three Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Gross profit	$	47,675		$	11,250		$	(5,955	)	$	52,970		$	51,438		$	12,571		$	(6,379	)	$	57,630
Gross margin	42.7		%	48.1		%	—		%	39.2		%	43.1		%	51.7		%	—		%	40.1		%
	Nine Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Gross profit	$138,182			$	34,118		$	(17,983	)	$	154,317		$151,204			$	36,176		$	(20,412	)	$	166,968
Gross margin	43.4		%	48.3		%	—		%	39.7		%	43.5		%	52.4		%	—		%	40.1		%

Probe Cards

For the three and nine months ended September 29, 2018, gross profit in the Probe Cards segment decreased due to decreased sales. Gross margins decreased due to fluctuations in product mix and factory utilization.

Systems

For the three and nine months ended September 29, 2018, gross profit and gross margin in the Systems segment decreased due to changes in product sales mix and changes in foreign currency exchange rates.

Corporate and Other includes unallocated expenses relating to amortization of intangible assets, share-based compensation expense, acquisition-related costs, including charges related to inventory stepped up to fair value, and other costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Overall

Gross profit and gross margin fluctuate with revenue levels, product mix, selling prices, factory loading and material costs. For the three and nine months ended September 29, 2018, compared to the three and nine months ended September 30, 2017, gross profit decreased due to lower revenue, and gross margins decreased due to unfavorable product mix and lower factory utilization, as well as changes in foreign currency exchange rates, partially offset by lower amortization.

Cost of revenues included stock-based compensation expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Stock-based compensation	$	832	$	894	$	2,565	$	2,540

Future gross margins may be adversely impacted by lower revenues, unfavorable product mix and lower factory utilization even though we have taken significant steps to reduce our operating cost structure. Our gross margins may also be adversely affected if we are required to record additional inventory write-downs for estimated average selling prices that are below cost.

27

Research and Development

	Three Months Ended
	September 29, 2018			September 30, 2017			$ Change			% Change
	(Dollars in thousands)
Research and development	$	18,857		$	19,338		$	(481	)	(2.5	)%
% of revenues	14.0		%	13.5		%
	Nine Months Ended
	September 29, 2018			September 30, 2017			$ Change			% Change
	(Dollars in thousands)
Research and development	$	56,578		$	55,294		$	1,284		2.3	%
% of revenues	14.6		%	13.3		%

The decrease in research and development expenses in the three months ended September 29, 2018 when compared to corresponding period in prior year was primarily driven by a decrease in employee incentive compensation. The increase in the nine months ended September 29, 2018 when compared to corresponding period in prior year was primarily due to an increase in project material costs to support research and development within our Probe Cards segment, partially offset by a decrease in employee incentive compensation. The lower employee incentive compensation in both periods was primarily due to decreased profitability from lower revenues.

A detail of the changes is as follows (in thousands):

	Three Months Ended September 29, 2018 compared to Three Months Ended September 30, 2017			Nine Months Ended September 29, 2018 compared to Nine Months Ended September 30, 2017
Employee compensation costs	$	(688	)	$	(627	)
Stock-based compensation	(125		)	102
Project material costs	153			1,104
Depreciation	85			287
Other general operations	94			418
	$	(481	)	$	1,284

Research and development included stock-based compensation expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Stock-based compensation	$	1,312	$	1,437	$	3,870	$	3,768

28

Selling, General and Administrative

	Three Months Ended
	September 29, 2018			September 30, 2017			$ Change		% Change
	(Dollars in thousands)
Selling, general and administrative	$	24,745		$	24,010		$	735	3.1	%
% of revenues	18.3		%	16.7		%
	Nine Months Ended
	September 29, 2018			September 30, 2017			$ Change		% Change
	(Dollars in thousands)
Selling, general and administrative	$	73,426		$	70,441		$	2,985	4.2%
% of revenues	18.9		%	16.9		%

The increases in the three and nine months ended September 29, 2018 when compared to the corresponding periods in the prior year were primarily due to increases in consulting fees related to information systems implementation and stock-based compensation, partially offset by a reduction in employee incentive compensation due to decreased profitability from lower revenues. A detail of the changes is as follows (in thousands):

	Three Months Ended September 29, 2018 compared to Three Months Ended September 30, 2017			Nine Months Ended September 29, 2018 compared to Nine Months Ended September 30, 2017
General operating expenses	$	224		$	698
Consulting fees	164			1,441
Stock-based compensation	138			1,015
Travel related costs	321			125
Employee compensation	(458		)	(654		)
Amortization of intangibles	346			360
	$	735		$	2,985

Selling, general and administrative included stock-based compensation expense as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Stock-based compensation	$	2,393	$	2,255	$	5,986	$	4,971

Restructuring Charges, net

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
Restructuring charges, net	$	—		$	16		$	—		$	329
% of revenues	—		%	—		%	—		%	0.1		%

Restructuring charges in the first nine months of fiscal 2017 were related to the consolidation of Cascade Microtech into our operations and included costs related to employee termination benefits and contract termination costs.

29

Interest Income and Interest Expense

	Three Months Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
	(Dollars in thousands)
Interest income	$	369		$	123		$	952		$	283
Weighted average balance of cash and investments	$	134,516		$	125,675		$	136,986		$	120,134
Weighted average yield on cash and investments	1.50		%	0.91		%	1.46		%	0.72		%
Interest expense	$	(777	)	$	(1,109	)	$	(2,654	)	$	(3,446	)
Average term loan outstanding	$	84,725		$	123,558		$	96,003		$	131,696
Weighted average interest rate on term loan	4.09		%	3.23		%	3.88		%	3.01		%

Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities. The increases in interest income for the three and nine months ended September 29, 2018 compared with corresponding periods of prior year were attributable to higher investment yields, as well as higher average investment balances.

Interest expense primarily includes interest on our term loan and interest-rate swap derivative contracts, as well as term loan issuance costs amortization charges. The decreases in interest expense for the three and nine months ended September 29, 2018 compared to the three and nine months ended September 30, 2017 were primarily due to lower outstanding debt balances as a result of principal payments made, partially offset by higher interest rates.

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 Ended						Nine Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017
	(Dollars in thousands)
Provision for income taxes	$	1,393		$	1,028		$	3,334		$	2,435
Effective income tax rate	15.3		%	7.6		%	15.0		%	6.4		%

Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from lapsing of statute of limitations related to uncertain tax positions in foreign jurisdictions. We continue to maintain a full valuation allowance against our U.S. Federal and State deferred tax assets. The change in provision for income taxes was driven by higher profits in foreign jurisdictions for the three and nine months ended September 29, 2018, compared to the three and nine months ended September 30, 2017.

We have reported U.S. pre-tax losses, compared to U.S. pre-tax income in seven of the last nine fiscal years. We have not yet been able to establish a sustained level of profitability in the U.S. or other sufficient significant positive evidence to conclude that our U.S. deferred tax assets are more likely than not to be realized. Therefore, we continue to maintain a valuation allowance against most of our U.S. deferred tax assets. It is reasonably possible that by the end of fiscal year 2018, we will establish a sustained level of profitability in the U.S. As a result, in the fourth quarter of fiscal year 2018, we may reverse a significant portion of the valuation allowance recorded against our U.S. deferred tax assets, which was $109.8 million at December 30, 2017. The reversal would result in a noncash income tax benefit for the three and twelve months ended December 29, 2018.

New tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), was enacted on December 22, 2017. In connection with our initial analysis of the impact of the Tax Act, the Tax Act did not have a material impact on the fiscal 2017 tax provision. With the reduction in the U.S. corporate income tax rate, we revalued our ending U.S. deferred tax assets at December 30, 2017, which was offset by a corresponding change in the U.S. valuation allowance. We also released the valuation allowance against $0.8 million of AMT tax credits at December 30, 2017 which became fully refundable under the Tax Act. We have completed the accounting for the tax effects of the Tax Act described above for fiscal year 2017 and there have been no material changes to estimated amounts.

30

Liquidity and Capital Resources

Capital Resources

Our working capital was $224.3 million at September 29, 2018, which did not change significantly compared to $213.7 million at December 30, 2017.

Cash and cash equivalents primarily consist of deposits held at banks, money market funds and commercial paper. Marketable securities primarily consist of U.S. agency securities and corporate bonds. 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.

Our cash, cash equivalents and marketable securities totaled approximately $142.1 million at September 29, 2018, compared to $140.2 million at December 30, 2017. 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.

If we are unsuccessful in maintaining or growing our revenues, maintaining or reducing our cost structure (in response to an industry demand downturn or other event), or increasing our available cash through debt or equity financings, our cash, cash equivalents and marketable securities may decline in fiscal 2018.

We utilize a variety of tax planning and financing strategies in an effort to manage our worldwide cash and deploy funds to locations where they are needed. As part of these strategies, we indefinitely reinvest a portion of our foreign earnings. During the nine months ended September 29, 2018, we repatriated $16.5 million of 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:

	Nine Months Ended
	September 29, 2018			September 30, 2017
	(In thousands)
Net cash provided by operating activities	$	46,138		$	59,866
Net cash used in investing activities	(13,463		)	(38,243		)
Net cash used in financing activities	(31,732		)	(22,847		)

Operating Activities 

Net cash provided by operating activities for the nine months ended September 29, 2018 was primarily attributable to net income of $18.9 million and $53.3 million of net non-cash expenses, offset by operating assets and liabilities using $26.1 million of cash as discussed in more detail below.

Accounts receivable, net, increased $7.4 million to $88.9 million at September 29, 2018, compared to $81.5 million at December 30, 2017, as a result of changes in customer sales mix and timing of customer shipments.

Inventories, net, increased $13.7 million to $81.5 million at September 29, 2018, compared to $67.8 million at December 30, 2017, as a result of increased inventory purchases to shorten lead time and improve pricing, and in anticipation of customer demand.

Prepaid expenses and other current assets increased $2.0 million to $15.7 million at September 29, 2018, compared to $13.7 million at December 30, 2017, as a result of increases in unrealized gains on hedging and forward contracts, prepaid insurance and other services, and short-term deposits.

Accounts payable increased $14.6 million to $49.7 million at September 29, 2018, compared to $35.0 million at December 30, 2017, as a result of increased inventory and fixed asset purchases, and timing of vendor payments.

31

Accrued liabilities decreased $8.8 million to $24.9 million at September 29, 2018, compared to $33.7 million at December 30, 2017, as a result of timing of employee payroll, decreases in employee stock purchase plan withholdings due to timing within the plan's withholding period, and decrease in accrued warranty.

Investing Activities

Net cash used in investing activities for the nine months ended September 29, 2018 was primarily related to $12.3 million of cash used in the acquisition of property, plant and equipment, as well as $1.2 million of net purchases of marketable securities.

Financing Activities

Net cash used in financing activities for the nine months ended September 29, 2018 primarily related to $33.8 million of principal payments made towards the repayment of our term loan and $5.7 million related to tax withholdings associated with the net share settlements of our equity awards, partially offset by $7.7 million of proceeds received from issuances of common stock under our employee stock purchase plan and exercise of stock options.

Debt Facility

On June 24, 2016, we entered into a credit agreement (the “Credit Agreement”) with HSBC Bank USA, National Association ("HSBC"). Pursuant to the Credit Agreement, the lenders provided us with a senior secured term loan facility of $150 million (the “Term Loan”). The proceeds of the Term Loan were used to finance a portion of the purchase price paid in connection with the acquisition of Cascade Microtech.

The Term Loan bears interest at a rate equal to, at our option, (i) the applicable London Interbank Offered Rate ("LIBOR") rate plus 2.00% per annum or (ii) Base Rate (as defined in the Credit Agreement) plus 1.00% per annum. We have currently elected to pay interest at 2.00% over the one-month LIBOR rate. Interest payments are payable in monthly installments over a five-year period.

On July 25, 2016 we entered into an interest rate swap agreement with HSBC and other lenders to hedge the interest payments on the Term Loan for the notional amount of $95.6 million. As future levels of LIBOR over the life of the loan are uncertain, we entered into these interest-rate swap agreements to hedge the exposure in interest rate risks associated with movement in LIBOR rates. By entering into the agreements, we convert a floating rate interest at one-month LIBOR plus 2% into a fixed rate interest at 2.939%. As of September 29, 2018 the notional amount of the loan that is subject to this interest rate swap is $60.0 million. See Note 7 of Notes to Condensed Consolidated Financial Statements for additional information.

The Term Loan amortizes in equal quarterly installments, which began June 30, 2016, in annual amounts equal to 5% for year one, 10% for year two, 20% for year three, 30% for year four and 35% for year five. The Credit Agreement allows voluntary prepayment to be made at any time to prepay the Term Loan in whole or in part without penalty or premium. As of September 29, 2018, we have made prepayments of $40.0 million in addition to scheduled installments per the Credit Agreement. For the three and nine months ended September 29, 2018, we made prepayments of $5.0 million and $15.0 million, respectively, in addition to scheduled installments.

The obligations under the Term Loan are guaranteed by substantially all of our assets and the assets of our domestic subsidiaries, subject to certain customary exceptions.

The Credit Agreement contains negative covenants customary for financing of this type, as well as certain financial maintenance covenants. As of September 29, 2018, the balance outstanding pursuant to the Term Loan was $72.5 million at an interest rate of 4.25% and we were in compliance with all covenants under the Credit Agreement.

Stock Repurchase Program

In February 2017, our Board of Directors authorized a program to repurchase up to $25 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 February 1, 2020. During the nine months ended September 29, 2018, we did not repurchase any shares of common stock. As of September 29, 2018, $6.0 million remained available for future repurchases.

Repurchased shares are retired upon the settlement of the related trade transactions with the excess of cost over par value charged to additional paid-in capital. All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

32

Contractual Obligations and Commitments

Other than our operating lease commitments as disclosed in Note 11 of Notes to Condensed Consolidated Financial Statements, our contractual obligations and commitments have not materially changed as of September 29, 2018 from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2017.

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 September 29, 2018, we were not involved in any such off-balance sheet arrangements.

Recent Accounting Pronouncements

See Note 1 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 30, 2017. Our exposure to market risk has not changed materially since December 30, 2017.

33

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 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. 

34

PART II - OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes during the nine months ended September 29, 2018 to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 30, 2017. 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 30, 2017 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.

Item 6. Exhibits

The following exhibits are filed herewith and this list constitutes the exhibit index.

Exhibit		Incorporated by Reference			Filed
Number	Exhibit Description	Form	Date	Number	Herewith
3.1	Amended and Restated Certificate of Incorporation of the Registrant as filed with the Delaware Secretary of State on June 17, 2003	S-1	October 20, 2003	3.01
3.2	Amended and Restated Bylaws of the Registrant	8-K	July 22, 2016	3.2
10.01	Third Amendment, dated October 1, 2018, between FormFactor, Inc. and MOHR PCC, LP, to Pacific Corporate Center Lease, dated October 5, 2004, by and between Greenville Investors, L.P. and FormFactor, Inc.	8-K	October 2, 2018	10.01
10.02	Fourth Amendment, dated October 1, 2018, between FormFactor, Inc. and MOHR PCC, LP, to Pacific Corporate Center Lease, dated May 3, 2001, by and between Greenville Investors, L.P. and FormFactor, Inc.	8-K	October 2, 2018	10.02
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				X
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				X
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				*
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema Document				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				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.

35

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:	November 6, 2018	By:	/s/ SHAI SHAHAR
			Shai Shahar
			Chief Financial Officer
			(Duly Authorized Officer, Principal Financial Officer, and Principal Accounting Officer)

36

EX-31.01

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:	November 6, 2018	/s/ MICHAEL D. SLESSOR
		Michael D. Slessor Chief Executive Officer (Principal Executive Officer and Director)

EX-31.02

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:	November 6, 2018	/s/ SHAI SHAHAR
		Shai Shahar Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.01

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 September 29, 2018, 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:	November 6, 2018	/s/ MICHAEL D. SLESSOR
		Michael D. Slessor Chief Executive Officer (Principal Executive Officer and Director)
Date:	November 6, 2018	/s/ SHAI SHAHAR
		Shai Shahar Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 29, 2018	Oct. 31, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	FORMFACTOR INC.
Entity Central Index Key	0001039399
Current Fiscal Year End Date	--12-29
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 29, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		74,102,335

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017
Current assets:
Cash and cash equivalents	$ 91,990	$ 91,184
Marketable securities	50,109	48,988
Accounts receivable, net of allowance for doubtful accounts of $200 and $200	88,869	81,515
Inventories, net	81,538	67,848
Restricted cash	129	372
Refundable income taxes	1,320	2,242
Prepaid expenses and other current assets	15,716	13,705
Total current assets	329,671	305,854
Restricted cash	1,034	1,170
Property, plant and equipment, net of accumulated depreciation of $260,607 and $255,755	52,857	46,754
Goodwill	189,427	189,920
Intangibles, net	75,278	97,484
Deferred tax assets	3,042	3,133
Other assets	1,163	2,259
Total assets	652,472	646,574
Current liabilities:
Accounts payable	49,668	35,046
Accrued liabilities	24,877	33,694
Current portion of term loan, net of unamortized issuance cost of $189 and $307	26,061	18,443
Deferred revenue	4,795	4,978
Total current liabilities	105,401	92,161
Term loan, less current portion, net of unamortized issuance cost of $57 and $272	46,193	87,228
Deferred tax liabilities	3,290	3,379
Deferred rent and other liabilities	7,537	5,169
Total liabilities	162,421	187,937
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.001 par value: 250,000,000 shares authorized; 74,101,623 and 72,532,176 shares issued and outstanding	75	73
Additional paid-in capital	857,505	843,116
Accumulated other comprehensive income	1,158	3,021
Accumulated deficit	(368,687)	(387,573)
Total stockholders’ equity	490,051	458,637
Total liabilities and stockholders’ equity	$ 652,472	$ 646,574

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 200	$ 200
Accumulated depreciation	260,607	255,755
Debt Issuance Costs, Current, Net	189	307
Debt Issuance Costs, Noncurrent, Net	$ 57	$ 272
Preferred stock, par value (In dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (In shares)	10,000,000	10,000,000
Preferred stock, shares issued (In shares)	0	0
Preferred stock, shares outstanding (In shares)	0	0
Common stock, par value (In dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (In shares)	250,000,000	250,000,000
Common stock, shares issued (In shares)	74,101,623	72,532,176
Common stock, shares outstanding (In shares)	74,101,623	72,532,176

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenues	$ 134,989	$ 143,735	$ 388,788	$ 416,540
Cost of revenues	82,019	86,105	234,471	249,572
Gross profit	52,970	57,630	154,317	166,968
Operating expenses:
Research and development	18,857	19,338	56,578	55,294
Selling, general and administrative	24,745	24,010	73,426	70,441
Restructuring	0	16	0	329
Total operating expenses	43,602	43,364	130,004	126,064
Operating income	9,368	14,266	24,313	40,904
Interest income	369	123	952	283
Interest expense	(777)	(1,109)	(2,654)	(3,446)
Other income (expense), net	121	311	(341)	19
Income before income taxes	9,081	13,591	22,270	37,760
Provision for income taxes	1,393	1,028	3,334	2,435
Net income	$ 7,688	$ 12,563	$ 18,936	$ 35,325
Net income per share:
Basic (In dollars per share)	$ 0.10	$ 0.17	$ 0.26	$ 0.49
Diluted (In dollars per share)	$ 0.10	$ 0.17	$ 0.25	$ 0.48
Weighted-average number of shares used in per share calculations:
Basic (In shares)	73,837	72,651	73,273	72,103
Diluted (In shares)	74,962	73,885	74,628	73,540

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 7,688	$ 12,563	$ 18,936	$ 35,325
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(449)	1,540	(1,732)	5,769
Unrealized gains (losses) on available-for-sale marketable securities	50	(15)	(84)	(37)
Unrealized gains (losses) on derivative instruments	(134)	(36)	(47)	4
Other comprehensive income (loss), net of tax	(533)	1,489	(1,863)	5,736
Comprehensive income	$ 7,155	$ 14,052	$ 17,073	$ 41,061

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (In shares) at Dec. 31, 2016		70,907,847,000
Beginning balance at Dec. 31, 2016	$ 401,056	$ 71	$ 833,341	$ (3,740)	$ (428,616)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (In shares)		655,961,000
Issuance of common stock under the Employee Stock Purchase Plan	5,695	$ 1	5,694
Issuance of common stock pursuant to exercise of options for cash (In shares)		1,431,767,000
Issuance of common stock pursuant to exercise of options for cash	13,413	$ 1	13,412
Issuance of common stock pursuant to vesting of restricted stock units (In shares)		845,063,000
Issuance of common stock pursuant to vesting of restricted stock units	(6,618)	$ 1	(6,619)
Purchase and retirement of common stock (In shares)		(867,620,000)
Purchase and retirement of common stock	(10,964)	$ (1)	(10,963)
Stock-based compensation	11,207		11,207
Accounting standard adoptions and adjustments	0		(130)		130
Components of other comprehensive income (loss):
Unrealized gain on marketable securities, net of tax	(37)			(37)
Currency translation adjustments	5,769			5,769
Currency translation adjustments	4			4
Net income	35,325				35,325
Ending balance (In shares) at Sep. 30, 2017		72,973,018,000
Ending balance at Sep. 30, 2017	454,850	$ 73	845,942	1,996	(393,161)
Beginning balance (In shares) at Jul. 01, 2017		72,346,116,000
Beginning balance at Jul. 01, 2017	434,607	$ 73	839,751	507	(405,724)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (In shares)		258,937,000
Issuance of common stock under the Employee Stock Purchase Plan	2,795	$ 0	2,795
Issuance of common stock pursuant to exercise of options for cash (In shares)		178,250,000
Issuance of common stock pursuant to exercise of options for cash	1,827	$ 0	1,827
Issuance of common stock pursuant to vesting of restricted stock units (In shares)		257,015,000
Issuance of common stock pursuant to vesting of restricted stock units	(2,156)		(2,156)
Purchase and retirement of common stock (In shares)		(67,300,000)
Purchase and retirement of common stock	(831)		(831)
Stock-based compensation	4,556		4,556
Components of other comprehensive income (loss):
Unrealized gain on marketable securities, net of tax	(15)			(15)
Currency translation adjustments	1,540			1,540
Currency translation adjustments	(36)			(36)
Net income	12,563				12,563
Ending balance (In shares) at Sep. 30, 2017		72,973,018,000
Ending balance at Sep. 30, 2017	$ 454,850	$ 73	845,942	1,996	(393,161)
Beginning balance (In shares) at Dec. 30, 2017	72,532,176	72,532,176,000
Beginning balance at Dec. 30, 2017	$ 458,637	$ 73	843,116	3,021	(387,573)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (In shares)		610,297,000
Issuance of common stock under the Employee Stock Purchase Plan	6,662	$ 1	6,661
Issuance of common stock pursuant to exercise of options for cash (In shares)		105,610,000
Issuance of common stock pursuant to exercise of options for cash	1,049		1,049
Issuance of common stock pursuant to vesting of restricted stock units (In shares)		853,540,000
Issuance of common stock pursuant to vesting of restricted stock units	(5,693)	$ 1	(5,694)
Stock-based compensation	12,373		12,373
Accounting standard adoptions and adjustments	(50)				(50)
Components of other comprehensive income (loss):
Unrealized gain on marketable securities, net of tax	(84)			(84)
Currency translation adjustments	(1,732)			(1,732)
Currency translation adjustments	(47)			(47)
Net income	$ 18,936				18,936
Ending balance (In shares) at Sep. 29, 2018	74,101,623	74,101,623,000
Ending balance at Sep. 29, 2018	$ 490,051	$ 75	857,505	1,158	(368,687)
Beginning balance (In shares) at Jun. 30, 2018		73,358,108,000
Beginning balance at Jun. 30, 2018	478,668	$ 74	853,278	1,691	(376,375)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (In shares)		268,627,000
Issuance of common stock under the Employee Stock Purchase Plan	2,957		2,957
Issuance of common stock pursuant to vesting of restricted stock units (In shares)		474,888,000
Issuance of common stock pursuant to vesting of restricted stock units	(3,240)	$ 1	(3,241)
Stock-based compensation	4,511		4,511
Components of other comprehensive income (loss):
Unrealized gain on marketable securities, net of tax	50			50
Currency translation adjustments	(449)			(449)
Currency translation adjustments	(134)			(134)
Net income	$ 7,688				7,688
Ending balance (In shares) at Sep. 29, 2018	74,101,623	74,101,623,000
Ending balance at Sep. 29, 2018	$ 490,051	$ 75	$ 857,505	$ 1,158	$ (368,687)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income	$ 18,936	$ 35,325
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	10,494	10,046
Amortization	21,876	23,509
Accretion of discount on investments	21	22
Stock-based compensation expense	12,421	11,279
Amortization of debt issuance costs	333	482
Deferred income tax provision	70	122
Recovery of doubtful accounts receivable	0	(97)
Provision for excess and obsolete inventories	7,414	6,899
Acquired inventory step-up amortization	0	484
Loss on disposal of long-lived assets	264	101
(Gain) loss on derivative instruments	0	(18)
Foreign currency transaction losses (gains)	409	(1,957)
Changes in assets and liabilities:
Accounts receivable, net	(7,569)	(17,097)
Inventories, net	(21,806)	(14,270)
Prepaid expenses and other current assets	(1,874)	1,140
Refundable income taxes	933	(440)
Other assets	697	823
Accounts payable	10,425	3,040
Accrued liabilities	(8,882)	(1,048)
Income tax payable	(248)	(97)
Deferred rent and other liabilities	2,445	101
Deferred revenues	(221)	1,517
Net cash provided by operating activities	46,138	59,866
Cash flows from investing activities:
Acquisition of property, plant and equipment	(12,326)	(13,918)
Proceeds from sale of a subsidiary	67	48
Proceeds from sale of property, plant and equipment	23	0
Purchases of marketable securities	(18,984)	(27,373)
Proceeds from maturities of marketable securities	17,757	3,000
Net cash used in investing activities	(13,463)	(38,243)
Cash flows from financing activities:
Proceeds from issuances of common stock	7,712	19,108
Purchase and retirement of common stock	0	(10,963)
Tax withholdings related to net share settlements of equity awards	(5,694)	(6,617)
Principal repayments on term loan	(33,750)	(24,375)
Net cash used in financing activities	(31,732)	(22,847)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(516)	2,481
Net increase in cash, cash equivalents and restricted cash	427	1,257
Cash, cash equivalents and restricted cash, beginning of period	92,726	102,596
Cash, cash equivalents and restricted cash, end of period	93,153	103,853
Non-cash investing and financing activities:
Change in accounts payable and accrued liabilities related to property, plant and equipment purchases	4,724	(283)
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	2,513	2,847
Cash paid for interest	$ 2,299	$ 2,974

XML

Basis of Presentation and New Accounting Pronouncements

9 Months Ended

Sep. 29, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and New Accounting Pronouncements

Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying condensed consolidated financial information of FormFactor, Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 30, 2017 is derived from our 2017 Annual Report on Form 10-K. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2017 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2018 and 2017 each contain 52 weeks and the nine months ended September 29, 2018 and September 30, 2017 each contained 39 weeks. Fiscal 2018 will end on December 29, 2018.

Reclassifications

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

Critical Accounting Policies

Except as described below, our critical accounting policies have not changed during the nine months ended September 29, 2018 from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2017.

Revenue Recognition

Revenue is recognized upon transferring control of products and services, and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. An arrangement may include some or all of the following products and services: probe cards, systems, accessories, installation services, service contracts and extended warranty contracts. We sell our products and services direct to customers and to partners in two distribution channels: global direct sales force and through a combination of manufacturers’ representatives and distributors.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined and accounted for as one unit of account. Generally, the performance obligations in a contract are considered distinct within the context of the contract and are accounted for as separate units of account.

Our products may be customized to our customers’ specifications, however, control of our product is typically transferred to the customer at the point in time the product is either shipped or delivered, depending on the terms of the arrangement, as the criteria for overtime recognition is not met. In limited circumstances, substantive acceptance by the customer exists which results in the deferral of revenue until acceptance is formally received from the customer. Judgment may be required in determining if the acceptance clause is substantive.

Installation services are routinely provided to customers purchasing our systems. Installation services are a distinct performance obligation apart from the systems and recognized in the period they are performed. Service contracts, which include repair and maintenance service contracts, and extended warranty contracts are also distinct performance obligations and recognized as our performance obligations are satisfied. This is typically the contractual service period, which ranges from one to two years. For these service contracts recognized over time, we use an input measure, days elapsed, to measure progress.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In determining the transaction price, we evaluate whether the price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled. We generally do not grant return privileges, except for defective products during the warranty period. Sales incentives and other programs that we may make available to these customers are considered to be a form of variable consideration, which is estimated in determining the contract’s transaction price to be allocated to the performance obligations. We have elected the practical expedient under Accounting Standards Codification (“ASC”) 606-10-32-18 to not assess whether a contract has a significant financing component as our standard payment terms are less than one year.

For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which we separately sell these products. For items that are not sold separately, we estimate the stand-alone selling prices using our best estimate of selling price.

Transaction price allocated to the remaining performance obligations: On September 29, 2018, we had $3.5 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. We expect to recognize approximately 54.4% of our remaining performance obligations as revenue in fiscal 2019, and approximately 13.2% in fiscal 2020 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 September 29, 2018 and December 30, 2017 were $1.4 million and $1.6 million, respectively, and are reported on the Condensed Consolidated Balance Sheet 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 on a contract-by-contract basis at the end of each reporting period as a component of Deferred revenue and Deferred rent and other liabilities. Contract liabilities as of September 29, 2018 and December 30, 2017 were $5.4 million and $5.7 million. During the three and nine months ended September 29, 2018, we recognized $0.2 million and $3.9 million of revenue, respectively, that was included in contract liabilities as of December 30, 2017.

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 12 of Notes to Consolidated Financial Statements for further details.

New Accounting Pronouncements

ASU 2016-10, ASU 2015-14 and ASU 2014-09

In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," and, in August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard permits the use of either the retrospective or modified retrospective transition methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which was issued to clarify ASC Topic 606, “Revenue from Contracts with Customers” related to (i) identifying performance obligations; and (ii) the licensing implementation guidance. We adopted ASC 606, Revenue from Contracts with Customers and all related amendments (collectively “ASC 606”), on December 31, 2017, the first day of fiscal 2018, using the modified retrospective method. We applied ASC 606 to all contracts not completed as of the date of adoption in order to determine any adjustment to the opening balance of retained earnings. Under the modified retrospective adoption method, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods, ASC 605, "Revenue Recognition", which is also referred to herein as "legacy GAAP."

The adoption of ASC 606 did not have a material impact on our consolidated financial statements as of December 31, 2017. No adjustment was recorded to accumulated deficit as of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption of the revenue standard to have a material impact to our net income on an ongoing basis.

ASU 2017-12

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and changing the presentation to include all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for applying hedge accounting to additional hedging strategies, measuring the hedged item in fair value hedges of interest rate risk, reducing the cost and complexity of applying hedge accounting and reducing the risk of material error correction if a company applies the shortcut method inappropriately. ASU 2017-12 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018, on a prospective basis. We early adopted ASU 2017-12 on December 31, 2017, the first day of fiscal 2018, resulting in an immaterial adjustment in our accumulated deficit on December 30, 2017.

ASU 2017-09

In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting," which provides clarity and reduces both diversity in practice and the cost and complexity when accounting for a change to the terms of a stock-based award. ASU 2017-09 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, on a prospective basis. We adopted ASU 2017-09 on December 31, 2017, the first day of fiscal 2018. There were no modifications to any stock-based awards during the three or nine months ended September 29, 2018.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment," which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We early adopted ASU 2017-04 on July 1, 2018, the first day of the third quarter. The adoption did not have an effect on our financial position, results of operations or cash flows.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash," which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, an entity should include amounts generally described as restricted cash or restricted cash equivalents within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to this ASU, there was no guidance to address how to classify and present changes in restricted cash or restricted cash equivalents. The updated guidance is effective for interim and annual periods beginning after December 15, 2017. We adopted ASU 2016-18 as of December 31, 2017, the first day of fiscal 2018 and retrospectively applied such guidance to our Condensed Consolidated Statements of Cash Flows.

The following table provides a reconciliation of Cash and cash equivalents as previously reported within the Condensed Consolidated Statements of Cash Flows to Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows (in thousands):

	December 30, 2017		September 30, 2017		December 31, 2016
Cash and cash equivalents as previously reported in the Condensed Consolidated Statements of Cash Flows	$	91,184	$	103,083	$	101,408
Current assets - Restricted cash	372		4		106
Restricted cash	1,170		766		1,082
Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows	$	92,726	$	103,853	$	102,596

As of September 29, 2018 and December 30, 2017, Restricted cash was comprised primarily of funds held by our foreign subsidiaries for employee obligations, office leases and customer deposits.

ASU 2016-02, ASU 2018-10 and ASU 2018-11

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. ASU 2016-02 was amended in July 2018 by both ASU 2018-10, "Codification Improvements to Topic 842, Leases," and ASU 2018-11, "Leases (Topic 842): Targeted Improvements." ASU 2016-02 provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced disclosures about our leasing arrangements. Under current accounting standards, substantially all of our leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This new standard is effective for us beginning on December 30, 2018, with early adoption permitted. As initially issued, the standard required a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. As amended, the standard allows an additional transition method that permits a company to use its effective date as the date of initial application, and therefore, not restate comparative prior period financial information. Upon adoption we will use the modified transition method. We are currently assessing the impact on our Consolidated Financial Statements and expect that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases to our Consolidated Balance Sheets resulting in the recording of right-of-use assets and lease liabilities.

XML

Concentration of Credit and Other Risks

9 Months Ended

Sep. 29, 2018

Risks and Uncertainties [Abstract]

Concentration of Credit and Other Risks

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				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Intel	24.5	%	30.6	%	18.0	%	27.4	%
Micron	12.0		*		10.1		*
SK Hynix	*		*		10.2		*
Total revenues attributable to 10% or greater customers	36.5	%	30.6	%	38.3	%	27.4	%

*Represents less than 10% of total revenues.

At September 29, 2018, two customers accounted for 25.4% and 10.2% of gross accounts receivable, respectively. At December 30, 2017, two customers accounted for 24.1% and 13.6% of gross accounts receivable, respectively. No other customers accounted for 10% or more of gross accounts receivable at either of these fiscal period ends.

XML

Inventories

9 Months Ended

Sep. 29, 2018

Inventory Disclosure [Abstract]

Inventories

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):

	September 29, 2018		December 30, 2017
Raw materials	$	44,793	$	33,101
Work-in-progress	21,922		20,134
Finished goods	14,823		14,613
	$	81,538	$	67,848

XML

Goodwill and Intangible Assets

9 Months Ended

Sep. 29, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

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

	Probe Cards		Systems			Total
Goodwill, gross, as of December 31, 2016	$	172,482	$	15,528		$	188,010
Foreign currency translation	—		1,910			1,910
Goodwill, gross, as of December 30, 2017	172,482		17,438			189,920
Foreign currency translation	—		(493		)	(493		)
Goodwill, gross, as of September 29, 2018	$	172,482	$	16,945		$	189,427

We have not recorded any goodwill impairments as of September 29, 2018.

Intangible assets were as follows (in thousands):

	September 29, 2018						December 30, 2017
Other Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	143,577	$	92,074	$	51,503	$	143,966	$	76,826	$	67,140
Trade name	12,042		8,136		3,906		12,086		5,735		6,351
Customer relationships	40,196		20,327		19,869		40,313		16,320		23,993
Backlog	—		—		—		15,811		15,811		—
	$	195,815	$	120,537	$	75,278	$	212,176	$	114,692	$	97,484

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

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	5,123	$	5,473	$	15,418	$	17,411
Selling, general and administrative	2,389		2,043		6,458		6,098
	$	7,512	$	7,516	$	21,876	$	23,509

The estimated future amortization of intangible assets is as follows (in thousands):

Fiscal Year	Amount
Remainder of 2018	$	7,509
2019	26,432
2020	23,421
2021	12,655
2022	3,215
Thereafter	2,046
	$	75,278

XML

Accrued Liabilities

9 Months Ended

Sep. 29, 2018

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	September 29, 2018		December 30, 2017
Accrued compensation and benefits	$	14,002	$	18,141
Accrued warranty	2,457		3,662
Accrued withholding for employee stock purchase plan	1,430		3,279
Accrued income and other taxes	3,397		3,965
Other accrued expenses	3,591		4,647
	$	24,877	$	33,694

XML

Fair Value and Derivative Instruments

9 Months Ended

Sep. 29, 2018

Fair Value Disclosures [Abstract]

Fair Value and Derivative Instruments

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 nine months ended September 29, 2018 or the year ended December 30, 2017.

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

No changes were made to our valuation techniques during the first nine months of fiscal 2018.

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): 

September 29, 2018	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	265	$	—	$	265
Commercial paper	—		999		999
Total cash equivalents	265		999		1,264
Marketable securities:
U.S. Treasuries	4,453		—		4,453
Certificates of deposit	—		1,197		1,197
Agency securities	—		8,994		8,994
Corporate bonds	—		32,186		32,186
Commercial paper	—		3,279		3,279
Total marketable securities	4,453		45,656		50,109
Interest rate swap derivative contracts	—		951		951
Total assets	$	4,718	$	47,606	$	52,324

December 30, 2017	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	1,064	$	—	$	1,064
Corporate bonds	—		774		774
Total cash equivalents	1,064		774		1,838
Marketable securities:
U.S. Treasuries	3,963		—		3,963
Certificates of deposit	—		957		957
Agency securities	—		10,432		10,432
Corporate bonds	—		30,636		30,636
Commercial paper	—		3,000		3,000
Total marketable securities	3,963		45,025		48,988
Foreign exchange derivative contracts	—		31		31
Interest rate swap derivative contracts	—		1,043		1,043
Total assets	$	5,027	$	46,873	$	51,900

We did not have any liabilities measured at fair value on a recurring basis at September 29, 2018 or December 30, 2017.

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 of our investments have a sufficient level of 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 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.

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 Prepaid expenses and other current assets and Other assets 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		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three Months Ended September 29, 2018	$	62	Interest expense	$	196		Interest expense
Three Months Ended September 30, 2017	$	18	Interest expense	$	54		Interest expense
Nine Months Ended September 29, 2018	$	418	Interest expense	$	514		Interest expense
Nine Months Ended September 30, 2017	$	8	Interest expense	$	(32	)	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, 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 income (expense), net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses.

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 September 29, 2018 will mature in the third quarter of fiscal 2018.

The following table provides information about our foreign currency forward contracts outstanding as of September 29, 2018 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Japanese Yen	Sell	(2,241,544	)	$	19,783
Taiwan Dollar	Buy	49,404		(1,626		)
Korean Won	Buy	4,508,988		(4,082		)
Euro Dollar	Sell	(15,050	)	17,574
Total USD notional amount of outstanding foreign exchange contracts				$	31,649

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 location and amount of net income (loss) related to non-designated derivative instruments in the Condensed Consolidated Statements of Income were as follows (in thousands):

		Three Months Ended					Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized on Derivatives	September 29, 2018		September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange forward contracts	Other income (expense), net	$	706	$	(556	)	$	923	$	(2,364	)

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure and report 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. There were no assets or liabilities measured at fair value on a nonrecurring basis during the three or nine months ended September 29, 2018 or September 30, 2017.

XML

Restructuring Charges

9 Months Ended

Sep. 29, 2018

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring Charges

Restructuring charges are comprised of costs related to employee termination benefits as well as contract termination costs, and are included in Restructuring in the Consolidated Statements of Income.

Restructuring charges in the first three quarters of fiscal 2017 related to the consolidation of an acquired subsidiary into our operations.

There were no restructuring charges in the first three quarters of fiscal 2018. Changes to the restructuring accrual in the nine months ended September 29, 2018 were as follows (in thousands):

	Accrual
December 30, 2017	$	399
Cash payments	(399		)
September 29, 2018	$	—

XML

Warranty

9 Months Ended

Sep. 29, 2018

Product Warranties Disclosures [Abstract]

Warranty

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 incurred in correcting a product failure. We continuously monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified field 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):

	Nine Months Ended
	September 29, 2018			September 30, 2017
Balance at beginning of period	$	3,662		$	2,972
Accruals	3,168			4,888
Settlements	(4,373		)	(5,009		)
Balance at end of period	$	2,457		$	2,851

XML

Stockholders' Equity

9 Months Ended

Sep. 29, 2018

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program

In February 2017, our Board of Directors authorized a program to repurchase up to $25 million of outstanding common stock to offset potential dilution from issuances of common stock under our employee stock purchase plan and equity incentive plan. The share repurchase program will expire on February 1, 2020. Repurchased shares are retired upon the settlement of the related transactions with the excess of cost over par value charged to additional paid-in capital. All repurchases are made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

During the nine months ended September 29, 2018, we did not repurchase any shares. As of September 29, 2018, $6.0 million remained available for future repurchases.

Restricted Stock Units

Restricted stock unit ("RSU") activity under our equity incentive plan was as follows:

	Units		Weighted Average Grant Date Fair Value
RSUs at December 30, 2017	3,148,061		$	11.22
Awards granted	1,551,770		13.79
Awards vested	(1,271,132	)	10.45
Awards forfeited	(293,969	)	11.60
RSUs at September 29, 2018	3,134,730		$	12.77

The total fair value of RSUs vested during the nine months ended September 29, 2018 was $17.3 million.

Performance Restricted Stock Units

We may grant Performance RSUs ("PRSUs") to certain executives, which vest based upon us achieving certain market performance criteria.

On August 16, 2018, we granted a total of 318,100 PRSUs to nine senior executives for a total grant date fair value of $4.7 million, which will be recognized ratably over the requisite service period. The performance criteria are based on a metric called Total Shareholder Return ("TSR") for the period from July 1, 2018 to June 30, 2021, relative to the TSR of the companies identified as being part of the S&P Semiconductor Select Industry Index (FormFactor peer companies) as of June 30, 2018.

There were no other PRSUs granted during the nine months ended September 29, 2018.

Stock Options

Stock option activity under our equity incentive plan was as follows:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
Outstanding at December 30, 2017	659,334		$	8.12
Options exercised	(105,610	)	9.93
Outstanding at September 29, 2018	553,724		$	7.77	3.56	$	3,308,931
Exercisable at September 29, 2018	430,104		$	7.67	3.54	$	2,620,928

Employee Stock Purchase Plan

Information related to activity under our Employee Stock Purchase Plan ("ESPP") was as follows:

	Nine Months Ended
	September 29, 2018
Shares issued	610,297
Weighted average per share purchase price	$	12.84
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	2.82

Stock-Based Compensation

Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	832	$	894	$	2,565	$	2,540
Research and development	1,312		1,437		3,870		3,768
Selling, general and administrative	2,393		2,255		5,986		4,971
Total stock-based compensation	$	4,537	$	4,586	$	12,421	$	11,279

Unrecognized Compensation Costs

At September 29, 2018, the unrecognized stock-based compensation was as follows (in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Stock options	$	167	0.36
Restricted stock units	28,035		2.76
Performance restricted stock units	6,580		2.38
Employee stock purchase plan	974		0.34
Total unrecognized stock-based compensation expense	$	35,756	1.76

XML

Net Income (Loss) per Share

9 Months Ended

Sep. 29, 2018

Earnings Per Share [Abstract]

Net Income (Loss) per Share

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 Ended		Nine Months Ended
	September 29, 2018	September 30, 2017	September 29, 2018	September 30, 2017
Weighted-average shares used in computing basic net income per share	73,837	72,651	73,273	72,103
Add potentially dilutive securities	1,125	1,234	1,355	1,437
Weighted-average shares used in computing diluted net income per share	74,962	73,885	74,628	73,540
Securities not included as they would have been antidilutive	5	—	21	77

XML

Commitments and Contingencies

9 Months Ended

Sep. 29, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Contractual Commitments and Purchase Obligations

During the second quarter of 2018, we amended our lease for our Beaverton, Oregon facility, which extended the lease through 2027. During the third quarter of 2018, we amended our lease for our Livermore, California facility, which extended the lease through 2028. Our purchase obligations and other contractual obligations have not materially changed as of September 29, 2018 from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2017. Future minimum payments under our non-cancelable operating leases were as follows as of September 29, 2018 (in thousands):

Fiscal Year	Amount
Remainder of 2018	$	1,698
2019	5,944
2020	5,861
2021	5,663
2022	4,784
Thereafter	24,737
Total	$	48,687

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of September 29, 2018, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

XML

Operating Segments

9 Months Ended

Sep. 29, 2018

Segment Reporting [Abstract]

Operating Segments

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
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	111,606		$	23,383		$	—		$	134,989		$	119,439		$	24,296		$	—		$	143,735
Gross profit	$	47,675		$	11,250		$	(5,955	)	$	52,970		$	51,438		$	12,571		$	(6,379	)	$	57,630
Gross margin	42.7		%	48.1		%	—		%	39.2		%	43.1		%	51.7		%	—		%	40.1		%
Operating income (loss)	$	25,609		$	4,228		$	(20,469	)	$	9,368		$	17,894		$	5,277		$	(8,905	)	$	14,266

	Nine Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	318,120		$	70,668		$	—		$	388,788		$	347,559		$	68,981		$	—		$	416,540
Gross profit	$	138,182		$	34,118		$	(17,983	)	$	154,317		$	151,204		$	36,176		$	(20,412	)	$	166,968
Gross margin	43.4		%	48.3		%	—		%	39.7		%	43.5		%	52.4		%	—		%	40.1		%
Operating income (loss)	$	71,326		$	12,634		$	(59,647	)	$	24,313		$	54,289		$	14,363		$	(27,748	)	$	40,904

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 general and administrative costs, amortization of intangible assets, share-based compensation, acquisition-related costs, including charges related to inventory stepped up to fair value and other costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses.

Certain revenue category information by reportable segment was as follows (in thousands):

	Three Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	61,270	$	—	$	61,270	$	81,914	$	—	$	81,914
DRAM	37,359		—		37,359		32,373		—		32,373
Flash	12,977		—		12,977		5,151		—		5,151
Systems	—		23,383		23,383		—		24,297		24,297
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Timing of revenue recognition:
Products transferred at a point in time	$	111,020	$	22,422	$	133,442	$	118,995	$	23,372	$	142,367
Services transferred over time	586		961		1,547		443		925		1,368
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Geographical region:
United States	$	34,398	$	5,729	$	40,127	$	48,544	$	8,712	$	57,256
Taiwan	18,904		777		19,681		15,951		1,863		17,814
South Korea	19,664		1,437		21,101		21,217		545		21,762
Asia-Pacific1	22,388		6,825		29,213		19,136		4,664		23,800
Europe	5,499		3,629		9,128		6,015		6,079		12,094
Japan	10,462		4,273		14,735		8,419		2,037		10,456
Rest of the world	291		713		1,004		156		397		553
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735

	Nine Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	181,819	$	—	$	181,819	$	244,952	$	—	$	244,952
DRAM	105,716		—		105,716		92,798		—		92,798
Flash	30,585		—		30,585		9,809		—		9,809
Systems	—		70,668		70,668		—		68,981		68,981
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Timing of revenue recognition:
Products transferred at a point in time	$	316,495	$	67,794	$	384,289	$	346,191	$	66,388	$	412,579
Services transferred over time	1,625		2,874		4,499		1,368		2,593		3,961
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Geographical region:
United States	$	89,960	$	16,861	$	106,821	$	126,110	$	21,384	$	147,494
Taiwan	71,300		5,680		76,980		61,568		5,593		67,161
South Korea	58,250		4,317		62,567		60,306		2,909		63,215
Asia-Pacific1	50,956		16,263		67,219		53,620		16,606		70,226
Europe	15,181		14,969		30,150		17,664		13,808		31,472
Japan	31,426		10,523		41,949		27,219		7,847		35,066
Rest of the world	1,047		2,055		3,102		1,072		834		1,906
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540

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

XML

Basis of Presentation and New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 29, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial information of FormFactor, Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 30, 2017 is derived from our 2017 Annual Report on Form 10-K. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2017 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year

Fiscal Year

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2018 and 2017 each contain 52 weeks and the nine months ended September 29, 2018 and September 30, 2017 each contained 39 weeks. Fiscal 2018 will end on December 29, 2018.

Reclassifications

Reclassifications

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

Significant Accounting Policies [Text Block]

Revenue Recognition

Revenue is recognized upon transferring control of products and services, and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. An arrangement may include some or all of the following products and services: probe cards, systems, accessories, installation services, service contracts and extended warranty contracts. We sell our products and services direct to customers and to partners in two distribution channels: global direct sales force and through a combination of manufacturers’ representatives and distributors.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined and accounted for as one unit of account. Generally, the performance obligations in a contract are considered distinct within the context of the contract and are accounted for as separate units of account.

Our products may be customized to our customers’ specifications, however, control of our product is typically transferred to the customer at the point in time the product is either shipped or delivered, depending on the terms of the arrangement, as the criteria for overtime recognition is not met. In limited circumstances, substantive acceptance by the customer exists which results in the deferral of revenue until acceptance is formally received from the customer. Judgment may be required in determining if the acceptance clause is substantive.

Installation services are routinely provided to customers purchasing our systems. Installation services are a distinct performance obligation apart from the systems and recognized in the period they are performed. Service contracts, which include repair and maintenance service contracts, and extended warranty contracts are also distinct performance obligations and recognized as our performance obligations are satisfied. This is typically the contractual service period, which ranges from one to two years. For these service contracts recognized over time, we use an input measure, days elapsed, to measure progress.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In determining the transaction price, we evaluate whether the price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled. We generally do not grant return privileges, except for defective products during the warranty period. Sales incentives and other programs that we may make available to these customers are considered to be a form of variable consideration, which is estimated in determining the contract’s transaction price to be allocated to the performance obligations. We have elected the practical expedient under Accounting Standards Codification (“ASC”) 606-10-32-18 to not assess whether a contract has a significant financing component as our standard payment terms are less than one year.

For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which we separately sell these products. For items that are not sold separately, we estimate the stand-alone selling prices using our best estimate of selling price.

Transaction price allocated to the remaining performance obligations: On September 29, 2018, we had $3.5 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. We expect to recognize approximately 54.4% of our remaining performance obligations as revenue in fiscal 2019, and approximately 13.2% in fiscal 2020 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 September 29, 2018 and December 30, 2017 were $1.4 million and $1.6 million, respectively, and are reported on the Condensed Consolidated Balance Sheet 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 on a contract-by-contract basis at the end of each reporting period as a component of Deferred revenue and Deferred rent and other liabilities. Contract liabilities as of September 29, 2018 and December 30, 2017 were $5.4 million and $5.7 million. During the three and nine months ended September 29, 2018, we recognized $0.2 million and $3.9 million of revenue, respectively, that was included in contract liabilities as of December 30, 2017.

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

New Accounting Pronouncements

New Accounting Pronouncements

ASU 2016-10, ASU 2015-14 and ASU 2014-09

In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," and, in August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard permits the use of either the retrospective or modified retrospective transition methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which was issued to clarify ASC Topic 606, “Revenue from Contracts with Customers” related to (i) identifying performance obligations; and (ii) the licensing implementation guidance. We adopted ASC 606, Revenue from Contracts with Customers and all related amendments (collectively “ASC 606”), on December 31, 2017, the first day of fiscal 2018, using the modified retrospective method. We applied ASC 606 to all contracts not completed as of the date of adoption in order to determine any adjustment to the opening balance of retained earnings. Under the modified retrospective adoption method, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods, ASC 605, "Revenue Recognition", which is also referred to herein as "legacy GAAP."

The adoption of ASC 606 did not have a material impact on our consolidated financial statements as of December 31, 2017. No adjustment was recorded to accumulated deficit as of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption of the revenue standard to have a material impact to our net income on an ongoing basis.

ASU 2017-12

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and changing the presentation to include all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for applying hedge accounting to additional hedging strategies, measuring the hedged item in fair value hedges of interest rate risk, reducing the cost and complexity of applying hedge accounting and reducing the risk of material error correction if a company applies the shortcut method inappropriately. ASU 2017-12 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018, on a prospective basis. We early adopted ASU 2017-12 on December 31, 2017, the first day of fiscal 2018, resulting in an immaterial adjustment in our accumulated deficit on December 30, 2017.

ASU 2017-09

In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting," which provides clarity and reduces both diversity in practice and the cost and complexity when accounting for a change to the terms of a stock-based award. ASU 2017-09 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, on a prospective basis. We adopted ASU 2017-09 on December 31, 2017, the first day of fiscal 2018. There were no modifications to any stock-based awards during the three or nine months ended September 29, 2018.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment," which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We early adopted ASU 2017-04 on July 1, 2018, the first day of the third quarter. The adoption did not have an effect on our financial position, results of operations or cash flows.

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash," which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, an entity should include amounts generally described as restricted cash or restricted cash equivalents within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to this ASU, there was no guidance to address how to classify and present changes in restricted cash or restricted cash equivalents. The updated guidance is effective for interim and annual periods beginning after December 15, 2017. We adopted ASU 2016-18 as of December 31, 2017, the first day of fiscal 2018 and retrospectively applied such guidance to our Condensed Consolidated Statements of Cash Flows.

The following table provides a reconciliation of Cash and cash equivalents as previously reported within the Condensed Consolidated Statements of Cash Flows to Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows (in thousands):

	December 30, 2017		September 30, 2017		December 31, 2016
Cash and cash equivalents as previously reported in the Condensed Consolidated Statements of Cash Flows	$	91,184	$	103,083	$	101,408
Current assets - Restricted cash	372		4		106
Restricted cash	1,170		766		1,082
Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows	$	92,726	$	103,853	$	102,596

As of September 29, 2018 and December 30, 2017, Restricted cash was comprised primarily of funds held by our foreign subsidiaries for employee obligations, office leases and customer deposits.

ASU 2016-02, ASU 2018-10 and ASU 2018-11

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. ASU 2016-02 was amended in July 2018 by both ASU 2018-10, "Codification Improvements to Topic 842, Leases," and ASU 2018-11, "Leases (Topic 842): Targeted Improvements." ASU 2016-02 provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced disclosures about our leasing arrangements. Under current accounting standards, substantially all of our leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This new standard is effective for us beginning on December 30, 2018, with early adoption permitted. As initially issued, the standard required a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. As amended, the standard allows an additional transition method that permits a company to use its effective date as the date of initial application, and therefore, not restate comparative prior period financial information. Upon adoption we will use the modified transition method. We are currently assessing the impact on our Consolidated Financial Statements and expect that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases to our Consolidated Balance Sheets resulting in the recording of right-of-use assets and lease liabilities.

Fair Value Policy

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure and report 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.

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 nine months ended September 29, 2018 or the year ended December 30, 2017.

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

No changes were made to our valuation techniques during the first nine months of fiscal 2018.

XML

Concentration of Credit and Other Risks (Tables)

9 Months Ended

Sep. 29, 2018

Risks and Uncertainties [Abstract]

Schedule of Customer Percentage of Revenue

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

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Intel	24.5	%	30.6	%	18.0	%	27.4	%
Micron	12.0		*		10.1		*
SK Hynix	*		*		10.2		*
Total revenues attributable to 10% or greater customers	36.5	%	30.6	%	38.3	%	27.4	%

XML

Inventories (Tables)

9 Months Ended

Sep. 29, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory Components

Inventories, net, consisted of the following (in thousands):

	September 29, 2018		December 30, 2017
Raw materials	$	44,793	$	33,101
Work-in-progress	21,922		20,134
Finished goods	14,823		14,613
	$	81,538	$	67,848

XML

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 29, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill by Reportable Segments

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

	Probe Cards		Systems			Total
Goodwill, gross, as of December 31, 2016	$	172,482	$	15,528		$	188,010
Foreign currency translation	—		1,910			1,910
Goodwill, gross, as of December 30, 2017	172,482		17,438			189,920
Foreign currency translation	—		(493		)	(493		)
Goodwill, gross, as of September 29, 2018	$	172,482	$	16,945		$	189,427

Schedule of Intangible Assets

Intangible assets were as follows (in thousands):

	September 29, 2018						December 30, 2017
Other Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	143,577	$	92,074	$	51,503	$	143,966	$	76,826	$	67,140
Trade name	12,042		8,136		3,906		12,086		5,735		6,351
Customer relationships	40,196		20,327		19,869		40,313		16,320		23,993
Backlog	—		—		—		15,811		15,811		—
	$	195,815	$	120,537	$	75,278	$	212,176	$	114,692	$	97,484

Schedule of Amortization Expense

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

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	5,123	$	5,473	$	15,418	$	17,411
Selling, general and administrative	2,389		2,043		6,458		6,098
	$	7,512	$	7,516	$	21,876	$	23,509

Schedule of Estimated Amortization of Intangible Assets

The estimated future amortization of intangible assets is as follows (in thousands):

Fiscal Year	Amount
Remainder of 2018	$	7,509
2019	26,432
2020	23,421
2021	12,655
2022	3,215
Thereafter	2,046
	$	75,278

XML

Accrued Liabilities (Tables)

9 Months Ended

Sep. 29, 2018

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accrued liabilities consisted of the following (in thousands):

	September 29, 2018		December 30, 2017
Accrued compensation and benefits	$	14,002	$	18,141
Accrued warranty	2,457		3,662
Accrued withholding for employee stock purchase plan	1,430		3,279
Accrued income and other taxes	3,397		3,965
Other accrued expenses	3,591		4,647
	$	24,877	$	33,694

XML

Fair Value and Derivative Instruments (Tables)

9 Months Ended

Sep. 29, 2018

Fair Value Disclosures [Abstract]

Fair Value Assets Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in thousands): 

September 29, 2018	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	265	$	—	$	265
Commercial paper	—		999		999
Total cash equivalents	265		999		1,264
Marketable securities:
U.S. Treasuries	4,453		—		4,453
Certificates of deposit	—		1,197		1,197
Agency securities	—		8,994		8,994
Corporate bonds	—		32,186		32,186
Commercial paper	—		3,279		3,279
Total marketable securities	4,453		45,656		50,109
Interest rate swap derivative contracts	—		951		951
Total assets	$	4,718	$	47,606	$	52,324

December 30, 2017	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	1,064	$	—	$	1,064
Corporate bonds	—		774		774
Total cash equivalents	1,064		774		1,838
Marketable securities:
U.S. Treasuries	3,963		—		3,963
Certificates of deposit	—		957		957
Agency securities	—		10,432		10,432
Corporate bonds	—		30,636		30,636
Commercial paper	—		3,000		3,000
Total marketable securities	3,963		45,025		48,988
Foreign exchange derivative contracts	—		31		31
Interest rate swap derivative contracts	—		1,043		1,043
Total assets	$	5,027	$	46,873	$	51,900

Schedule of the Impact of Cash Flow Hedges on Consolidated Financial Statements

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		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three Months Ended September 29, 2018	$	62	Interest expense	$	196		Interest expense
Three Months Ended September 30, 2017	$	18	Interest expense	$	54		Interest expense
Nine Months Ended September 29, 2018	$	418	Interest expense	$	514		Interest expense
Nine Months Ended September 30, 2017	$	8	Interest expense	$	(32	)	Interest expense

Schedule of Foreign Currency Forward Contracts

The following table provides information about our foreign currency forward contracts outstanding as of September 29, 2018 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Japanese Yen	Sell	(2,241,544	)	$	19,783
Taiwan Dollar	Buy	49,404		(1,626		)
Korean Won	Buy	4,508,988		(4,082		)
Euro Dollar	Sell	(15,050	)	17,574
Total USD notional amount of outstanding foreign exchange contracts				$	31,649

Schedule of Gains and Losses Related to Non-designated Derivative Instruments

		Three Months Ended					Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized on Derivatives	September 29, 2018		September 30, 2017			September 29, 2018		September 30, 2017
Foreign exchange forward contracts	Other income (expense), net	$	706	$	(556	)	$	923	$	(2,364	)

XML

Restructuring Charges (Tables)

9 Months Ended

Sep. 29, 2018

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Accrual Activity

Changes to the restructuring accrual in the nine months ended September 29, 2018 were as follows (in thousands):

	Accrual
December 30, 2017	$	399
Cash payments	(399		)
September 29, 2018	$	—

XML

Warranty (Tables)

9 Months Ended

Sep. 29, 2018

Product Warranties Disclosures [Abstract]

Reconciliation of Changes in Warranty Liability

Changes in our warranty liability were as follows (in thousands):

	Nine Months Ended
	September 29, 2018			September 30, 2017
Balance at beginning of period	$	3,662		$	2,972
Accruals	3,168			4,888
Settlements	(4,373		)	(5,009		)
Balance at end of period	$	2,457		$	2,851

XML

Stockholders' Equity (Tables)

9 Months Ended

Sep. 29, 2018

Equity [Abstract]

Schedule of Restricted Stock Unit Activity

Restricted stock unit ("RSU") activity under our equity incentive plan was as follows:

	Units		Weighted Average Grant Date Fair Value
RSUs at December 30, 2017	3,148,061		$	11.22
Awards granted	1,551,770		13.79
Awards vested	(1,271,132	)	10.45
Awards forfeited	(293,969	)	11.60
RSUs at September 29, 2018	3,134,730		$	12.77

Schedule of Stock Option Activity

Stock option activity under our equity incentive plan was as follows:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
Outstanding at December 30, 2017	659,334		$	8.12
Options exercised	(105,610	)	9.93
Outstanding at September 29, 2018	553,724		$	7.77	3.56	$	3,308,931
Exercisable at September 29, 2018	430,104		$	7.67	3.54	$	2,620,928

Schedule of ESPP Activity

Information related to activity under our Employee Stock Purchase Plan ("ESPP") was as follows:

	Nine Months Ended
	September 29, 2018
Shares issued	610,297
Weighted average per share purchase price	$	12.84
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	2.82

Schedule of Stock-based Compensation

Stock-based compensation was included in our Condensed Consolidated Statements of Income as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017
Cost of revenues	$	832	$	894	$	2,565	$	2,540
Research and development	1,312		1,437		3,870		3,768
Selling, general and administrative	2,393		2,255		5,986		4,971
Total stock-based compensation	$	4,537	$	4,586	$	12,421	$	11,279

Schedule of Unrecognized Stock-based Compensation

At September 29, 2018, the unrecognized stock-based compensation was as follows (in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Stock options	$	167	0.36
Restricted stock units	28,035		2.76
Performance restricted stock units	6,580		2.38
Employee stock purchase plan	974		0.34
Total unrecognized stock-based compensation expense	$	35,756	1.76

XML

Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 29, 2018

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings 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 Ended		Nine Months Ended
	September 29, 2018	September 30, 2017	September 29, 2018	September 30, 2017
Weighted-average shares used in computing basic net income per share	73,837	72,651	73,273	72,103
Add potentially dilutive securities	1,125	1,234	1,355	1,437
Weighted-average shares used in computing diluted net income per share	74,962	73,885	74,628	73,540
Securities not included as they would have been antidilutive	5	—	21	77

XML

Operating Segments (Tables)

9 Months Ended

Sep. 29, 2018

Segment Reporting [Abstract]

Schedule of Operating Results by Segment

The following table summarizes the operating results by reportable segment (dollars in thousands):

	Three Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	111,606		$	23,383		$	—		$	134,989		$	119,439		$	24,296		$	—		$	143,735
Gross profit	$	47,675		$	11,250		$	(5,955	)	$	52,970		$	51,438		$	12,571		$	(6,379	)	$	57,630
Gross margin	42.7		%	48.1		%	—		%	39.2		%	43.1		%	51.7		%	—		%	40.1		%
Operating income (loss)	$	25,609		$	4,228		$	(20,469	)	$	9,368		$	17,894		$	5,277		$	(8,905	)	$	14,266

	Nine Months Ended
	September 29, 2018												September 30, 2017
	Probe Cards			Systems			Corporate and Other			Total			Probe Cards			Systems			Corporate and Other			Total
Revenues	$	318,120		$	70,668		$	—		$	388,788		$	347,559		$	68,981		$	—		$	416,540
Gross profit	$	138,182		$	34,118		$	(17,983	)	$	154,317		$	151,204		$	36,176		$	(20,412	)	$	166,968
Gross margin	43.4		%	48.3		%	—		%	39.7		%	43.5		%	52.4		%	—		%	40.1		%
Operating income (loss)	$	71,326		$	12,634		$	(59,647	)	$	24,313		$	54,289		$	14,363		$	(27,748	)	$	40,904

Disaggregation of Revenue by Segment

Certain revenue category information by reportable segment was as follows (in thousands):

	Three Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	61,270	$	—	$	61,270	$	81,914	$	—	$	81,914
DRAM	37,359		—		37,359		32,373		—		32,373
Flash	12,977		—		12,977		5,151		—		5,151
Systems	—		23,383		23,383		—		24,297		24,297
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Timing of revenue recognition:
Products transferred at a point in time	$	111,020	$	22,422	$	133,442	$	118,995	$	23,372	$	142,367
Services transferred over time	586		961		1,547		443		925		1,368
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735
Geographical region:
United States	$	34,398	$	5,729	$	40,127	$	48,544	$	8,712	$	57,256
Taiwan	18,904		777		19,681		15,951		1,863		17,814
South Korea	19,664		1,437		21,101		21,217		545		21,762
Asia-Pacific1	22,388		6,825		29,213		19,136		4,664		23,800
Europe	5,499		3,629		9,128		6,015		6,079		12,094
Japan	10,462		4,273		14,735		8,419		2,037		10,456
Rest of the world	291		713		1,004		156		397		553
Total	$	111,606	$	23,383	$	134,989	$	119,438	$	24,297	$	143,735

	Nine Months Ended
	September 29, 2018						September 30, 2017
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	181,819	$	—	$	181,819	$	244,952	$	—	$	244,952
DRAM	105,716		—		105,716		92,798		—		92,798
Flash	30,585		—		30,585		9,809		—		9,809
Systems	—		70,668		70,668		—		68,981		68,981
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Timing of revenue recognition:
Products transferred at a point in time	$	316,495	$	67,794	$	384,289	$	346,191	$	66,388	$	412,579
Services transferred over time	1,625		2,874		4,499		1,368		2,593		3,961
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540
Geographical region:
United States	$	89,960	$	16,861	$	106,821	$	126,110	$	21,384	$	147,494
Taiwan	71,300		5,680		76,980		61,568		5,593		67,161
South Korea	58,250		4,317		62,567		60,306		2,909		63,215
Asia-Pacific1	50,956		16,263		67,219		53,620		16,606		70,226
Europe	15,181		14,969		30,150		17,664		13,808		31,472
Japan	31,426		10,523		41,949		27,219		7,847		35,066
Rest of the world	1,047		2,055		3,102		1,072		834		1,906
Total	$	318,120	$	70,668	$	388,788	$	347,559	$	68,981	$	416,540

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

XML

Basis of Presentation and New Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 29, 2018	Sep. 29, 2018	Dec. 26, 2020	Dec. 28, 2019	Dec. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Performance obligations	$ 3.5	$ 3.5
Contract assets	1.4	1.4			$ 1.6
Contract liabilities	5.4	5.4			$ 5.7
Revenue recognized included in contracts	$ 0.2	$ 3.9
Forecast
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Expected to be recognized			13.20%	54.40%

XML

Basis of Presentation and New Accounting Pronouncements - ASU 2016-18 Information (Details) - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017	Sep. 30, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents as previously reported in the Condensed Consolidated Statements of Cash Flows	$ 91,990	$ 91,184	$ 103,083	$ 101,408
Current assets - Restricted cash	129	372	4	106
Restricted cash	1,034	1,170	766	1,082
Cash, cash equivalents and restricted cash as currently reported in the Condensed Consolidated Statements of Cash Flows	$ 93,153	$ 92,726	$ 103,853	$ 102,596

XML

Concentration of Credit and Other Risks (Details) - Customer Concentration Risk	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 30, 2017
Revenues
Concentration Risk [Line Items]
Concentration risk percentage	36.50%	30.60%	38.30%	27.40%
Revenues | Intel
Concentration Risk [Line Items]
Concentration risk percentage	24.50%	30.60%	18.00%	27.40%
Revenues | Micron
Concentration Risk [Line Items]
Concentration risk percentage	12.00%		10.10%
Revenues | Micron
Concentration Risk [Line Items]
Concentration risk percentage			10.20%
Accounts Receivable | Major Customer 1
Concentration Risk [Line Items]
Concentration risk percentage			25.40%		24.10%
Accounts Receivable | Major Customer 2
Concentration Risk [Line Items]
Concentration risk percentage			10.20%		13.60%

XML

Inventories (Details) - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 44,793	$ 33,101
Work-in-progress	21,922	20,134
Finished goods	14,823	14,613
Inventories	$ 81,538	$ 67,848

XML

Goodwill and Intangible Assets - Goodwill (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 29, 2018	Dec. 30, 2017
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 189,920,000	$ 188,010,000
Foreign currency translation	(493,000)	1,910,000
Goodwill, ending balance	189,427,000	189,920,000
Goodwill impairment	0
Probe Cards
Goodwill [Roll Forward]
Goodwill, beginning balance	172,482,000	172,482,000
Foreign currency translation	0	0
Goodwill, ending balance	172,482,000	172,482,000
Systems
Goodwill [Roll Forward]
Goodwill, beginning balance	17,438,000	15,528,000
Foreign currency translation	(493,000)	1,910,000
Goodwill, ending balance	$ 16,945,000	$ 17,438,000

XML

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 195,815	$ 212,176
Accumulated Amortization	120,537	114,692
Intangible Assets, Net	75,278	97,484
Existing developed technologies
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	143,577	143,966
Accumulated Amortization	92,074	76,826
Intangible Assets, Net	51,503	67,140
Trade name
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	12,042	12,086
Accumulated Amortization	8,136	5,735
Intangible Assets, Net	3,906	6,351
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	40,196	40,313
Accumulated Amortization	20,327	16,320
Intangible Assets, Net	19,869	23,993
Backlog
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	0	15,811
Accumulated Amortization	0	15,811
Intangible Assets, Net	$ 0	$ 0

XML

Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 30, 2017
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 7,512	$ 7,516	$ 21,876	$ 23,509
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
Remainder of 2018	7,509		7,509
2019	26,432		26,432
2020	23,421		23,421
2021	12,655		12,655
2022	3,215		3,215
Thereafter	2,046		2,046
Intangible Assets, Net	75,278		75,278		$ 97,484
Cost of revenues
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	5,123	5,473	15,418	17,411
Selling, general and administrative
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 2,389	$ 2,043	$ 6,458	$ 6,098

XML

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 29, 2018	Dec. 30, 2017
Payables and Accruals [Abstract]
Accrued compensation and benefits	$ 14,002	$ 18,141
Accrued warranty	2,457	3,662
Accrued withholding for employee stock purchase plan	1,430	3,279
Accrued income and other taxes	3,397	3,965
Other accrued expenses	3,591	4,647
Accrued liabilities	$ 24,877	$ 33,694

XML

Fair Value and Derivative Instruments - Fair Value Assets Measured on Recurring Basis (Details) - USD ($)	Sep. 29, 2018	Dec. 30, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	$ 1,264,000	$ 1,838,000
Marketable securities	50,109,000	48,988,000
Total assets measured at fair value	52,324,000	51,900,000
Liabilities measured at fair value on recurring basis		0
Interest rate swap derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	951,000	1,043,000
Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts		31,000
Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	265,000	1,064,000
Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		774,000
Marketable securities		30,636,000
US Treasury Bill Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	4,453,000	3,963,000
Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	1,197,000	957,000
Agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	8,994,000	10,432,000
Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	32,186,000
Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	999,000
Marketable securities	3,279,000	3,000,000
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	265,000	1,064,000
Marketable securities	4,453,000	3,963,000
Total assets measured at fair value	4,718,000	5,027,000
Level 1 | Interest rate swap derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	0	0
Level 1 | Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts		0
Level 1 | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	265,000	1,064,000
Level 1 | Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		0
Marketable securities		0
Level 1 | US Treasury Bill Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	4,453,000	3,963,000
Level 1 | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Level 1 | Agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Level 1 | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0
Level 1 | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0
Marketable securities	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	999,000	774,000
Marketable securities	45,656,000	45,025,000
Total assets measured at fair value	47,606,000	46,873,000
Level 2 | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0	0
Level 2 | Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		774,000
Marketable securities		30,636,000
Level 2 | US Treasury Bill Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Level 2 | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	1,197,000	957,000
Level 2 | Agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	8,994,000	10,432,000
Level 2 | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	32,186,000
Level 2 | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	999,000
Marketable securities	3,279,000	3,000,000
Designated as Hedging Instrument | Interest rate swap derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	$ 951,000
Designated as Hedging Instrument | Level 2 | Interest rate swap derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts		1,043,000
Designated as Hedging Instrument | Level 2 | Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts		$ 31,000

XML

Restructuring Charges (Details) $ in Thousands	9 Months Ended
	Sep. 29, 2018 USD ($)
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	$ 399
Cash payments	(399)
Accrual at end of period	$ 0

XML

Fair Value and Derivative Instruments - Impact of Cash Flow Hedges and Derivatives (Details) - Interest Rate Contracts - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017	Dec. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	$ 951		$ 951		$ 1,043
Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	951		951
Designated as Hedging Instrument | Cash Flow Hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	62	$ 18	418	$ 8
Designated as Hedging Instrument | Cash Flow Hedging | Other Income (Expense), Net [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	$ 196	$ 54	$ 514	$ (32)

XML

Fair Value and Derivative Instruments - Foreign Currency Forward Contracts (Details) - Sep. 29, 2018 - Foreign exchange forward contracts € in Thousands, ₩ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands	USD ($)	KRW (₩)	TWD ($)	EUR (€)	JPY (¥)
Derivative [Line Items]
Contract amount (in various currencies)	$ 31,649
Sell | Japanese Yen
Derivative [Line Items]
Contract amount (in various currencies)	19,783				¥ (2,241,544)
Sell | Euro Dollar
Derivative [Line Items]
Contract amount (in various currencies)	17,574			€ (15,050)
Buy | Taiwan Dollar
Derivative [Line Items]
Contract amount (in various currencies)	(1,626)		$ 49,404
Buy | Korean Won
Derivative [Line Items]
Contract amount (in various currencies)	$ (4,082)	₩ 4,508,988

XML

Fair Value and Derivative Instruments - Gains and Losses Related to Non-designated Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Derivatives Not Designated as Hedging Instruments | Foreign exchange forward contracts | Other income (expense), net
Derivatives, Fair Value [Line Items]
Foreign exchange forward contracts	$ 706	$ (556)	$ 923	$ (2,364)

XML

Fair Value and Derivative Instruments - Assets Measured at Fair Value on a Non-Recurring Basis (Details) - USD ($)	Sep. 29, 2018	Dec. 30, 2017	Sep. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities measured at fair value on recurring basis		$ 0
Assets measured at fair value on non-recurring basis	$ 52,324,000	$ 51,900,000
Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on non-recurring basis	$ 0		$ 0

XML

Warranty (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 3,662	$ 2,972
Accruals	3,168	4,888
Settlements	(4,373)	(5,009)
Balance at end of period	$ 2,457	$ 2,851

XML

Stockholders' Equity - Additional Information (Details) - USD ($)		9 Months Ended
	Aug. 16, 2018	Sep. 29, 2018	Feb. 28, 2017
Equity Incentive Plan | Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total fair value of restricted stock units vested during the period		$ 17,300,000
Awards granted (in shares)		1,551,770
Awards granted (in dollars per share)		$ 13.79
Equity Incentive Plan | PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	318,100
Awards granted (in dollars per share)	$ 4,700,000
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program authorized amount			$ 25,000,000
Amount remaining for future repurchases		$ 6,000,000

XML

Stockholders' Equity - Restricted Stock Unit Activity (Details) - Equity Incentive Plan - Restricted Stock Units	9 Months Ended
	Sep. 29, 2018 $ / shares shares
Units
Beginning balance (in shares) | shares	3,148,061
Awards granted (in shares) | shares	1,551,770
Awards vested (in shares) | shares	(1,271,132)
Awards canceled (in shares) | shares	(293,969)
Ending balance (in shares) | shares	3,134,730
Weighted Average Grant Date Fair Value
Beginning Balance (in dollars per share) | $ / shares	$ 11.22
Awards granted (in dollars per share) | $ / shares	13.79
Awards vested (in dollars per share) | $ / shares	10.45
Awards canceled (in dollars per share) | $ / shares	11.60
Ending Balance (in dollars per share) | $ / shares	$ 12.77

XML

Stockholders' Equity - Stock Option Activity (Details) - Equity Incentive Plan $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 29, 2018 USD ($) $ / shares shares
Options Outstanding
Outstanding, beginning of period (In shares) | shares	659,334
Options exercised (In shares) | shares	(105,610)
Outstanding, end of period (In shares) | shares	553,724
Exercisable (In shares) | shares	430,104
Weighted Average Exercise Price
Outstanding, beginning of period (In dollars per share) | $ / shares	$ 8.12
Options exercised (In dollars per share) | $ / shares	9.93
Outstanding, end of period (In dollars per share) | $ / shares	7.77
Exercisable (In dollars per share) | $ / shares	$ 7.67
Additional Disclosures
Outstanding, weighted average remaining contractual life	3 years 6 months 22 days
Exercisable, weighted average remaining contractual life	3 years 6 months 16 days
Outstanding, aggregate intrinsic value | $	$ 3,308,931
Exercisable, aggregate intrinsic value | $	$ 2,620,928

XML

Stockholders' Equity - ESPP Activity (Details) - Employee stock purchase plan	9 Months Ended
	Sep. 29, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued under ESPP (In shares) | shares	610,297
Weighted average per share purchase price (in dollars per share)	$ 12.84
Weighted average per share discount from the fair value of our common stock on the date of issuance (in dollars per share)	$ 2.82

XML

Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 4,537	$ 4,586	$ 12,421	$ 11,279
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	832	894	2,565	2,540
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	1,312	1,437	3,870	3,768
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation	$ 2,393	$ 2,255	$ 5,986	$ 4,971

XML

Stockholders' Equity - Unrecognized Compensation Costs (Details) $ in Thousands	9 Months Ended
	Sep. 29, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation expense	$ 35,756
Average expected recognition period	1 year 9 months 4 days
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized expense, stock options	$ 167
Average expected recognition period	4 months 9 days
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized expense, other than options	$ 28,035
Average expected recognition period	2 years 9 months 5 days
Performance restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized expense, other than options	$ 6,580
Average expected recognition period	2 years 4 months 18 days
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized expense, other than options	$ 974
Average expected recognition period	4 months 2 days

XML

Net Income (Loss) per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Weighted-average shares used in computing basic net income (loss) per share (In shares)	73,837	72,651	73,273	72,103
Add potentially dilutive securities (In shares)	1,125	1,234	1,355	1,437
Weighted-average shares used in computing diluted net income per share (In shares)	74,962	73,885	74,628	73,540
Anti-dilutive securities (In shares)	5	0	21	77

XML

Commitments and Contingencies (Details) $ in Thousands	Sep. 29, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2018	$ 1,698
2019	5,944
2020	5,861
2021	5,663
2022	4,784
Thereafter	24,737
Total	$ 48,687

XML

Operating Segments - Additional Information (Details)	9 Months Ended
	Sep. 29, 2018 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

Operating Segments - Operating Results by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Revenues	$ 134,989	$ 143,735	$ 388,788	$ 416,540
Gross profit	$ 52,970	$ 57,630	$ 154,317	$ 166,968
Gross margin	39.20%	40.10%	39.70%	40.10%
Operating income (loss)	$ 9,368	$ 14,266	$ 24,313	$ 40,904
Probe Cards
Segment Reporting Information [Line Items]
Revenues	111,606	119,438	318,120	347,559
Systems
Segment Reporting Information [Line Items]
Revenues	23,383	24,297	70,668	68,981
Corporate and Other
Segment Reporting Information [Line Items]
Revenues	0	0	0	0
Gross profit	$ (5,955)	$ (6,379)	$ (17,983)	$ (20,412)
Gross margin	0.00%	0.00%	0.00%	0.00%
Operating income (loss)	$ (20,469)	$ (8,905)	$ (59,647)	$ (27,748)
Operating Segments | Probe Cards
Segment Reporting Information [Line Items]
Revenues	111,606	119,439	318,120	347,559
Gross profit	$ 47,675	$ 51,438	$ 138,182	$ 151,204
Gross margin	42.70%	43.10%	43.40%	43.50%
Operating income (loss)	$ 25,609	$ 17,894	$ 71,326	$ 54,289
Operating Segments | Systems
Segment Reporting Information [Line Items]
Revenues	23,383	24,296	70,668	68,981
Gross profit	$ 11,250	$ 12,571	$ 34,118	$ 36,176
Gross margin	48.10%	51.70%	48.30%	52.40%
Operating income (loss)	$ 4,228	$ 5,277	$ 12,634	$ 14,363

XML

Operating Segments - Revenue by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2018	Sep. 30, 2017	Sep. 29, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Revenues	$ 134,989	$ 143,735	$ 388,788	$ 416,540
Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	111,606	119,438	318,120	347,559
Systems
Disaggregation of Revenue [Line Items]
Revenues	23,383	24,297	70,668	68,981
Corporate and Other
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
United States
Disaggregation of Revenue [Line Items]
Revenues	40,127	57,256	106,821	147,494
United States | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	34,398	48,544	89,960	126,110
United States | Systems
Disaggregation of Revenue [Line Items]
Revenues	5,729	8,712	16,861	21,384
Taiwan
Disaggregation of Revenue [Line Items]
Revenues	19,681	17,814	76,980	67,161
Taiwan | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	18,904	15,951	71,300	61,568
Taiwan | Systems
Disaggregation of Revenue [Line Items]
Revenues	777	1,863	5,680	5,593
South Korea
Disaggregation of Revenue [Line Items]
Revenues	21,101	21,762	62,567	63,215
South Korea | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	19,664	21,217	58,250	60,306
South Korea | Systems
Disaggregation of Revenue [Line Items]
Revenues	1,437	545	4,317	2,909
Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	29,213	23,800	67,219	70,226
Asia-Pacific | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	22,388	19,136	50,956	53,620
Asia-Pacific | Systems
Disaggregation of Revenue [Line Items]
Revenues	6,825	4,664	16,263	16,606
Europe
Disaggregation of Revenue [Line Items]
Revenues	9,128	12,094	30,150	31,472
Europe | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	5,499	6,015	15,181	17,664
Europe | Systems
Disaggregation of Revenue [Line Items]
Revenues	3,629	6,079	14,969	13,808
Japan
Disaggregation of Revenue [Line Items]
Revenues	14,735	10,456	41,949	35,066
Japan | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	10,462	8,419	31,426	27,219
Japan | Systems
Disaggregation of Revenue [Line Items]
Revenues	4,273	2,037	10,523	7,847
Rest of the world
Disaggregation of Revenue [Line Items]
Revenues	1,004	553	3,102	1,906
Rest of the world | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	291	156	1,047	1,072
Rest of the world | Systems
Disaggregation of Revenue [Line Items]
Revenues	713	397	2,055	834
Products transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	133,442	142,367	384,289	412,579
Products transferred at a point in time | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	111,020	118,995	316,495	346,191
Products transferred at a point in time | Systems
Disaggregation of Revenue [Line Items]
Revenues	22,422	23,372	67,794	66,388
Services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	1,547	1,368	4,499	3,961
Services transferred over time | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	586	443	1,625	1,368
Services transferred over time | Systems
Disaggregation of Revenue [Line Items]
Revenues	961	925	2,874	2,593
Foundry & Logic
Disaggregation of Revenue [Line Items]
Revenues	61,270	81,914	181,819	244,952
Foundry & Logic | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	61,270	81,914	181,819	244,952
Foundry & Logic | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
DRAM
Disaggregation of Revenue [Line Items]
Revenues	37,359	32,373	105,716	92,798
DRAM | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	37,359	32,373	105,716	92,798
DRAM | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Flash
Disaggregation of Revenue [Line Items]
Revenues	12,977	5,151	30,585	9,809
Flash | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	12,977	5,151	30,585	9,809
Flash | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Systems
Disaggregation of Revenue [Line Items]
Revenues	23,383	24,297	70,668	68,981
Systems | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Systems | Systems
Disaggregation of Revenue [Line Items]
Revenues	23,383	24,297	70,668	68,981
Operating Segments | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	111,606	119,439	318,120	347,559
Operating Segments | Systems
Disaggregation of Revenue [Line Items]
Revenues	$ 23,383	$ 24,296	$ 70,668	$ 68,981