10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 Form 10-Q

(Mark one)

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

For the quarterly period ended March 26, 2022

Or 

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

For the transition period from            to            

Commission file number: 000-50307

FormFactor, Inc.

(Exact name of registrant as specified in its charter)

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

7005 Southfront Road, Livermore, California 94551

(Address of principal executive offices, including zip code)

(925) 290-4000

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	FORM	Nasdaq Global Market

 ______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒  No ☐

Indicate by check mark whether the registrant submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of the Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☒	Accelerated Filer	☐	Non-accelerated Filer	☐
Smaller Reporting Company	☐	Emerging Growth Company	☐

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

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

As of April 27, 2022, 78,063,870 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 MARCH 26, 2022

INDEX

Part I.	Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of March 26, 2022 and December 25, 2021	3
	Condensed Consolidated Statements of Income for the three months ended March 26, 2022 and March 27, 2021	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 26, 2022 and March 27, 2021	5
	Condensed Consolidated Statement of Stockholders' Equity for the three months ended March 26, 2022 and March 27, 2021	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 26, 2022 and March 27, 2021	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
Part II.	Other Information	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and use of proceeds	29
Item 6.	Exhibits	30
Signatures		31

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FORMFACTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	March 26, 2022		December 25, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	167,182	$	151,010
Marketable securities	129,174		125,055
Accounts receivable, net of allowance for credit losses of $194 and $195	113,505		115,541
Inventories, net	125,590		111,548
Restricted cash	2,026		2,233
Prepaid expenses and other current assets	18,671		18,652
Total current assets	556,148		524,039
Restricted cash	2,053		2,099
Operating lease, right-of-use-assets	35,764		35,210
Property, plant and equipment, net of accumulated depreciation	152,179		146,555
Goodwill	211,553		212,299
Intangibles, net	33,638		36,342
Deferred tax assets	62,746		61,995
Other assets	2,799		1,981
Total assets	$	1,056,880	$	1,020,520
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	65,378	$	57,862
Accrued liabilities	47,438		50,836
Current portion of term loans, net of unamortized issuance costs	6,790		8,931
Deferred revenue	27,002		23,224
Operating lease liabilities	8,049		7,901
Total current liabilities	154,657		148,754
Term loans, less current portion, net of unamortized issuance costs	15,175		15,434
Deferred tax liabilities	3,131		3,623
Long-term operating lease liabilities	31,366		31,009
Other liabilities	5,878		5,920
Total liabilities	210,207		204,740
Stockholders’ equity:
Common stock, $0.001 par value:
250,000,000 shares authorized; 78,166,212 and 78,240,506 shares issued and outstanding	78		78
Additional paid-in capital	902,994		898,945
Accumulated other comprehensive loss	(4,477)		(1,449)
Accumulated deficit	(51,922)		(81,794)
Total stockholders’ equity	846,673		815,780
Total liabilities and stockholders’ equity	$	1,056,880	$	1,020,520

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
	March 26, 2022		March 27, 2021
Revenues	$	197,174	$	186,636
Cost of revenues	102,950		109,930
Gross profit	94,224		76,706
Operating expenses:
Research and development	27,134		24,046
Selling, general and administrative	32,906		30,015
Total operating expenses	60,040		54,061
Operating income	34,184		22,645
Interest income	138		194
Interest expense	(192)		(180)
Other income, net	192		172
Income before income taxes	34,322		22,831
Provision for income taxes	4,450		3,206
Net income	$	29,872	$	19,625
Net income per share:
Basic	$	0.38	$	0.25
Diluted	$	0.38	$	0.25
Weighted-average number of shares used in per share calculations:
Basic	78,246		77,598
Diluted	79,468		79,988

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
	March 26, 2022		March 27, 2021
Net income	$	29,872	$	19,625
Other comprehensive loss, net of tax:
Translation adjustments and other	(2,698)		(2,379)
Unrealized losses on available-for-sale marketable securities	(1,204)		(131)
Unrealized gains (losses) on derivative instruments	874		(226)
Other comprehensive loss, net of tax	(3,028)		(2,736)
Comprehensive income	$	26,844	$	16,889

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

5

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except shares)

(Unaudited)

	Shares of Common Stock	Common Stock		Shares of Treasury Stock	Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive  Income (Loss)		Accumulated Deficit		Total
	Three Months Ended March 26, 2022
Balances, December 25, 2021	78,240,506	$	78	—	$	—	$	898,945	$	(1,449)	$	(81,794)	$	815,780
Issuance of common stock under the Employee Stock Purchase Plan	157,642	—		—	—		5,645		—		—		5,645
Issuance of common stock pursuant to exercise of options	6,000	—		—	—		42		—		—		42
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	2,612	—		—	—		(72)		—		—		(72)
Purchase and retirement of common stock through repurchase program	(240,548)	—		—	—		(9,397)		—		—		(9,397)
Stock-based compensation	—	—		—	—		7,831		—		—		7,831
Other comprehensive loss	—	—		—	—		—		(3,028)		—		(3,028)
Net income	—	—		—	—		—		—		29,872		29,872
Balances, March 26, 2022	78,166,212	$	78	—	$	—	$	902,994	$	(4,477)	$	(51,922)	$	846,673

	Shares of Common Stock	Common Stock		Shares of Treasury Stock	Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive  Income (Loss)		Accumulated Deficit		Total
	Three Months Ended March 27, 2021
Balances, December 26, 2020	77,437,997	$	78	—	$	—	$	903,838	$	5,886	$	(165,718)	$	744,084
Issuance of common stock under the Employee Stock Purchase Plan	228,784	—		—	—		5,065		—		—		5,065
Issuance of common stock pursuant to exercise of options	50,000	—		—	—		422		—		—		422
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	41,749	—		—	—		(1,141)		—		—		(1,141)
Purchase of common stock through repurchase program	—	—		(136,402)	(5,738)		—		—		—		(5,738)
Stock-based compensation	—	—		—	—		6,952		—		—		6,952
Other comprehensive income	—	—		—	—		—		(2,736)		—		(2,736)
Net income	—	—		—	—		—		—		19,625		19,625
Balances, March 27, 2021	77,758,530	$	78	(136,402)	$	(5,738)	$	915,136	$	3,150	$	(146,093)	$	766,533

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

6

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	March 26, 2022		March 27, 2021
Cash flows from operating activities:
Net income	$	29,872	$	19,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	6,960		6,130
Amortization	2,369		6,805
Reduction in the carrying amount of right-of-use assets	2,492		1,811
Stock-based compensation expense	7,520		7,077
Provision for excess and obsolete inventories	2,501		3,394
Non-cash restructuring charges	150		—
Other adjustments to reconcile net income to net cash provided by operating activities	32		2,140
Changes in assets and liabilities:
Accounts receivable	966		3,576
Inventories	(17,080)		(9,911)
Prepaid expenses and other current assets	(144)		3,011
Other assets	(73)		(50)
Accounts payable	10,150		5,722
Accrued liabilities	(3,120)		(12,732)
Other liabilities	87		114
Deferred revenues	3,908		(2,411)
Operating lease liabilities	(2,435)		(1,945)
Net cash provided by operating activities	44,155		32,356
Cash flows from investing activities:
Acquisition of property, plant and equipment	(15,606)		(13,470)
Purchases of marketable securities	(23,462)		(41,062)
Proceeds from maturities and sales of marketable securities	17,990		14,610
Net cash used in investing activities	(21,078)		(39,922)
Cash flows from financing activities:
Proceeds from issuances of common stock	5,687		5,487
Purchase of common stock through stock repurchase program	(9,397)		(5,738)
Tax withholdings related to net share settlements of equity awards	(72)		(1,141)
Principal repayments on term loans	(2,234)		(2,376)
Net cash used in financing activities	(6,016)		(3,768)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,142)		(1,456)
Net increase (decrease) in cash, cash equivalents and restricted cash	15,919		(12,790)
Cash, cash equivalents and restricted cash, beginning of period	155,342		191,098
Cash, cash equivalents and restricted cash, end of period	$	171,261	$	178,308

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)

	Three Months Ended
	March 26, 2022		March 27, 2021
Non-cash investing and financing activities:
Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases	$	(2,524)	$	1,087
Operating lease, right-of-use assets obtained in exchange for lease obligations	3,359		8,572
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	890	$	1,034
Cash paid for interest	163		173
Operating cash outflows from operating leases	2,094		2,201
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	167,182	$	173,616
Restricted cash, current	2,026		2,798
Restricted cash, non-current	2,053		1,894
Total cash, cash equivalents and restricted cash	$	171,261	$	178,308

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 (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2021 Annual Report on Form 10-K filed with the SEC on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year 

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the three months ended March 26, 2022 and March 27, 2021 each contained 13 weeks. Fiscal 2022 will end on December 31, 2022.

Significant Accounting Policies

Our significant accounting policies have not changed during the three months ended March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Reclassifications

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

New Accounting Pronouncements

ASU 2020-04

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

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption impact of the new standard will depend on the magnitude of future acquisitions. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

9

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
	March 26, 2022		March 27, 2021
Intel Corporation	20.8	%	28.1	%
Taiwan Semiconductor Manufacturing Co., LTD.	10.7	%	11.5	%
	31.5	%	39.6	%

At March 26, 2022, one customer accounted for 22.8% of gross accounts receivable. At December 25, 2021, one customer accounted for 13.8% of gross accounts receivable.

Note 3 — Inventories, net

Inventories are stated at the lower of cost (principally standard cost, which approximates actual cost on a first in, first out basis) or net realizable value.

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

	March 26, 2022		December 25, 2021
Raw materials	$	60,976	$	57,673
Work-in-progress	41,875		35,935
Finished goods	22,739		17,940
	$	125,590	$	111,548

Note 4 — Goodwill and Intangible Assets

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

	Probe Cards		Systems		Total
Goodwill, as of December 26, 2020	$	178,072	$	34,689	$	212,761
Addition - Baldwin Park Acquisition	352		—		352
Addition - HPD Acquisition	—		1,254		1,254
Foreign currency translation	—		(2,068)		(2,068)
Goodwill, as of December 25, 2021	178,424		33,875		212,299
Foreign currency translation	—		(746)		(746)
Goodwill, as of March 26, 2022	$	178,424	$	33,129	$	211,553

We have not recorded goodwill impairments for the three months ended March 26, 2022.

Intangible assets were as follows (in thousands):

	March 26, 2022						December 25, 2021
Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	171,560	$	149,149	$	22,411	$	172,259	$	148,784	$	23,475
Customer relationships	51,080		40,638		10,442		51,270		39,254		12,016
Trade name	8,010		7,625		385		8,054		7,603		451
Backlog	—		—		—		1,896		1,896		—
In-process research and development	400		—		400		400		—		400
	$	231,050	$	197,412	$	33,638	$	233,879	$	197,537	$	36,342

10

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	808	$	5,090
Selling, general and administrative	1,561		1,715
	$	2,369	$	6,805

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

Fiscal Year	Amount
Remainder of 2022	$	7,056
2023	7,062
2024	4,472
2025	4,219
2026	3,195
Thereafter	7,234
	$	33,238

Note 5 — Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Accrued compensation and benefits	$	28,321	$	29,706
Accrued income and other taxes	10,276		8,086
Accrued warranty	2,775		2,805
Employee stock purchase plan contributions withheld	2,027		4,693
Accrued restructuring charges	890		2,478
Other accrued expenses	3,149		3,068
	$	47,438	$	50,836

Note 6 — Restructuring Charges

On September 25, 2021, we adopted restructuring plans to improve our business effectiveness and streamline our operations by consolidating certain manufacturing facilities for both the Probe Cards segment and the Systems segment. This includes plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia. As a result of these changes to certain work locations, we have incurred, and expect to incur, personnel related costs to sever, relocate, or retain select employees. Additionally, we are undertaking actions to adjust capacity for certain product offerings. As a result of these adjustments, contract termination costs include charges to satisfy contract obligations. The liability was recognized using our best estimate and it is reasonably possible that the final amount will differ from the amount estimated in the near term. We expect the actions defined under these plans will be largely completed by the end of December 2022, except facilities charges which may extend beyond that time.

These plans are expected to result in FormFactor recording restructuring and other charges in the aggregate amount of approximately $6.0 million to $9.0 million, estimated to be comprised primarily of $1.0 million to $2.0 million of severance and employee-related costs, $2.0 million to 3.0 million in contract and lease termination costs, $1.0 million to $1.5 million in inventory impairments, and $2.0 million to $2.5 million of cost related to impairment of leasehold improvements, facility exits, and other costs. Approximately $3.0 million to $4.5 million and $3.0 million to $4.5 million is expected within the Probe Cards segment and Systems segment, respectively.

The Company has recognized to date restructuring and other charges in the aggregate amount of $4.4 million, comprised of $1.2 million of severance and employee-related costs, $1.5 million in contract and lease termination costs, $1.5 million in inventory impairments, and $0.3 million of cost related to impairment of leasehold improvements, facility exits and other costs.

11

Restructuring charges by reportable segment included in our Condensed Consolidated Statements of Income were as follows (in thousands):

	Three Months Ended
	March 26, 2022
	Probe Cards		Systems		Total
Cost of revenues	$	39	$	100	$	139
Research and development	—		146		146
Selling, general and administrative	3		25		28
	$	42	$	271	$	313

Changes to the restructuring accrual in the three months ended March 26, 2022 were as follows (in thousands):

	Employee Severance and Benefits		Inventory Impairments		Contract  Termination Costs		Total
December 25, 2021	$	1,028	$	—	$	1,450	$	2,478
Restructuring charges	163		150		—		313
Cash payments	(301)		—		(1,450)		(1,751)
Non-cash settlement	—		(150)		—		(150)
March 26, 2022	$	890	$	—	$	—	$	890

Note 7 — Fair Value and Derivative Instruments

Whenever possible, the fair values of our financial assets and liabilities are determined using quoted market prices of identical securities or quoted market prices of similar securities from active markets. The three levels of inputs that may be used to measure fair value are as follows:

•Level 1 valuations are obtained from real-time quotes for transactions in active exchange markets involving identical securities;

•Level 2 valuations utilize significant observable inputs, such as quoted prices for similar assets or liabilities, quoted prices near the reporting date in markets that are less active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3 valuations utilize unobservable inputs to the valuation methodology and include our own data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the three months ended March 26, 2022 or the year ended December 25, 2021.

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

No changes were made to our valuation techniques during the first three months of fiscal 2022.

12

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): 

March 26, 2022	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	25,172	$	—	$	25,172
Commercial paper	—		7,132		7,132
U.S. treasuries	6,000		—		6,000
	31,172		7,132		38,304
Marketable securities:
U.S. treasuries	40,039		—		40,039
Certificates of deposit	—		951		951
U.S. agency securities	—		1,939		1,939
Corporate bonds	—		58,318		58,318
Commercial paper	—		27,927		27,927
	40,039		89,135		129,174
Interest rate swap derivative contracts	—		1,537		1,537
Total assets	$	71,211	$	97,804	$	169,015
Liabilities:
Foreign exchange derivative contracts	$	—	$	(577)	$	(577)

December 25, 2021	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	9,526	$	—	$	9,526
U.S. treasuries	2,500		—		2,500
Commercial paper	—		1,000		1,000
U.S. agency securities	—		5,556		5,556
	12,026		6,556		18,582
Marketable securities:
U.S. treasuries	38,985		—		38,985
Certificates of deposit	—		1,199		1,199
Corporate bonds	—		52,709		52,709
Commercial paper	—		32,162		32,162
	38,985		86,070		125,055
Interest rate swap derivative contracts	—		629		629
Total assets	$	51,011	$	93,255	$	144,266
Liabilities:
Foreign exchange derivative contracts	$	—	$	(489)	$	(489)
Interest rate swap derivative contracts	—		(55)		(55)
Total liabilities	$	—	$	(544)	$	(544)

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

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based on similar assets without applying significant judgments. In addition, all investments have a sufficient trading volume to demonstrate that the fair value is appropriate.

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

Foreign Exchange Derivative Contracts

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

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

The fair value of our foreign exchange derivative contracts was determined based on current foreign currency exchange rates and forward points. All of our foreign exchange derivative contracts outstanding at March 26, 2022 will mature by the first quarter of fiscal 2023.

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2022 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)	Contract Amount (U.S. Dollars)
Euro Dollar	Buy	(9,967)	$	(11,617)
Euro Dollar	Sell	2,065	2,269
Japanese Yen	Sell	2,334,287	19,127
Korean Won	Buy	(1,281,414)	(1,052)
Taiwan Dollar	Sell	27,806	972
Total USD notional amount of outstanding foreign exchange contracts			$	9,699

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.

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

We measure and report our non-financial assets such as Property, plant and equipment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition. Other than as discussed in Note 6, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 26, 2022 or March 27, 2021.

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Note 8 — Warranty

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

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Balance at beginning of period	$	2,805	$	3,918
Accruals	1,214		1,374
Settlements	(1,244)		(1,573)
Balance at end of period	$	2,775	$	3,719

Note 9 — Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Land	$	4,751	$	4,751
Building and building improvements	44,123		41,722
Machinery and equipment	258,783		252,632
Computer equipment and software	45,200		44,667
Furniture and fixtures	7,367		7,293
Leasehold improvements	83,707		82,266
Sub-total	443,931		433,331
Less: Accumulated depreciation and amortization	(318,726)		(312,700)
Net, property, plant and equipment	125,205		120,631
Construction-in-process	26,974		25,924
Total	$	152,179	$	146,555

Note 10 — Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program

On October 26, 2020, our Board of Directors authorized a program to repurchase up to $50 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the three months ended March 26, 2022, we repurchased and retired 240,548 shares of common stock for $9.4 million. During fiscal 2021 we repurchased and retired 622,400 shares of common stock for $24.0 million. As of March 26, 2022, $16.6 million remained available for future repurchases.

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

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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 25, 2021	2,166,934	$	28.63
Awards granted	12,450	40.94
Awards vested	(4,255)	36.70
Awards forfeited	(19,511)	28.18
RSUs at March 26, 2022	2,155,618	28.69

Performance Restricted Stock Units

We may grant Performance RSUs (“PRSUs”) to certain executives, which vest based upon us achieving certain market performance criteria. There were no PRSUs granted during the three months ended March 26, 2022. PRSUs are included as part of the RSU activity above.

Employee Stock Purchase Plan

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

	Three Months Ended
	March 26, 2022
Shares issued	157,642
Weighted average per share purchase price	$	35.81
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	(6.93)

Stock-Based Compensation

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	1,078	$	1,335
Research and development	1,986		1,689
Selling, general and administrative	4,456		4,053
Total stock-based compensation	$	7,520	$	7,077

Unrecognized Compensation Costs

At March 26, 2022, the unrecognized stock-based compensation was as follows (dollars in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Restricted stock units	$	31,005	2.00
Performance restricted stock units	8,652		1.90
Employee stock purchase plan	1,140		0.86
Total unrecognized stock-based compensation expense	$	40,797	1.95

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Note 11 — Net Income per Share

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):

	Three Months Ended
	March 26, 2022	March 27, 2021
Weighted-average shares used in computing basic net income per share	78,246	77,598
Add potentially dilutive securities	1,222	2,390
Weighted-average shares used in computing diluted net income per share	79,468	79,988
Securities not included as they would have been antidilutive	—	3

Note 12 — Commitments and Contingencies

Leases

See Note 13, Leases.

Contractual Obligations and Commitments

Our contractual obligations and commitments have not materially changed as of March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of March 26, 2022, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

Note 13 — Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for our corporate headquarters located in Livermore, California. Our leases have remaining terms of 1 to 7 years, and some leases include options to extend up to 20 years. We also have operating leases for automobiles with remaining lease terms of 1 to 3 years. We did not include any of our renewal options in our lease terms for calculating our lease liability as the renewal options allow us to maintain operational flexibility and we are not reasonably certain we will exercise these options at this time. The weighted-average remaining lease term for our operating leases was 6 years as of March 26, 2022 and the weighted-average discount rate was 3.67%.

The components of lease expense were as follows (in thousands):

	Three Months Ended
	March 26, 2022		March 27, 2021
Lease expense:
Operating lease expense	$	2,221	$	2,123
Short-term lease expense	40		37
Variable lease expense	458		537
	$	2,719	$	2,697

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Future minimum payments under our non-cancelable operating leases were as follows as of March 26, 2022 (in thousands):

Fiscal Year	Amount
Remainder of 2022	$	6,589
2023	7,680
2024	7,317
2025	7,270
2026	6,532
Thereafter	9,195
Total minimum lease payments	44,583
Less: interest	(5,168)
Present value of net minimum lease payments	39,415
Less: current portion	(8,049)
Total long-term operating lease liabilities	$	31,366

Note 14 — Revenue

Transaction price allocated to the remaining performance obligations: On March 26, 2022, we had $7.7 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts and contracts with overtime revenue recognition that are not yet delivered. We expect to recognize approximately 75.6% of our remaining performance obligations as revenue in the remainder of fiscal 2022, approximately 18.4% in fiscal 2023, and approximately 6.0% in fiscal 2024 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 credit losses. 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 March 26, 2022 and December 25, 2021 were $0.9 million and $0.9 million, respectively, and are reported on the Condensed Consolidated Balance Sheets as a component of Prepaid expenses and other current assets.

Contract liabilities include payments received and payments due in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of Deferred revenue and Other liabilities. Contract liabilities as of March 26, 2022 and December 25, 2021 were $28.0 million and $24.2 million, respectively. During the three months ended March 26, 2022, we recognized $11.0 million of revenue that was included in contract liabilities as of December 25, 2021.

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

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

Note 15 — Operating Segments and Enterprise-Wide Information

Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. We operate in two reportable segments consisting

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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
	March 26, 2022											March 27, 2021
	Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Revenues	$	159,983		$	37,191		$	—	$	197,174		$	158,898		$	27,738		$	—	$	186,636
Gross profit	77,202			19,407			(2,385)		94,224			70,315			13,599			(7,208)		76,706
Gross margin	48.3		%	52.2		%			47.8		%	44.3		%	49.0		%			41.1		%

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

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

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

	Three Months Ended
	March 26, 2022						March 27, 2021
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	114,121	$	—	$	114,121	$	113,410	$	—	$	113,410
DRAM	34,437		—		34,437		33,898		—		33,898
Flash	11,425		—		11,425		11,590		—		11,590
Systems	—		37,191		37,191		—		27,738		27,738
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Timing of revenue recognition:
Products transferred at a point in time	$	158,836	$	35,416	$	194,252	$	158,476	$	24,671	$	183,147
Products and services transferred over time	1,147		1,775		2,922		422		3,067		3,489
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Geographical region:
Taiwan	$	42,522	$	10,547	$	53,069	$	44,734	$	846	$	45,580
China	32,791		5,608		38,399		37,831		4,794		42,625
South Korea	24,881		2,620		27,501		18,001		1,084		19,085
Malaysia	21,517		682		22,199		19,888		42		19,930
United States	19,976		5,671		25,647		21,308		8,178		29,486
Singapore	10,284		612		10,896		7,627		931		8,558
Japan	4,785		4,597		9,382		5,249		4,072		9,321
Europe	2,382		6,013		8,395		2,833		7,166		9,999
Rest of the world	845		841		1,686		1,427		625		2,052
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636

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

Cautionary Statement Regarding Forward-Looking Statements

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

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The forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements. We have no obligation to update any of these statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to COVID-19 and the impact of our responses to it, the interpretation and impacts of changes in export controls and other trade barriers, military conflicts, political volatility and similar factors (including developments related to Ukraine and Russia), 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 25, 2021 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 essential test and measurement technologies along the full semiconductor product lifecycle - from characterization, modeling, reliability, and design de-bug, to qualification and production test. We provide a broad range of high-performance probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to both semiconductor companies and scientific institutions. Our products provide electrical and physical information from a variety of semiconductor and electro-optical devices and integrated circuits from early research, through development, to high-volume production. Customers use our products and services to accelerate profitability by optimizing device performance and advancing yield knowledge.

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

We generated net income of $29.9 million in the first three months of fiscal 2022 as compared to $19.6 million in the first three months of fiscal 2021. The increase in net income was primarily due to increased revenue with improved gross margins from a change in product mix and a reduction in the amortization of intangibles from significant intangibles becoming fully amortized, partially offset by higher operating expenses.

Impact of COVID-19

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

We continue to operate our manufacturing sites at production levels greater than those prior to the pandemic, albeit subject to certain safety and related constraints. Our other operations are continuing with substantial work-from-home activities.

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

While the disruptions in our operations, supply chain and customer demand as a result of the COVID-19 pandemic have been somewhat limited, we continue to see impacts on elements in the supply chain and believe that the COVID-19 pandemic represents a sustained threat that may give rise to a variety of more significant adverse impacts on our business and financial results. The semiconductor industry is experiencing various supply constraints due to the pandemic. While we are working with our global supply chain partners to mitigate this risk, the duration and extent of the supply chain disruptions remain uncertain. For a further description of the uncertainties and business risks associated with the COVID-19 pandemic, see the risk factors discussed in our Annual Report on Form 10-K for the year ended December 25, 2021.

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Significant Accounting Policies and the Use of Estimates

Management’s Discussion and Analysis and Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K describe the significant accounting estimates and significant accounting policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. During the three months ended March 26, 2022, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 25, 2021, which was filed with the Securities and Exchange Commission on February 18, 2022.

Results of Operations

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Revenues	100.0	%	100.0	%
Cost of revenues	52.2		58.9
Gross profit	47.8		41.1
Operating expenses:
Research and development	13.8		12.9
Selling, general and administrative	16.7		16.1
Total operating expenses	30.5		29.0
Operating income	17.3		12.1
Interest income	0.1		0.1
Interest expense	(0.1)		(0.1)
Other income, net	0.1		0.1
Income before income taxes	17.4		12.2
Provision for income taxes	2.2		1.7
Net income	15.2	%	10.5	%

Revenues by Segment and Market

	Three Months Ended
	March 26, 2022		March 27, 2021
	(In thousands)
Probe Cards	$	159,983	$	158,898
Systems	37,191		27,738
	$	197,174	$	186,636

	Three Months Ended
	March 26, 2022		% of Revenues		March 27, 2021		% of Revenues		$ Change		% Change
	(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic	$	114,121	57.8	%	$	113,410	60.7	%	$	711	0.6	%
DRAM	34,437		17.5		33,898		18.2		539		1.6
Flash	11,425		5.8		11,590		6.2		(165)		(1.4)
Systems Market:
Systems	37,191		18.9		27,738		14.9		9,453		34.1
Total revenues	$	197,174	100.0	%	$	186,636	100.0	%	$	10,538	5.6	%

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Our Probe Cards markets for the three months ended March 26, 2022, improved slightly in total compared to the three months ended March 27, 2021, despite a decline within our top two customers in these periods. Our ability to maintain and grow our revenues, despite product mix changes between our top customers, is the result of our long-term customer and market diversification initiatives.

The increase in Systems market revenue for the three months ended March 26, 2022, compared to the three months ended March 27, 2021, was driven by increased sales of metrology systems and our 200 and 300 millimeter probe stations.

Revenues by Geographic Region

	Three Months Ended
	March 26, 2022		% of Revenue		March 27, 2021		% of Revenue
	(Dollars in thousands)
Taiwan	$	53,069	26.9	%	$	45,580	24.4	%
China	38,399		19.5		42,625		22.8
South Korea	27,501		13.9		19,085		10.2
United States	25,647		13.0		29,486		15.8
Malaysia	22,199		11.3		19,930		10.7
Singapore	10,896		5.5		8,558		4.6
Japan	9,382		4.8		9,321		5.0
Europe	8,395		4.3		9,999		5.4
Rest of the world	1,686		0.8		2,052		1.1
Total revenues	$	197,174	100.0	%	$	186,636	100.0	%

Geographic revenue information is based on the location to which we ship the product. For example, if a certain South Korean customer purchases through their U.S. subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S.

Changes in revenue by geographic region for the three months ended March 26, 2022, compared to the three months ended March 27, 2021, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix.

Cost of Revenues and Gross Margins

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

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

	Three Months Ended
	March 26, 2022			March 27, 2021			$ Change		% Change
Gross profit	$	94,224		$	76,706		$	17,518	22.8	%
Gross margin	47.8		%	41.1		%

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

	Three Months Ended
	March 26, 2022											March 27, 2021
	Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Gross profit	$	77,202		$	19,407		$	(2,385)	$	94,224		$	70,315		$	13,599		$	(7,208)	$	76,706
Gross margin	48.3		%	52.2		%			47.8		%	44.3		%	49.0		%			41.1		%

Probe Cards

For the three months ended March 26, 2022, gross margins increased compared to the three months ended March 27, 2021, primarily due to improved standard margins due to change in product mix, favorable absorption of costs on higher production volumes, and favorable capitalization, partially offset by higher manufacturing spending driven by higher material costs from fluctuations in commodity costs.

Systems

For the three months ended March 26, 2022, gross margins increased compared to the three months ended March 27, 2021, primarily as a result of favorable product mix, largely related to increased sales of metrology systems and improved leverage on fixed costs at these higher volumes.

Corporate and Other

Corporate and Other includes unallocated expenses relating to share-based compensation and amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, and restructuring which are not used in evaluating the results of, or in allocating resources to, our reportable segments. The reduction in Corporate and Other for the three months ended March 26, 2022 compared to the three months ended March 27, 2021 is primarily due to a reduction in the amortization of intangibles from significant intangibles becoming fully amortized.

Overall

Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading and material costs. For the three months ended March 26, 2022, compared to the three months ended March 27, 2021, gross profit and gross margins have increased on greater revenue levels, a favorable product mix, and less amortization of intangibles.

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Stock-based compensation	$	1,078	$	1,335

Research and Development

	Three Months Ended
	March 26, 2022			March 27, 2021			$ Change		% Change
	(Dollars in thousands)
Research and development	$	27,134		$	24,046		$	3,088	12.8	%
% of revenues	13.8		%	12.9		%

The increase in research and development expenses in the three months ended March 26, 2022 when compared to the corresponding period in the prior year was primarily driven by an increase in headcount to support current operating levels. Increased general operational costs, annual salary adjustments, project material costs, and stock-based compensation also contributed to the increase.

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

	Three Months Ended March 26, 2022 compared to Three Months Ended March 27, 2021
Employee compensation costs	$	1,606
Other general operations	967
Stock-based compensation	297
Project material costs	218
	$	3,088

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Stock-based compensation	$	1,986	$	1,689

Selling, General and Administrative

	Three Months Ended
	March 26, 2022			March 27, 2021			$ Change		% Change
	(Dollars in thousands)
Selling, general and administrative	$	32,906		$	30,015		$	2,891	9.6	%
% of revenues	16.7		%	16.1		%

The increase in selling, general and administrative expenses in the three months ended March 26, 2022 when compared to the corresponding period in the prior year was primarily driven by increased headcount, annual salary adjustments, increased travel related costs as restrictions related to COVID-19 relaxed, and higher stock-based compensation. We expect travel costs to continue to return to previous levels assuming travel restrictions continue to ease. These increases were partially offset by lower amortization of intangibles.

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

	Three Months Ended March 26, 2022 compared to Three Months Ended March 27, 2021
Employee compensation costs	$	1,385
General operating expenses	602
Travel related costs	656
Stock-based compensation	403
Amortization of intangibles	(155)
	$	2,891

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Stock-based compensation	$	4,456	$	4,053

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Interest Income and Interest Expense

Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities. The decrease in interest income for the three months ended March 26, 2022 compared with the corresponding period of the prior year was attributable to lower investment yields due to the low interest rate environment, despite higher invested balances.

Interest expense primarily includes interest on our term loans, interest rate swap derivative contracts, and term loan issuance costs amortization charges. The interest expense for the three months ended March 26, 2022 compared to the same period of the prior year increased slightly primarily due to increased average interest rates on the outstanding debt.

Other Income (Expense), Net

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

Provision for Income Taxes

	Three Months Ended
	March 26, 2022			March 27, 2021
	(In thousands, except percentages)
Provision for income taxes	$	4,450		$	3,206
Effective tax rate	13.0		%	14.0		%

Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income (“FDII”) deduction. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, changes in ASC 718 stock-based compensation expense/benefit, future expansion into areas with varying country, state, and local income tax rates, and deductibility of certain costs and expenses by jurisdiction.

We have utilized our previous net operating loss carryforwards, and expect the FDII deduction and corresponding benefit to be available, resulting in a decrease from the U.S. statutory rate and included in our worldwide effective tax rate for the year ending December 31, 2022.

The decrease in the effective tax rate in the three months ended March 26, 2022 when compared to the corresponding period in the prior year was primarily driven by an increased tax deduction from foreign derived intangible income, offset by a reduction in stock-based compensation tax benefits.

As of January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and experimental expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years in the U.S. and fifteen years in foreign jurisdictions. While it is possible that Congress may defer, modify, or repeal this provision, potentially with retroactive effect, we have no assurance that this provision will be deferred, modified, or repealed. If this provision is not deferred, modified, or repealed with retroactive effect to January 1, 2022, we expect our cash taxes to slowly increase over the next few years until we have fully utilized our Federal research and development credits to offset our Federal tax liability to the extent allowed by law.

Liquidity and Capital Resources

Capital Resources

Our working capital was $401.5 million at March 26, 2022, compared to $375.3 million at December 25, 2021.

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

Our cash, cash equivalents and marketable securities totaled approximately $296.4 million at March 26, 2022, compared to $276.1 million at December 25, 2021. Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, and the cash we expect to generate from operations, will be sufficient to fund our short-term and long-term liquidity requirements primarily arising from: research and development, capital expenditures, working capital, outstanding commitments, and other liquidity requirements associated with existing operations. However, we cannot be certain that our cash, cash equivalents, and marketable securities on hand, and cash generated from operations, will be available in the

25

future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources. 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. If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected.

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

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

Cash Flows

The following table sets forth our net cash flows from operating, investing and financing activities:

	Three Months Ended
	March 26, 2022		March 27, 2021
	(In thousands)
Net cash provided by operating activities	$	44,155	$	32,356
Net cash used in investing activities	$	(21,078)	$	(39,922)
Net cash used in financing activities	$	(6,016)	$	(3,768)

Operating Activities 

Net cash provided by operating activities for the three months ended March 26, 2022 was primarily attributable to net income of $29.9 million and net non-cash expenses of $22.0 million, which includes depreciation, amortization, stock-based compensation, and the provision for excess and obsolete inventories. These inflows were partially offset by net changes in working capital of $7.7 million primarily related to cash paid for inventories of $17.1 million, partially offset by cash provided by an increase in accounts payable for $10.2 million.

Investing Activities

Net cash used in investing activities for the three months ended March 26, 2022 was primarily related to $15.6 million property, plant and equipment acquisitions and $5.5 million net cash used to purchase marketable securities.

Financing Activities

Net cash used in financing activities for the three months ended March 26, 2022 primarily related to $9.4 million used to purchase common stock under our stock repurchase program and $2.2 million of principal payments made towards the repayment of our term loans, partially offset by $5.7 million of proceeds received from issuances of common stock under our employee stock purchase plan and stock option plans.

Debt

FRT Term Loan

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

The FRT Term Loan bears interest at a rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus 1.75% per annum and will be repaid in quarterly installments of approximately $2.0 million plus interest. The interest rate at March 26, 2022 was 1.20%. As of March 26, 2022, the balance outstanding pursuant to the FRT term loan was $5.8 million. The FRT Term Loan is expected to be fully paid as of October 25, 2022.

Building Term Loan

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

26

The Building Term Loan bears interest at a rate equal to the applicable LIBOR rate plus 1.75% per annum. Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at March 26, 2022 was 1.98%. As of March 26, 2022, the balance outstanding pursuant to the Building Term Loan was $16.3 million.

On March 17, 2020, we entered into a forward starting interest rate swap agreement to hedge the interest payments on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt. As future levels of LIBOR over the life of the loan are uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates. By entering into the agreement, we converted a floating rate interest at one-month LIBOR plus 1.75% into a fixed rate interest at 2.75%. As of March 26, 2022, the notional amount of the loan that is subject to this interest rate swap is $16.3 million.

Stock Repurchase Program

In October 2020, our Board of Directors authorized a program to repurchase up to $50.0 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the three months ended March 26, 2022, we repurchased 240,548 shares of common stock for $9.4 million. During 2021, we repurchased and retired 622,400 shares of common stock for $24.0 million. As of March 26, 2022, $16.6 million remained available for future repurchases.

Contractual Obligations and Commitments

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of March 26, 2022:

	Payments Due In Fiscal Year
	Remainder  2022		2023		2024		2025		2026		Thereafter		Total
Operating leases	$	6,589	$	7,680	$	7,317	$	7,270	$	6,532	$	9,195	$	44,583
Term loans - principal payments	6,535		1,050		1,080		1,111		1,142		11,116		22,034
Term loans - interest payments (1)	276		302		282		258		236		996		2,350
Total	$	13,400	$	9,032	$	8,679	$	8,639	$	7,910	$	21,307	$	68,967

(1) Represents our minimum interest payment commitments at 1.98% per annum for the Building Term Loan and 1.20% per annum for the FRT Term Loan. This also excludes any amounts related to our interest rate swap.

Off-Balance Sheet Arrangements

Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of March 26, 2022, we were not involved in any such off-balance sheet arrangements.

Recent Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For financial market risks related to changes in interest rates and foreign currency exchange rates, reference is made to Item 7A “Quantitative and Qualitative Disclosures about Market Risk” contained in Part II of our Annual Report on Form 10-K for the fiscal year ended December 25, 2021. Our exposure to market risk has not changed materially since December 25, 2021.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

Limitations on the Effectiveness of Controls

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

CEO and CFO Certifications

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

PART II - OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes during the three months ended March 26, 2022 to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 25, 2021. 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 25, 2021 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.

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

Repurchase of Common Stock

The following table summarizes our repurchases of outstanding common stock for the three months ended March 26, 2022:

Period (fiscal months)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Amount that May Yet Be Purchased Under the Plans or Programs
December 26, 2021 - January 22, 2022	—	$	—	—	$	25,962,818
January 23, 2022 - February 19, 2022	98,000	39.94		98,000	22,049,181
February 20, 2022 - March 26, 2022	142,548	38.47		142,548	16,565,655
	240,548	$	39.07	240,548

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

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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
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	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 26, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags				X
101.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
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 26, 2022, formatted in Inline XBRL (included as Exhibit 101)				X

 ______________________________________

*    This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

30

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:	May 3, 2022	By:	/s/ SHAI SHAHAR
			Shai Shahar
			Chief Financial Officer
			(Duly Authorized Officer, Principal Financial Officer, and Principal Accounting Officer)

31

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:	May 3, 2022	/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:	May 3, 2022	/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 March 26, 2022, 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:	May 3, 2022	/s/ MICHAEL D. SLESSOR
		Michael D. Slessor Chief Executive Officer (Principal Executive Officer and Director)
Date:	May 3, 2022	/s/ SHAI SHAHAR
		Shai Shahar Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

XML

Cover Page - shares	3 Months Ended
	Mar. 26, 2022	Apr. 27, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 26, 2022
Document Transition Report	false
Entity File Number	000-50307
Entity Registrant Name	FormFactor, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3711155
Entity Address, Address Line One	7005 Southfront Road
Entity Address, City or Town	Livermore
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94551
City Area Code	925
Local Phone Number	290-4000
Title of 12(b) Security	Common stock, $0.001 par value
Trading Symbol	FORM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		78,063,870
Amendment Flag	false
Entity Central Index Key	0001039399
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Current assets:
Cash and cash equivalents	$ 167,182	$ 151,010
Marketable securities	129,174	125,055
Accounts receivable, net of allowance for credit losses of $194 and $195	113,505	115,541
Inventories, net	125,590	111,548
Restricted cash	2,026	2,233
Prepaid expenses and other current assets	18,671	18,652
Total current assets	556,148	524,039
Restricted cash	2,053	2,099
Operating lease, right-of-use-assets	35,764	35,210
Property, plant and equipment, net of accumulated depreciation	152,179	146,555
Goodwill	211,553	212,299
Intangibles, net	33,638	36,342
Deferred tax assets	62,746	61,995
Other assets	2,799	1,981
Total assets	1,056,880	1,020,520
Current liabilities:
Accounts payable	65,378	57,862
Accrued liabilities	47,438	50,836
Current portion of term loans, net of unamortized issuance costs	6,790	8,931
Deferred revenue	27,002	23,224
Operating lease liabilities	8,049	7,901
Total current liabilities	154,657	148,754
Term loans, less current portion, net of unamortized issuance costs	15,175	15,434
Deferred tax liabilities	3,131	3,623
Long-term operating lease liabilities	31,366	31,009
Other liabilities	5,878	5,920
Total liabilities	210,207	204,740
Stockholders’ equity:
Common stock, $0.001 par value	78	78
Additional paid-in capital	902,994	898,945
Accumulated other comprehensive loss	(4,477)	(1,449)
Accumulated deficit	(51,922)	(81,794)
Total stockholders’ equity	846,673	815,780
Total liabilities and stockholders’ equity	$ 1,056,880	$ 1,020,520

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 194	$ 195
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)	78,166,212	78,240,506
Common stock, shares outstanding (in shares)	78,166,212	78,240,506

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Income Statement [Abstract]
Revenues	$ 197,174	$ 186,636
Cost of revenues	102,950	109,930
Gross profit	94,224	76,706
Operating expenses:
Research and development	27,134	24,046
Selling, general and administrative	32,906	30,015
Total operating expenses	60,040	54,061
Operating income	34,184	22,645
Interest income	138	194
Interest expense	(192)	(180)
Other income, net	192	172
Income before income taxes	34,322	22,831
Provision for income taxes	4,450	3,206
Net income	$ 29,872	$ 19,625
Net income per share:
Basic (in dollars per share)	$ 0.38	$ 0.25
Diluted (in dollars per share)	$ 0.38	$ 0.25
Weighted-average number of shares used in per share calculations:
Basic (in shares)	78,246	77,598
Diluted (in shares)	79,468	79,988

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 29,872	$ 19,625
Other comprehensive loss, net of tax:
Translation adjustments and other	(2,698)	(2,379)
Unrealized losses on available-for-sale marketable securities	(1,204)	(131)
Unrealized gains (losses) on derivative instruments	874	(226)
Other comprehensive loss, net of tax	(3,028)	(2,736)
Comprehensive income	$ 26,844	$ 16,889

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (in shares) at Dec. 26, 2020		77,437,997	0
Beginning balance at Dec. 26, 2020	$ 744,084	$ 78	$ 0	$ 903,838	$ 5,886	$ (165,718)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (in shares)		228,784
Issuance of common stock under the Employee Stock Purchase Plan	5,065			5,065
Issuance of common stock pursuant to exercise of options (in shares)		50,000
Issuance of common stock pursuant to exercise of options	422	$ 0		422
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax (in shares)		41,749
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	(1,141)	$ 0		(1,141)
Purchase and retirement of common stock through repurchase program	5,738		$ 5,738
Purchase of common stock through repurchase program (in shares)			(136,402)
Stock-based compensation	6,952			6,952
Other comprehensive income (loss)	(2,736)				(2,736)
Net income	19,625					19,625
Ending balance (in shares) at Mar. 27, 2021		77,758,530	(136,402)
Ending balance at Mar. 27, 2021	766,533	$ 78	$ (5,738)	915,136	3,150	(146,093)
Beginning balance (in shares) at Dec. 26, 2020		77,437,997	0
Beginning balance at Dec. 26, 2020	744,084	$ 78	$ 0	903,838	5,886	(165,718)
Ending balance (in shares) at Dec. 25, 2021		78,240,506	0
Ending balance at Dec. 25, 2021	815,780	$ 78	$ 0	898,945	(1,449)	(81,794)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under the Employee Stock Purchase Plan (in shares)		157,642
Issuance of common stock under the Employee Stock Purchase Plan	5,645			5,645
Issuance of common stock pursuant to exercise of options (in shares)		6,000
Issuance of common stock pursuant to exercise of options	42			42
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax (in shares)		2,612
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	(72)	$ 0		(72)
Purchase of common stock retired through repurchase program (in shares)		240,548
Purchase and retirement of common stock through repurchase program	(9,397)	$ 0		(9,397)
Stock-based compensation	7,831			7,831
Other comprehensive income (loss)	(3,028)				(3,028)
Net income	29,872					29,872
Ending balance (in shares) at Mar. 26, 2022		78,166,212	0
Ending balance at Mar. 26, 2022	$ 846,673	$ 78	$ 0	$ 902,994	$ (4,477)	$ (51,922)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Cash flows from operating activities:
Net income	$ 29,872	$ 19,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	6,960	6,130
Amortization	2,369	6,805
Reduction in the carrying amount of right-of-use assets	2,492	1,811
Stock-based compensation expense	7,520	7,077
Provision for excess and obsolete inventories	2,501	3,394
Non-cash restructuring charges	150	0
Other adjustments to reconcile net income to net cash provided by operating activities	32	2,140
Changes in assets and liabilities:
Accounts receivable	966	3,576
Inventories	(17,080)	(9,911)
Prepaid expenses and other current assets	(144)	3,011
Other assets	(73)	(50)
Accounts payable	10,150	5,722
Accrued liabilities	(3,120)	(12,732)
Other liabilities	87	114
Deferred revenues	3,908	(2,411)
Operating lease liabilities	(2,435)	(1,945)
Net cash provided by operating activities	44,155	32,356
Cash flows from investing activities:
Acquisition of property, plant and equipment	(15,606)	(13,470)
Purchases of marketable securities	(23,462)	(41,062)
Proceeds from maturities and sales of marketable securities	17,990	14,610
Net cash used in investing activities	(21,078)	(39,922)
Cash flows from financing activities:
Proceeds from issuances of common stock	5,687	5,487
Purchase of common stock through stock repurchase program	(9,397)	(5,738)
Tax withholdings related to net share settlements of equity awards	(72)	(1,141)
Principal repayments on term loans	(2,234)	(2,376)
Net cash used in financing activities	(6,016)	(3,768)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,142)	(1,456)
Net increase (decrease) in cash, cash equivalents and restricted cash	15,919	(12,790)
Cash, cash equivalents and restricted cash, beginning of period	155,342	191,098
Cash, cash equivalents and restricted cash, end of period	171,261	178,308
Non-cash investing and financing activities:
Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases	(2,524)	1,087
Operating lease, right-of-use assets obtained in exchange for lease obligations	3,359	8,572
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	890	1,034
Cash paid for interest	163	173
Operating cash outflows from operating leases	2,094	2,201
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	167,182	173,616
Restricted cash, current	2,026	2,798
Restricted cash, non-current	2,053	1,894
Total cash, cash equivalents and restricted cash	$ 171,261	$ 178,308

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Basis of Presentation and New Accounting Pronouncements

3 Months Ended

Mar. 26, 2022

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 (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2021 Annual Report on Form 10-K filed with the SEC on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year 

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the three months ended March 26, 2022 and March 27, 2021 each contained 13 weeks. Fiscal 2022 will end on December 31, 2022.

Significant Accounting Policies

Our significant accounting policies have not changed during the three months ended March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Reclassifications

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

New Accounting Pronouncements

ASU 2020-04

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

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption impact of the new standard will depend on the magnitude of future acquisitions. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

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Concentration of Credit and Other Risks

3 Months Ended

Mar. 26, 2022

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
	March 26, 2022		March 27, 2021
Intel Corporation	20.8	%	28.1	%
Taiwan Semiconductor Manufacturing Co., LTD.	10.7	%	11.5	%
	31.5	%	39.6	%

At March 26, 2022, one customer accounted for 22.8% of gross accounts receivable. At December 25, 2021, one customer accounted for 13.8% of gross accounts receivable.

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Inventories, net

3 Months Ended

Mar. 26, 2022

Inventory Disclosure [Abstract]

Inventories, net

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):

	March 26, 2022		December 25, 2021
Raw materials	$	60,976	$	57,673
Work-in-progress	41,875		35,935
Finished goods	22,739		17,940
	$	125,590	$	111,548

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Goodwill and Intangible Assets

3 Months Ended

Mar. 26, 2022

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, as of December 26, 2020	$	178,072	$	34,689	$	212,761
Addition - Baldwin Park Acquisition	352		—		352
Addition - HPD Acquisition	—		1,254		1,254
Foreign currency translation	—		(2,068)		(2,068)
Goodwill, as of December 25, 2021	178,424		33,875		212,299
Foreign currency translation	—		(746)		(746)
Goodwill, as of March 26, 2022	$	178,424	$	33,129	$	211,553

We have not recorded goodwill impairments for the three months ended March 26, 2022.

Intangible assets were as follows (in thousands):

	March 26, 2022						December 25, 2021
Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	171,560	$	149,149	$	22,411	$	172,259	$	148,784	$	23,475
Customer relationships	51,080		40,638		10,442		51,270		39,254		12,016
Trade name	8,010		7,625		385		8,054		7,603		451
Backlog	—		—		—		1,896		1,896		—
In-process research and development	400		—		400		400		—		400
	$	231,050	$	197,412	$	33,638	$	233,879	$	197,537	$	36,342

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	808	$	5,090
Selling, general and administrative	1,561		1,715
	$	2,369	$	6,805

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

Fiscal Year	Amount
Remainder of 2022	$	7,056
2023	7,062
2024	4,472
2025	4,219
2026	3,195
Thereafter	7,234
	$	33,238

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Accrued Liabilities

3 Months Ended

Mar. 26, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Accrued compensation and benefits	$	28,321	$	29,706
Accrued income and other taxes	10,276		8,086
Accrued warranty	2,775		2,805
Employee stock purchase plan contributions withheld	2,027		4,693
Accrued restructuring charges	890		2,478
Other accrued expenses	3,149		3,068
	$	47,438	$	50,836

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Restructuring Charges

3 Months Ended

Mar. 26, 2022

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring Charges

On September 25, 2021, we adopted restructuring plans to improve our business effectiveness and streamline our operations by consolidating certain manufacturing facilities for both the Probe Cards segment and the Systems segment. This includes plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia. As a result of these changes to certain work locations, we have incurred, and expect to incur, personnel related costs to sever, relocate, or retain select employees. Additionally, we are undertaking actions to adjust capacity for certain product offerings. As a result of these adjustments, contract termination costs include charges to satisfy contract obligations. The liability was recognized using our best estimate and it is reasonably possible that the final amount will differ from the amount estimated in the near term. We expect the actions defined under these plans will be largely completed by the end of December 2022, except facilities charges which may extend beyond that time.

These plans are expected to result in FormFactor recording restructuring and other charges in the aggregate amount of approximately $6.0 million to $9.0 million, estimated to be comprised primarily of $1.0 million to $2.0 million of severance and employee-related costs, $2.0 million to 3.0 million in contract and lease termination costs, $1.0 million to $1.5 million in inventory impairments, and $2.0 million to $2.5 million of cost related to impairment of leasehold improvements, facility exits, and other costs. Approximately $3.0 million to $4.5 million and $3.0 million to $4.5 million is expected within the Probe Cards segment and Systems segment, respectively.

The Company has recognized to date restructuring and other charges in the aggregate amount of $4.4 million, comprised of $1.2 million of severance and employee-related costs, $1.5 million in contract and lease termination costs, $1.5 million in inventory impairments, and $0.3 million of cost related to impairment of leasehold improvements, facility exits and other costs.

Restructuring charges by reportable segment included in our Condensed Consolidated Statements of Income were as follows (in thousands):

	Three Months Ended
	March 26, 2022
	Probe Cards		Systems		Total
Cost of revenues	$	39	$	100	$	139
Research and development	—		146		146
Selling, general and administrative	3		25		28
	$	42	$	271	$	313

Changes to the restructuring accrual in the three months ended March 26, 2022 were as follows (in thousands):

	Employee Severance and Benefits		Inventory Impairments		Contract  Termination Costs		Total
December 25, 2021	$	1,028	$	—	$	1,450	$	2,478
Restructuring charges	163		150		—		313
Cash payments	(301)		—		(1,450)		(1,751)
Non-cash settlement	—		(150)		—		(150)
March 26, 2022	$	890	$	—	$	—	$	890

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Fair Value and Derivative Instruments

3 Months Ended

Mar. 26, 2022

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 three months ended March 26, 2022 or the year ended December 25, 2021.

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

No changes were made to our valuation techniques during the first three months of fiscal 2022.

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): 

March 26, 2022	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	25,172	$	—	$	25,172
Commercial paper	—		7,132		7,132
U.S. treasuries	6,000		—		6,000
	31,172		7,132		38,304
Marketable securities:
U.S. treasuries	40,039		—		40,039
Certificates of deposit	—		951		951
U.S. agency securities	—		1,939		1,939
Corporate bonds	—		58,318		58,318
Commercial paper	—		27,927		27,927
	40,039		89,135		129,174
Interest rate swap derivative contracts	—		1,537		1,537
Total assets	$	71,211	$	97,804	$	169,015
Liabilities:
Foreign exchange derivative contracts	$	—	$	(577)	$	(577)

December 25, 2021	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	9,526	$	—	$	9,526
U.S. treasuries	2,500		—		2,500
Commercial paper	—		1,000		1,000
U.S. agency securities	—		5,556		5,556
	12,026		6,556		18,582
Marketable securities:
U.S. treasuries	38,985		—		38,985
Certificates of deposit	—		1,199		1,199
Corporate bonds	—		52,709		52,709
Commercial paper	—		32,162		32,162
	38,985		86,070		125,055
Interest rate swap derivative contracts	—		629		629
Total assets	$	51,011	$	93,255	$	144,266
Liabilities:
Foreign exchange derivative contracts	$	—	$	(489)	$	(489)
Interest rate swap derivative contracts	—		(55)		(55)
Total liabilities	$	—	$	(544)	$	(544)

Cash Equivalents

The fair value of our cash equivalents is determined based on quoted market prices for similar or identical securities.

Marketable Securities

We classify our marketable securities as available-for-sale and value them utilizing a market approach. Our investments are priced by pricing vendors who provide observable inputs for their pricing without applying significant judgment. Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors or when a broker price is more reflective of fair value. Our broker-priced investments are categorized as Level 2 investments because fair value is

based on similar assets without applying significant judgments. In addition, all investments have a sufficient trading volume to demonstrate that the fair value is appropriate.

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

Foreign Exchange Derivative Contracts

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

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

The fair value of our foreign exchange derivative contracts was determined based on current foreign currency exchange rates and forward points. All of our foreign exchange derivative contracts outstanding at March 26, 2022 will mature by the first quarter of fiscal 2023.

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2022 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)	Contract Amount (U.S. Dollars)
Euro Dollar	Buy	(9,967)	$	(11,617)
Euro Dollar	Sell	2,065	2,269
Japanese Yen	Sell	2,334,287	19,127
Korean Won	Buy	(1,281,414)	(1,052)
Taiwan Dollar	Sell	27,806	972
Total USD notional amount of outstanding foreign exchange contracts			$	9,699

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.

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

We measure and report our non-financial assets such as Property, plant and equipment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition. Other than as discussed in Note 6, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 26, 2022 or March 27, 2021.

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Warranty

3 Months Ended

Mar. 26, 2022

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. We regularly monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified failures. As we sell new products to our customers, we must exercise considerable judgment in estimating the expected failure rates. This estimating process is based on historical experience of similar products, as well as various other assumptions that we believe to be reasonable under the circumstances. We provide for the estimated cost of product warranties at the time revenue is recognized as a component of Cost of revenues in our Condensed Consolidated Statement of Income.

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Balance at beginning of period	$	2,805	$	3,918
Accruals	1,214		1,374
Settlements	(1,244)		(1,573)
Balance at end of period	$	2,775	$	3,719

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Property, Plant, and Equipment, net

3 Months Ended

Mar. 26, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, net

Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Land	$	4,751	$	4,751
Building and building improvements	44,123		41,722
Machinery and equipment	258,783		252,632
Computer equipment and software	45,200		44,667
Furniture and fixtures	7,367		7,293
Leasehold improvements	83,707		82,266
Sub-total	443,931		433,331
Less: Accumulated depreciation and amortization	(318,726)		(312,700)
Net, property, plant and equipment	125,205		120,631
Construction-in-process	26,974		25,924
Total	$	152,179	$	146,555

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Stockholders’ Equity and Stock-Based Compensation

3 Months Ended

Mar. 26, 2022

Equity [Abstract]

Stockholders’ Equity and Stock-Based Compensation

Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Program

On October 26, 2020, our Board of Directors authorized a program to repurchase up to $50 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation plans. The share repurchase program will expire on October 28, 2022. During the three months ended March 26, 2022, we repurchased and retired 240,548 shares of common stock for $9.4 million. During fiscal 2021 we repurchased and retired 622,400 shares of common stock for $24.0 million. As of March 26, 2022, $16.6 million remained available for future repurchases.

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

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 25, 2021	2,166,934	$	28.63
Awards granted	12,450	40.94
Awards vested	(4,255)	36.70
Awards forfeited	(19,511)	28.18
RSUs at March 26, 2022	2,155,618	28.69

Performance Restricted Stock Units

We may grant Performance RSUs (“PRSUs”) to certain executives, which vest based upon us achieving certain market performance criteria. There were no PRSUs granted during the three months ended March 26, 2022. PRSUs are included as part of the RSU activity above.

Employee Stock Purchase Plan

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

	Three Months Ended
	March 26, 2022
Shares issued	157,642
Weighted average per share purchase price	$	35.81
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	(6.93)

Stock-Based Compensation

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	1,078	$	1,335
Research and development	1,986		1,689
Selling, general and administrative	4,456		4,053
Total stock-based compensation	$	7,520	$	7,077

Unrecognized Compensation Costs

At March 26, 2022, the unrecognized stock-based compensation was as follows (dollars in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Restricted stock units	$	31,005	2.00
Performance restricted stock units	8,652		1.90
Employee stock purchase plan	1,140		0.86
Total unrecognized stock-based compensation expense	$	40,797	1.95

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Net Income per Share

3 Months Ended

Mar. 26, 2022

Earnings Per Share [Abstract]

Net Income 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
	March 26, 2022	March 27, 2021
Weighted-average shares used in computing basic net income per share	78,246	77,598
Add potentially dilutive securities	1,222	2,390
Weighted-average shares used in computing diluted net income per share	79,468	79,988
Securities not included as they would have been antidilutive	—	3

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Commitments and Contingencies

3 Months Ended

Mar. 26, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Leases

See Note 13, Leases.

Contractual Obligations and Commitments

Our contractual obligations and commitments have not materially changed as of March 26, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 25, 2021.

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of March 26, 2022, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

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Leases

3 Months Ended

Mar. 26, 2022

Leases [Abstract]

Leases

Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for our corporate headquarters located in Livermore, California. Our leases have remaining terms of 1 to 7 years, and some leases include options to extend up to 20 years. We also have operating leases for automobiles with remaining lease terms of 1 to 3 years. We did not include any of our renewal options in our lease terms for calculating our lease liability as the renewal options allow us to maintain operational flexibility and we are not reasonably certain we will exercise these options at this time. The weighted-average remaining lease term for our operating leases was 6 years as of March 26, 2022 and the weighted-average discount rate was 3.67%.

The components of lease expense were as follows (in thousands):

	Three Months Ended
	March 26, 2022		March 27, 2021
Lease expense:
Operating lease expense	$	2,221	$	2,123
Short-term lease expense	40		37
Variable lease expense	458		537
	$	2,719	$	2,697

Future minimum payments under our non-cancelable operating leases were as follows as of March 26, 2022 (in thousands):

Fiscal Year	Amount
Remainder of 2022	$	6,589
2023	7,680
2024	7,317
2025	7,270
2026	6,532
Thereafter	9,195
Total minimum lease payments	44,583
Less: interest	(5,168)
Present value of net minimum lease payments	39,415
Less: current portion	(8,049)
Total long-term operating lease liabilities	$	31,366

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Revenue

3 Months Ended

Mar. 26, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Transaction price allocated to the remaining performance obligations: On March 26, 2022, we had $7.7 million of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts and contracts with overtime revenue recognition that are not yet delivered. We expect to recognize approximately 75.6% of our remaining performance obligations as revenue in the remainder of fiscal 2022, approximately 18.4% in fiscal 2023, and approximately 6.0% in fiscal 2024 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 credit losses. 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 March 26, 2022 and December 25, 2021 were $0.9 million and $0.9 million, respectively, and are reported on the Condensed Consolidated Balance Sheets as a component of Prepaid expenses and other current assets.

Contract liabilities include payments received and payments due in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of Deferred revenue and Other liabilities. Contract liabilities as of March 26, 2022 and December 25, 2021 were $28.0 million and $24.2 million, respectively. During the three months ended March 26, 2022, we recognized $11.0 million of revenue that was included in contract liabilities as of December 25, 2021.

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

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

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Operating Segments and Enterprise-Wide Information

3 Months Ended

Mar. 26, 2022

Segment Reporting [Abstract]

Operating Segments and Enterprise-Wide Information

Operating Segments and Enterprise-Wide InformationOur 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
	March 26, 2022											March 27, 2021
	Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Revenues	$	159,983		$	37,191		$	—	$	197,174		$	158,898		$	27,738		$	—	$	186,636
Gross profit	77,202			19,407			(2,385)		94,224			70,315			13,599			(7,208)		76,706
Gross margin	48.3		%	52.2		%			47.8		%	44.3		%	49.0		%			41.1		%

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

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

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

	Three Months Ended
	March 26, 2022						March 27, 2021
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	114,121	$	—	$	114,121	$	113,410	$	—	$	113,410
DRAM	34,437		—		34,437		33,898		—		33,898
Flash	11,425		—		11,425		11,590		—		11,590
Systems	—		37,191		37,191		—		27,738		27,738
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Timing of revenue recognition:
Products transferred at a point in time	$	158,836	$	35,416	$	194,252	$	158,476	$	24,671	$	183,147
Products and services transferred over time	1,147		1,775		2,922		422		3,067		3,489
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Geographical region:
Taiwan	$	42,522	$	10,547	$	53,069	$	44,734	$	846	$	45,580
China	32,791		5,608		38,399		37,831		4,794		42,625
South Korea	24,881		2,620		27,501		18,001		1,084		19,085
Malaysia	21,517		682		22,199		19,888		42		19,930
United States	19,976		5,671		25,647		21,308		8,178		29,486
Singapore	10,284		612		10,896		7,627		931		8,558
Japan	4,785		4,597		9,382		5,249		4,072		9,321
Europe	2,382		6,013		8,395		2,833		7,166		9,999
Rest of the world	845		841		1,686		1,427		625		2,052
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636

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Basis of Presentation and New Accounting Pronouncements (Policies)

3 Months Ended

Mar. 26, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying condensed consolidated financial information of FormFactor, Inc. is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2021 Annual Report on Form 10-K filed with the SEC on February 18, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Fiscal Year

Fiscal Year 

We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2022 and 2021 contain 53 weeks and 52 weeks, respectively, and the three months ended March 26, 2022 and March 27, 2021 each contained 13 weeks. Fiscal 2022 will end on December 31, 2022.

New Accounting Pronouncements

New Accounting Pronouncements

ASU 2020-04

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

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption impact of the new standard will depend on the magnitude of future acquisitions. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

Fair Value

Whenever possible, the fair values of our financial assets and liabilities are determined using quoted market prices of identical securities or quoted market prices of similar securities from active markets. The three levels of inputs that may be used to measure fair value are as follows:

•Level 1 valuations are obtained from real-time quotes for transactions in active exchange markets involving identical securities;

•Level 2 valuations utilize significant observable inputs, such as quoted prices for similar assets or liabilities, quoted prices near the reporting date in markets that are less active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3 valuations utilize unobservable inputs to the valuation methodology and include our own data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the three months ended March 26, 2022 or the year ended December 25, 2021.

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

No changes were made to our valuation techniques during the first three months of fiscal 2022.

Assets and Liabilities Measured at Fair Value on a Non-Recurring BasisWe measure and report our non-financial assets such as Property, plant and equipment, Goodwill and Intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired or in the period when we make a business acquisition.

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Concentration of Credit and Other Risks (Tables)

3 Months Ended

Mar. 26, 2022

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
	March 26, 2022		March 27, 2021
Intel Corporation	20.8	%	28.1	%
Taiwan Semiconductor Manufacturing Co., LTD.	10.7	%	11.5	%
	31.5	%	39.6	%

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Inventories, net (Tables)

3 Months Ended

Mar. 26, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory Components

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

	March 26, 2022		December 25, 2021
Raw materials	$	60,976	$	57,673
Work-in-progress	41,875		35,935
Finished goods	22,739		17,940
	$	125,590	$	111,548

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 26, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill by Reportable Segments

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

	Probe Cards		Systems		Total
Goodwill, as of December 26, 2020	$	178,072	$	34,689	$	212,761
Addition - Baldwin Park Acquisition	352		—		352
Addition - HPD Acquisition	—		1,254		1,254
Foreign currency translation	—		(2,068)		(2,068)
Goodwill, as of December 25, 2021	178,424		33,875		212,299
Foreign currency translation	—		(746)		(746)
Goodwill, as of March 26, 2022	$	178,424	$	33,129	$	211,553

Schedule of Intangible Assets

Intangible assets were as follows (in thousands):

	March 26, 2022						December 25, 2021
Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	$	171,560	$	149,149	$	22,411	$	172,259	$	148,784	$	23,475
Customer relationships	51,080		40,638		10,442		51,270		39,254		12,016
Trade name	8,010		7,625		385		8,054		7,603		451
Backlog	—		—		—		1,896		1,896		—
In-process research and development	400		—		400		400		—		400
	$	231,050	$	197,412	$	33,638	$	233,879	$	197,537	$	36,342

Schedule of Amortization Expense

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	808	$	5,090
Selling, general and administrative	1,561		1,715
	$	2,369	$	6,805

Schedule of Estimated Amortization of Intangible Assets

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

Fiscal Year	Amount
Remainder of 2022	$	7,056
2023	7,062
2024	4,472
2025	4,219
2026	3,195
Thereafter	7,234
	$	33,238

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Accrued Liabilities (Tables)

3 Months Ended

Mar. 26, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Accrued compensation and benefits	$	28,321	$	29,706
Accrued income and other taxes	10,276		8,086
Accrued warranty	2,775		2,805
Employee stock purchase plan contributions withheld	2,027		4,693
Accrued restructuring charges	890		2,478
Other accrued expenses	3,149		3,068
	$	47,438	$	50,836

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Restructuring Charges (Tables)

3 Months Ended

Mar. 26, 2022

Restructuring and Related Activities [Abstract]

Restructuring Costs by Reportable Segment

Restructuring charges by reportable segment included in our Condensed Consolidated Statements of Income were as follows (in thousands):

	Three Months Ended
	March 26, 2022
	Probe Cards		Systems		Total
Cost of revenues	$	39	$	100	$	139
Research and development	—		146		146
Selling, general and administrative	3		25		28
	$	42	$	271	$	313

Schedule of Restructuring Accrual Activity

Changes to the restructuring accrual in the three months ended March 26, 2022 were as follows (in thousands):

	Employee Severance and Benefits		Inventory Impairments		Contract  Termination Costs		Total
December 25, 2021	$	1,028	$	—	$	1,450	$	2,478
Restructuring charges	163		150		—		313
Cash payments	(301)		—		(1,450)		(1,751)
Non-cash settlement	—		(150)		—		(150)
March 26, 2022	$	890	$	—	$	—	$	890

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Fair Value and Derivative Instruments (Tables)

3 Months Ended

Mar. 26, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets Measured on Recurring Basis

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

March 26, 2022	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	25,172	$	—	$	25,172
Commercial paper	—		7,132		7,132
U.S. treasuries	6,000		—		6,000
	31,172		7,132		38,304
Marketable securities:
U.S. treasuries	40,039		—		40,039
Certificates of deposit	—		951		951
U.S. agency securities	—		1,939		1,939
Corporate bonds	—		58,318		58,318
Commercial paper	—		27,927		27,927
	40,039		89,135		129,174
Interest rate swap derivative contracts	—		1,537		1,537
Total assets	$	71,211	$	97,804	$	169,015
Liabilities:
Foreign exchange derivative contracts	$	—	$	(577)	$	(577)

December 25, 2021	Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	9,526	$	—	$	9,526
U.S. treasuries	2,500		—		2,500
Commercial paper	—		1,000		1,000
U.S. agency securities	—		5,556		5,556
	12,026		6,556		18,582
Marketable securities:
U.S. treasuries	38,985		—		38,985
Certificates of deposit	—		1,199		1,199
Corporate bonds	—		52,709		52,709
Commercial paper	—		32,162		32,162
	38,985		86,070		125,055
Interest rate swap derivative contracts	—		629		629
Total assets	$	51,011	$	93,255	$	144,266
Liabilities:
Foreign exchange derivative contracts	$	—	$	(489)	$	(489)
Interest rate swap derivative contracts	—		(55)		(55)
Total liabilities	$	—	$	(544)	$	(544)

Schedule of Foreign Currency Forward Contracts

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2022 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)	Contract Amount (U.S. Dollars)
Euro Dollar	Buy	(9,967)	$	(11,617)
Euro Dollar	Sell	2,065	2,269
Japanese Yen	Sell	2,334,287	19,127
Korean Won	Buy	(1,281,414)	(1,052)
Taiwan Dollar	Sell	27,806	972
Total USD notional amount of outstanding foreign exchange contracts			$	9,699

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Warranty (Tables)

3 Months Ended

Mar. 26, 2022

Product Warranties Disclosures [Abstract]

Schedule of Reconciliation of Changes in Warranty Liability

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Balance at beginning of period	$	2,805	$	3,918
Accruals	1,214		1,374
Settlements	(1,244)		(1,573)
Balance at end of period	$	2,775	$	3,719

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Property, Plant, and Equipment, net (Tables)

3 Months Ended

Mar. 26, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant and equipment, net consisted of the following (in thousands):

	March 26, 2022		December 25, 2021
Land	$	4,751	$	4,751
Building and building improvements	44,123		41,722
Machinery and equipment	258,783		252,632
Computer equipment and software	45,200		44,667
Furniture and fixtures	7,367		7,293
Leasehold improvements	83,707		82,266
Sub-total	443,931		433,331
Less: Accumulated depreciation and amortization	(318,726)		(312,700)
Net, property, plant and equipment	125,205		120,631
Construction-in-process	26,974		25,924
Total	$	152,179	$	146,555

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Stockholders’ Equity and Stock-Based Compensation (Tables)

3 Months Ended

Mar. 26, 2022

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 25, 2021	2,166,934	$	28.63
Awards granted	12,450	40.94
Awards vested	(4,255)	36.70
Awards forfeited	(19,511)	28.18
RSUs at March 26, 2022	2,155,618	28.69

Schedule of ESPP Activity

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

	Three Months Ended
	March 26, 2022
Shares issued	157,642
Weighted average per share purchase price	$	35.81
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	(6.93)

Schedule of Stock-based Compensation

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

	Three Months Ended
	March 26, 2022		March 27, 2021
Cost of revenues	$	1,078	$	1,335
Research and development	1,986		1,689
Selling, general and administrative	4,456		4,053
Total stock-based compensation	$	7,520	$	7,077

Schedule of Unrecognized Stock-based Compensation

At March 26, 2022, the unrecognized stock-based compensation was as follows (dollars in thousands): 

	Unrecognized Expense		Average Expected Recognition Period in Years
Restricted stock units	$	31,005	2.00
Performance restricted stock units	8,652		1.90
Employee stock purchase plan	1,140		0.86
Total unrecognized stock-based compensation expense	$	40,797	1.95

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Net Income per Share (Tables)

3 Months Ended

Mar. 26, 2022

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
	March 26, 2022	March 27, 2021
Weighted-average shares used in computing basic net income per share	78,246	77,598
Add potentially dilutive securities	1,222	2,390
Weighted-average shares used in computing diluted net income per share	79,468	79,988
Securities not included as they would have been antidilutive	—	3

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Leases (Tables)

3 Months Ended

Mar. 26, 2022

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease expense were as follows (in thousands):

	Three Months Ended
	March 26, 2022		March 27, 2021
Lease expense:
Operating lease expense	$	2,221	$	2,123
Short-term lease expense	40		37
Variable lease expense	458		537
	$	2,719	$	2,697

Schedule of Future Minimum Payments Under Leases

Future minimum payments under our non-cancelable operating leases were as follows as of March 26, 2022 (in thousands):

Fiscal Year	Amount
Remainder of 2022	$	6,589
2023	7,680
2024	7,317
2025	7,270
2026	6,532
Thereafter	9,195
Total minimum lease payments	44,583
Less: interest	(5,168)
Present value of net minimum lease payments	39,415
Less: current portion	(8,049)
Total long-term operating lease liabilities	$	31,366

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Operating Segments and Enterprise-Wide Information (Tables)

3 Months Ended

Mar. 26, 2022

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
	March 26, 2022											March 27, 2021
	Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Revenues	$	159,983		$	37,191		$	—	$	197,174		$	158,898		$	27,738		$	—	$	186,636
Gross profit	77,202			19,407			(2,385)		94,224			70,315			13,599			(7,208)		76,706
Gross margin	48.3		%	52.2		%			47.8		%	44.3		%	49.0		%			41.1		%

Schedule of Disaggregation of Revenue by Segment

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

	Three Months Ended
	March 26, 2022						March 27, 2021
	Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:
Foundry & Logic	$	114,121	$	—	$	114,121	$	113,410	$	—	$	113,410
DRAM	34,437		—		34,437		33,898		—		33,898
Flash	11,425		—		11,425		11,590		—		11,590
Systems	—		37,191		37,191		—		27,738		27,738
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Timing of revenue recognition:
Products transferred at a point in time	$	158,836	$	35,416	$	194,252	$	158,476	$	24,671	$	183,147
Products and services transferred over time	1,147		1,775		2,922		422		3,067		3,489
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636
Geographical region:
Taiwan	$	42,522	$	10,547	$	53,069	$	44,734	$	846	$	45,580
China	32,791		5,608		38,399		37,831		4,794		42,625
South Korea	24,881		2,620		27,501		18,001		1,084		19,085
Malaysia	21,517		682		22,199		19,888		42		19,930
United States	19,976		5,671		25,647		21,308		8,178		29,486
Singapore	10,284		612		10,896		7,627		931		8,558
Japan	4,785		4,597		9,382		5,249		4,072		9,321
Europe	2,382		6,013		8,395		2,833		7,166		9,999
Rest of the world	845		841		1,686		1,427		625		2,052
Total	$	159,983	$	37,191	$	197,174	$	158,898	$	27,738	$	186,636

XML

Concentration of Credit and Other Risks (Details) - Customer Concentration Risk	3 Months Ended		6 Months Ended
	Mar. 26, 2022	Mar. 27, 2021	Jun. 26, 2021
Revenue from Contract with Customer Benchmark | Intel Corporation
Concentration Risk [Line Items]
Concentration risk percentage	20.80%	28.10%
Revenue from Contract with Customer Benchmark | Taiwan Semiconductor Manufacturing Co., LTD.
Concentration Risk [Line Items]
Concentration risk percentage	10.70%	11.50%
Revenue from Contract with Customer Benchmark | Customers Representing 10% or More of Total Revenues
Concentration Risk [Line Items]
Concentration risk percentage	31.50%	39.60%
Accounts Receivable | Major Customer 1
Concentration Risk [Line Items]
Concentration risk percentage	22.80%		13.80%
Revenue Benchmark | Two Major Customers
Concentration Risk [Line Items]
Concentration risk percentage	10.00%	10.00%

XML

Inventories, net (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 60,976	$ 57,673
Work-in-progress	41,875	35,935
Finished goods	22,739	17,940
Inventories	$ 125,590	$ 111,548

XML

Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 26, 2022	Dec. 25, 2021
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 212,299	$ 212,761
Foreign currency translation	(746)	(2,068)
Goodwill, ending balance	211,553	212,299
Baldwin Park
Goodwill [Roll Forward]
Goodwill, acquired during period		352
High Precision Devices, Inc.
Goodwill [Roll Forward]
Goodwill, acquired during period		1,254
Probe Cards
Goodwill [Roll Forward]
Goodwill, beginning balance	178,424	178,072
Foreign currency translation	0	0
Goodwill, ending balance	178,424	178,424
Probe Cards | Baldwin Park
Goodwill [Roll Forward]
Goodwill, acquired during period		352
Probe Cards | High Precision Devices, Inc.
Goodwill [Roll Forward]
Goodwill, acquired during period		0
Systems
Goodwill [Roll Forward]
Goodwill, beginning balance	33,875	34,689
Foreign currency translation	(746)	(2,068)
Goodwill, ending balance	$ 33,129	33,875
Systems | Baldwin Park
Goodwill [Roll Forward]
Goodwill, acquired during period		0
Systems | High Precision Devices, Inc.
Goodwill [Roll Forward]
Goodwill, acquired during period		$ 1,254

XML

Goodwill and Intangible Assets - Additional information (Details)	3 Months Ended
	Mar. 26, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, impairment loss	$ 0

XML

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Finite-Lived Intangible Assets [Line Items]
Gross	$ 231,050	$ 233,879
Accumulated Amortization	197,412	197,537
Net	33,638	36,342
Existing developed technologies
Finite-Lived Intangible Assets [Line Items]
Gross	171,560	172,259
Accumulated Amortization	149,149	148,784
Net	22,411	23,475
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross	51,080	51,270
Accumulated Amortization	40,638	39,254
Net	10,442	12,016
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross	8,010	8,054
Accumulated Amortization	7,625	7,603
Net	385	451
Backlog
Finite-Lived Intangible Assets [Line Items]
Gross	0	1,896
Accumulated Amortization	0	1,896
Net	0	0
In-process research and development
Finite-Lived Intangible Assets [Line Items]
Gross	400	400
Accumulated Amortization	0	0
Net	$ 400	$ 400

XML

Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 2,369	$ 6,805
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
Remainder of 2022	7,056
2023	7,062
2024	4,472
2025	4,219
2026	3,195
Thereafter	7,234
Net	33,238
Cost of revenues
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	808	5,090
Selling, general and administrative
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 1,561	$ 1,715

XML

Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Payables and Accruals [Abstract]
Accrued compensation and benefits	$ 28,321	$ 29,706
Accrued income and other taxes	10,276	8,086
Accrued warranty	2,775	2,805
Employee stock purchase plan contributions withheld	2,027	4,693
Accrued restructuring charges	890	2,478
Other accrued expenses	3,149	3,068
Accrued liabilities	$ 47,438	$ 50,836

XML

Restructuring Charges - Narrative (Details) $ in Millions	Mar. 26, 2022 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	$ 4.4
Employee Severance and Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.2
Contract Termination Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.5
Inventory Impairments
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.5
Other Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	0.3
Minimum
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	6.0
Minimum | Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	3.0
Minimum | Systems
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	3.0
Minimum | Employee Severance and Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.0
Minimum | Contract Termination Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	2.0
Minimum | Inventory Impairments
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.0
Minimum | Other Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	2.0
Maximum
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	9.0
Maximum | Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	4.5
Maximum | Systems
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	4.5
Maximum | Employee Severance and Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	2.0
Maximum | Contract Termination Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	3.0
Maximum | Inventory Impairments
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	1.5
Maximum | Other Costs
Restructuring Cost and Reserve [Line Items]
Restructuring expected cost	$ 2.5

XML

Restructuring Charges - Restructuring Charges (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2022 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 313
Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring charges	42
Systems
Restructuring Cost and Reserve [Line Items]
Restructuring charges	271
Cost of revenues
Restructuring Cost and Reserve [Line Items]
Restructuring charges	139
Cost of revenues | Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring charges	39
Cost of revenues | Systems
Restructuring Cost and Reserve [Line Items]
Restructuring charges	100
Research and development
Restructuring Cost and Reserve [Line Items]
Restructuring charges	146
Research and development | Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0
Research and development | Systems
Restructuring Cost and Reserve [Line Items]
Restructuring charges	146
Selling, general and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges	28
Selling, general and administrative | Probe Cards
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3
Selling, general and administrative | Systems
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 25

XML

Restructuring Charges - Changes to the Restructuring Accrual (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2022 USD ($)
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	$ 2,478
Restructuring charges	313
Cash payments	(1,751)
Non-cash settlement	(150)
Accrual at end of period	890
Employee Severance and Benefits
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	1,028
Restructuring charges	163
Cash payments	(301)
Non-cash settlement	0
Accrual at end of period	890
Inventory Impairments
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	0
Restructuring charges	150
Cash payments	0
Non-cash settlement	(150)
Accrual at end of period	0
Contract Termination Costs
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	1,450
Restructuring charges	0
Cash payments	(1,450)
Non-cash settlement	0
Accrual at end of period	$ 0

XML

Fair Value and Derivative Instruments - Fair Value Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	$ 38,304	$ 18,582
Marketable securities	129,174	125,055
Total assets	169,015	144,266
Total liabilities		(544)
Interest rate swap derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	1,537	629
Derivative liability		(55)
Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	(577)
Foreign exchange derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability		(489)
Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	25,172	9,526
Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	7,132	1,000
Marketable securities	27,927
Commercial paper | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities		32,162
U.S. treasuries
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	6,000	2,500
Marketable securities	40,039	38,985
Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	951	1,199
U.S. agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		5,556
Marketable securities	1,939
Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	58,318	52,709
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	31,172	12,026
Marketable securities	40,039	38,985
Total assets	71,211	51,011
Total liabilities		0
Level 1 | Interest rate swap derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	0	0
Derivative liability		0
Level 1 | Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0
Level 1 | Foreign exchange derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability		0
Level 1 | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	25,172	9,526
Level 1 | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0	0
Marketable securities	0
Level 1 | Commercial paper | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities		0
Level 1 | U.S. treasuries
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	6,000	2,500
Marketable securities	40,039	38,985
Level 1 | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Level 1 | U.S. agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		0
Marketable securities	0
Level 1 | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	7,132	6,556
Marketable securities	89,135	86,070
Total assets	97,804	93,255
Total liabilities		(544)
Level 2 | Interest rate swap derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative contracts	1,537	629
Derivative liability		(55)
Level 2 | Foreign exchange derivative contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	(577)
Level 2 | Foreign exchange derivative contracts | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability		(489)
Level 2 | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0	0
Level 2 | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	7,132	1,000
Marketable securities	27,927
Level 2 | Commercial paper | Designated as hedging instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities		32,162
Level 2 | U.S. treasuries
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0	0
Marketable securities	0	0
Level 2 | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	951	1,199
Level 2 | U.S. agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		5,556
Marketable securities	1,939
Level 2 | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	$ 58,318	$ 52,709

XML

Fair Value and Derivative Instruments - Foreign Currency Forward Contracts (Details) - Mar. 26, 2022 - Foreign Exchange Forward € in Thousands, ₩ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands	EUR (€)	USD ($)	JPY (¥)	KRW (₩)	TWD ($)
Derivative [Line Items]
Derivative, notional amount		$ 9,699
Buy | Euro Dollar
Derivative [Line Items]
Derivative, notional amount	€ 9,967	11,617
Buy | Korean Won
Derivative [Line Items]
Derivative, notional amount		1,052		₩ 1,281,414
Sell | Euro Dollar
Derivative [Line Items]
Derivative, notional amount	€ 2,065	2,269
Sell | Japanese Yen
Derivative [Line Items]
Derivative, notional amount		19,127	¥ 2,334,287
Sell | Taiwan Dollar
Derivative [Line Items]
Derivative, notional amount		$ 972			$ 27,806

XML

Fair Value and Derivative Instruments - Additional Information (Details) - USD ($)	Mar. 26, 2022	Dec. 25, 2021	Mar. 27, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on non-recurring basis	$ 169,015,000	$ 144,266,000
Liabilities measured at fair value on non-recurring basis		$ 544,000
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
Liabilities measured at fair value on non-recurring basis	$ 0		$ 0

XML

Warranty (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 2,805	$ 3,918
Accruals	1,214	1,374
Settlements	(1,244)	(1,573)
Balance at end of period	$ 2,775	$ 3,719

XML

Property, Plant, and Equipment, net (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Property, Plant and Equipment [Line Items]
Sub-total	$ 443,931	$ 433,331
Less: Accumulated depreciation and amortization	(318,726)	(312,700)
Net, property, plant and equipment	125,205	120,631
Construction-in-process	26,974	25,924
Total	152,179	146,555
Land
Property, Plant and Equipment [Line Items]
Sub-total	4,751	4,751
Building and building improvements
Property, Plant and Equipment [Line Items]
Sub-total	44,123	41,722
Machinery and equipment
Property, Plant and Equipment [Line Items]
Sub-total	258,783	252,632
Computer equipment and software
Property, Plant and Equipment [Line Items]
Sub-total	45,200	44,667
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Sub-total	7,367	7,293
Leasehold improvements
Property, Plant and Equipment [Line Items]
Sub-total	$ 83,707	$ 82,266

XML

Stockholders’ Equity and Stock-Based Compensation - Additional Information (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 26, 2022	Dec. 25, 2021	Oct. 26, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase of common stock value retired through repurchase program	$ 9,397,000
PRSUs | Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	0
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program authorized amount			$ 50,000,000
Purchase of common stock retired through repurchase program (in shares)	240,548	622,400
Purchase of common stock value retired through repurchase program	$ 9,400,000	$ 24,000,000
Amount remaining for future repurchases	$ 16,600,000

XML

Stockholders’ Equity and Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Equity Incentive Plan - Restricted Stock Units	3 Months Ended
	Mar. 26, 2022 $ / shares shares
Units
Beginning balance (in shares) | shares	2,166,934
Awards granted (in shares) | shares	12,450
Awards vested (in shares) | shares	(4,255)
Awards canceled (in shares) | shares	(19,511)
Ending balance (in shares) | shares	2,155,618
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 28.63
Awards granted (in dollars per share) | $ / shares	40.94
Awards vested (in dollars per share) | $ / shares	36.70
Awards canceled (in dollars per share) | $ / shares	28.18
Ending balance (in dollars per share) | $ / shares	$ 28.69

XML

Stockholders’ Equity and Stock-Based Compensation - ESPP Activity (Details) - Employee stock purchase plan	3 Months Ended
	Mar. 26, 2022 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares) | shares	157,642
Weighted average per share purchase price (in dollars per share)	$ 35.81
Weighted average per share discount from the fair value of our common stock on the date of issuance (in dollars per share)	$ (6.93)

XML

Stockholders’ Equity and Stock-Based Compensation - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 7,520	$ 7,077
Cost of revenues
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,078	1,335
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,986	1,689
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 4,456	$ 4,053

XML

Stockholders’ Equity and Stock-Based Compensation - Unrecognized Compensation Costs (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2022 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Expense	$ 40,797
Average Expected Recognition Period in Years	1 year 11 months 12 days
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Expense	$ 31,005
Average Expected Recognition Period in Years	2 years
Performance restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Expense	$ 8,652
Average Expected Recognition Period in Years	1 year 10 months 24 days
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Expense	$ 1,140
Average Expected Recognition Period in Years	10 months 9 days

XML

Net Income per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Earnings Per Share [Abstract]
Weighted-average shares used in computing basic net income per share (in shares)	78,246	77,598
Add potentially dilutive securities (in shares)	1,222	2,390
Weighted-average shares used in computing diluted net income per share (in shares)	79,468	79,988
Securities not included as they would have been antidilutive (in shares)	0	3

XML

Leases - Narrative (Details)	Mar. 26, 2022
Lessee, Lease, Description [Line Items]
Operating lease, renewal term	20 years
Operating lease, weighted average remaining lease term	6 years
Operating lease, weighted average discount rate	3.67%
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	7 years
Automobiles | Minimum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	1 year
Automobiles | Maximum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	3 years

XML

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Leases [Abstract]
Operating lease expense	$ 2,221	$ 2,123
Short-term lease expense	40	37
Variable lease expense	458	537
Total lease expense	$ 2,719	$ 2,697

XML

Leases - Schedule of Future Minimum Payments Under Leases (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Leases [Abstract]
Remainder of 2022	$ 6,589
2023	7,680
2024	7,317
2025	7,270
2026	6,532
Thereafter	9,195
Total minimum lease payments	44,583
Less: interest	(5,168)
Present value of net minimum lease payments	39,415
Less: current portion	(8,049)	$ (7,901)
Total long-term operating lease liabilities	$ 31,366	$ 31,009

XML

Revenue - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 26, 2022	Dec. 25, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 7.7
Contract assets	0.9	$ 0.9
Contract with customer, liability	28.0	$ 24.2
Revenue recognized included in contracts	$ 11.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	75.60%
Revenue, remaining performance obligation, expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	18.40%
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-28
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	6.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period

XML

Operating Segments and Enterprise-Wide Information - Additional Information (Details)	3 Months Ended
	Mar. 26, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Operating Segments and Enterprise-Wide Information - Operating Results by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Segment Reporting Information [Line Items]
Revenues	$ 197,174	$ 186,636
Gross profit	$ 94,224	$ 76,706
Gross margin	47.80%	41.10%
Probe Cards
Segment Reporting Information [Line Items]
Revenues	$ 159,983	$ 158,898
Systems
Segment Reporting Information [Line Items]
Revenues	37,191	27,738
Operating segments | Probe Cards
Segment Reporting Information [Line Items]
Revenues	159,983	158,898
Gross profit	$ 77,202	$ 70,315
Gross margin	48.30%	44.30%
Operating segments | Systems
Segment Reporting Information [Line Items]
Revenues	$ 37,191	$ 27,738
Gross profit	$ 19,407	$ 13,599
Gross margin	52.20%	49.00%
Operating segments | Corporate and Other
Segment Reporting Information [Line Items]
Revenues	$ 0	$ 0
Gross profit	$ (2,385)	$ (7,208)
Gross margin

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Operating Segments and Enterprise-Wide Information - Revenue by Segment, Recognition Type, and Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Disaggregation of Revenue [Line Items]
Revenues	$ 197,174	$ 186,636
Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	159,983	158,898
Systems
Disaggregation of Revenue [Line Items]
Revenues	37,191	27,738
Taiwan
Disaggregation of Revenue [Line Items]
Revenues	53,069	45,580
Taiwan | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	42,522	44,734
Taiwan | Systems
Disaggregation of Revenue [Line Items]
Revenues	10,547	846
China
Disaggregation of Revenue [Line Items]
Revenues	38,399	42,625
China | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	32,791	37,831
China | Systems
Disaggregation of Revenue [Line Items]
Revenues	5,608	4,794
South Korea
Disaggregation of Revenue [Line Items]
Revenues	27,501	19,085
South Korea | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	24,881	18,001
South Korea | Systems
Disaggregation of Revenue [Line Items]
Revenues	2,620	1,084
Malaysia
Disaggregation of Revenue [Line Items]
Revenues	22,199	19,930
Malaysia | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	21,517	19,888
Malaysia | Systems
Disaggregation of Revenue [Line Items]
Revenues	682	42
United States
Disaggregation of Revenue [Line Items]
Revenues	25,647	29,486
United States | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	19,976	21,308
United States | Systems
Disaggregation of Revenue [Line Items]
Revenues	5,671	8,178
Singapore
Disaggregation of Revenue [Line Items]
Revenues	10,896	8,558
Singapore | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	10,284	7,627
Singapore | Systems
Disaggregation of Revenue [Line Items]
Revenues	612	931
Japan
Disaggregation of Revenue [Line Items]
Revenues	9,382	9,321
Japan | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	4,785	5,249
Japan | Systems
Disaggregation of Revenue [Line Items]
Revenues	4,597	4,072
Europe
Disaggregation of Revenue [Line Items]
Revenues	8,395	9,999
Europe | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	2,382	2,833
Europe | Systems
Disaggregation of Revenue [Line Items]
Revenues	6,013	7,166
Rest of the world
Disaggregation of Revenue [Line Items]
Revenues	1,686	2,052
Rest of the world | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	845	1,427
Rest of the world | Systems
Disaggregation of Revenue [Line Items]
Revenues	841	625
Products transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenues	194,252	183,147
Products transferred at a point in time | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	158,836	158,476
Products transferred at a point in time | Systems
Disaggregation of Revenue [Line Items]
Revenues	35,416	24,671
Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenues	2,922	3,489
Products and services transferred over time | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	1,147	422
Products and services transferred over time | Systems
Disaggregation of Revenue [Line Items]
Revenues	1,775	3,067
Foundry & Logic
Disaggregation of Revenue [Line Items]
Revenues	114,121	113,410
Foundry & Logic | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	114,121	113,410
Foundry & Logic | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0
DRAM
Disaggregation of Revenue [Line Items]
Revenues	34,437	33,898
DRAM | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	34,437	33,898
DRAM | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0
Flash
Disaggregation of Revenue [Line Items]
Revenues	11,425	11,590
Flash | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	11,425	11,590
Flash | Systems
Disaggregation of Revenue [Line Items]
Revenues	0	0
Systems
Disaggregation of Revenue [Line Items]
Revenues	37,191	27,738
Systems | Probe Cards
Disaggregation of Revenue [Line Items]
Revenues	0	0
Systems | Systems
Disaggregation of Revenue [Line Items]
Revenues	$ 37,191	$ 27,738