UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

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

For the quarterly period ended ~~June 25, 2022~~April 1, 2023

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

For the transition period from to

Commission file number: 000-50307

FormFactor, Inc.

(Exact name of registrant as specified in its charter)


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

7005 Southfront Road, Livermore, California 94551

(Address of principal executive offices, including zip code)

(925) 290-4000

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value

FORM

Nasdaq Global Market

______________________________________

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

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

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

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of ~~July 27, 2022, 77,132,681~~May 3, 2023, 77,144,094 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.

FORMFACTOR, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~JUNE 25, 2022~~APRIL 1, 2023

INDEX


Part I.	Financial Information

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of ~~June~~April 2 51 , ~~2022~~202 3 and December ~~25, 2021~~31 , 20 2 2	3

	Condensed Consolidated Statements of Income for the three a ~~nd six~~ months ended April ~~June~~1 , 202 3 and March 2 56 , ~~2022 and~~ 20 ~~June 26~~2 ~~, 2021~~2	4

	Condensed Consolidated Statements of Comprehensive Income for the three an ~~d si~~x months ended ~~June~~April 2 51 , ~~2022~~202 3 and ~~June~~ March 2 6 , ~~2021~~20 2 2	5

	Condensed Consolidated Statement of Stockholders' Equity for the three ~~and six~~months ended ~~June~~April 2 51 , ~~2022~~202 3 and ~~June~~ March 2 6 , ~~2021~~20 2 2	6

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June~~April 2 51 , ~~2022~~202 3 and ~~June~~March 2 6 , ~~2021~~20 2 2	87

	Notes to Condensed Consolidated Financial Statements	109

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2219

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3227

Item 4.	Controls and Procedures	3227

Part II.	Other Information	3328



Item 1A.	Risk Factors	3328

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







Item 6.	Exhibits	3429

Signatures		3530

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FORMFACTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


		June 25, 2022		December 25, 2021			April 1, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	136,395	$	151,010	Cash and cash equivalents	$	112,360	$	109,130
Marketable securities	Marketable securities	129,919		125,055		Marketable securities	123,891		129,006
Accounts receivable, net of allowance for credit losses of $193 and $195		107,726		115,541
Accounts receivable, net of allowance for credit losses of $169 and $168						Accounts receivable, net of allowance for credit losses of $169 and $168	103,969		88,143
Inventories, net	Inventories, net	143,475		111,548		Inventories, net	116,553		123,157
Restricted cash	Restricted cash	2,102		2,233		Restricted cash	1,207		1,221
Prepaid expenses and other current assets	Prepaid expenses and other current assets	17,447		18,652		Prepaid expenses and other current assets	22,941		23,895
Total current assets	Total current assets	537,064		524,039		Total current assets	480,921		474,552
Restricted cash	Restricted cash	1,802		2,099		Restricted cash	2,287		2,631
Operating lease, right-of-use-assets	Operating lease, right-of-use-assets	33,499		35,210		Operating lease, right-of-use-assets	30,420		31,362
Property, plant and equipment, net of accumulated depreciation	Property, plant and equipment, net of accumulated depreciation	157,814		146,555		Property, plant and equipment, net of accumulated depreciation	198,232		189,848
Goodwill	Goodwill	212,357		212,299		Goodwill	211,773		211,444
Intangibles, net	Intangibles, net	30,872		36,342		Intangibles, net	24,486		26,751
Deferred tax assets	Deferred tax assets	65,059		61,995		Deferred tax assets	67,951		67,646
Other assets	Other assets	3,980		1,981		Other assets	3,686		3,994
Total assets	Total assets	$	1,042,447	$	1,020,520	Total assets	$	1,019,756	$	1,008,228

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	60,927	$	57,862	Accounts payable	$	63,756	$	69,308
Accrued liabilities	Accrued liabilities	54,835		50,836		Accrued liabilities	31,981		42,115
Current portion of term loans, net of unamortized issuance costs		4,725		8,931
Current portion of term loan, net of unamortized issuance costs						Current portion of term loan, net of unamortized issuance costs	1,142		1,045
Deferred revenue	Deferred revenue	31,255		23,224		Deferred revenue	23,779		29,846
Operating lease liabilities	Operating lease liabilities	7,843		7,901		Operating lease liabilities	7,512		7,353
Total current liabilities	Total current liabilities	159,585		148,754		Total current liabilities	128,170		149,667
Term loans, less current portion, net of unamortized issuance costs		14,915		15,434
Term loan, less current portion, net of unamortized issuance costs						Term loan, less current portion, net of unamortized issuance costs	14,034		14,389
Deferred tax liabilities	Deferred tax liabilities	2,909		3,623		Deferred tax liabilities	2,905		2,732
Long-term operating lease liabilities	Long-term operating lease liabilities	29,511		31,009		Long-term operating lease liabilities	26,407		27,587
Deferred grant						Deferred grant	18,000		—
Other liabilities	Other liabilities	5,542		5,920		Other liabilities	5,868		5,568
Total liabilities	Total liabilities	212,462		204,740		Total liabilities	195,384		199,943

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:

Common stock, $0.001 par value:	Common stock, $0.001 par value:					Common stock, $0.001 par value:
250,000,000 shares authorized; 77,194,733 and 78,240,506 shares issued and outstanding		77		78
250,000,000 shares authorized; 77,142,023 and 76,914,590 shares issued and outstanding						250,000,000 shares authorized; 77,142,023 and 76,914,590 shares issued and outstanding	77		77

Additional paid-in capital	Additional paid-in capital	860,584		898,945		Additional paid-in capital	858,195		844,842
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,996)		(1,449)		Accumulated other comprehensive loss	(4,186)		(5,578)
Accumulated deficit	Accumulated deficit	(21,680)		(81,794)		Accumulated deficit	(29,714)		(31,056)
Total stockholders’ equity	Total stockholders’ equity	829,985		815,780		Total stockholders’ equity	824,372		808,285
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,042,447	$	1,020,520	Total liabilities and stockholders’ equity	$	1,019,756	$	1,008,228

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Revenues	Revenues	$	203,907	$	188,076	$	401,081	$	374,712	Revenues	$	167,448	$	197,174
Cost of revenues	Cost of revenues	109,538		111,793		212,488		221,723		Cost of revenues	106,370		102,950
Gross profit	Gross profit	94,369		76,283		188,593		152,989		Gross profit	61,078		94,224
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	28,317		25,454		55,451		49,500		Research and development	28,245		27,134
Selling, general and administrative	Selling, general and administrative	33,406		30,479		66,312		60,494		Selling, general and administrative	32,742		32,906
Total operating expenses	Total operating expenses	61,723		55,933		121,763		109,994		Total operating expenses	60,987		60,040
Operating income	Operating income	32,646		20,350		66,830		42,995		Operating income	91		34,184
Interest income		300		148		438		342
Interest expense		(119)		(116)		(311)		(296)
Other income (expense), net		551		(194)		743		(22)
Interest income (expense), net										Interest income (expense), net	1,276		(54)

Other income, net										Other income, net	23		192
Income before income taxes	Income before income taxes	33,378		20,188		67,700		43,019		Income before income taxes	1,390		34,322
Provision for income taxes	Provision for income taxes	3,136		2,283		7,586		5,489		Provision for income taxes	48		4,450
Net income	Net income	$	30,242	$	17,905	$	60,114	$	37,530	Net income	$	1,342	$	29,872
Net income per share:	Net income per share:									Net income per share:
Basic	Basic	$	0.39	$	0.23	$	0.77	$	0.48	Basic	$	0.02	$	0.38
Diluted	Diluted	$	0.38	$	0.23	$	0.76	$	0.47	Diluted	$	0.02	$	0.38
Weighted-average number of shares used in per share calculations:	Weighted-average number of shares used in per share calculations:									Weighted-average number of shares used in per share calculations:
Basic	Basic	77,897		77,463		78,071		77,530		Basic	77,066		78,246
Diluted	Diluted	79,210		79,466		79,423		79,621		Diluted	77,255		79,468

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Net income	Net income	$	30,242	$	17,905	$	60,114	$	37,530	Net income	$	1,342	$	29,872
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Translation adjustments and other		(3,856)		632		(6,554)		(1,747)
Unrealized losses on available-for-sale marketable securities		(547)		(97)		(1,751)		(228)
Translation adjustments										Translation adjustments	832		(2,698)
Unrealized gains (losses) on available-for-sale marketable securities										Unrealized gains (losses) on available-for-sale marketable securities	603		(1,204)
Unrealized gains (losses) on derivative instruments	Unrealized gains (losses) on derivative instruments	(116)		(89)		758		(315)		Unrealized gains (losses) on derivative instruments	(43)		874
Other comprehensive income (loss), net of tax		(4,519)		446		(7,547)		(2,290)
Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:	1,392		(3,028)
Comprehensive income	Comprehensive income	$	25,723	$	18,351	$	52,567	$	35,240	Comprehensive income	$	2,734	$	26,844

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except shares)

(Unaudited)
Shares of
Common
Stock Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Six Months Ended June 25, 2022
Balances, December 25, 2021 78,240,506 $ 78 $ 898,945 $ (1,449) $ (81,794) $ 815,780
Issuance of common stock under the Employee Stock Purchase Plan 157,642 — 5,645 — — 5,645
Issuance of common stock pursuant to exercise of options 6,000 — 42 — — 42
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 234,076 — (4,243) — — (4,243)
Purchase and retirement of common stock through repurchase program (1,443,491) (1) (54,327) — — (54,328)
Stock-based compensation — — 14,522 — — 14,522
Other comprehensive loss — — — (7,547) — (7,547)
Net income — — — — 60,114 60,114
Balances, June 25, 2022 77,194,733 $ 77 $ 860,584 $ (8,996) $ (21,680) $ 829,985
Three Months Ended June 25, 2022
Balances, March 26, 2022 78,166,212 $ 78 $ 902,994 $ (4,477) $ (51,922) $ 846,673
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax 231,464 — (4,171) — — (4,171)
Purchase and retirement of common stock through repurchase program (1,202,943) (1) (44,930) — — (44,931)
Stock-based compensation — — 6,691 — — 6,691
Other comprehensive loss — — — (4,519) — (4,519)
Net income — — — — 30,242 30,242
Balances, June 25, 2022 77,194,733 $ 77 $ 860,584 $ (8,996) $ (21,680) $ 829,985


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

	Three Months Ended April 1, 2023
Balances, December 31, 2022	76,914,590	$	77	$	844,842	$	(5,578)	$	(31,056)	$	808,285
Issuance of common stock under the Employee Stock Purchase Plan	210,055	—		5,024		—		—		5,024

Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	17,378	—		(387)		—		—		(387)

Stock-based compensation	—	—		8,716		—		—		8,716
Other comprehensive income	—	—		—		1,392		—		1,392
Net income	—	—		—		—		1,342		1,342
Balances, April 1, 2023	77,142,023	$	77	$	858,195	$	(4,186)	$	(29,714)	$	824,372

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

~~FORMFACTOR, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(In thousands, except shares)~~

~~(Unaudited)~~


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

		Six Months Ended June 26, 2021															Three Months Ended March 26, 2022
Balances, December 26, 2020		77,437,997	$	78	—	$	—	$	903,838	$	5,886	$	(165,718)	$	744,084
Balances, December 25, 2021																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	Issuance of common stock under the Employee Stock Purchase Plan	228,784	—		—	—		5,065		—		—		5,065		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	Issuance of common stock pursuant to exercise of options	100,000	—		—	—		844		—		—		844		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	Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax	308,219	—		—	—		(5,261)		—		—		(5,261)		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	Purchase and retirement of common stock through repurchase program	(620,200)	(1)		—	—		(23,950)		—		—		(23,951)		Purchase and retirement of common stock through repurchase program	(240,548)	—		(9,397)		—		—		(9,397)
Stock-based compensation	Stock-based compensation	—	—		—	—		13,526		—		—		13,526		Stock-based compensation	—	—		7,831		—		—		7,831
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		(2,290)		—		(2,290)		Other comprehensive loss	—	—		—		(3,028)		—		(3,028)
Net income	Net income	—	—		—	—		—		—		37,530		37,530		Net income	—	—		—		—		29,872		29,872
Balances, June 26, 2021		77,454,800	$	77	—	$	—	$	894,062	$	3,596	$	(128,188)	$	769,547
Balances, March 26, 2022																Balances, March 26, 2022	78,166,212	$	78	$	902,994	$	(4,477)	$	(51,922)	$	846,673

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

Issuance of common stock pursuant to exercise of options		50,000	—		—	—		422		—		—		422
Issuance of common stock pursuant to vesting of restricted stock units, net of stock withheld for tax		266,470	—		—	—		(4,120)		—		—		(4,120)
Purchase and retirement of common stock through repurchase program		(620,200)	(1)		136,402	5,738		(23,950)		—		—		(18,213)
Stock-based compensation		—	—		—	—		6,574		—		—		6,574
Other comprehensive income		—	—		—	—		—		446		—		446
Net income		—	—		—	—		—		—		17,905		17,905
Balances, June 26, 2021		77,454,800	$	77	—	$	—	$	894,062	$	3,596	$	(128,188)	$	769,547

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	60,114	$	37,530	Net income	$	1,342	$	29,872
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	14,146		12,678		Depreciation	7,576		6,960
Amortization	Amortization	4,702		13,900		Amortization	2,378		2,369
Reduction in the carrying amount of right-of-use assets	Reduction in the carrying amount of right-of-use assets	4,414		3,652		Reduction in the carrying amount of right-of-use assets	1,690		2,492
Stock-based compensation expense	Stock-based compensation expense	13,878		13,665		Stock-based compensation expense	9,290		7,520

Provision for excess and obsolete inventories	Provision for excess and obsolete inventories	4,726		6,898		Provision for excess and obsolete inventories	4,973		2,501
Non-cash restructuring charges		710		—
Gain on contingent consideration		—		(95)

Other adjustments to reconcile net income to net cash provided by operating activities	Other adjustments to reconcile net income to net cash provided by operating activities	(567)		1,211		Other adjustments to reconcile net income to net cash provided by operating activities	133		182
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	5,530		(1,194)		Accounts receivable	(15,926)		966
Inventories	Inventories	(32,268)		(20,388)		Inventories	1,375		(17,080)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,295		3,179		Prepaid expenses and other current assets	1,009		(144)
Other assets	Other assets	(40)		(344)		Other assets	(55)		(73)
Accounts payable	Accounts payable	7,521		(2,028)		Accounts payable	(1,819)		10,150
Accrued liabilities	Accrued liabilities	4,102		(235)		Accrued liabilities	(10,209)		(3,120)
Other liabilities	Other liabilities	73		184		Other liabilities	319		87
Deferred revenues	Deferred revenues	2,727		1,522		Deferred revenues	(6,046)		3,908
Deferred grant						Deferred grant	18,000		—
Operating lease liabilities	Operating lease liabilities	(4,262)		(3,980)		Operating lease liabilities	(1,721)		(2,435)
Net cash provided by operating activities	Net cash provided by operating activities	86,801		66,155		Net cash provided by operating activities	12,309		44,155
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of property, plant and equipment	Acquisition of property, plant and equipment	(30,116)		(31,322)		Acquisition of property, plant and equipment	(19,701)		(15,606)
Acquisition of business		(3,121)		—

Purchases of marketable securities	Purchases of marketable securities	(52,344)		(71,186)		Purchases of marketable securities	(27,311)		(23,462)
Purchase of promissory note receivable		(1,000)		—

Proceeds from maturities and sales of marketable securities	Proceeds from maturities and sales of marketable securities	45,470		42,695		Proceeds from maturities and sales of marketable securities	33,473		17,990
Net cash used in investing activities	Net cash used in investing activities	(41,111)		(59,813)		Net cash used in investing activities	(13,539)		(21,078)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuances of common stock	Proceeds from issuances of common stock	5,687		5,909		Proceeds from issuances of common stock	5,024		5,687
Purchase of common stock through stock repurchase program	Purchase of common stock through stock repurchase program	(54,328)		(23,951)		Purchase of common stock through stock repurchase program	—		(9,397)
Tax withholdings related to net share settlements of equity awards	Tax withholdings related to net share settlements of equity awards	(4,243)		(5,261)		Tax withholdings related to net share settlements of equity awards	(387)		(72)
Payment of contingent consideration		—		(3,873)

Principal repayments on term loans	Principal repayments on term loans	(4,379)		(4,740)		Principal repayments on term loans	(259)		(2,234)

Net cash used in financing activities		(57,263)		(31,916)
Net cash provided by (used) in financing activities						Net cash provided by (used) in financing activities	4,378		(6,016)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3,470)		(1,558)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(276)		(1,142)
Net decrease in cash, cash equivalents and restricted cash		(15,043)		(27,132)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	2,872		15,919
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	155,342		191,098		Cash, cash equivalents and restricted cash, beginning of period	112,982		155,342
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	140,299	$	163,966	Cash, cash equivalents and restricted cash, end of period	$	115,854	$	171,261

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

FORMFACTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Increase (decrease) in accounts payable and accrued liabilities related to property, plant and equipment purchases		$	(4,165)	$	2,906
Decrease in accounts payable and accrued liabilities related to property, plant and equipment purchases						Decrease in accounts payable and accrued liabilities related to property, plant and equipment purchases	$	3,755	$	2,524

Operating lease, right-of-use assets obtained in exchange for lease obligations	Operating lease, right-of-use assets obtained in exchange for lease obligations	3,438		11,629		Operating lease, right-of-use assets obtained in exchange for lease obligations	727		3,359

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	Cash paid for income taxes, net	$	6,473	$	4,559	Cash paid for income taxes, net	$	7,391	$	890
Cash paid for interest	Cash paid for interest	294		339		Cash paid for interest	106		163
Operating cash outflows from operating leases	Operating cash outflows from operating leases	4,379		4,352		Operating cash outflows from operating leases	2,191		2,094

Reconciliation of cash, cash equivalents and restricted cash:	Reconciliation of cash, cash equivalents and restricted cash:					Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	Cash and cash equivalents	$	136,395	$	160,273	Cash and cash equivalents	$	112,360	$	167,182
Restricted cash, current	Restricted cash, current	2,102		1,857		Restricted cash, current	1,207		2,026
Restricted cash, non-current	Restricted cash, non-current	1,802		1,836		Restricted cash, non-current	2,287		2,053
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	140,299	$	163,966	Total cash, cash equivalents and restricted cash	$	115,854	$	171,261

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

FORMFACTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation and ~~New~~Significant Accounting ~~Pronouncements~~Policies

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~~2022 Annual Report on Form 10-K filed with the SEC on February ~~18, 2022.~~24, 2023. 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 2023 and 2022 ~~and 2021~~ contain 5352 weeks and 5253 weeks, respectively, and the ~~six~~three months ended ~~June 25,~~April 1, 2023 and March 26, 2022 ~~and June 26, 2021~~ each contained 2613 weeks. Fiscal ~~2022~~2023 will end on December ~~31, 2022.~~30, 2023.

Significant Accounting Policies

Our significant accounting policies have not changed during the ~~six~~three months ended ~~June 25, 2022~~April 1, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December ~~25, 2021.~~31, 2022, except for:

~~Reclassifications~~Government Assistance

~~Certain immaterial reclassifications were made~~In January 2023, we received $18.0 million in cash from a California Competes Grant (the “Grant”) awarded from the California Governor’s Office of Business and Economic Development. The Grant requires FormFactor to create and maintain full-time jobs and make significant infrastructure investments within California over a 5-year term. If we do not meet the ~~prior year financial statements~~requirements of the Grant, we will be required to ~~conform to~~repay all or a portion of the ~~current year presentation.~~Grant.

~~New Accounting Pronouncements~~

~~ASU 2020-04~~

~~In March 2020,~~The Grant is included in our Condensed Consolidated Balance Sheets within Deferred grant and we have elected to recognize when earned as an offset to Cost of revenues and Operating expenses within our Condensed Consolidated Statements of Income. We have elected to present 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 dateproceeds from the ~~beginning~~Grant as cash provided by operating activities within our Condensed Consolidated Statements of ~~an interim period that includes or~~Cash Flows as the grant 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.offset operations.

~~ASU 2021-08~~

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

Note 2 — Concentration of Credit and Other Risks

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Intel Corporation	Intel Corporation	20.9	%	16.2	%	20.9	%	22.1	%	Intel Corporation	20.0	%	20.8	%
Samsung Electronics., LTD.		*		14.7	%	*		*

Taiwan Semiconductor Manufacturing Co., LTD.	Taiwan Semiconductor Manufacturing Co., LTD.	*		11.0	%	*		11.2	%	Taiwan Semiconductor Manufacturing Co., LTD.	*		10.7	%

		20.9	%	41.9	%	20.9	%	33.3	%		20.0	%	31.5	%

At ~~June 25, 2022, one customer~~April 1, 2023, two customers accounted for ~~20.0%~~17.9% and 15.9% of gross accounts ~~receivable.~~receivable, respectively. At December ~~25, 2021,~~31, 2022, one customer accounted for 13.8% of gross accounts receivable.

Note 3 — Inventories, net

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

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


		June 25, 2022		December 25, 2021			April 1, 2023		December 31, 2022
Raw materials	Raw materials	$	68,247	$	57,673	Raw materials	$	57,748	$	55,726
Work-in-progress	Work-in-progress	52,619		35,935		Work-in-progress	39,376		46,067
Finished goods	Finished goods	22,609		17,940		Finished goods	19,429		21,364
		$	143,475	$	111,548		$	116,553	$	123,157

Note 4~~— Acquisition~~

~~Woburn Acquisition~~

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

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

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

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


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

~~Goodwill~~	~~1,798~~
~~Net Assets Acquired~~	$	~~3,121~~

~~Note 5~~ — Goodwill and Intangible Assets

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


		Probe Cards		Systems		Total			Probe Cards		Systems		Total
Goodwill, as of December 26, 2020		$	178,072	$	34,689	$	212,761
Goodwill, as of December 25, 2021								Goodwill, as of December 25, 2021	$	178,424	$	33,875	$	212,299

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

Addition - Woburn Acquisition	Addition - Woburn Acquisition	—		1,798		1,798		Addition - Woburn Acquisition	—		550		550
Foreign currency translation	Foreign currency translation	—		(1,740)		(1,740)		Foreign currency translation	—		(1,405)		(1,405)
Goodwill, as of June 25, 2022		$	178,424	$	33,933	$	212,357
Goodwill, as of December 31, 2022								Goodwill, as of December 31, 2022	178,424		33,020		211,444

Foreign currency translation								Foreign currency translation	—		329		329
Goodwill, as of April 1, 2023								Goodwill, as of April 1, 2023	$	178,424	$	33,349	$	211,773

We have not recorded goodwill impairments for the ~~six~~three months ended ~~June 25, 2022.~~April 1, 2023.

Intangible assets were as follows (in thousands):


		June 25, 2022						December 25, 2021							April 1, 2023						December 31, 2022
Intangible Assets	Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Intangible Assets	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Existing developed technologies	Existing developed technologies	$	170,627	$	149,338	$	21,289	$	172,259	$	148,784	$	23,475	Existing developed technologies	$	171,750	$	152,260	$	19,490	$	171,441	$	151,212	$	20,229
Customer relationships	Customer relationships	50,827		41,966		8,861		51,270		39,254		12,016		Customer relationships	50,996		46,559		4,437		50,912		45,003		5,909
Trade name	Trade name	7,952		7,630		322		8,054		7,603		451		Trade name	7,992		7,833		159		7,972		7,759		213
Backlog		—		—		—		1,896		1,896		—

In-process research and development	In-process research and development	400		—		400		400		—		400		In-process research and development	400		—		400		400		—		400
		$	229,806	$	198,934	$	30,872	$	233,879	$	197,537	$	36,342		$	231,138	$	206,652	$	24,486	$	230,725	$	203,974	$	26,751

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Cost of revenues	Cost of revenues	$	788	$	5,505	$	1,596	$	10,595	Cost of revenues	$	831	$	808
Selling, general and administrative	Selling, general and administrative	1,545		1,590		3,106		3,305		Selling, general and administrative	1,547		1,561
		$	2,333	$	7,095	$	4,702	$	13,900		$	2,378	$	2,369

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


Fiscal Year	Fiscal Year	Amount		Fiscal Year	Amount
Remainder of 2022		$	4,650
2023		6,968
Remainder of 2023				Remainder of 2023	$	4,813
2024	2024	4,390		2024	4,611
2025	2025	4,142		2025	4,268
2026	2026	3,134		2026	3,175
2027				2027	2,832
Thereafter	Thereafter	7,188		Thereafter	4,387
		$	30,472		$	24,086

Note 65 — Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


		June 25, 2022		December 25, 2021			April 1, 2023		December 31, 2022
Accrued compensation and benefits	Accrued compensation and benefits	$	32,001	$	29,706	Accrued compensation and benefits	$	20,028	$	15,864
Accrued income and other taxes	Accrued income and other taxes	9,468		8,086		Accrued income and other taxes	3,241		12,817
Accrued warranty	Accrued warranty	3,978		2,805		Accrued warranty	3,872		4,199
Employee stock purchase plan contributions withheld	Employee stock purchase plan contributions withheld	4,789		4,693		Employee stock purchase plan contributions withheld	1,533		4,585
Accrued restructuring charges	Accrued restructuring charges	592		2,478		Accrued restructuring charges	376		1,249
Other accrued expenses	Other accrued expenses	4,007		3,068		Other accrued expenses	2,931		3,401
		$	54,835	$	50,836		$	31,981	$	42,115

Note 76 — Restructuring Charges

2022 Restructuring Plan

On October 25, 2022, we adopted a restructuring plan (“2022 restructuring plan”) to align our cost structure with reduced demand levels, by streamlining and improving the efficiency and business effectiveness of our operations. This plan included lowering headcount by approximately 13% of our workforce.

The Company has recognized 2022 restructuring plan charges of approximately $8.1 million for severance and employee-related costs, including $0.3 million for stock-based compensation, with $7.1 million within the Probe Cards segment, $0.5 million within the Systems segment, and $0.5 million within Corporate. We do not expect to incur additional material costs related to the 2022 restructuring plan.

2021 Restructuring Plan

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

~~These~~The Company has recognized 2021 restructuring plans ~~are expected to result in FormFactor recording restructuring and other~~ charges ~~in the aggregate amount~~ of approximately ~~$5.0~~$12.7 million, ~~to $8.5~~with $9.9 million ~~estimated to be~~within the Probe Cards segment and $2.8 million within the Systems segment, and were comprised ~~primarily~~ of ~~$1.0 million to $2.0~~$1.3 million of severance and employee-related costs, ~~$1.5 million to $2.5~~$1.8 million in contract and lease termination costs, ~~$2.0 million to $3.0~~$9.1 million in inventory impairments and other inventory related costs, and $0.5 ~~million to $1.0~~ million of cost related to impairment of leasehold improvements, facility exits and ~~other~~fixed asset related costs. ~~Approximately $2.5 million~~We do not expect additional material costs related to ~~$4.5 million is expected within each of~~ the ~~Probe Cards and Systems segments, respectively.~~2021 restructuring plan.

~~The Company has recognized to date~~Total restructuring charges for both the 2022 and other charges in the aggregate amount of $5.0 million, comprised of $1.2 million of severance and employee-related costs, $1.5 million in contract and lease termination costs, $2.0 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~~2021 restructuring plans included in our Condensed Consolidated Statements of Income were as follows (in thousands):


		Three Months Ended						Six Months Ended							Three Months Ended
		June 25, 2022						June 25, 2022							April 1, 2023						March 26, 2022
		Probe Cards		Systems		Total		Probe Cards		Systems		Total			Probe Cards		Systems		Total		Probe Cards		Systems		Total
Cost of revenues	Cost of revenues	$	227	$	227	$	454	$	266	$	327	$	593	Cost of revenues	$	70	$	(45)	$	25	$	39	$	100	$	139
Research and development	Research and development	—		53		53		—		199		199		Research and development	4		66		70		—		146		146
Selling, general and administrative	Selling, general and administrative	—		74		74		3		99		102		Selling, general and administrative	1,060		62		1,122		3		25		28
		$	227	$	354	$	581	$	269	$	625	$	894		$	1,134	$	83	$	1,217	$	42	$	271	$	313

Changes to the restructuring accrual in the ~~six~~three months ended ~~June 25, 2022~~April 1, 2023 were as follows (in thousands):


		Employee Severance and Benefits		Inventory Impairments		Contract Termination Costs		Total			Employee Severance and Benefits		Stock-based Compensation		Inventory Impairments & Other Inventory Related Costs		Total
December 25, 2021		$	1,028	$	—	$	1,450	$	2,478
December 31, 2022										December 31, 2022	$	1,249	$	—	$	—	$	1,249
Restructuring charges	Restructuring charges	185		646		—		894		Restructuring charges	842		295		80		1,217
Cash payments	Cash payments	(621)		—		(1,450)		(2,071)		Cash payments	(1,715)		—		(63)		(1,778)

Non-cash settlement	Non-cash settlement	—		(646)		—		(709)		Non-cash settlement	—		(295)		(17)		(312)
June 25, 2022		$	592	$	—	$	—	$	592
April 1, 2023										April 1, 2023	$	376	$	—	$	—	$	376

Note 87 — Fair Value and Derivative Instruments

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

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

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

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

We did not have any transfers of assets or liabilities measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 during the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 or the year ended December ~~25, 2021.~~31, 2022.

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

No changes were made to our valuation techniques during the first ~~six~~three months of fiscal ~~2022.~~2023.

1412

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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


June 25, 2022		Level 1		Level 2		Level 3		Total
April 1, 2023										April 1, 2023	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	39,228	$	—	$	—	$	39,228	Money market funds	$	44,777	$	—	$	—	$	44,777
Commercial paper	Commercial paper	—		3,393		—		3,393		Commercial paper	—		4,475		—		4,475
U.S. agency securities		—		2,558		—		2,558
U.S. treasuries		1,995		—		—		1,995

		41,223		5,951		—		47,174			44,777		4,475		—		49,252
Marketable securities:	Marketable securities:									Marketable securities:
U.S. treasuries										U.S. treasuries	25,144		—		—		25,144
Certificates of deposit										Certificates of deposit	—		471		—		471
U.S. agency securities										U.S. agency securities	—		13,062		—		13,062
Corporate bonds	Corporate bonds	—		64,930		—		64,930		Corporate bonds	—		53,899		—		53,899
U.S. treasuries		35,894		—		—		35,894
Commercial paper	Commercial paper	—		22,480		—		22,480		Commercial paper	—		31,315		—		31,315
U.S. agency securities		—		5,912		—		5,912
Certificates of deposit		—		703		—		703
		35,894		94,025		—		129,919			25,144		98,747		—		123,891

Foreign exchange derivative contracts										Foreign exchange derivative contracts	—		763		—		763
Promissory note receivable	Promissory note receivable	—		—		1,007		1,007		Promissory note receivable	—		—		943		943
Interest rate swap derivative contracts	Interest rate swap derivative contracts	—		1,990		—		1,990		Interest rate swap derivative contracts	—		2,041		—		2,041
Total assets	Total assets	$	77,117	$	101,966	$	1,007	$	180,090	Total assets	$	69,921	$	106,026	$	943	$	176,890
Liabilities:	Liabilities:									Liabilities:
Foreign exchange derivative contracts		$	—	$	(1,146)	$	—	$	(1,146)

Interest rate swap derivative contracts										Interest rate swap derivative contracts	$	—	$	(2)	$	—	$	(2)

Total liabilities										Total liabilities	$	—	$	(2)	$	—	$	(2)


December 25, 2021		Level 1		Level 2		Level 3		Total
December 31, 2022										December 31, 2022	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	9,526	$	—	$	—	$	9,526	Money market funds	$	21,279	$	—	$	—	$	21,279
U.S. agency securities		—		5,556		—		5,556
U.S. treasuries		2,500		—		—		2,500
Commercial paper	Commercial paper	—		1,000		—		1,000		Commercial paper	—		4,969		—		4,969
		12,026		6,556		—		18,582
U.S. agency securities										U.S. agency securities	—		996		—		996
											21,279		5,965		—		27,244
Marketable securities:	Marketable securities:									Marketable securities:
U.S. treasuries										U.S. treasuries	25,019		—		—		25,019
Certificates of deposit										Certificates of deposit	—		706		—		706
U.S. agency securities										U.S. agency securities	—		11,045		—		11,045
Corporate bonds	Corporate bonds	—		52,709		—		52,709		Corporate bonds	—		67,396		—		67,396
U.S. treasuries		38,985		—		—		38,985
Commercial paper										Commercial paper	—		24,840		—		24,840
											25,019		103,987		—		129,006
Commercial paper		—		32,162		—		32,162
Certificates of deposit		—		1,199		—		1,199
		38,985		86,070		—		125,055

Foreign exchange derivative contracts										Foreign exchange derivative contracts	—		664		—		664
Promissory note receivable										Promissory note receivable	—		—		943		943
Interest rate swap derivative contracts	Interest rate swap derivative contracts	—		629		—		629		Interest rate swap derivative contracts	—		2,374		—		2,374
Total assets	Total assets	$	51,011	$	93,255	$	—	$	144,266	Total assets	$	46,298	$	112,990	$	943	$	160,231
Liabilities:	Liabilities:									Liabilities:
Foreign exchange derivative contracts	Foreign exchange derivative contracts	$	—	$	(489)	$	—	$	(489)	Foreign exchange derivative contracts	$	—	$	(193)	$	—	$	(193)
Interest rate swap derivative contracts		—		(55)		—		(55)

Total liabilities	Total liabilities	$	—	$	(544)	$	—	$	(544)	Total liabilities	$	—	$	(193)	$	—	$	(193)

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

1513

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 loss 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, ~~(expense),~~ net in our Condensed Consolidated Statement of Income for both realized and unrealized gains and losses. Certain of our foreign currency forward contracts are designated as cash flow hedges, and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our Condensed Consolidated Balance Sheets with changes in fair value recorded as a component of Accumulated other comprehensive 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 ~~June 25, 2022~~April 1, 2023 will mature by the ~~second~~first quarter of fiscal ~~2023.~~2024.

The following table provides information about our foreign currency forward contracts outstanding as of ~~June 25, 2022~~April 1, 2023 (in thousands):


Currency	Currency	Contract Position	Contract Amount (Local Currency)	Contract Amount (U.S. Dollars)		Currency	Contract Position	Contract Amount (Local Currency)	Contract Amount (U.S. Dollars)
Euro Dollar	Euro Dollar	Buy	(21,445)	$	(24,117)	Euro Dollar	Buy	23,004	$	24,250

Euro Dollar						Euro Dollar	Sell	2,356	2,472
Japanese Yen	Japanese Yen	Sell	2,247,411	16,633		Japanese Yen	Sell	3,227,282	24,377
Korean Won	Korean Won	Buy	(1,010,988)	(779)		Korean Won	Buy	1,751,490	1,355
Taiwan Dollar	Taiwan Dollar	Sell	28,890	974		Taiwan Dollar	Sell	43,413	1,435

Total USD notional amount of outstanding foreign exchange contracts				$	(7,289)

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

1614

acquisition. Other than as discussed in Note ~~4, Acquisition~~, ~~and Note 7,~~6, Restructuring Charges, there were no assets or liabilities measured at fair value on a nonrecurring basis during the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 or ~~June~~March 26, ~~2021.~~2022.

Note 98 — 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):


		Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Balance at beginning of period	Balance at beginning of period	$	2,805	$	3,918	Balance at beginning of period	$	4,199	$	2,805
Accruals	Accruals	3,846		3,472		Accruals	1,390		1,214
Settlements	Settlements	(2,673)		(3,132)		Settlements	(1,717)		(1,244)
Balance at end of period	Balance at end of period	$	3,978	$	4,258	Balance at end of period	$	3,872	$	2,775

Note 109 — Property, Plant and Equipment, net

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


		June 25, 2022		December 25, 2021			April 1, 2023		December 31, 2022
Land	Land	$	4,751	$	4,751	Land	$	17,136	$	17,136
Building and building improvements	Building and building improvements	44,429		41,722		Building and building improvements	44,444		44,932
Machinery and equipment	Machinery and equipment	263,851		252,632		Machinery and equipment	280,936		276,180
Computer equipment and software	Computer equipment and software	45,727		44,667		Computer equipment and software	46,568		45,813
Furniture and fixtures	Furniture and fixtures	7,434		7,293		Furniture and fixtures	7,481		7,540
Leasehold improvements	Leasehold improvements	83,127		82,266		Leasehold improvements	87,318		86,500
Sub-total	Sub-total	449,319		433,331		Sub-total	483,883		478,101
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(323,779)		(312,700)		Less: Accumulated depreciation and amortization	(342,763)		(335,711)
Net, property, plant and equipment	Net, property, plant and equipment	125,540		120,631		Net, property, plant and equipment	141,120		142,390
Construction-in-process	Construction-in-process	32,274		25,924		Construction-in-process	57,112		47,458
Total	Total	$	157,814	$	146,555	Total	$	198,232	$	189,848

Note 1110 — Stockholders’ Equity and Stock-Based Compensation

Common Stock Repurchase Programs

On October 26, 2020, our Board of Directors authorized a two-year 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 programs. During ~~fiscal 2021~~the three months ended March 26, 2022, we repurchased ~~and retired 622,400~~240,548 shares of common stock for ~~$24.0~~$9.4 million. ~~During the six months ended June 25, 2022, we repurchased and retired 676,408 shares of common stock for $26.0 million, utilizing~~We utilized the remaining funds available for ~~repurchase.~~repurchase under this program during fiscal 2022.

On May 20, 2022, our Board of Directors authorized an additional program to repurchase up to $75 million of outstanding common stock, also with the primary purpose to offset potential dilution from issuances of common stock under our stock-based compensation programs. The share repurchase program will expire on May 20, 2024. During the three months ended ~~June 25, 2022,~~April 1, 2023, we ~~repurchased and retired 767,083 shares of~~did not repurchase any common ~~stock for $28.4 million under the program.~~stock. As of ~~June 25, 2022, $46.6~~April 1, 2023, $18.6 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			Units	Weighted Average Grant Date Fair Value
RSUs at December 25, 2021		2,166,934	$	28.63
RSUs at December 31, 2022					RSUs at December 31, 2022	2,227,081	$	35.28
Awards granted	Awards granted	63,697	41.25		Awards granted	79,020	25.51
Awards vested	Awards vested	(338,825)	16.73		Awards vested	(30,751)	34.87
Awards forfeited	Awards forfeited	(51,941)	30.23		Awards forfeited	(82,523)	35.16
RSUs at June 25, 2022		1,839,865	31.22
RSUs at April 1, 2023					RSUs at April 1, 2023	2,192,827	34.94

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 market based PRSUs granted during the ~~six~~three months ended ~~June 25, 2022.~~April 1, 2023. 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:


	~~Six~~Three Months Ended
	~~June 25, 2022~~April 1, 2023
Shares issued	~~157,642~~210,055
Weighted average per share purchase price	$	~~35.81~~23.92
Weighted average per share discount from the fair value of our common stock on the date of issuance	$	~~(6.93)~~(4.22)

Stock-Based Compensation

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Cost of revenues	Cost of revenues	$	734	$	1,079	$	1,812	$	2,414	Cost of revenues	$	1,910	$	1,078
Research and development	Research and development	1,695		1,663		3,681		3,352		Research and development	2,372		1,986
Selling, general and administrative	Selling, general and administrative	3,929		3,846		8,385		7,899		Selling, general and administrative	5,008		4,456
Total stock-based compensation	Total stock-based compensation	$	6,358	$	6,588	$	13,878	$	13,665	Total stock-based compensation	$	9,290	$	7,520

Unrecognized Compensation Costs

At ~~June 25, 2022,~~April 1, 2023, the unrecognized stock-based compensation was as follows (dollars in thousands):


		Unrecognized Expense		Average Expected Recognition Period in Years		Unrecognized Expense		Average Expected Recognition Period in Years
Restricted stock units	Restricted stock units	$	27,430	1.80	Restricted stock units	$	39,761	1.98
Performance restricted stock units	Performance restricted stock units	7,202		1.74	Performance restricted stock units	9,486		1.86
Employee stock purchase plan	Employee stock purchase plan	285		0.61	Employee stock purchase plan	985		0.33
Total unrecognized stock-based compensation expense	Total unrecognized stock-based compensation expense	$	34,917	1.77	Total unrecognized stock-based compensation expense	$	50,232	1.93

1816

Note 1211 — 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		Six Months Ended			Three Months Ended
		June 25, 2022	June 26, 2021	June 25, 2022	June 26, 2021		April 1, 2023	March 26, 2022

Weighted-average shares used in computing basic net income per share	Weighted-average shares used in computing basic net income per share	77,897	77,463	78,071	77,530	Weighted-average shares used in computing basic net income per share	77,066	78,246
Add potentially dilutive securities	Add potentially dilutive securities	1,313	2,003	1,352	2,091	Add potentially dilutive securities	189	1,222
Weighted-average shares used in computing diluted net income per share	Weighted-average shares used in computing diluted net income per share	79,210	79,466	79,423	79,621	Weighted-average shares used in computing diluted net income per share	77,255	79,468

Securities not included as they would have been antidilutive	Securities not included as they would have been antidilutive	23	128	—	118	Securities not included as they would have been antidilutive	1,121	—

Note 1312 — Commitments and Contingencies

Leases

See Note ~~14,~~13, Leases.

Contractual Obligations and Commitments

Our contractual obligations and commitments have not materially changed as of ~~June 25, 2022~~April 1, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December ~~25, 2021.~~31, 2022.

Legal Matters

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. As of ~~June 25, 2022,~~April 1, 2023, and as of the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.

Note 1413 — Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space, as well as for a portion of our corporate headquarters located in Livermore, California. Our leases have remaining terms of 1 to 76 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.~~year. 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 65 years as of ~~June 25, 2022~~April 1, 2023 and the weighted-average discount rate was ~~3.69%~~3.92%.

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Lease expense:	Lease expense:									Lease expense:
Operating lease expense	Operating lease expense	$	2,183	$	2,048	$	4,404	$	4,171	Operating lease expense	$	1,952	$	2,221
Short-term lease expense	Short-term lease expense	76		45		116		82		Short-term lease expense	157		40
Variable lease expense	Variable lease expense	677		426		1,135		963		Variable lease expense	746		458
		$	2,936	$	2,519	$	5,655	$	5,216		$	2,855	$	2,719

1917

Future minimum payments under our non-cancelable operating leases were as follows as of ~~June 25, 2022~~April 1, 2023 (in thousands):


Fiscal Year	Fiscal Year	Amount		Fiscal Year	Amount
Remainder of 2022		$	4,319
2023		7,564
Remainder of 2023				Remainder of 2023	$	6,190
2024	2024	7,224		2024	8,106
2025	2025	7,187		2025	8,018
2026	2026	6,505		2026	6,641
2027				2027	5,756
Thereafter	Thereafter	9,143		Thereafter	3,431
Total minimum lease payments	Total minimum lease payments	41,942		Total minimum lease payments	38,142
Less: interest	Less: interest	(4,588)		Less: interest	(4,223)
Present value of net minimum lease payments	Present value of net minimum lease payments	37,354		Present value of net minimum lease payments	33,919
Less: current portion	Less: current portion	(7,843)		Less: current portion	(7,512)
Total long-term operating lease liabilities	Total long-term operating lease liabilities	$	29,511	Total long-term operating lease liabilities	$	26,407

Note 1514 — Revenue

Transaction price allocated to the remaining performance obligations: On ~~June 25, 2022,~~April 1, 2023, we had ~~$9.7~~$9.8 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 ~~66.9%~~67.6% of our remaining performance obligations as revenue in the remainder of fiscal ~~2022,~~2023, approximately ~~27.7%~~26.8% in fiscal ~~2023,~~2024, and approximately ~~5.4%~~5.6% in fiscal ~~2024~~2025 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 ~~June 25, 2022~~April 1, 2023 and December ~~25, 2021~~31, 2022 were ~~$2.0~~$2.9 million and ~~$0.9~~$1.9 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 ~~June 25, 2022~~April 1, 2023 and December ~~25, 2021~~31, 2022 were ~~$32.2~~$24.9 million and ~~$24.2~~$30.9 million, respectively. During the ~~six~~three months ended ~~June 25, 2022,~~April 1, 2023, we recognized ~~$16.5~~$14.0 million of revenue that was included in contract liabilities as of December ~~25, 2021.~~31, 2022.

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:~~category: Refer to Note ~~16,~~15, Operating Segments and Enterprise-Wide Information, for further details.

Note 1615 — 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 2two reportable segments consisting

2018

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																							Three Months Ended
		June 25, 2022											June 26, 2021												April 1, 2023											March 26, 2022
		Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total				Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Revenues	Revenues	$	167,708		$	36,199		$	—	$	203,907		$	153,641		$	34,435		$	—	$	188,076		Revenues	$	127,328		$	40,120		$	—	$	167,448		$	159,983		$	37,191		$	—	$	197,174
Gross profit	Gross profit	78,420			18,276			(2,327)		94,369			66,600			16,907			(7,224)		76,283			Gross profit	43,623			20,746			(3,291)		61,078			77,202			19,407			(2,385)		94,224
Gross margin	Gross margin	46.8		%	50.5		%	0		46.3		%	43.3		%	49.1		%	0		40.6		%	Gross margin	34.3		%	51.7		%			36.5		%	48.3		%	52.2		%			47.8		%

		Six Months Ended
		June 25, 2022											June 26, 2021
		Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Revenues		$	327,691		$	73,390		$	—	$	401,081		$	312,539		$	62,173		$	—	$	374,712
Gross profit		$	155,622		$	37,683		$	(4,712)	$	188,593		$	136,915		$	30,506		$	(14,432)	$	152,989
Gross margin		47.5		%	51.3		%	0		47.0		%	43.8		%	49.1		%	0		40.8		%

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													Three Months Ended
		June 25, 2022						June 26, 2021							April 1, 2023						March 26, 2022
		Probe Cards		Systems		Total		Probe Cards		Systems		Total			Probe Cards		Systems		Total		Probe Cards		Systems		Total
Market:	Market:													Market:
Foundry & Logic	Foundry & Logic	$	122,380	$	—	$	122,380	$	103,726	$	—	$	103,726	Foundry & Logic	$	101,562	$	—	$	101,562	$	114,121	$	—	$	114,121
DRAM	DRAM	36,843		—		36,843		42,088		—		42,088		DRAM	19,890		—		19,890		34,437		—		34,437
Flash	Flash	8,485		—		8,485		7,827		—		7,827		Flash	5,876		—		5,876		11,425		—		11,425
Systems	Systems	—		36,199		36,199		—		34,435		34,435		Systems	—		40,120		40,120		—		37,191		37,191
Total	Total	$	167,708	$	36,199	$	203,907	$	153,641	$	34,435	$	188,076	Total	$	127,328	$	40,120	$	167,448	$	159,983	$	37,191	$	197,174
Timing of revenue recognition:	Timing of revenue recognition:													Timing of revenue recognition:
Products transferred at a point in time	Products transferred at a point in time	$	166,701	$	33,081	$	199,782	$	153,129	$	30,884	$	184,013	Products transferred at a point in time	$	126,678	$	36,710	$	163,388	$	158,836	$	35,416	$	194,252
Products and services transferred over time	Products and services transferred over time	1,007		3,118		4,125		512		3,551		4,063		Products and services transferred over time	650		3,410		4,060		1,147		1,775		2,922
Total	Total	$	167,708	$	36,199	$	203,907	$	153,641	$	34,435	$	188,076	Total	$	127,328	$	40,120	$	167,448	$	159,983	$	37,191	$	197,174
Geographical region:	Geographical region:													Geographical region:
Taiwan	Taiwan	$	45,188	$	4,832	$	50,020	$	46,737	$	5,147	$	51,884	Taiwan	$	38,897	$	1,432	$	40,329	$	42,522	$	10,547	$	53,069
United States														United States	24,641		13,090		37,731		19,976		5,671		25,647
China	China	40,578		9,157		49,735		23,996		7,831		31,827		China	18,476		8,623		27,099		32,791		5,608		38,399
United States		21,539		9,703		31,242		24,174		8,476		32,650
South Korea	South Korea	27,418		1,337		28,755		35,426		751		36,177		South Korea	19,572		1,203		20,775		24,881		2,620		27,501
Malaysia	Malaysia	16,157		87		16,244		3,034		161		3,195		Malaysia	10,324		946		11,270		21,517		682		22,199
Japan	Japan	6,716		3,221		9,937		3,477		4,227		7,704		Japan	7,136		3,841		10,977		4,785		4,597		9,382
Europe	Europe	3,824		4,267		8,091		6,466		5,544		12,010		Europe	3,426		6,000		9,426		2,382		6,013		8,395
Singapore	Singapore	5,131		1,977		7,108		8,602		1,360		9,962		Singapore	3,200		2,140		5,340		10,284		612		10,896
Rest of the world	Rest of the world	1,157		1,618		2,775		1,729		938		2,667		Rest of the world	1,656		2,845		4,501		845		841		1,686
Total	Total	$	167,708	$	36,199	$	203,907	$	153,641	$	34,435	$	188,076	Total	$	127,328	$	40,120	$	167,448	$	159,983	$	37,191	$	197,174

Six Months Ended
June 25, 2022 June 26, 2021
Probe Cards Systems Total Probe Cards Systems Total
Market:
Foundry & Logic $ 236,501 $ — $ 236,501 $ 217,136 $ — $ 217,136
DRAM 71,280 — 71,280 75,986 — 75,986
Flash 19,910 — 19,910 19,417 — 19,417
Systems — 73,390 73,390 — 62,173 62,173
Total $ 327,691 $ 73,390 $ 401,081 $ 312,539 $ 62,173 $ 374,712
Timing of revenue recognition:
Products transferred at a point in time $ 325,537 $ 68,497 $ 394,034 $ 311,605 $ 55,555 $ 367,160
Products and services transferred over time 2,154 4,893 7,047 934 6,618 7,552
Total $ 327,691 $ 73,390 $ 401,081 $ 312,539 $ 62,173 $ 374,712
Geographical region:
Taiwan $ 87,710 $ 15,379 $ 103,089 $ 91,471 $ 5,993 $ 97,464
China 73,369 14,765 88,134 61,827 12,625 74,452
United States 41,515 15,374 56,889 45,482 16,654 62,136
South Korea 52,299 3,957 56,256 53,427 1,835 55,262
Malaysia 37,674 769 38,443 22,922 203 23,125
Japan 11,501 7,818 19,319 8,726 8,299 17,025
Singapore 15,415 2,589 18,004 16,229 2,291 18,520
Europe 6,206 10,280 16,486 9,299 12,710 22,009
Rest of the world 2,002 2,459 4,461 3,156 1,563 4,719
Total $ 327,691 $ 73,390 $ 401,081 $ 312,539 $ 62,173 $ 374,712

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

Cautionary Statement Regarding Forward-Looking Statements

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

The forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements. We have no obligation to update any of these statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to COVID-19 and other global, regional or national public health-related crises and the impact of our responses to ~~it,~~them, the interpretation and impacts of changes in export controls and other trade barriers, military conflicts, political volatility and similar factors, 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~~31, 2022 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 ~~$60.1~~$1.3 million in the first ~~six~~three months of fiscal ~~2022~~2023 as compared to ~~$37.5~~$29.9 million in the first ~~six~~three months of fiscal ~~2021.~~2022. The ~~increase~~decrease in net income was primarily due to ~~increased revenue with improved~~a decline in revenues and the associated decline in 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.margins.

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~~2022 Annual Report on Form 10-K describe the significant accounting estimates and significant accounting policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. During the ~~six~~three months ended ~~June 25, 2022,~~April 1, 2023, 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,~~31, 2022, which was filed with the Securities and Exchange Commission on February ~~18, 2022.~~24, 2023, except for:

Government Assistance

In January 2023, we received $18.0 million in cash from a California Competes Grant (the “Grant”) awarded from the California Governor’s Office of Business and Economic Development. The Grant requires FormFactor to create and maintain full-time jobs and make significant infrastructure investments within California over a 5-year term. If we do not meet the requirements of the Grant, we will be required to repay all or a portion of the Grant.

The Grant is included in our Condensed Consolidated Balance Sheets within Deferred grant and we have elected to recognize when earned as an offset to Cost of revenues and Operating expenses within our Condensed Consolidated Statements of Income. We have elected to present the proceeds from the Grant as cash provided by operating activities within our Condensed Consolidated Statements of Cash Flows as the grant is to offset operations.

2320

Results of Operations

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022
Revenues	Revenues	100.0	%	100.0	%	100.0	%	100.0	%	Revenues	100.0	%	100.0	%
Cost of revenues	Cost of revenues	53.7		59.4		53.0		59.2		Cost of revenues	63.5		52.2
Gross profit	Gross profit	46.3		40.6		47.0		40.8		Gross profit	36.5		47.8
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	13.9		13.5		13.8		13.2		Research and development	16.9		13.8
Selling, general and administrative	Selling, general and administrative	16.4		16.2		16.5		16.1		Selling, general and administrative	19.5		16.7

Total operating expenses	Total operating expenses	30.3		29.7		30.3		29.3		Total operating expenses	36.4		30.5
Operating income	Operating income	16.0		10.9		16.7		11.5		Operating income	0.1		17.3
Interest income	Interest income	0.1		0.1		0.1		0.1		Interest income	0.8		0.1
Interest expense	Interest expense	(0.1)		(0.1)		(0.1)		(0.1)		Interest expense	(0.1)		(0.1)
Other income (expense), net		0.3		(0.1)		0.2		—
Other income, net										Other income, net	—		0.1
Income before income taxes	Income before income taxes	16.3		10.8		16.9		11.5		Income before income taxes	0.8		17.4
Provision for income taxes	Provision for income taxes	1.5		1.2		1.9		1.5		Provision for income taxes	—		2.2
Net income	Net income	14.8	%	9.6	%	15.0	%	10.0	%	Net income	0.8	%	15.2	%

Revenues by Segment and Market


		Three Months Ended				Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022

		(In thousands)									(In thousands)
Probe Cards	Probe Cards	$	167,708	$	153,641	$	327,691	$	312,539	Probe Cards	$	127,328	$	159,983
Systems	Systems	36,199		34,435		73,390		62,173		Systems	40,120		37,191
		$	203,907	$	188,076	$	401,081	$	374,712		$	167,448	$	197,174


		Three Months Ended													Three Months Ended
		June 25, 2022		% of Revenues		June 26, 2021		% of Revenues		$ Change		% Change			April 1, 2023		% of Revenues		March 26, 2022		% of Revenues		$ Change		% Change

		(Dollars in thousands)													(Dollars in thousands)
Probe Cards Markets:	Probe Cards Markets:													Probe Cards Markets:
Foundry & Logic	Foundry & Logic	$	122,380	60.0	%	$	103,726	55.1	%	$	18,654	18.0	%	Foundry & Logic	$	101,562	60.6	%	$	114,121	57.8	%	$	(12,559)	(11.0)	%
DRAM	DRAM	36,843		18.0		42,088		22.4		(5,245)		(12.5)		DRAM	19,890		11.9		34,437		17.5		(14,547)		(42.2)
Flash	Flash	8,485		4.2		7,827		4.2		658		8.4		Flash	5,876		3.5		11,425		5.8		(5,549)		(48.6)
Systems Market:	Systems Market:													Systems Market:
Systems	Systems	36,199		17.8		34,435		18.3		1,764		5.1		Systems	40,120		24.0		37,191		18.9		2,929		7.9
Total revenues	Total revenues	$	203,907	100.0	%	$	188,076	100.0	%	$	15,831	8.4	%	Total revenues	$	167,448	100.0	%	$	197,174	100.0	%	$	(29,726)	(15.1)	%

		Six Months Ended
		June 25, 2022		% of Revenues		June 26, 2021		% of Revenues		$ Change		% Change

		(Dollars in thousands)
Probe Cards Markets:
Foundry & Logic		$	236,501	58.9	%	$	217,136	57.9	%	$	19,365	8.9	%
DRAM		71,280		17.8		75,986		20.3		(4,706)		(6.2)
Flash		19,910		5.0		19,417		5.2		493		2.5
Systems Market:
Systems		73,390		18.3		62,173		16.6		11,217		18.0
Total revenues		$	401,081	100.0	%	$	374,712	100.0	%	$	26,369	7.0	%

Foundry & Logic— The ~~increase~~decrease in Foundry & Logic product revenue for the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, was driven ~~principally~~ by the ~~increased~~weakening demand in the semiconductor industry that began in the third quarter of fiscal 2022 and ~~increased~~continued into the three months ended April 1, 2023 and resulted in decreased unit sales ~~to other large semiconductor foundries and integrated device manufacturers.~~across all major customers.

DRAM— The decrease in DRAM product revenue for the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, was driven by ~~decreased design wins~~lower customer demand, a result of the semiconductor industry's overall demand weakening and ~~customer demand.~~DRAM market weakness.

Flash— The ~~increase~~decrease in Flash product revenue for the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, was driven by ~~increased~~decreased customer ~~demand.~~demand from large multi-national customers, a result of the semiconductor industry's overall demand weakening and Flash market weakness.

Systems— The increase in Systems market revenue for the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, was driven by ~~both~~ increased sales of ~~metrology systems and~~ our 200 ~~and 300~~ millimeter probe ~~stations.~~stations and cryogenic systems, partially offset by decreased sales of our metrology systems.

Revenues by Geographic Region


		Three Months Ended								Six Months Ended									Three Months Ended
		June 25, 2022		% of Revenue		June 26, 2021		% of Revenue		June 25, 2022		% of Revenue		June 26, 2021		% of Revenue			April 1, 2023		% of Revenues		March 26, 2022		% of Revenues

		(Dollars in thousands)																	(Dollars in thousands)
Taiwan	Taiwan	$	50,020	24.5	%	$	51,884	27.6	%	$	103,089	25.7	%	$	97,464	26.0	%	Taiwan	$	40,329	24.1	%	$	53,069	26.9	%
United States																		United States	37,731		22.5		25,647		13.0
China	China	49,735		24.4		31,827		16.9		88,134		22.0		74,452		19.9		China	27,099		16.2		38,399		19.5
United States		31,242		15.3		32,650		17.4		56,889		14.2		62,136		16.6
South Korea	South Korea	28,755		14.1		36,177		19.2		56,256		14.0		55,262		14.7		South Korea	20,775		12.4		27,501		13.9
Malaysia	Malaysia	16,244		8.0		3,195		1.7		38,443		9.6		23,125		6.2		Malaysia	11,270		6.7		22,199		11.3
Japan	Japan	9,937		4.9		7,704		4.1		19,319		4.8		17,025		4.5		Japan	10,977		6.6		9,382		4.8
Europe	Europe	8,091		4.0		12,010		6.4		16,486		4.1		22,009		5.9		Europe	9,426		5.6		8,395		4.3
Singapore	Singapore	7,108		3.5		9,962		5.3		18,004		4.5		18,520		4.9		Singapore	5,340		3.2		10,896		5.5
Rest of the world	Rest of the world	2,775		1.3		2,667		1.4		4,461		1.1		4,719		1.3		Rest of the world	4,501		2.7		1,686		0.8
Total revenues	Total revenues	$	203,907	100.0	%	$	188,076	100.0	%	$	401,081	100.0	%	$	374,712	100.0	%	Total revenues	$	167,448	100.0	%	$	197,174	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 ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix. More specifically, the increase in revenues for the United States, and decreases in revenues for China and Malaysia were driven principally by a single large U.S.-based company with operations in ~~China and Malaysia. Further increases~~these regions. The decrease in China ~~were driven~~mentioned previously is also impacted by ~~increased~~lowered demand from a large Chinese DRAM integrated device ~~manufacturer.~~manufacturer and the impact from expanded export license requirements imposed by the United States government in the fourth quarter of fiscal 2022 for exporting advanced U.S. semiconductor technology sold in China.

Cost of Revenues and Gross Margins

Cost of revenues consists primarily of manufacturing materials, compensation and benefits, shipping and handling costs, manufacturing-related overhead (including equipment costs, related occupancy, and computer services), warranty adjustments, inventory adjustments (including write-downs for inventory obsolescence), 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											Three Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change			April 1, 2023			March 26, 2022			$ Change		% Change
Gross profit	Gross profit	$	94,369		$	76,283		$	18,086	23.7	%	Gross profit	$	61,078		$	94,224		$	(33,146)	(35.2)	%
Gross margin	Gross margin	46.3		%	40.6		%					Gross margin	36.5		%	47.8		%

		Six Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change
Gross profit		$	188,593		$	152,989		$	35,604	23.3	%
Gross margin		47.0		%	40.8		%

2622

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


		Three Months Ended																							Three Months Ended
		June 25, 2022											June 26, 2021												April 1, 2023											March 26, 2022
		Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total				Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Gross profit	Gross profit	$	78,420		$	18,276		$	(2,327)	$	94,369		$	66,600		$	16,907		$	(7,224)	$	76,283		Gross profit	$	43,623		$	20,746		$	(3,291)	$	61,078		$	77,202		$	19,407		$	(2,385)	$	94,224
Gross margin	Gross margin	46.8		%	50.5		%			46.3		%	43.3		%	49.1		%			40.6		%	Gross margin	34.3		%	51.7		%			36.5		%	48.3		%	52.2		%			47.8		%

		Six Months Ended
		June 25, 2022											June 26, 2021
		Probe Cards			Systems			Corporate and Other		Total			Probe Cards			Systems			Corporate and Other		Total
Gross profit		$155,622			$	37,683		$	(4,712)	$	188,593		$136,915			$	30,506		$	(14,432)	$	152,989
Gross margin		47.5		%	51.3		%			47.0		%	43.8		%	49.1		%			40.8		%

Probe Cards

— For the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, gross margins ~~increased~~decreased compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, primarily due to higher revenues and improved standard margins related to favorable product mix, partially offset by higher net manufacturing spending driven by higher material and labor costs, and — for the three month periods — unfavorable absorption of costs ~~despite higher~~on lower production ~~volumes.~~volumes and greater inventory excess and obsolescence reserves.

Systems

— For the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, gross margins ~~increased~~decreased compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, primarily as a result of less favorable product ~~mix primarily driven by increased sales of metrology tools at favorable margins, and improved leverage on fixed costs at these higher volumes.~~mix.

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 and six months ended June 25, 2022 compared to the three and six months ended June 26, 2021 is primarily due to a reduction in the amortization of intangibles resulting from significant intangibles becoming fully amortized, partially offset by increased share-based compensation driven by increases in headcount to support our growth.

Overall

— Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading, labor costs, and material costs. For the three ~~and six~~ months ended ~~June 25, 2022,~~April 1, 2023, compared to the three ~~and six~~ months ended ~~June~~March 26, ~~2021,~~2022, gross profit and gross margins have ~~increased~~decreased on ~~higher~~lower revenue levels, ~~favorable product mix,~~unfavorable absorption of costs on lower production volumes, and ~~less amortization of intangibles.~~greater inventory excess and obsolescence reserves.

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

Three Months Ended Six Months Ended
June 25,
2022 June 26,
2021 June 25,
2022 June 26,
2021
Stock-based compensation $ 734 $ 1,079 $ 1,812 $ 2,414


	Three Months Ended
	April 1, 2023		March 26, 2022
Stock-based compensation	$	1,910	$	1,078

Research and Development


		Three Months Ended											Three Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change			April 1, 2023			March 26, 2022			$ Change		% Change

		(Dollars in thousands)											(Dollars in thousands)
Research and development	Research and development	$	28,317		$	25,454		$	2,863	11.2	%	Research and development	$	28,245		$	27,134		$	1,111	4.1	%
% of revenues	% of revenues	13.9		%	13.5		%					% of revenues	16.9		%	13.8		%

		Six Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change

		(Dollars in thousands)
Research and development		$	55,451		$	49,500		$	5,951	12.0	%
% of revenues		13.8		%	13.2		%

~~The increase in research~~Research and development expenses in the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 increased when compared to the corresponding period in the prior year ~~was~~ primarily ~~driven by~~due to an increase in headcount, which is to support our continued investment in technology leadership. Increased general operational costs, annual salary adjustments, ~~project material costs,~~ and stock-based compensation also contributed to the increase. These increases were partially offset by lower performance-based compensation and project material costs.

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

Three Months Ended June 25, 2022 compared to Three Months Ended June 26, 2021 Six Months Ended June 25, 2022 compared to Six Months Ended June 26, 2021
Employee compensation costs $ 1,006 $ 2,612
Other general operations 1,421 2,387
Stock-based compensation 32 329
Project material costs 404 623
$ 2,863 $ 5,951


	Three Months Ended April 1, 2023 compared to Three Months Ended March 26, 2022
Other general operational costs	$	490
Stock-based compensation	386
Depreciation	263
Project material costs	(214)

Employee compensation costs	186
	$	1,111

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

Three Months Ended Six Months Ended
June 25,
2022 June 26,
2021 June 25,
2022 June 26,
2021
Stock-based compensation $ 1,695 $ 1,663 $ 3,681 $ 3,352


	Three Months Ended
	April 1, 2023		March 26, 2022
Stock-based compensation	$	2,372	$	1,986

Selling, General and Administrative


		Three Months Ended											Three Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change			April 1, 2023			March 26, 2022			$ Change		% Change

		(Dollars in thousands)											(Dollars in thousands)
Selling, general and administrative	Selling, general and administrative	$	33,406		$	30,479		$	2,927	9.6	%	Selling, general and administrative	$	32,742		$	32,906		$	(164)	(0.5)	%
% of revenues	% of revenues	16.4		%	16.2		%					% of revenues	19.5		%	16.7		%

		Six Months Ended
		June 25, 2022			June 26, 2021			$ Change		% Change

		(Dollars in thousands)
Selling, general and administrative		$	66,312		$	60,494		$	5,818	9.6	%
% of revenues		16.5		%	16.1		%

~~The increase in selling,~~Selling, general and administrative expenses decreased in the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 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,~~lower performance-based compensation, mostly offset by restructuring charges, higher stock-based compensation, 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.general operating expenses.

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

Three Months Ended June 25, 2022 compared to Three Months Ended June 26, 2021 Six Months Ended June 25, 2022 compared to Six Months Ended June 26, 2021
Employee compensation costs $ 1,249 $ 2,632
General operating expenses 831 1,465
Travel related costs 809 1,436
Stock-based compensation 83 486
Amortization of intangibles (45) (201)
$ 2,927 $ 5,818


	Three Months Ended April 1, 2023 compared to Three Months Ended March 26, 2022
Employee compensation	(2,385)
General operating expenses	843
Restructuring charges	826
Stock-based compensation	552



	$	(164)

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

Three Months Ended Six Months Ended
June 25,
2022 June 26,
2021 June 25,
2022 June 26,
2021
Stock-based compensation $ 3,929 $ 3,846 $ 8,385 $ 7,899


	Three Months Ended
	April 1, 2023		March 26, 2022
Stock-based compensation	$	5,008	$	4,456

Interest Income ~~and Interest Expense~~(Expense), Net

Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities. The increase in interest income for the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 compared with the corresponding period of the prior year was attributable to ~~a slight~~an increase in investment yields due to the higher interest rate ~~environment on higher invested balances.~~environment.

Interest expense primarily includes interest on our term ~~loans,~~loan, interest rate swap derivative contracts, and term loan issuance costs amortization charges. The interest expense for the three ~~and six~~ months ended ~~June 25, 2022~~April 1, 2023 compared to the same period of the prior year ~~remained consistent despite a lower outstanding debt~~decreased due to ~~increased average interest rates on the~~lower outstanding debt.

Other Income, ~~(Expense),~~ Net

Other income, ~~(expense),~~ net, primarily includes the effects of foreign currency impact and various other gains and losses. We partially mitigate our risks from currency movements by hedging certain balance sheet exposures, which minimizes the impacts during periods of foreign exchange volatility.

Provision for Income Taxes


		Three Months Ended						Six Months Ended							Three Months Ended
		June 25, 2022			June 26, 2021			June 25, 2022			June 26, 2021				April 1, 2023			March 26, 2022

		(In thousands, except percentages)													(In thousands, except percentages)
Provision for income taxes	Provision for income taxes	$	3,136		$	2,283		$	7,586		$	5,489		Provision for income taxes	$	48		$	4,450
Effective tax rate	Effective tax rate	9.4		%	11.3		%	11.2		%	12.8		%	Effective tax rate	3.5		%	13.0		%

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~~allowing us to benefit more from the available FDII deduction, which, combined with higher research and ~~corresponding benefit to be available, resulting~~development tax credits, results in a ~~decrease from the U.S. statutory rate for the year ending December 31, 2022.~~

~~The decrease in the~~lower worldwide effective tax rate infor the three months ended ~~June 25, 2022~~April 1, 2023 when compared to the corresponding period in the prior ~~year was primarily driven by an increased tax deduction from FDII.~~

year.

AsThe Creating Helpful Incentives to Produce Semiconductors and Science Act of ~~January 1,~~2022 (“CHIPS Act”) was signed into law on August 9, 2022. The CHIPS Act provides for various incentives and tax credits among other items including the Advanced Manufacturing Investment Credit (“AMIC”) which equals 25% of qualified investments in an advanced manufacturing facility that is placed in service after December 31, 2022. At least a portion of our future capital expenditures and research and development costs will qualify for this credit, which benefits us by allowing us to net the credit received against our costs. The AMIC credit is accounted for outside of ASC 740 as a reduction to the depreciable basis of the assets used in operations and will not have an impact on our effective tax rate.

Beginning in 2022, the U.S. Tax Cuts and Jobs Act of 2017 ~~eliminates~~(“TCJA”) eliminated the existing option to deduct research and ~~experimental~~development expenditures ~~immediately in the year incurred~~ and requires taxpayers to amortize such expenditures attributable to domestic and foreign research over five ~~years in the U.S.~~ and fifteen years, respectively, pursuant to IRC Section 174. While the capitalization requirement has a negative impact on our cash flows, there are offsetting benefits from the enactment of this provision that we have included in ~~foreign jurisdictions.~~our estimated annual effective tax rate. 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,~~Changes in our tax provisions or ~~repealed with retroactive~~an increase in our tax liabilities, whether due to changes in applicable laws and regulations, the interpretation or application thereof, or a final determination of tax audits or litigation or agreements, could have a material adverse effect ~~to January 1, 2022, we expect~~on our financial position, results of operations and/or 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.~~flows.

Liquidity and Capital Resources

Capital Resources

Our working capital was ~~$377.5~~$352.8 million at ~~June 25, 2022,~~April 1, 2023, compared to ~~$375.3~~$324.9 million at December ~~25, 2021.~~31, 2022.

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, U.S. agency securities, corporate bonds, and commercial paper. We typically invest in ~~highly-rated~~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 ~~$266.3~~$236.3 million at ~~June 25, 2022,~~April 1, 2023, compared to ~~$276.1~~$238.1 million at December ~~25, 2021.~~31, 2022. 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 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, or other event),~~ or increasing our available cash through debt or equity financings, our cash, cash equivalents and marketable securities may decline.

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

Cash Flows

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


		Six Months Ended					Three Months Ended
		June 25, 2022		June 26, 2021			April 1, 2023		March 26, 2022

		(In thousands)					(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	86,801	$	66,155	Net cash provided by operating activities	$	12,309	$	44,155
Net cash used in investing activities	Net cash used in investing activities	$	(41,111)	$	(59,813)	Net cash used in investing activities	$	(13,539)	$	(21,078)
Net cash used in financing activities		$	(57,263)	$	(31,916)
Net cash provided by (used) in financing activities						Net cash provided by (used) in financing activities	$	4,378	$	(6,016)

Operating Activities

Net cash provided by operating activities for the ~~six~~three months ended ~~June 25, 2022~~April 1, 2023 was ~~primarily~~ attributable to net income of ~~$60.1~~$1.3 million and net non-cash expenses of ~~$42.0~~$26.0 million, which includes depreciation, amortization, stock-based compensation, and the provision for excess and obsolete ~~inventories. These inflows were~~inventories, partially offset ~~by net changes in working capital of $15.3 million, primarily related to cash paid for inventories of $32.3 million, partially offset by cash provided~~ by an increase in ~~accounts payable~~net working capital of ~~$7.5 million, an~~$15.1 million. The increase in ~~accrued liabilities for $4.1 million, and a reduction~~net working capital related to an increase in accounts receivable of ~~$5.5~~$15.9 million and decreases in accrued liabilities and deferred revenues of $10.2 million and $6.0 million, respectively, partially offset by an increase in deferred grant of $18.0 million.

Investing Activities

Net cash used in investing activities for the ~~six~~three months ended ~~June 25, 2022 was~~April 1, 2023 primarily related to ~~$30.1~~$19.7 million in property, plant and equipment purchases, ~~$6.9~~partially offset by $6.2 million net cash ~~used to purchase~~received from the maturities and sales of marketable ~~securities, and $3.1 million for acquisition of a business.~~securities.

Financing Activities

Net cash ~~used in~~provided by financing activities for the ~~six~~three months ended ~~June 25, 2022~~April 1, 2023 primarily related to ~~$54.3~~$5.0 million ~~used to purchase~~received from issuances of common stock under our employee stock ~~repurchase programs, $4.4~~purchase plan, partially offset by $0.3 million of principal payments made towards the repayment of our term ~~loans,~~loan and ~~$4.2~~$0.4 million related to tax withholdings associated with the net share settlements of our equity ~~awards, partially offset by $5.7 million of proceeds received from issuances of common stock under our employee stock purchase plan.~~awards.

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 $1.8 million plus interest. The interest rate at June 25, 2022 was 1.29%. As of June 25, 2022, the balance outstanding pursuant to the FRT term loan was $3.7 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.

The Building Term Loan bears interest at a rate equal to the applicable LIBOR rate plus 1.75% per annum. Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at ~~June 25, 2022~~April 1, 2023 was ~~2.81%~~4.66%. As of ~~June 25, 2022,~~April 1, 2023, the balance outstanding pursuant to the Building Term Loan was ~~$16.0~~$15.2 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 interest rate of one-month LIBOR plus 1.75% into a fixed interest rate of 2.75%. As of ~~June 25, 2022,~~April 1, 2023, the notional amount of the loan that is subject to this interest rate swap is ~~$16.0~~$15.2 million.

Stock Repurchase Programs

On May 20, 2022, our Board of Directors authorized an additional program to repurchase up to $75 million of outstanding common stock, also with the primary purpose to offset potential dilution from issuances of common stock under our stock-based compensation programs. The share repurchase program will expire on May 20, 2024. During the three months ended ~~June 25, 2022,~~April 1, 2023, we ~~repurchased and retired 767,083~~did not repurchase any shares of common ~~stock for $28.4 million under this program.~~stock. As of ~~June 25, 2022, $46.6~~April 1, 2023, $18.6 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 ~~June 25, 2022:~~April 1, 2023:


		Payments Due In Fiscal Year															Payments Due In Fiscal Year
		Remainder 2022		2023		2024		2025		2026		Thereafter		Total			Remainder 2023		2024		2025		2026		2027		Thereafter		Total
Operating leases	Operating leases	$	4,319	$	7,564	$	7,224	$	7,187	$	6,505	$	9,143	$	41,942	Operating leases	$	6,190	$	8,106	$	8,018	$	6,641	$	5,756	$	3,431	$	38,142
Term loans - principal payments	Term loans - principal payments	4,208		1,050		1,080		1,111		1,142		11,116		19,707		Term loans - principal payments	791		1,080		1,111		1,142		1,175		9,940		15,239
Term loans - interest payments (1)	Term loans - interest payments (1)	244		428		400		366		335		1,415		3,188		Term loans - interest payments (1)	729		912		834		763		688		2,538		6,464
Total	Total	$	8,771	$	9,042	$	8,704	$	8,664	$	7,982	$	21,674	$	64,837	Total	$	7,710	$	10,098	$	9,963	$	8,546	$	7,619	$	15,909	$	59,845

(1) Represents our minimum interest payment commitments at ~~2.81%~~4.66% per annum for the Building Term ~~Loan and 1.29% per annum for the FRT Term~~ Loan. This ~~also~~ excludes any amounts related to our interest rate swap.

Off-Balance Sheet Arrangements

Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of ~~June 25, 2022,~~April 1, 2023, we were not involved in any such off-balance sheet arrangements.

Recent Accounting ~~Pronouncements~~Standards

~~See~~For a description of a recent change in accounting standards, including the expected dates of adoption and estimated effects, if any, in our condensed consolidated financial statements, see Note 1, Basis of Presentation and ~~New~~Significant Accounting ~~Pronouncements~~Policies, ,in Part I, Item 1 of ~~Notes to Condensed Consolidated Financial Statements.~~this Form 10-Q.

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.~~31, 2022. Our exposure to market risk has not changed materially since December ~~25, 2021.~~31, 2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

Limitations on the Effectiveness of Controls

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any control systems must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all

control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

CEO and CFO Certifications

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

PART II - OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes during the ~~six~~three months ended ~~June 25, 2022~~April 1, 2023 to the risk factors discussed in our Annual Report on Form 10-K for the year ended December ~~25, 2021.~~31, 2022. 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~~31, 2022 are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations.

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

~~Repurchase of Common Stock~~

~~The following table summarizes our repurchases of outstanding common stock for the three months ended June 25, 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
March 27, 2022 - April 23, 2022 76,052 $ 35.93 76,052 $ 13,833,084
April 24, 2022 - May 21, 2022 242,975 37.49 242,975 4,723,942
May 22, 2022 - June 25, 2022 883,916 37.43 883,916 46,634,889
1,202,943 $ 37.35 1,202,943

1 In May, our Board of Directors authorized a program to repurchase up to $75.0 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. This authorization is in addition to the program authorized to repurchase up to $50.0 million of outstanding common stock that expires October 28, 2022. Under the authorized stock repurchase programs, 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 programs may be modified or discontinued at any time. This new share repurchase program will expire May 20, 2024.

3328

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
Certificate of Amendment of Amended and Restated Certificate of Incorporation of FormFactor, Inc.
8-K June 3, 2022 3.01
3.2
Restated Certificate of Incorporation of FormFactor, Inc.
8-K June 3, 2022 3.02
3.3
Amended and Restated By-laws of FormFactor, Inc.
8-K June 3, 2022 3.03
10.1
First Amendment to FormFactor, Inc. Employee Stock Purchase Plan
X
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 June 25, 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 June 25, 2022, formatted in Inline XBRL (included as Exhibit 101) X

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Date

Number

Herewith

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

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

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 April 1, 2023, 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

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in Inline XBRL (included as Exhibit 101)

______________________________________

* 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.

3429

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:	~~August 2, 2022~~May 9, 2023	By:	/s/ SHAI SHAHAR

			Shai Shahar
			Chief Financial Officer
			(Duly Authorized Officer, Principal Financial Officer, and Principal Accounting Officer)

3530


	Three Months Ended June 25, 2022 compared to Three Months Ended June 26, 2021		Six Months Ended June 25, 2022 compared to Six Months Ended June 26, 2021
Employee compensation costs	$	1,006	$	2,612
Other general operations	1,421		2,387

Stock-based compensation	32		329

Project material costs	404		623
	$	2,863	$	5,951


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
March 27, 2022 - April 23, 2022	76,052	$	35.93	76,052	$	13,833,084
April 24, 2022 - May 21, 2022	242,975	37.49		242,975	4,723,942
May 22, 2022 - June 25, 2022	883,916	37.43		883,916	46,634,889
	1,202,943	$	37.35	1,202,943