FormFactor, Inc. Reports Second Quarter Results

LIVERMORE, CA--(Marketwired - Jul 30, 2014) - FormFactor, Inc. (NASDAQ: FORM) today announced its financial results for the second quarter of fiscal 2014 that ended on June 28, 2014. Quarterly revenues were $67.4 million, up 20% from $56.0 million in the first quarter of fiscal 2014, and up 7% from $62.7 million in the second quarter of fiscal 2013.

On a GAAP basis, net loss for the second quarter of fiscal 2014 was $(4.3) million, or $(0.08) per fully-diluted share, compared to a net loss for the first quarter of fiscal 2014 of $(12.7) million, or $(0.23) per fully-diluted share, and a net loss for the second quarter of fiscal 2013 of $(8.4) million, or $(0.16) per fully-diluted share.

On a non-GAAP basis, net income for the second quarter of fiscal 2014 was $4.9 million, or $0.08 per fully-diluted share, compared to a net loss for the first quarter of fiscal 2014 of $(2.3) million, or $(0.04) per fully-diluted share, and a net loss for the second quarter of fiscal 2013 of $(0.3) million, or $(0.01) per fully-diluted share. A reconciliation of GAAP to non-GAAP net income (loss) and net income (loss) per share is provided in the schedules included below.

Cash generation for the second quarter of fiscal 2014 was $5.0 million, compared to cash usage of $(7.1) million for the first quarter of fiscal 2014 and cash generation of $1.0 million for the second quarter of fiscal 2013. 

"In Q2, we saw increased business and improved operational performance, resulting in our first non-GAAP profitable quarter since Q4 of 2007," said Tom St. Dennis, CEO of FormFactor, Inc. "We made significant progress in each of our DRAM, Flash Memory and SOC product lines during the quarter and are positioned to support our growth objectives through 2016."

The company has posted its revenue breakdown by region and market segment on the Investors section of its website at www.formfactor.com. FormFactor will conduct a conference call at 1:30 p.m. PDT, or 4:30 p.m. EDT, today.

The public is invited to listen to a live webcast of FormFactor's conference call on the Investors section of the company's web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available through August 1, 2014, 9:00 p.m. PDT, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 73696070. Additionally, the replay will be available on the Investors section of our website, www.formfactor.com.

Non-GAAP Financial Measures:

This press release highlights the company's financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain charges that are excluded from non-GAAP results. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends. FormFactor's management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

About FormFactor:

FormFactor, Inc. (NASDAQ: FORM) helps semiconductor manufacturers test the integrated circuits (ICs) that power consumer mobile devices, as well as computing, automotive and other applications. The company is one of the world's leading providers of essential wafer test technologies and expertise, with an extensive portfolio of high-performance probe cards for DRAM, Flash and SoC devices. Customers use FormFactor's products and services to lower overall production costs, improve their yields and enable complex next-generation ICs. Headquartered in Livermore, California, the company services its customers from a network of facilities in Europe, Asia and North America. For more information, visit the company's website at www.formfactor.com.

FormFactor, MicroProbe, and the FormFactor and MicroProbe logos are registered or unregistered trademarks of FormFactor, Inc. All other product, trademark, company or service names mentioned herein are the property of their respective owners.

Forward-looking Statements:

Statements in this press release that are not strictly historical in nature are forward-looking statements within the meaning of the federal securities laws, including statements regarding anticipated results, market conditions or trends, expectations and operating plans. These forward-looking statements are based on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. Actual events or results might differ materially from those in any forward-looking statement due to various factors, including, but not limited to: unexpected changes in demand for the company's products; seasonal industry trends; risks of the company's ability to realize further operational efficiencies, to realize sustainable profitability, to achieve its growth objectives, and to meet customer demand for the company's DRAM, Flash Memory and SoC products; and changes in the market and macro-economic environments. Additional information concerning factors that could cause actual events or results to differ materially from those in any forward-looking statement is contained in the company's Form 10-K for the fiscal year ended December 28, 2013, as filed with the SEC, and subsequent SEC filings, including the company's Quarterly Reports on Forms 10-Q. Copies of the company's SEC filings are available at http://investors.formfactor.com/sec.cfm. The company assumes no obligation to update the information in this press release, to revise any forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward-looking statements.

FORM-F

FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
				Three Months Ended								Six Months Ended
				June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
Revenues				$	67,352			$	62,733			$	123,311			$	115,353
Cost of revenues					47,328				46,328				90,962				89,873
Gross profit					20,024				16,405				32,349				25,480
Operating expenses:
	Research and development				11,074				10,915				20,821				21,844
	Selling, general and administrative				13,191				13,487				25,445				28,105
	Restructuring charges, net				59				92				2,056				4,072
	Loss on sale of subsidiary				--				300				--				300
	Impairment of long-lived assets				--				121				743				179
		Total operating expenses			24,324				24,915				49,065				54,500
Operating loss					(4,300	)			(8,510	)			(16,716	)			(29,020	)
Interest income, net					79				96				158				203
Other income (expense), net					(156	)			209				(222	)			632
Loss before income taxes					(4,377	)			(8,205	)			(16,780	)			(28,185	)
Provision (benefit) for income taxes					(51	)			202				257				(5	)
Net loss				$	(4,326	)		$	(8,407	)		$	(17,037	)		$	(28,180	)
Net loss per share:
	Basic and Diluted			$	(0.08	)		$	(0.16	)		$	(0.31	)		$	(0.52	)
Weighted-average number of shares used in per share calculations:
	Basic and diluted				55,812				54,105				55,431				53,886

FORMFACTOR, INC.
RECONCILIATION OF NON-GAAP NET INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
GAAP net loss		$	(4,326	)		$	(8,407	)		$	(17,037	)		$	(28,180	)
Stock-based compensation			3,519				3,132				6,089				6,166
Restructuring charges, net			59				92				2,056				4,072
Acquisition and integration related expenses			388				282				429				1,194
Amortization of intangibles, inventory and fixed assets fair value adjustment due to acquisition			4,953				4,206				9,902				8,992
Impairment of long-lived assets			--				421				743				479
Loss contingency			280				--				413				--
Income tax valuation allowance			--				--				--				150
Non-GAAP net income (loss)		$	4,873			$	(274	)		$	2,595			$	(7,127	)
Non-GAAP net income (loss) per share:
Basic		$	0.09			$	(0.01	)		$	0.05			$	(0.13	)
Diluted		$	0.08			$	(0.01	)		$	0.05			$	(0.13	)
Weighted-average number of shares used in per share calculations:
Basic			55,812				54,105				55,431				53,886
Diluted			57,373				54,105				57,012				53,886

FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
				June 28, 2014				December 28, 2013
ASSETS
Current assets:
	Cash and cash equivalents			$	69,859			$	59,196
	Marketable securities				79,182				91,895
	Accounts receivable, net				41,962				30,189
	Inventories, net				22,050				20,707
	Deferred tax assets				2,841				2,776
	Refundable income taxes				782				782
	Prepaid expenses and other current assets				7,476				6,106
		Total current assets			224,152				211,651
Restricted cash					435				435
Property, plant and equipment, net					29,210				35,190
Goodwill					30,731				30,731
Intangibles, net					47,326				57,470
Deferred tax assets					3,983				3,960
Other assets					1,291				1,271
		Total assets		$	337,128			$	340,708
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	18,388			$	16,313
	Accrued liabilities				17,205				13,985
	Capital leases, current portion				--				270
	Income taxes payable				493				172
	Deferred revenue				7,238				7,030
		Total current liabilities			43,324				37,770
Long-term income taxes payable					2,318				2,497
Deferred tax liabilities					3,029				3,029
Deferred rent and other liabilities					3,443				3,326
		Total liabilities			52,114				46,622
Commitments and contingencies
Stockholders' equity:
	Common stock and capital in excess of par value				703,189				695,686
	Accumulated other comprehensive gain (loss)				213				(249	)
	Accumulated deficit				(418,388	)			(401,351	)
		Total stockholders' equity			285,014				294,086
		Total liabilities and stockholders' equity		$	337,128			$	340,708