FormFactor, Inc. Reports Second Quarter Results

LIVERMORE, CA--(Marketwired - Jul 29, 2015) - FormFactor, Inc. (NASDAQ: FORM) today announced its financial results for the second quarter of fiscal 2015 that ended on June 27, 2015. Quarterly revenues were $73.9 million, up 4% from $70.8 million in the first quarter of fiscal 2015, and up 10% from $67.4 million in the second quarter of fiscal 2014.

On a GAAP basis, net income for the second quarter of fiscal 2015 was $0.8 million, or $0.01 per fully-diluted share, compared to a net income for the first quarter of fiscal 2015 of $0.8 million, or $0.01 per fully-diluted share, and a net loss for the second quarter of fiscal 2014 of $(4.3) million, or $(0.08) per fully-diluted share.

On a non-GAAP basis, net income for the second quarter of fiscal 2015 was $6.7 million, or $0.11 per fully-diluted share, compared to net income for the first quarter of fiscal 2015 of $5.9 million, or $0.10 per fully-diluted share, and net income for the second quarter of fiscal 2014 of $4.9 million, or $0.08 per fully-diluted share. A reconciliation of GAAP to non-GAAP net income and net income per share is provided in the schedules included below.

Cash generation including stock repurchases for the second quarter of fiscal 2015 was $7.1 million, compared to cash generation of $7.8 million for the first quarter of fiscal 2015 and cash generation of $5.0 million for the second quarter of fiscal 2014. Stock repurchases in the second quarter of fiscal 2015 was $3.5 million. There were no stock repurchases in the first quarter of fiscal 2015 or the second quarter of fiscal 2014.

"In the second quarter of 2015 the company again delivered strong operational and financial performance in a solid demand environment," said Mike Slessor, Chief Executive Officer of FormFactor, Inc. "Despite the current headwinds in PC-related end-market demand, we remain encouraged by our strong and growing position in the overall advanced probe card market while executing on a structurally profitable operational model."

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 July 31, 2015, 9:00 p.m. PDT, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 78964868. 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; changes in historical demands on a seasonal basis; risks in the company's ability to execute on its operational model; risks of the company's ability to realize sustainable profitability, to achieve its growth objectives, and to meet customer demand for its 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 27, 2014, as filed with the SEC, and subsequent SEC filings. 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 27, 2015			June 28, 2014				June 27, 2015			June 28, 2014
Revenues				$	73,885		$	67,352			$	144,714		$	123,311
Cost of revenues					50,582			47,328				98,621			90,962
Gross profit					23,303			20,024				46,093			32,349
Operating expenses:
	Research and development				11,217			11,074				22,302			20,821
	Selling, general and administrative				11,381			13,191				23,265			25,445
	Restructuring charges, net				--			59				503			2,056
	Impairment of long-lived assets				8			--				8			743
		Total operating expenses			22,606			24,324				46,078			49,065
Operating income (loss)					697			(4,300	)			15			(16,716	)
Interest income, net					65			79				149			158
Other income (expense), net					100			(156	)			1,602			(222	)
Income (loss) before income taxes					862			(4,377	)			1,766			(16,780	)
Provision (benefit) for income taxes					24			(51	)			145			257
Net income (loss)				$	838		$	(4,326	)		$	1,621		$	(17,037	)
Net income (loss) per share:
	Basic			$	0.01		$	(0.08	)		$	0.03		$	(0.31	)
	Diluted			$	0.01		$	(0.08	)		$	0.03		$	(0.31	)
Weighted-average number of shares used in per share calculations:
	Basic				58,109			55,812				57,532			55,431
	Diluted				59,094			55,812				58,874			55,431

FORMFACTOR, INC.
RECONCILIATION OF NON-GAAP NET INCOME
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 27, 2015				June 28, 2014				June 27, 2015				June 28, 2014
GAAP net income (loss)		$	838			$	(4,326	)		$	1,621			$	(17,037	)
Stock-based compensation			2,506				3,519				5,415				6,089
Restructuring charges, net			--				59				503				2,056
Acquisition and integration related expenses			2				388				(89	)			429
Amortization of intangibles, inventory and fixed assets fair value adjustment due to acquisition			3,430				4,953				6,722				9,902
Impairment of long-lived assets			8				--				8				743
Loss contingency			--				280				--				413
Business interruption insurance claim recovery			(37	)			--				(1,521	)			--
Non-GAAP net income		$	6,747			$	4,873			$	12,659			$	2,595
Non-GAAP net income per share:
Basic		$	0.12			$	0.09			$	0.22			$	0.05
Diluted		$	0.11			$	0.08			$	0.22			$	0.05
Weighted-average number of shares used in per share calculations:
Basic			58,109				55,812				57,532				55,431
Diluted			59,094				57,373				58,874				57,012

FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
				June 27, 2015				December 27, 2014
ASSETS
Current assets:
	Cash and cash equivalents			$	137,088			$	113,940
	Marketable securities				41,668				49,897
	Accounts receivable, net				43,979				45,152
	Inventories, net				24,247				25,548
	Deferred tax assets				2,030				2,036
	Refundable income taxes				--				782
	Prepaid expenses and other current assets				7,602				6,919
		Total current assets			256,614				244,274
Restricted cash					435				435
Property, plant and equipment, net					24,485				25,498
Goodwill					30,731				30,731
Intangibles, net					32,187				38,689
Deferred tax assets					3,437				3,466
Other assets					864				1,150
		Total assets		$	348,753			$	344,243
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	21,449			$	20,274
	Accrued liabilities				19,660				21,217
	Income taxes payable				180				68
	Deferred revenue				5,766				6,303
		Total current liabilities			47,055				47,862
Long-term income taxes payable					902				1,094
Deferred tax liabilities					2,208				2,208
Deferred rent and other liabilities					3,580				3,643
		Total liabilities			53,745				54,807
Commitments and contingencies
Stockholders' equity:
	Common stock and capital in excess of par value				715,921				711,733
	Accumulated other comprehensive loss				(1,998	)			(1,761	)
	Accumulated deficit				(418,915	)			(420,536	)
		Total stockholders' equity			295,008				289,436
		Total liabilities and stockholders' equity		$	348,753			$	344,243