FormFactor, Inc. Reports Third Quarter Results

LIVERMORE, CA--(Marketwired - Oct 24, 2013) - FormFactor, Inc. (NASDAQ: FORM) today announced its financial results for the third quarter of fiscal 2013 that ended on September 28, 2013. Quarterly revenues were $67.6 million, up 7.8% from $62.7 million in the second quarter of fiscal 2013, and up 63.9% from $41.3 million in the third quarter of fiscal 2012.

On a GAAP basis, net loss for the third quarter of fiscal 2013 was $10.7 million or $(0.20) per fully-diluted share, compared to a net loss for the second quarter of fiscal 2013 of $8.4 million or $(0.16) per fully-diluted share, and a net loss for the third quarter of fiscal 2012 of $14.5 million or $(0.29) per fully-diluted share.

On a Non-GAAP basis, net loss for the third quarter of fiscal 2013 was $3.5 million, or $(0.06) per fully-diluted share, compared to a net loss for the second quarter of fiscal 2013 of $0.3 million or $(0.01) per fully-diluted share, and a net loss for the third quarter of fiscal 2012 of $7.7 million or $(0.15) per fully-diluted share.

Although third quarter revenue was within the anticipated range, Non-GAAP gross profit at 24% of sales was significantly below the anticipated range, due to a combination of factors including lower than forecasted manufacturing utilization during September due to a significant drop in demand, lower margins on a specific high-volume DRAM design, increased warranty and service expenses caused by execution challenges at a specific customer and increased excess inventory charges.

For the third quarter, the difference between GAAP gross profit of $12.5 million, 19% of sales, and Non-GAAP gross profit of $16.3 million, 24% of sales, is that Non-GAAP gross profit excludes $0.6 million of stock-based compensation expense and $3.2 million of intangible asset amortization expense.

A reconciliation of GAAP to non-GAAP net loss and net loss per share is provided in the schedules included below.

Cash generation for the third quarter of fiscal 2013 was $1.8 million, compared to cash generation of $1.0 million for the second quarter of fiscal 2013 and cash usage of $1.6 million for the third quarter of fiscal 2012.

"We are currently addressing our Q3 operational execution challenges," said Tom St. Dennis, CEO and Executive Chairman of FormFactor. "Despite our financial performance in Q3, the company made progress in products addressing all markets and delivered positive cash flow for the second consecutive quarter."

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 5:30 a.m. PDT, or 8:30 a.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 October 26, 2013, 9:00 p.m. Pacific Daylight Time, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 72494882. 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) is a leader in advanced wafer test solutions. The company's advanced wafer probe cards enable semiconductor manufacturers to lower their overall production costs, improve yields and bring next-generation devices to market. FormFactor's acquisition of MicroProbe creates the leading wafer test solution provider for both memory and non-memory semiconductor manufacturers. FormFactor is headquartered in Livermore, California with operations 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 the company's manufacturing utilization, greater than anticipated warranty and service expenses, variances in margins on specific product designs, increased inventory charges, and seasonal industry trends; risks of the company's ability to realize further operational efficiencies and achieve synergies through the MicroProbe integration; 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 29, 2012, 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/edgar.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								Nine Months Ended
				September 28, 2013				September 29, 2012				September 28, 2013				September 29, 2012
Revenues				$	67,634			$	41,262			$	182,987			$	130,881
Cost of revenues					55,088				33,110				144,961				102,406
Gross profit					12,546				8,152				38,026				28,475
Operating expenses:
	Research and development				10,301				8,573				32,145				30,355
	Selling, general and administrative				12,952				11,594				41,057				34,273
	Restructuring charges, net				143				2,481				4,215				2,584
	Loss on sale of subsidiary				--				--				300				--
	Impairment of long-lived assets				15				143				194				372
		Total operating expenses			23,411				22,791				77,911				67,584
Operating loss					(10,865	)			(14,639	)			(39,885	)			(39,109	)
Interest income, net					95				163				298				557
Other income, net					(91	)			171				541				1,127
Loss before income taxes					(10,861	)			(14,305	)			(39,046	)			(37,425	)
Provision for (benefit from) income taxes					(147	)			173				(152	)			(1,276	)
Net loss				$	(10,714	)		$	(14,478	)		$	(38,894	)		$	(36,149	)
Net loss per share:
	Basic and Diluted			$	(0.20	)		$	(0.29	)		$	(0.72	)		$	(0.73	)
Weighted-average number of shares used in per share calculations:
	Basic and Diluted				54,437				50,154				54,070				49,805

FORMFACTOR, INC.
RECONCILIATION OF NON-GAAP NET LOSS
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 28, 2013				September 29, 2012				September 28, 2013				September 29, 2012
GAAP net loss		$	(10,714	)		$	(14,478	)		$	(38,894	)		$	(36,149	)
Stock-based compensation			2,958				2,968				9,125				9,489
Restructuring charges, net			143				2,481				4,215				2,584
Acquisition and integration related expenses			106				1,175				1,300				1,175
Amortization of intangibles, inventory and fixed assets fair value adjustment due to acquisition			3,955				--				12,947				--
Impairment of long-lived assets and loss on sale of subsidiary			15				143				494				372
Income tax valuation allowance			--				--				150				--
Non-GAAP net loss		$	(3,537	)		$	(7,711	)		$	(10,663	)		$	(22,529	)
Non-GAAP net loss per share:
Basic and Diluted		$	(0.06	)		$	(0.15	)		$	(0.20	)		$	(0.45	)
Weighted-average number of shares used in per share calculations:
Basic and Diluted			54,437				50,154				54,070				49,805

FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
				September 28, 2013				December 29, 2012
ASSETS
Current assets:
	Cash and cash equivalents			$	59,470			$	72,243
	Marketable securities				96,868				93,545
	Accounts receivable, net				46,320				28,919
	Inventories, net				22,369				23,616
	Deferred tax assets				4,206				4,613
	Refundable income taxes				1,568				5,667
	Prepaid expenses and other current assets				7,844				10,569
		Total current assets			238,645				239,172
Restricted cash					436				318
Property, plant and equipment, net					36,945				45,515
Goodwill					30,731				30,994
Intangibles, net					61,495				74,276
Deferred tax assets					4,460				4,207
Other assets					1,004				1,200
		Total assets		$	373,716			$	395,682
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	28,676			$	21,015
	Accrued liabilities				15,313				17,270
	Capital leases, current portion				400				573
	Income taxes payable				1,344				--
	Deferred revenue				6,937				6,189
		Total current liabilities			52,670				45,047
Long-term income taxes payable					2,453				3,028
Capital leases, net of current portion					--				340
Deferred rent and other liabilities					7,910				8,009
		Total liabilities			63,033				56,424
Stockholders' equity:
	Common stock and capital in excess of par value				692,940				681,211
	Accumulated other comprehensive income				305				1,715
	Accumulated deficit				(382,562	)			(343,668	)
		Total stockholders' equity			310,683				339,258
		Total liabilities and stockholders' equity		$	373,716			$	395,682