FormFactor, Inc. Reports Third Quarter Results

LIVERMORE, CA--(Marketwired - Oct 29, 2014) - FormFactor, Inc. (NASDAQ: FORM) today announced its financial results for the third quarter of fiscal 2014 that ended on September 27, 2014. Quarterly revenues were $73.9 million, up 10% from $67.4 million in the second quarter of fiscal 2014, and up 9% from $67.6 million in the third quarter of fiscal 2013.

On a GAAP basis, net loss for the third quarter of fiscal 2014 was $(0.3) million, or $0.00 per fully-diluted share, compared to a net loss for the second quarter of fiscal 2014 of $(4.3) million, or $(0.08) per fully-diluted share, and a net loss for the third quarter of fiscal 2013 of $(10.7) million, or $(0.20) per fully-diluted share.

On a non-GAAP basis, net income for the third quarter of fiscal 2014 was $9.0 million, or $0.16 per fully-diluted share, compared to a net income for the second quarter of fiscal 2014 of $4.9 million, or $0.08 per fully-diluted share, and a net loss for the third quarter of fiscal 2013 of $(3.5) million, or $(0.06) 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 third quarter of fiscal 2014 was $5.3 million, compared to cash generation of $5.0 million for the second quarter of fiscal 2014 and cash generation of $1.8 million for the third quarter of fiscal 2013. 

"Q3 marked our second consecutive non-GAAP profitable quarter as we saw strong demand in both our SoC and DRAM businesses," said Tom St. Dennis, CEO and Executive Chairman of FormFactor, Inc. "Our reduced cost structure combined with solid product momentum, in both the SoC and DRAM markets, is showing the earnings leverage that we have on incremental revenue growth. We are very optimistic about our ability to continue to drive revenue growth in 2015 and beyond."

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 October 31, 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 7559228. 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								Nine Months Ended
				September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Revenues				$	73,933			$	67,634			$	197,245			$	182,987
Cost of revenues					49,791				55,088				140,754				144,961
Gross profit					24,142				12,546				56,491				38,026
Operating expenses:
	Research and development				11,198				10,301				32,019				32,145
	Selling, general and administrative				13,309				12,952				38,754				41,057
	Restructuring charges, net				28				143				2,084				4,215
	Loss on sale of subsidiary				--				--				--				300
	Impairment of long-lived assets				86				15				829				194
		Total operating expenses			24,621				23,411				73,686				77,911
Operating loss					(479	)			(10,865	)			(17,195	)			(39,885	)
Interest income, net					75				95				233				298
Other income (expense), net					228				(91	)			6				541
Loss before income taxes					(176	)			(10,861	)			(16,956	)			(39,046	)
Provision (benefit) for income taxes					101				(147	)			358				(152	)
Net loss				$	(277	)		$	(10,714	)		$	(17,314	)		$	(38,894	)
Net loss per share:
	Basic and diluted			$	0.00			$	(0.20	)		$	(0.31	)		$	(0.72	)
Weighted-average number of shares used in per share calculations:
	Basic and diluted				56,297				54,437				55,720				54,070

FORMFACTOR, INC.
RECONCILIATION OF NON-GAAP NET INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
GAAP net loss		$	(277	)		$	(10,714	)		$	(17,314	)		$	(38,894	)
Stock-based compensation			3,934				2,958				10,023				9,125
Restructuring charges, net			28				143				2,084				4,215
Acquisition and integration related expenses			(31	)			106				398				1,300
Amortization of intangibles, inventory and fixed assets fair value adjustment due to acquisition			4,983				3,955				14,885				12,947
Impairment of long-lived assets			86				15				829				494
Loss contingency			307				--				720				--
Income tax valuation allowance			--				--				--				150
Non-GAAP net income (loss)		$	9,030			$	(3,537	)		$	11,625			$	(10,663	)
Non-GAAP net income (loss) per share:
Basic		$	0.16			$	(0.06	)		$	0.21			$	(0.20	)
Diluted		$	0.16			$	(0.06	)		$	0.20			$	(0.20	)
Weighted-average number of shares used in per share calculations:
Basic			56,297				54,437				55,720				54,070
Diluted			57,597				54,437				57,110				54,070

FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
				September 27,  2014				December 28, 2013
ASSETS
Current assets:
	Cash and cash equivalents			$	89,264			$	59,196
	Marketable securities				65,103				91,895
	Accounts receivable, net				47,776				30,189
	Inventories, net				25,902				20,707
	Deferred tax assets				2,837				2,776
	Refundable income taxes				782				782
	Prepaid expenses and other current assets				7,730				6,106
		Total current assets			239,394				211,651
Restricted cash					435				435
Property, plant and equipment, net					26,610				35,190
Goodwill					30,731				30,731
Intangibles, net					42,255				57,470
Deferred tax assets					3,881				3,960
Other assets					1,225				1,271
		Total assets		$	344,531			$	340,708
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	21,267			$	16,313
	Accrued liabilities				19,102				13,985
	Capital leases, current portion				--				270
	Income taxes payable				625				172
	Deferred revenue				5,466				7,030
		Total current liabilities			46,460				37,770
Long-term income taxes payable					2,208				2,497
Deferred tax liabilities					3,029				3,029
Deferred rent and other liabilities					3,603				3,326
		Total liabilities			55,300				46,622
Commitments and contingencies
Stockholders' equity:
	Common stock and capital in excess of par value				708,496				695,686
	Accumulated other comprehensive loss				(600	)			(249	)
	Accumulated deficit				(418,665	)			(401,351	)
		Total stockholders' equity			289,231				294,086
		Total liabilities and stockholders' equity		$	344,531			$	340,708