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      September      September      September  
                                                            28,  2013        29,  2012        28,  2013        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      September      September      September  
                                                            28,  2013        29,  2012        28,  2013        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,      December  29,  
                                                                                                        2013                      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  
                                                                                              =============    =============  
                                                                                                                                                        
                                                                                                                                                        
 

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