0001039399-16-000042 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 26, 2016	Apr. 26, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	FORMFACTOR INC.
Entity Central Index Key	0001039399
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 26, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		58,912,756

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Income Statement [Abstract]
Revenues	$ 53,611	$ 70,829
Cost of revenues	43,819	48,040
Gross profit	9,792	22,789
Operating expenses:
Research and development	10,849	11,086
Selling, general and administrative	12,516	11,882
Restructuring charges, net	0	503
Total operating expenses	23,365	23,471
Operating loss	(13,573)	(682)
Interest income, net	117	85
Other income (expense), net	(314)	1,501
Income (loss) before income taxes	(13,770)	904
Provision for income taxes	30	121
Net income (loss)	$ (13,800)	$ 783
Net income (loss) per share:
Basic (In dollars per share)	$ (0.24)	$ 0.01
Diluted (In dollars per share)	$ (0.24)	$ 0.01
Weighted-average number of shares used in per share calculations:
Basic (In shares)	58,431	56,954
Diluted (In shares)	58,431	58,838

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (13,800)	$ 783
Other comprehensive income, net of tax:
Foreign currency translation adjustments	603	54
Unrealized gains on available-for-sale marketable securities	38	10
Other comprehensive income, net of tax	641	64
Comprehensive income (loss)	$ (13,159)	$ 847

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Current assets:
Cash and cash equivalents	$ 151,913	$ 146,264
Marketable securities	35,270	41,325
Accounts receivable, net	35,743	36,725
Inventories, net	30,993	27,223
Prepaid expenses and other current assets	4,417	6,481
Total current assets	258,336	258,018
Restricted cash	435	435
Property, plant and equipment, net	23,707	23,853
Goodwill	30,731	30,731
Intangibles, net	22,823	25,552
Deferred tax assets	3,339	3,281
Other assets	1,157	853
Total assets	340,528	342,723
Current liabilities:
Accounts payable	28,611	18,072
Accrued liabilities	17,477	21,507
Income taxes payable	153	110
Deferred revenue	3,406	3,892
Total current liabilities	49,647	43,581
Long-term income taxes payable	1,026	1,069
Deferred rent and other liabilities	3,644	3,392
Total liabilities	54,317	48,042
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at March 26, 2016 and December 26, 2015, respectively	0	0
Common stock, $0.001 par value: 250,000,000 shares authorized; 58,912,756 and 58,088,969 shares issued and outstanding at March 26, 2016 and December 26, 2015, respectively	59	58
Additional paid-in capital	723,592	718,904
Accumulated other comprehensive loss	(1,581)	(2,222)
Accumulated deficit	(435,859)	(422,059)
Total stockholders’ equity	286,211	294,681
Total liabilities and stockholders’ equity	$ 340,528	$ 342,723

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 26, 2016	Dec. 26, 2015
Stockholders' Equity:
Preferred stock, par value (In dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (In shares)	10,000,000	10,000,000
Preferred stock, shares issued (In shares)	0	0
Preferred stock, shares outstanding (In shares)	0	0
Common stock, par value (In dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (In shares)	250,000,000	250,000,000
Common stock, shares issued (In shares)	58,912,756	58,088,969
Common stock, shares outstanding (In shares)	58,912,756	58,088,969

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Cash flows from operating activities:
Net income (loss)	$ (13,800)	$ 783
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	5,239	5,884
Accretion of discount on investments	(16)	(1)
Stock-based compensation expense	2,734	2,909
Deferred income tax provision	0	6
Recovery of doubtful accounts receivable	(34)	(13)
Provision for excess and obsolete inventories	1,989	1,463
Non-cash restructuring	0	500
Foreign currency transaction gains	(1,393)	(192)
Changes in assets and liabilities:
Accounts receivable	1,260	4,172
Inventories	(5,750)	(485)
Prepaid expenses and other current assets	2,108	748
Refundable income taxes	0	782
Other assets	(286)	313
Accounts payable	8,824	(4,947)
Accrued liabilities	(3,597)	(4,286)
Income tax payable	(2)	21
Deferred rent and other liabilities	178	74
Deferred revenues	(486)	(342)
Net cash (used in) provided by operating activities	(3,032)	7,389
Cash flows from investing activities:
Acquisition of property, plant and equipment	(1,111)	(1,443)
Proceeds from sale of subsidiary	9	30
Purchases of marketable securities	(6,591)	(14,252)
Proceeds from maturities of marketable securities	12,700	18,500
Net cash provided by investing activities	5,007	2,835
Cash flows from financing activities:
Proceeds from issuances of common stock	1,961	1,694
Net cash provided by financing activities	1,961	1,694
Effect of exchange rate changes on cash and cash equivalents	1,713	135
Net increase in cash and cash equivalents	5,649	12,053
Cash and cash equivalents, beginning of period	146,264	113,940
Cash and cash equivalents, end of period	151,913	125,993
Supplemental cash flow disclosures:
Changes in accounts payable and accrued liabilities related to property, plant and equipment purchases	1,166	778
Income and property taxes paid (refunded), net	$ 22	$ (945)

Basis of Presentation and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 26, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Basis of Presentation and Summary of Significant Accounting Policies Basis of presentation. The accompanying unaudited condensed consolidated interim financial statements of FormFactor, Inc. and our subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). Our interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary to fairly present our financial position, results of operations and cash flows have been included. Operating results for the three months ended March 26, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or for any other period. The balance sheet at December 26, 2015 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated financial statements include our accounts as well as those of our wholly-owned subsidiaries after elimination of all inter-company balances and transactions. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and may result in material effects on our consolidated operating results and financial position. These financial statements and notes should be read with the consolidated financial statements and notes for the year ended December 26, 2015 included in our Annual Report on Form 10-K filed with the SEC on March 4, 2016. Fiscal year. We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2016 and 2015 each contain 53 weeks and 52 weeks, respectively and the three months ended March 26, 2016 and March 28, 2015 each contained 13 weeks, respectively. Fiscal 2016 will end on December 31, 2016. Critical Accounting Policies. Our critical accounting policies have not changed during the three months ended March 26, 2016 from those disclosed in our Annual Report on Form 10-K for the year ended December 26, 2015.

Concentration of Credit and Other Risks

3 Months Ended

Mar. 26, 2016

Risks and Uncertainties [Abstract]

Concentration of Credit and Other Risks

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, marketable securities and trade receivables. Our cash equivalents and marketable securities are held in safekeeping by large, credit worthy financial institutions. We invest our excess cash primarily in U.S. banks, government and agency bonds, money market funds and corporate obligations. We have established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Deposits in these banks may exceed the amounts of insurance provided on such deposits. To date, we have not experienced any losses on our deposits of cash and cash equivalents.

We market and sell our products to a narrow base of customers and generally do not require collateral. The following customers accounted for more than 10% of our revenues for the periods indicated:



	Three Months Ended
	March 26, 2016		March 28, 2015
Intel	34.3	%	18.6	%
Samsung	10.4		13.7
SK hynix	*		17.5
Micron	*		10.6
	44.7	%	60.4	%

* Less than 10% of revenues.

At March 26, 2016, one customer accounted for approximately 38% of gross accounts receivable. At December 26, 2015, one customer accounted for approximately 29% of gross accounts receivable. No other customers accounted for more than 10% of gross accounts receivable at either of these fiscal period ends. We operate in the intensely competitive semiconductor industry, including the Dynamic Random Access Memory, or DRAM, Flash memory, and System-on-Chip, or SoC markets, which have been characterized by price erosion, rapid technological change, short product life cycles and heightened foreign and domestic competition. Significant technological changes in the industry could adversely affect our operating results.

Certain components for our wafer probe card products that meet our requirements are available only from a limited number of suppliers. The rapid rate of technological change and the necessity of developing and manufacturing products with short life cycles may intensify our reliance on such suppliers. The inability to obtain components as required, or to develop alternative sources, if and as required in the future, could result in delays or reductions in product shipments, which in turn could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Goodwill and Intangible Assets

3 Months Ended

Mar. 26, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill recorded from the acquisition of MicroProbe Inc. on October 16, 2012 was $30.7 million as of March 26, 2016 and remained unchanged from the amounts recorded as of December 26, 2015. The Company has not recorded any historical goodwill impairments as of March 26, 2016.

The changes in intangible assets during the three months ended March 26, 2016 and the net book value of intangible assets as of March 26, 2016 and December 26, 2015 were as follows (in thousands):



	Intangible Assets, Gross Amount				Accumulated Amortization						Intangible Assets, Net				Weighted Average Useful Life
Other Intangible Assets (1)	December 26, 2015		March 26, 2016		December 26, 2015		Expense, net		March 26, 2016		December 26, 2015		March 26, 2016		March 26, 2016
Existing developed technologies	$	52,200	$	52,200	$	39,581	$	2,079	$	41,660	$	12,619	$	10,540	2.3
Trade name	4,388		4,388		1,409		109		1,518		2,979		2,870		6.5
Customer relationships	17,000		17,000		7,046		541		7,587		9,954		9,413		4.5
Total intangible assets	$	73,588	$	73,588	$	48,036	$	2,729	$	50,765	$	25,552	$	22,823



(1	)	Excludes fully amortized intangible assets

For the three months ended March 26, 2016, amortization expense of $2.1 million and $0.6 million was included in cost of revenues and selling, general and administrative expenses, respectively. For the three months ended March 28, 2015, amortization expense of $2.5 million and $0.7 million was included in cost of revenues and selling, general and administrative expenses, respectively.

Based on the carrying values of the intangible assets recorded as of March 26, 2016 and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows (in thousands):



Fiscal Year	Amount
2016	$	7,330
2017	4,943
2018	4,666
2019	3,052
2020	2,045
and thereafter	787
Total	$	22,823

Restructuring Charges

3 Months Ended

Mar. 26, 2016

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring charges include costs related to employee termination benefits. During the three months ended March 26, 2016, we did not incur restructuring charges. During the three months ended March 28, 2015, we recorded stock-based compensation expense of approximately $0.5 million relating to the modification of an equity-based award.

The activities in the restructuring accrual for the three months ended March 28, 2015 were as follows (in thousands):



	Employee Severance and Benefits			Stock-based Compensation			Total
Accrual at December 27, 2014	$	584		$	—		$	584
Restructuring charges	—			500			500
Cash payments	(560		)	—			(560		)
Adjustment to restructuring charges	3			—			3
Non-cash settlement	—			(500		)	(500		)
Accrual at March 28, 2015	$	27		$	—		$	27

Fair Value

3 Months Ended

Mar. 26, 2016

Fair Value Disclosures [Abstract]

Fair Value

Assets Measured at Fair Value on a Recurring Basis

We measure and report certain assets and liabilities at fair value on a recurring basis, including money market funds, U.S. Treasury securities, agency securities and foreign currency derivatives (see Note 17 to the Condensed Consolidated Financial Statements - Derivative Financial Instruments, for a discussion of fair value of foreign currency derivatives).

Assets measured at fair value on a recurring basis as of March 26, 2016 were as follows (in thousands):



	Level 1		Level 2		Total
Assets:
Cash equivalents
Money market funds	$	89,107	$	—	$	89,107
Marketable securities
U.S. Treasuries	—		11,182		11,182
Agency securities (Federal)	—		24,088		24,088
Total	$	89,107	$	35,270	$	124,377

Assets measured at fair value on a recurring basis as of December 26, 2015 was as follows (in thousands):



	Level 1		Level 2		Total
Assets:
Cash equivalents
Money market funds	$	82,935	$	—	$	82,935
Marketable securities
U.S. Treasuries	—		18,853		18,853
Agency securities (Federal)	—		22,472		22,472
Total	$	82,935	$	41,325	$	124,260

The Level 1 assets consist of our money market fund deposits. The Level 2 assets consist of our available-for-sale investment portfolio, which are valued utilizing a market approach. Our investments are priced by pricing vendors who provided observable inputs for their pricing without applying significant judgment. Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors or when a broker price is more reflective of fair values in the market in which the investment trades. Our broker-priced investments are labeled as Level 2 investments because fair values of these investments are based on similar assets without applying significant judgments. In addition, all of our investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

We did not have any transfers of assets measured at fair value on a recurring basis to or from Level 1 and Level 2 during the three months ended March 26, 2016 and March 28, 2015.

Assets Measured at Fair Value on a Non-Recurring Basis

We measure and report goodwill and intangible assets at fair value on a non-recurring basis if we determine these assets to be impaired. Refer to Note 3 to the Condensed Consolidated Financial Statements-Goodwill and Intangible Assets, for further details. There were no assets measured at fair value on a nonrecurring basis during the three months ended March 26, 2016 and March 28, 2015.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Marketable Securities

3 Months Ended

Mar. 26, 2016

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

We classify our marketable securities as available-for-sale. All marketable securities represent the investment of funds available for current operations, notwithstanding their contractual maturities. Such marketable securities are recorded at fair value and unrealized gains and losses are recorded in accumulated other comprehensive income until realized.

Marketable securities at March 26, 2016 consisted of the following (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasuries	$	11,198	$	—	$	(15	)	$	11,183
Agency securities (Federal)	24,089		—		(2		)	24,087
	$	35,287	$	—	$	(17	)	$	35,270

Marketable securities at December 26, 2015 consisted of the following (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasuries	$	18,896	$	1	$	(44	)	$	18,853
Agency securities (Federal)	22,484		—		(12		)	22,472
	$	41,380	$	1	$	(56	)	$	41,325

The marketable securities with gross unrealized losses have been in a loss position for less than twelve months as of March 26, 2016 and December 26, 2015, respectively.

When evaluating the investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below the amortized cost basis, current market liquidity, interest rate risk, financial condition of the issuer, and credit rating downgrades. We believe that the unrealized losses are not other-than-temporary and anticipate recovering the full cost of the securities either as market conditions improve or as the securities mature.

Contractual maturities of marketable securities as of March 26, 2016 were as follows (in thousands):



	Amortized Cost		Fair Value
Due in one year or less	$	27,789	$	27,787
Due after one year to five years	7,498		7,483
	$	35,287	$	35,270

There were no realized gains and losses on sales and maturities of marketable securities during the three months ended March 26, 2016 and March 28, 2015, respectively.

Allowance for Doubtful Accounts

3 Months Ended

Mar. 26, 2016

Receivables [Abstract]

Allowance for Doubtful Accounts

A reconciliation of the changes in our allowance for doubtful accounts receivable for the three months ended March 26, 2016 and March 28, 2015, respectively, is as follows (in thousands):



	March 26, 2016			March 28, 2015
Balance at beginning of period	$	284		$	266
Reductions	(34		)	(13		)
Balance at end of period	$	250		$	253

Inventories

3 Months Ended

Mar. 26, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following (in thousands):



	March 26, 2016		December 26, 2015
Raw materials	$	11,681	$	12,996
Work-in-progress	15,343		12,492
Finished goods	3,969		1,735
	$	30,993	$	27,223

Warranty

3 Months Ended

Mar. 26, 2016

Product Warranties Disclosures [Abstract]

Warranty

A reconciliation of the changes in our warranty liability for the three months ended March 26, 2016 and March 28, 2015, respectively, is as follows (in thousands):



	March 26, 2016			March 28, 2015
Balance at beginning of period	$	1,116		$	1,592
Accruals	805			248
Settlements	(747		)	(833		)
Balance at the end of period	$	1,174		$	1,007

Long-lived Assets

3 Months Ended

Mar. 26, 2016

Property, Plant and Equipment [Abstract]

Long-lived Assets

Impairment of long-lived assets

During the three months ended March 26, 2016 and March 28, 2015, we did not record any impairments relating to our long-lived assets.

Long-lived Assets

Property, plant and equipment consisted of the following (in thousands):



	March 26, 2016			December 26, 2015
Machinery and equipment	$	152,201		$	150,983
Computer equipment and software	28,040			27,951
Furniture and fixtures	5,401			5,380
Leasehold improvements	68,111			67,121
Sub total	253,753			251,435
Less: accumulated depreciation and amortization	(235,042		)	(232,005		)
Net long-lived assets	18,711			19,430
Construction-in-progress	4,996			4,423
Total	$	23,707		$	23,853

During the three months ended March 28, 2015, we ceased using fully depreciated assets with an acquired cost of $0.4 million. The amount of fully depreciated assets we ceased using was insignificant during the three months ended March 26, 2016.

Refer to Note 3 to the Condensed Consolidated Financial Statements - Goodwill and Intangible Assets for further details relating to our intangible long-lived assets.

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 26, 2016

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss includes foreign currency translation adjustments and unrealized losses on available-for-sale securities, net of tax, the impact of which has been excluded from earnings and reflected as components of stockholders' equity as shown below (in thousands):



	March 26, 2016			December 26, 2015
Unrealized loss on marketable securities, net of tax of $428 at March 26, 2016 and December 26, 2015, respectively	$	(445	)	$	(483	)
Cumulative translation adjustments	(1,136		)	(1,739		)
Accumulated other comprehensive loss	$	(1,581	)	$	(2,222	)

- Definition

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
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-Section 45
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
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-URI http://asc.fasb.org/extlink&oid=36458714&loc=SL7669619-108580

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Stockholders' Equity

3 Months Ended

Mar. 26, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock Repurchase Program

On April 16, 2015, our Board of Directors authorized a program to repurchase up to $25.0 million of outstanding common stock. Under the authorized stock repurchase program, we may repurchase shares from time-to-time on the open market. The pace of repurchase activity will depend on levels of cash generation, current stock price and other factors. The stock repurchase program was announced on April 16, 2015 and expired on April 15, 2016. During the three months ended March 26, 2016, we did not repurchase any shares under this program.

Restricted Stock Units

Restricted stock unit (RSU) activity under our equity incentive plan during the three months ended March 26, 2016 is set forth below:



	Units		Weighted Average Grant Date Fair Value
Restricted stock units at December 26, 2015	2,578,138		$	7.63
Awards granted	—		—
Awards vested	(520,202	)	7.13
Awards canceled	(81,000	)	4.75
Restricted stock units at March 26, 2016	1,976,936		$	7.88

The total fair value of RSUs vested during the three months ended March 26, 2016 and March 28, 2015 was $4.0 million and $7.5 million, respectively.

Stock Options

During the three months ended March 26, 2016, we did not grant any stock options.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Stock-Based Compensation

3 Months Ended

Mar. 26, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

We account for all stock-based compensation to employees and directors, including grants of RSUs and stock options, as stock-based compensation costs based on the fair value measured as of the date of grant. These costs are recognized as an expense in the Condensed Consolidated Statements of Operations over the requisite service period.

The table below shows stock-based compensation charges included in the Condensed Consolidated Statements of Operations (in thousands):



	Three Months Ended
	March 26, 2016		March 28, 2015
Stock-based compensation included in:
Cost of revenues	$	633	$	583
Research and development	796		845
Selling, general and administrative	1,305		1,481
Total stock-based compensation	2,734		2,909
Tax effect of stock-based compensation	—		—
Total stock-based compensation, net of tax	$	2,734	$	2,909

During the three months ended March 28, 2015, we recorded stock-based compensation expense of approximately $0.5 million relating to a full-time employee who was impacted by our restructuring activities. Hence, we classified this stock-based compensation expense as a restructuring expense. The table above does not include this expense. Refer to Note 4 to the Condensed Consolidated Financial Statements - Restructuring Charges for further details.

Employee Stock Purchase Plan

Under our 2012 Employee Stock Purchase Plan ("ESPP"), the offering periods are 12 months commencing on February 1 of each calendar year and ending on January 31 of the subsequent calendar year, and a six month fixed offering period commencing on August 1 of each calendar year and ending on January 31 of the subsequent calendar year. The 12 month offering period consists of two six month purchase periods and the six month offering period consists of one six month purchase period. The price of the common stock purchased is 85% of the lesser of the fair market value of the common stock on the first day of the applicable offering period or the last day of each purchase period.

During the three months ended March 26, 2016 and March 28, 2015, we issued 303,585 and 302,705 ESPP shares, respectively.

The following weighted-average assumptions were used in estimating the fair value of employees' purchase rights under our approved employee stock purchase plans:



	Three Months Ended
	March 26, 2016		March 28, 2015
ESPP:
Dividend yield	—	%	—	%
Expected volatility	48.7	%	54.7	%
Risk-free interest rate	0.26	%	0.07	%
Expected term (in years)	0.50		0.50

Unrecognized Compensation Costs

At March 26, 2016, the unrecognized stock-based compensation, adjusted for estimated forfeitures, was as follows (in thousands):



	Unrecognized Expense		Average Expected Recognition Period in years
Stock options	$	1,240	2.87
Restricted stock units	8,575		1.97
Employee stock purchase plan	325		0.35
Total unrecognized stock-based compensation expense	$	10,140

Net Income (Loss) per Share

3 Months Ended

Mar. 26, 2016

Earnings Per Share [Abstract]

Net Income (Loss) per Share

Basic net income (loss) per share for the three months ended March 26, 2016 and March 28, 2015 was computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted net loss per share for the three months ended March 26, 2016 was computed by dividing net loss by the weighted-average number of common shares outstanding for the period because the inclusion of any common stock equivalents would have been anti-dilutive. Diluted net income per share for the three months ended March 28, 2015 was computed by dividing net income by the diluted weighted-average number of shares outstanding during that period.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share is as follows (in thousands):



	Three Months Ended
	March 26, 2016			March 28, 2015
Numerator:
Net income (loss) used in computing basic and diluted net loss per share	$	(13,800	)	$	783
Denominator:
Weighted-average shares used in computing basic net income (loss) per share	58,431			56,954
Add potentially dilutive securities	—			1,884
Weighted-average shares used in computing basic and diluted net income (loss) per share	58,431			58,838

The following securities were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):



	Three Months Ended
	March 26, 2016	March 28, 2015
Options to purchase common stock	2,280	2,010
Restricted stock units	1,977	—
Total potentially dilutive securities	4,257	2,010

Income Taxes	3 Months Ended
Income Taxes	Mar. 26, 2016
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes We recorded an income tax provision of $30.0 thousand and $0.1 million for the three months ended March 26, 2016 and March 28, 2015, respectively. Income tax provisions reflect the tax provision on our non-U.S. operations in foreign jurisdictions offset by tax benefit from lapsing of statute of limitations in foreign jurisdictions. We continue to maintain a valuation allowance for our U.S. Federal and State deferred tax assets.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 26, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Contractual and purchase obligations We lease facilities under non-cancellable operating leases with various expiration dates through 2021. The facilities generally require us to pay property taxes, insurance and maintenance costs. Further, several lease agreements contain rent escalation clauses or rent holidays. For purposes of recognizing minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization. We have the option to extend or renew most of our leases, which may increase the future minimum lease commitments. Purchase obligations are primarily for purchases of inventory and manufacturing related service contracts. Purchase obligations are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations. Our lease and purchase obligations have not materially changed as of March 26, 2016 from those disclosed in our Annual Report on Form 10-K for the year ended December 26, 2015. Environmental Matters We are subject to U.S. Federal, State, local, and foreign governmental laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites and the maintenance of a safe workplace. We believe that we comply in all material respects with the environmental laws and regulations that apply to us, including those of the California Department of Toxic Substances Control, the Bay Area Air Quality Management District, the City of Livermore Water Resources Division, County of Santa Clara Department of Environmental Health, County of San Diego Hazardous Materials Division and Encino Water District, and the California Division of Occupational Safety and Health. We did not receive any notices of violations of environmental laws and regulations during the three months ended March 26, 2016, or in our fiscal 2015. In the future, we may receive notices of violations of environmental regulations, or otherwise learn of such violations. Environmental contamination or violations may negatively impact our business. Indemnification Arrangements We have entered, and may from time to time in the ordinary course of our business enter, into contractual arrangements with third parties that include indemnification obligations. Under these contractual arrangements, we have agreed to defend, indemnify and/or hold the third party harmless from and against certain liabilities. These arrangements include indemnities in favor of customers in the event that our products or services infringe a third party's intellectual property or cause property or other damages and indemnities in favor of our lessors in connection with facility leasehold liabilities that we may cause. In addition, we have entered into indemnification agreements with our directors and certain of our officers, and our bylaws contain indemnification obligations in favor of our directors, officers and agents. These indemnity arrangements may limit the type of the claim, the total amount that we can be required to be paid in connection with the indemnification obligation and the time within which an indemnification claim can be made. The duration of the indemnification obligation may vary, and for most arrangements, survives the agreement term and is indefinite. We believe that substantially all of our indemnity arrangements provide either for limitations on the maximum potential future payments we could be obligated to make, or for limitations on the types of claims and damages we could be obligated to indemnify, or both. However, it is not possible to determine or reasonably estimate the maximum potential amount of future payments under these indemnification obligations due to the varying terms of such obligations, a lack of history of prior indemnification claims, the unique facts and circumstances involved in each particular contractual arrangement and in each potential future claim for indemnification, and the contingency of any potential liabilities upon the occurrence of events that are not reasonably determinable. We have not had any material requests for indemnification under these arrangements. Our management believes that any liability for these indemnity arrangements would not be material to our accompanying consolidated financial statements. We have not recorded any liabilities for these indemnification arrangements on our condensed consolidated balance sheet as of March 26, 2016. Legal Matters From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. For the three months ended March 26, 2016, we were named in a proceeding in connection with our pending acquisition of Cascade Microtech, Inc. (“Cascade Microtech”). We identify below in "Other Litigation", a proceeding filed in fiscal 2013, which, if not resolved amicably, either (i) includes allegations that could potentially result in a material legal proceeding, or (ii) the cost to defend the allegations through trial could be material. In the future we may become a party to additional legal proceedings that may require us to spend significant resources, including proceedings designed to protect our intellectual property rights. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. On March 8, 2016, an individual plaintiff filed a putative class action lawsuit on behalf of Cascade Microtech shareholders against Cascade Microtech, its directors, FormFactor and Cardinal Merger Subsidiary, Inc. (“Merger Sub”), in connection with Cascade Microtech, FormFactor and Merger Sub entering into the merger agreement. The lawsuit, captioned Lum v. Cascade Microtech, Inc., et al., No. 16CV07293, was filed in Washington County Circuit Court in the State of Oregon. The lawsuit alleges that the individual members of Cascade Microtech’s board of directors breached their fiduciary duties owed to Cascade Microtech’s shareholders by approving the proposed merger for inadequate consideration; approving the merger to obtain unique benefits not shared equally with other Cascade Microtech shareholders; failing to take steps to maximize the value paid to Cascade Microtech shareholders; failing to take steps to ensure a fair process leading up to the proposed merger; and agreeing to preclusive deal protection devices in the merger agreement. The lawsuit also alleges claims against FormFactor and Merger Sub for aiding and abetting the alleged breaches of fiduciary duties by the individual members of Cascade Microtech’s board of directors. The plaintiff seeks, among other things, injunctive relief prohibiting completion of the merger, rescission of the merger if it is completed, an accounting by defendants, plaintiff’s attorney’s fees and costs, and other relief. On April 8, 2016, an additional putative class action lawsuit was filed by another individual plaintiff. This lawsuit, captioned Solak v. Cascade Microtech, Inc., et al., No. 16CV11809, was filed in Multnomah County Circuit Court in the State of Oregon. This lawsuit makes similar allegations, including that Cascade Microtech’s directors breached their fiduciary duties to Cascade Microtech shareholders by failing to perform a reasonable sale process designed to obtain the best possible price for Cascade Microtech’s shareholders, adopting unfair deal protections and failing to disclose all material information necessary to allow Cascade Microtech shareholders to cast a fully informed vote on the pending acquisition. The lawsuit additionally alleges that FormFactor and Merger Sub aided and abetted the Cascade Microtech directors in the breach of that fiduciary duty. The plaintiff seeks, among other things, injunctive relief prohibiting completion of the merger, plaintiff’s attorney’s fees and costs, reforming the Merger Agreement to remove deal protection provisions and other relief. We believe that the claims asserted in each of these cases are without merit. Other Litigation In August 2013, a former employee filed a class action lawsuit against the Company in the Superior Court of California, alleging violations of California’s wage and hour laws and unfair business practices on behalf of himself and all other similarly situated current and former employees at the Company’s Livermore facilities from August 21, 2009, to the present. On January 4, 2016, the court certified the plaintiff class. The lawsuit is currently proceeding to notice to class members and merits discovery. The Company denies the allegations contained in the lawsuit, and, based on available information, believes it has significant defenses to the allegations of the lawsuit. The Company currently believes that any settlement reached would be an amount that is not material to the Company's financial statements. If the matter is not settled, the Company could incur material attorneys’ fees in defending the lawsuit.

Derivative Financial Instruments

3 Months Ended

Mar. 26, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

We operate and sell our products in various global markets. As a result, we are exposed to changes in foreign currency exchange rates. We utilize foreign currency forward contracts to hedge against future movements in foreign exchange rates that affect certain existing foreign currency denominated assets and liabilities. Under this program, our strategy is to have increases or decreases in our foreign currency exposures offset by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses. We do not use derivative financial instruments for speculative or trading purposes. Our derivative instruments are not designated as hedging instruments. We record the fair value of these contracts as of the end of our reporting period to our Condensed Consolidated Balance Sheet with changes in fair value recorded within “Other income (expense), net” in our Condensed Consolidated Statements of Operations for both realized and unrealized gains and losses.

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2016 (in thousands):



Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Japanese Yen	Sell	1,120,123		$	9,895
Taiwan Dollar	Buy	(36,923	)	(1,139		)
Korean Won	Buy	(575,070	)	(493		)
Total USD notional amount of outstanding foreign exchange contracts				$	8,263

The contracts were entered into on March 25, 2016 and matured on April 22, 2016. Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs. There was no change in the value of these contracts as of March 26, 2016. Additionally, no gains or losses relating to the outstanding derivative contracts were recorded in the three months ended March 26, 2016.

The location and amount of losses related to non-designated derivative instruments that matured in the three months ended March 26, 2016 and March 28, 2015 in the Condensed Consolidated Statements of Operations are as follows (in thousands):



		Amount of Loss Recognized on Derivatives
		Three Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized on Derivatives	March 26, 2016			March 28, 2015
Foreign exchange forward contracts	Other income (expense), net	$	(1,562	)	$	(162	)

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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+ Details

Business Interruption Insurance Claim Recovery	3 Months Ended
Business Interruption Insurance Claim Recovery	Mar. 26, 2016
Extraordinary and Unusual Items [Abstract]
Business Interruption Insurance Claim Recovery	Business Interruption Insurance Claim Recovery During the three months ended March 28, 2015, we received approximately $1.5 million as a result of a payment from our insurer arising from a business interruption insurance claim related to a factory fire at a customer during the second half of fiscal 2013. We recorded this cash receipt within “Other income (expense), net” in our Condensed Consolidated Statements of Operations.

Acquisition of Cascade Microtech Inc.	3 Months Ended
Acquisition of Cascade Microtech Inc.	Mar. 26, 2016
Business Combinations [Abstract]
Acquisition of Cascade Microtech Inc.	Acquisition of Cascade Microtech Inc. On February 3, 2016, we entered into an Agreement and Plan of Merger under which we agreed to acquire Cascade Microtech Inc. ("Cascade Microtech") through the merger of a wholly owned subsidiary with and into Cascade Microtech. Subject to the terms of the merger agreement, at the effective time of the merger, each outstanding share of Cascade Microtech common stock will be cancelled and converted into the right to receive (a) $16.00 in cash, without interest, and (b) 0.6534 shares of FormFactor common stock. Cascade Microtech is an Oregon corporation that designs, develops, manufactures and markets advanced wafer probing, thermal and reliability solutions for the electrical measurement and testing of high performance semiconductor devices. Subject to the terms of the merger agreement, at the effective time of the merger all of the outstanding and vested equity awards of Cascade Microtech will be cancelled and converted into the right to receive an amount in cash in respect of the merger consideration the shares of Cascade Microtech common stock underlying the awards would have received, and all of the outstanding and unvested equity awards of Cascade Microtech will be assumed on substantially the same terms, except that the number of shares of our common stock that will underlie the assumed award and the exercise price of any assumed option will be determined pursuant to a formula intended to preserve the intrinsic value of the original award. On March 21, 2016, we announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) for FormFactor’s proposed acquisition of Cascade Microtech expired. The HSR Act imposes waiting periods on certain transactions to allow for antitrust review before those transactions can close. The expiration of the waiting period under the HSR Act satisfies one of the conditions to the closing of the proposed acquisition, which remains subject to other customary closing conditions, including receipt of the approval of Cascade Microtech shareholders. We expect to close the transaction in mid-2016. To finance a portion of the consideration for the proposed merger, we entered into a commitment letter with certain lenders to provide a senior secured term loan facility in an aggregate amount of $150 million. There is no financing condition to our obligations under the merger agreement. The funding of the term loan facility is subject to certain conditions, including the execution of definitive financing documentation, the consummation of the merger in accordance with the merger agreement, the absence of a Company Material Adverse Effect (as defined in the merger agreement), a minimum liquidity condition and other customary closing conditions. The above description of the merger agreement and the proposed merger is a summary and is qualified in its entirety by reference to the merger agreement included as Exhibit 2.1 to our Current Report on Form 8-K, filed with the SEC on February 9, 2016.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

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+ Details

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 26, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Fiscal Year	Fiscal year. We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. Fiscal 2016 and 2015 each contain 53 weeks and 52 weeks, respectively and the three months ended March 26, 2016 and March 28, 2015 each contained 13 weeks, respectively. Fiscal 2016 will end on December 31, 2016.
Assets Measured at Fair Value on Recurring Basis	Assets Measured at Fair Value on a Recurring Basis We measure and report certain assets and liabilities at fair value on a recurring basis, including money market funds, U.S. Treasury securities, agency securities and foreign currency derivatives (see Note 17 to the Condensed Consolidated Financial Statements - Derivative Financial Instruments, for a discussion of fair value of foreign currency derivatives)

Concentration of Credit and Other Risks (Tables)

3 Months Ended

Mar. 26, 2016

Risks and Uncertainties [Abstract]

Schedule of Concentration Risk, Customer Percentage of Revenue

We market and sell our products to a narrow base of customers and generally do not require collateral. The following customers accounted for more than 10% of our revenues for the periods indicated:



	Three Months Ended
	March 26, 2016		March 28, 2015
Intel	34.3	%	18.6	%
Samsung	10.4		13.7
SK hynix	*		17.5
Micron	*		10.6
	44.7	%	60.4	%

* Less than 10% of revenues.

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 26, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The changes in intangible assets during the three months ended March 26, 2016 and the net book value of intangible assets as of March 26, 2016 and December 26, 2015 were as follows (in thousands):



	Intangible Assets, Gross Amount				Accumulated Amortization						Intangible Assets, Net				Weighted Average Useful Life
Other Intangible Assets (1)	December 26, 2015		March 26, 2016		December 26, 2015		Expense, net		March 26, 2016		December 26, 2015		March 26, 2016		March 26, 2016
Existing developed technologies	$	52,200	$	52,200	$	39,581	$	2,079	$	41,660	$	12,619	$	10,540	2.3
Trade name	4,388		4,388		1,409		109		1,518		2,979		2,870		6.5
Customer relationships	17,000		17,000		7,046		541		7,587		9,954		9,413		4.5
Total intangible assets	$	73,588	$	73,588	$	48,036	$	2,729	$	50,765	$	25,552	$	22,823



(1	)	Excludes fully amortized intangible assets

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense



Fiscal Year	Amount
2016	$	7,330
2017	4,943
2018	4,666
2019	3,052
2020	2,045
and thereafter	787
Total	$	22,823

Restructuring Charges (Tables)

3 Months Ended

Mar. 26, 2016

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Accrual Activity

The activities in the restructuring accrual for the three months ended March 28, 2015 were as follows (in thousands):



	Employee Severance and Benefits			Stock-based Compensation			Total
Accrual at December 27, 2014	$	584		$	—		$	584
Restructuring charges	—			500			500
Cash payments	(560		)	—			(560		)
Adjustment to restructuring charges	3			—			3
Non-cash settlement	—			(500		)	(500		)
Accrual at March 28, 2015	$	27		$	—		$	27

Fair Value (Tables)

3 Months Ended

Mar. 26, 2016

Fair Value Disclosures [Abstract]

Fair Value Assets Measured on Recurring Basis

Assets measured at fair value on a recurring basis as of March 26, 2016 were as follows (in thousands):



	Level 1		Level 2		Total
Assets:
Cash equivalents
Money market funds	$	89,107	$	—	$	89,107
Marketable securities
U.S. Treasuries	—		11,182		11,182
Agency securities (Federal)	—		24,088		24,088
Total	$	89,107	$	35,270	$	124,377

Assets measured at fair value on a recurring basis as of December 26, 2015 was as follows (in thousands):



	Level 1		Level 2		Total
Assets:
Cash equivalents
Money market funds	$	82,935	$	—	$	82,935
Marketable securities
U.S. Treasuries	—		18,853		18,853
Agency securities (Federal)	—		22,472		22,472
Total	$	82,935	$	41,325	$	124,260

Marketable Securities (Tables)

3 Months Ended

Mar. 26, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities

Marketable securities at March 26, 2016 consisted of the following (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasuries	$	11,198	$	—	$	(15	)	$	11,183
Agency securities (Federal)	24,089		—		(2		)	24,087
	$	35,287	$	—	$	(17	)	$	35,270

Marketable securities at December 26, 2015 consisted of the following (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasuries	$	18,896	$	1	$	(44	)	$	18,853
Agency securities (Federal)	22,484		—		(12		)	22,472
	$	41,380	$	1	$	(56	)	$	41,325

Schedule of Contractual Maturities of Marketable Securities

Contractual maturities of marketable securities as of March 26, 2016 were as follows (in thousands):



	Amortized Cost		Fair Value
Due in one year or less	$	27,789	$	27,787
Due after one year to five years	7,498		7,483
	$	35,287	$	35,270

Allowance for Doubtful Accounts (Tables)

3 Months Ended

Mar. 26, 2016

Receivables [Abstract]

Reconciliation of Allowance for Doubtful Accounts

A reconciliation of the changes in our allowance for doubtful accounts receivable for the three months ended March 26, 2016 and March 28, 2015, respectively, is as follows (in thousands):



	March 26, 2016			March 28, 2015
Balance at beginning of period	$	284		$	266
Reductions	(34		)	(13		)
Balance at end of period	$	250		$	253

Inventories (Tables)

3 Months Ended

Mar. 26, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory Components

Inventories consisted of the following (in thousands):



	March 26, 2016		December 26, 2015
Raw materials	$	11,681	$	12,996
Work-in-progress	15,343		12,492
Finished goods	3,969		1,735
	$	30,993	$	27,223

Warranty (Tables)

3 Months Ended

Mar. 26, 2016

Product Warranties Disclosures [Abstract]

Reconciliation of Changes in Product Warranty Liability

A reconciliation of the changes in our warranty liability for the three months ended March 26, 2016 and March 28, 2015, respectively, is as follows (in thousands):



	March 26, 2016			March 28, 2015
Balance at beginning of period	$	1,116		$	1,592
Accruals	805			248
Settlements	(747		)	(833		)
Balance at the end of period	$	1,174		$	1,007

Long-lived Assets (Tables)

3 Months Ended

Mar. 26, 2016

Property, Plant and Equipment [Abstract]

Long-lived assets

Property, plant and equipment consisted of the following (in thousands):



	March 26, 2016			December 26, 2015
Machinery and equipment	$	152,201		$	150,983
Computer equipment and software	28,040			27,951
Furniture and fixtures	5,401			5,380
Leasehold improvements	68,111			67,121
Sub total	253,753			251,435
Less: accumulated depreciation and amortization	(235,042		)	(232,005		)
Net long-lived assets	18,711			19,430
Construction-in-progress	4,996			4,423
Total	$	23,707		$	23,853

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 26, 2016

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss



	March 26, 2016			December 26, 2015
Unrealized loss on marketable securities, net of tax of $428 at March 26, 2016 and December 26, 2015, respectively	$	(445	)	$	(483	)
Cumulative translation adjustments	(1,136		)	(1,739		)
Accumulated other comprehensive loss	$	(1,581	)	$	(2,222	)

Stockholders' Equity (Tables)

3 Months Ended

Mar. 26, 2016

Stockholders' Equity Note [Abstract]

Schedule of Restricted Stock Unit Activity

Restricted stock unit (RSU) activity under our equity incentive plan during the three months ended March 26, 2016 is set forth below:



	Units		Weighted Average Grant Date Fair Value
Restricted stock units at December 26, 2015	2,578,138		$	7.63
Awards granted	—		—
Awards vested	(520,202	)	7.13
Awards canceled	(81,000	)	4.75
Restricted stock units at March 26, 2016	1,976,936		$	7.88

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 26, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation Charges

The table below shows stock-based compensation charges included in the Condensed Consolidated Statements of Operations (in thousands):



	Three Months Ended
	March 26, 2016		March 28, 2015
Stock-based compensation included in:
Cost of revenues	$	633	$	583
Research and development	796		845
Selling, general and administrative	1,305		1,481
Total stock-based compensation	2,734		2,909
Tax effect of stock-based compensation	—		—
Total stock-based compensation, net of tax	$	2,734	$	2,909

Schedule of Weighted-Average Assumptions

The following weighted-average assumptions were used in estimating the fair value of employees' purchase rights under our approved employee stock purchase plans:



	Three Months Ended
	March 26, 2016		March 28, 2015
ESPP:
Dividend yield	—	%	—	%
Expected volatility	48.7	%	54.7	%
Risk-free interest rate	0.26	%	0.07	%
Expected term (in years)	0.50		0.50

Schedule of Unrecognized Compensation Costs

At March 26, 2016, the unrecognized stock-based compensation, adjusted for estimated forfeitures, was as follows (in thousands):



	Unrecognized Expense		Average Expected Recognition Period in years
Stock options	$	1,240	2.87
Restricted stock units	8,575		1.97
Employee stock purchase plan	325		0.35
Total unrecognized stock-based compensation expense	$	10,140

Net Income (Loss) per Share (Tables)

3 Months Ended

Mar. 26, 2016

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share is as follows (in thousands):



	Three Months Ended
	March 26, 2016			March 28, 2015
Numerator:
Net income (loss) used in computing basic and diluted net loss per share	$	(13,800	)	$	783
Denominator:
Weighted-average shares used in computing basic net income (loss) per share	58,431			56,954
Add potentially dilutive securities	—			1,884
Weighted-average shares used in computing basic and diluted net income (loss) per share	58,431			58,838

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

The following securities were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):



	Three Months Ended
	March 26, 2016	March 28, 2015
Options to purchase common stock	2,280	2,010
Restricted stock units	1,977	—
Total potentially dilutive securities	4,257	2,010

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 26, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Foreign Currency Forward Contracts Outstanding

The following table provides information about our foreign currency forward contracts outstanding as of March 26, 2016 (in thousands):



Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Japanese Yen	Sell	1,120,123		$	9,895
Taiwan Dollar	Buy	(36,923	)	(1,139		)
Korean Won	Buy	(575,070	)	(493		)
Total USD notional amount of outstanding foreign exchange contracts				$	8,263

Schedule of Losses Related to Non-designated Derivative Instruments



		Amount of Loss Recognized on Derivatives
		Three Months Ended
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized on Derivatives	March 26, 2016			March 28, 2015
Foreign exchange forward contracts	Other income (expense), net	$	(1,562	)	$	(162	)

Basis of Presentation and Summary of Significant Accounting Policies (Details)	3 Months Ended		12 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 31, 2016	Dec. 26, 2015
Fiscal periods	91 days	91 days		364 days
Forecast
Fiscal periods			371 days

Concentration of Credit and Other Risks (Details) - Customer	3 Months Ended		12 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 26, 2015
Concentration Risk [Line Items]
Concentration risk percentage	44.70%	60.40%
Customer Concentration Risk \| Revenues \| Intel
Concentration Risk [Line Items]
Concentration risk percentage	34.30%	18.60%
Customer Concentration Risk \| Revenues \| Samsung
Concentration Risk [Line Items]
Concentration risk percentage	10.40%	13.70%
Customer Concentration Risk \| Revenues \| SK hynix
Concentration Risk [Line Items]
Concentration risk percentage		17.50%
Customer Concentration Risk \| Revenues \| Micron
Concentration Risk [Line Items]
Concentration risk percentage		10.60%
Customer Concentration Risk \| Accounts Receivable \| Major Customer 1
Concentration Risk [Line Items]
Concentration risk percentage	38.00%		29.00%
Number of customers	1		1

Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 30,731	$ 30,731

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Dec. 26, 2015
Finite-lived Intangible Assets [Roll Forward]
Intangible Assets, Gross Amount	$ 73,588	$ 73,588
Accumulated Amortization, Beginning balance	48,036
Expense, net	2,729
Accumulated Amortization, Ending balance	50,765
Intangible Assets, Net	22,823	25,552
Existing developed technologies
Finite-lived Intangible Assets [Roll Forward]
Intangible Assets, Gross Amount	52,200	52,200
Accumulated Amortization, Beginning balance	39,581
Expense, net	2,079
Accumulated Amortization, Ending balance	41,660
Intangible Assets, Net	$ 10,540	12,619
Weighted Average Useful Life	2 years 3 months 6 days
Trade name
Finite-lived Intangible Assets [Roll Forward]
Intangible Assets, Gross Amount	$ 4,388	4,388
Accumulated Amortization, Beginning balance	1,409
Expense, net	109
Accumulated Amortization, Ending balance	1,518
Intangible Assets, Net	$ 2,870	2,979
Weighted Average Useful Life	6 years 6 months 6 days
Customer relationships
Finite-lived Intangible Assets [Roll Forward]
Intangible Assets, Gross Amount	$ 17,000	17,000
Accumulated Amortization, Beginning balance	7,046
Expense, net	541
Accumulated Amortization, Ending balance	7,587
Intangible Assets, Net	$ 9,413	$ 9,954
Weighted Average Useful Life	4 years 6 months 6 days

Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 26, 2015
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 2,729
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
2016	7,330
2017	4,943
2018	4,666
2019	3,052
2020	2,045
and thereafter	787
Intangible Assets, Net	22,823		$ 25,552
Cost of Sales \| Intellectual Property
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	2,100	$ 2,500
Selling, general and administrative \| Intellectual Property
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 600	$ 700

Restructuring Charges - Additional Information (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 500
Stock-based Compensation
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 500

Restructuring Charges - Restructuring Accrual Activity (Details) $ in Thousands	3 Months Ended
	Mar. 28, 2015 USD ($)
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	$ 584
Restructuring charges	500
Cash payments	(560)
Adjustment to restructuring charges	3
Non-cash settlement	(500)
Accrual at end of period	27
Employee Severance and Benefits
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	584
Restructuring charges	0
Cash payments	(560)
Adjustment to restructuring charges	3
Non-cash settlement	0
Accrual at end of period	27
Stock-based Compensation
Restructuring Reserve [Roll Forward]
Accrual at beginning of period	0
Restructuring charges	500
Cash payments	0
Adjustment to restructuring charges	0
Non-cash settlement	(500)
Accrual at end of period	$ 0

Fair Value (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	$ 35,270	$ 41,325
Total	124,377	124,260
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total	89,107	82,935
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total	35,270	41,325
Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	89,107	82,935
Money market funds \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	89,107	82,935
Money market funds \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	0	0
U.S. Treasuries
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	11,182	18,853
U.S. Treasuries \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
U.S. Treasuries \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	11,182	18,853
Agency securities (Federal)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	24,088	22,472
Agency securities (Federal) \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	0	0
Agency securities (Federal) \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable securities	$ 24,088	$ 22,472

Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 35,287	$ 41,380
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(17)	(56)
Fair Value	35,270	41,325
Amortized Cost
Due in one year or less	27,789
Due after one year to five years	7,498
Amortized Cost	35,287
Fair Value
Due in one year or less	27,787
Due after one year to five years	7,483
Fair Value	35,270
U.S. Treasuries
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11,198	18,896
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(15)	(44)
Fair Value	11,183	18,853
Agency securities (Federal)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	24,089	22,484
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(2)	(12)
Fair Value	$ 24,087	$ 22,472

Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	$ 284	$ 266
Reductions	(34)	(13)
Balance at end of period	$ 250	$ 253

Inventories (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 11,681	$ 12,996
Work-in-progress	15,343	12,492
Finished goods	3,969	1,735
Inventory, Net	$ 30,993	$ 27,223

Warranty (Details) - USD ($) $ in Thousands	3 Months Ended
Warranty (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Mar. 28, 2015
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 1,116	$ 1,592
Accruals	805	248
Settlements	(747)	(833)
Balance at the end of period	$ 1,174	$ 1,007

Long-lived Assets - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 28, 2015 USD ($)
Property, Plant and Equipment [Abstract]
Impairment of Long-lived assets to be disposed of	$ 0.4

Long-lived Assets - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Property, Plant and Equipment [Line Items]
Long-lived assets, gross	$ 253,753	$ 251,435
Less: accumulated depreciation and amortization	(235,042)	(232,005)
Net long-lived assets	18,711	19,430
Construction-in-progress	4,996	4,423
Total	23,707	23,853
Machinery and equipment
Property, Plant and Equipment [Line Items]
Long-lived assets, gross	152,201	150,983
Computer equipment and software
Property, Plant and Equipment [Line Items]
Long-lived assets, gross	28,040	27,951
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Long-lived assets, gross	5,401	5,380
Leasehold improvements
Property, Plant and Equipment [Line Items]
Long-lived assets, gross	$ 68,111	$ 67,121

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Dec. 26, 2015
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Unrealized loss on marketable securities, net of tax of $428 at March 26, 2016 and December 26, 2015, respectively	$ (445)	$ (483)
Cumulative translation adjustments	(1,136)	(1,739)
Accumulated other comprehensive loss	(1,581)	(2,222)
Unrealized loss on marketable securities, tax	$ 428	$ 428

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details

Stockholders' Equity - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Apr. 16, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 2,734,000	$ 2,909,000
Equity Incentive Plan \| Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total fair value of restricted stock units vested during the period	$ 4,000,000	$ 7,500,000
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program authorized amount			$ 25,000,000.0

Stockholders' Equity - Restricted Stock Unit Activity (Details) - Equity Incentive Plan - Restricted Stock Units	3 Months Ended
	Mar. 26, 2016 $ / shares shares
Units
Beginning balance (in units) \| shares	2,578,138
Awards granted (in units) \| shares	0
Awards vested (in units) \| shares	(520,202)
Awards canceled (in units) \| shares	(81,000)
Ending balance (in units) \| shares	1,976,936
Weighted Average Grant Date Fair Value
Beginning Balance (in dollars per unit) \| $ / shares	$ 7.63
Awards granted (in dollars per unit) \| $ / shares	0.00
Awards vested (in dollars per unit) \| $ / shares	7.13
Awards canceled (in dollars per unit) \| $ / shares	4.75
Ending Balance (in dollars per unit) \| $ / shares	$ 7.88

Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restructuring charges		$ 500
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price of common stock, percent of market value	85.00%
Stock issued during the period (In shares)	303,585	302,705
Stock-based Compensation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restructuring charges		$ 500

Stock-Based Compensation - Share-Based Compensation Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 2,734	$ 2,909
Tax effect of stock-based compensation	0	0
Total stock-based compensation, net of tax	2,734	2,909
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	633	583
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	796	845
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 1,305	$ 1,481

Stock-Based Compensation - Weighted Average Assumptions (Details) - Employee stock purchase plan	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%	0.00%
Expected volatility	48.70%	54.70%
Risk-free interest rate	0.26%	0.07%
Expected term (in years)	6 months	6 months

Stock-Based Compensation - Unrecognized Compensation Costs (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2016 USD ($)
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized [Abstract]
Total unrecognized stock-based compensation expense	$ 10,140
Stock options
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized [Abstract]
Stock options	$ 1,240
Average Expected Recognition Period in years	2 years 10 months 12 days
Restricted stock units
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized [Abstract]
Restricted stock units and employee stock purchase plan	$ 8,575
Average Expected Recognition Period in years	1 year 11 months 18 days
Employee stock purchase plan
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized [Abstract]
Restricted stock units and employee stock purchase plan	$ 325
Average Expected Recognition Period in years	4 months 6 days

Net Income (Loss) per Share - Schedule of Numerator and Denominator in EPS (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Numerator:
Net income (loss) used in computing basic and diluted net loss per share	$ (13,800)	$ 783
Denominator:
Weighted-average shares used in computing basic net income (loss) per share (In shares)	58,431	56,954
Add potentially dilutive securities (In shares)	0	1,884
Weighted-average shares used in computing basic and diluted net income (loss) per share (In shares)	58,431	58,838

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Net Income (Loss) per Share - Anti-dilutive Securities Excluded from EPS (Details) - shares shares in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities (In shares)	4,257	2,010
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities (In shares)	2,280	2,010
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities (In shares)	1,977	0

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 26, 2016	Mar. 28, 2015
Income Tax Disclosure [Abstract]
Income tax provision	$ 30	$ 121

Derivative Financial Instruments - Foreign Currency Forward Contracts Outstanding (Details) - Mar. 26, 2016 - Not Designated as Hedging Instrument - Foreign Exchange Forward ₩ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands	USD ($)	KRW (₩)	TWD ($)	JPY (¥)
Derivatives, Fair Value [Line Items]
Total USD notional amount of outstanding foreign exchange contracts	$ 8,263
Sell \| Japanese Yen
Derivatives, Fair Value [Line Items]
Derivative asset contract amount	9,895			¥ 1,120,123
Buy \| Taiwan Dollar
Derivatives, Fair Value [Line Items]
Derivative liability contract amount	(1,139)		$ (36,923)
Buy \| Korean Won
Derivatives, Fair Value [Line Items]
Derivative liability contract amount	$ (493)	₩ (575,070)

Derivative Financial Instruments - Losses Related to Non-designated Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Not Designated as Hedging Instrument \| Foreign Exchange Forward \| Other income (expense), net
Derivatives, Fair Value [Line Items]
Foreign exchange forward contracts	$ (1,562)	$ (162)

Business Interruption Insurance Claim Recovery (Details) $ in Millions	3 Months Ended
	Mar. 28, 2015 USD ($)
Other income (expense), net
Business Interruption Loss [Line Items]
Proceeds from business interruption insurance claim	$ 1.5

Acquisition of Cascade Microtech Inc. (Details) $ / shares in Units, $ in Millions	Feb. 03, 2016 USD ($) $ / shares shares
Business Acquisition [Line Items]
Cash paid to acquire business (In dollars per share) \| $ / shares	$ 16.00
Shares issued to acquire business (In shares) \| shares	0.6534
Senior Secured Term Loan
Business Acquisition [Line Items]
Senior secured loan to finance merger \| $	$ 150