FormFactor, Inc. Announces 2005 Second Quarter Financial Results; Record Quarterly Revenues of $52.3 Million, up 21% Year over Year

Business Wire, July 20, 2005

LIVERMORE, Calif. -- FormFactor, Inc. (Nasdaq:FORM) today announced its financial results for the second quarter of fiscal year 2005, ended June 25, 2005. Quarterly revenues were a record $52.3 million, up 3% from $51.0 million in the first quarter of fiscal year 2005, and up 21% from $43.2 million for the second quarter of fiscal year 2004.

Operating income for the second quarter of fiscal year 2005 was 12.0% of revenues, compared to 13.1% for the first quarter of fiscal year 2005. Operating income for the first quarter of fiscal year 2005 and for the second quarter of fiscal 2005 was reduced by startup costs related to the transition to our new manufacturing facility of $4.4 million and $4.7 million, or 8.6% and 9.0% of revenues, respectively. Operating income for the second quarter of fiscal year 2004 was 25.3% of revenues as no costs were incurred on the new manufacturing facility.

Net income for the second quarter of fiscal year 2005 was $5.0 million or $0.12 per share on a fully diluted basis, compared to $4.9 million or $0.12 per share on a fully diluted basis for the first quarter of fiscal year 2005, and $6.8 million or $0.17 per share on a fully diluted basis for the second quarter of fiscal year 2004.

Bookings of $58.0 million for the second quarter of fiscal year 2005 also set a company record, with an increase of 14.0% from $50.9 million for the first quarter of fiscal year 2005 and 13.3% from $51.2 million for the second quarter of fiscal year 2004.

Joseph Bronson, President of FormFactor stated, "Demand for our advanced probe card products continued to be strong. We are beginning to ramp capacity in our new facility and are focused on expanding our capacity to meet demand."

The Company has posted its revenue breakdown by region and market segment on the Investors section of its website at www.formfactor.com. FormFactor will conduct a conference call at 1:30 p.m. PDT, or 4:30 p.m. EDT, today. The public is invited to listen to a live web cast of FormFactor's conference call on the Investor section of the Company's website at www.formfactor.com. A replay of the web cast will be available approximately two hours after the conclusion of the call. An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available until July 23, 2005, at 9:00 p.m. PDT and can be accessed by dialing 888-203-1112 or 719-457-0820 and entering confirmation code 9424909.

About FormFactor:

FormFactor, Inc. (Nasdaq:FORM) is an industry leader in the design, development, manufacture, sale and support of precision, high-performance advanced semiconductor wafer probe cards. The Company's products are based on its proprietary technologies, including its MicroSpring interconnect technology and design processes, which enable FormFactor to produce wafer probe cards for test applications that require reliability, speed, precision and signal integrity. FormFactor is headquartered in Livermore, California. For more information, visit the Company's website at www.formfactor.com.

FormFactor and MicroSpring are registered trademarks of FormFactor, Inc. All other product, trademark, company or service names mentioned herein are the property of their respective owners.

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 business momentum, future growth and the performance of our products. 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: the demand for certain semiconductor devices; the rate at which semiconductor manufacturers make the transition to 110 and sub-110 nanometer technology nodes and to 300mm fabrication facilities, and implement tooling cycles; and the Company's ability to efficiently transition into its new manufacturing facility. 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-Q for the period ended March 26, 2005, filed with the Securities and Exchange Commission ("SEC"), and other SEC filings. Copies of SEC filings made by the Company 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.

FORMFACTOR, INC.
                   CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)

                                    Three Months       Six Months
                                        Ended             Ended
                                  June 25, June 26, June 25,  June 26,
                                    2005     2004      2005     2004
                                  -------- -------- --------- --------
(In thousands, except per share data)

Revenues                          $52,337  $43,154  $103,302  $80,272
Cost of revenues                   30,434   20,158    59,125   38,184
Stock-based compensation              127      157       271      312
                                   -------  -------  --------  -------
Gross margin                       21,776   22,839    43,906   41,776
                                   -------  -------  --------  -------
Operating expenses:
   Research and development         5,516    4,516    11,184    8,865
   Selling, general and
    administrative                  9,377    6,862    18,573   12,736
   Stock-based compensation           625      564     1,235    1,116
                                   -------  -------  --------  -------
        Total operating expenses   15,518   11,942    30,992   22,717
                                   -------  -------  --------  -------

Operating income                    6,258   10,897    12,914   19,059

Interest income                       980      572     1,796    1,105
Other income (expense), net          (112)    (247)      (25)    (642)
                                   -------  -------  --------  -------
                                      868      325     1,771      463

Income before income taxes          7,126   11,222    14,685   19,522
Provision for income taxes         (2,114)  (4,466)   (4,762)  (7,663)
                                   -------  -------  --------  -------
Net income                        $ 5,012  $ 6,756  $  9,923  $11,859
                                   =======  =======  ========  =======
Net income per share:
  Basic                           $  0.13  $  0.18  $   0.25  $  0.32
                                   =======  =======  ========  =======
  Diluted                         $  0.12  $  0.17  $   0.24  $  0.29
                                   =======  =======  ========  =======
Weighted-average number of shares
used in per share calculations:

Basic                              39,274   37,381    39,146   37,308
                                   =======  =======  ========  =======
Diluted                            41,497   40,609    41,355   40,388
                                   =======  =======  ========  =======


                           FORMFACTOR, INC.
                     CONSOLIDATED BALANCE SHEETS
           (in thousands, except share and per share data)
                             (Unaudited)
                                                   June 25,  Dec. 25,
                                                     2005      2004
ASSETS
Current assets:
   Cash and cash equivalents                       $ 18,887  $ 34,836
   Marketable securities                            174,394   156,647
   Accounts receivable, net of allowance for
    doubtful accounts of $118 in 2005 and
    $41 in 2004                                      33,346    25,054
   Inventories                                       12,769    11,232

   Deferred tax assets                                7,587     7,587
   Prepaid expenses and other current assets          4,371     4,760
                                                    --------  --------
      Total current assets                          251,354   240,116
                                                    --------  --------

   Restricted cash                                    2,250     2,250

Property and equipment, net                          67,848    59,356

Deferred tax assets                                     570       570
Other assets                                            645       274
                                                    --------  --------
      Total assets                                 $322,667  $302,566
                                                    ========  ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                                $ 15,543  $ 17,556
   Accrued liabilities                               18,358    14,685
   Deferred revenue and customer advances             2,924     2,770
                                                    --------  --------
      Total current liabilities                      36,825    35,011

Deferred revenue and customer advances                   75       195
Deferred rent                                         2,402     2,185
                                                    --------  --------
      Total liabilities                              39,302    37,391
                                                    --------  --------

Stockholders' equity
   Common stock, $0.001 par value                        40        39
   Additional paid in capital                       256,199   249,149
   Deferred stock-based compensation                 (4,520)   (5,413)
   Accumulated other comprehensive loss                (407)     (730)
   Retained earnings                                 32,053    22,130
                                                    --------  --------

      Total stockholders' equity                    283,365   265,175
                                                    --------  --------
      Total liabilities and stockholders' equity   $322,667  $302,566
                                                    ========  ========