FormFactor, Inc. Announces 2006 Second Quarter Financial Results; Record Quarterly Revenues of $92.4 Million, Up 77% Year Over Year

FormFactor, Inc. (Nasdaq:FORM) today announced its financial results for the second quarter of fiscal 2006, ended July 1, 2006. Quarterly revenues were a record $92.4 million, up 14% from $81.3 million in the first quarter of fiscal 2006, and up 77% from $52.3 million for the second quarter of fiscal 2005.

"FormFactor had another record quarter, as we continued to make significant progress in addressing our target markets," said Joseph Bronson, President of FormFactor. "We are very pleased with the performance of our manufacturing operations and continue to make ongoing productivity and efficiency improvements."

Net income for the second quarter of fiscal 2006 was $15.3 million or $0.32 per share on a fully diluted basis, which included $2.8 million or $0.06 of incremental FAS 123R stock option expense net of tax. This compares to $10.8 million or $0.25 per share on a fully diluted basis for the first quarter of fiscal 2006, which included $2.5 million or $0.05 of incremental FAS 123R stock option expense net of tax. Net income for the second quarter of fiscal 2005 was $5.0 million or $0.12 per share on a fully diluted basis, which excluded incremental stock-based compensation expense from the adoption of FAS 123R.

Bookings of $96.5 million for the second quarter of fiscal 2006 also set a company record. Bookings for the first quarter of fiscal 2006 and second quarter of fiscal 2005 were $95.9 million and $58.0 million, respectively.

"Key to our growth strategy is our ongoing focus on R&D, where our pipeline remains stronger than ever," said Igor Khandros, CEO of FormFactor. "Innovative new products, manufacturing execution and world-wide infrastructure put FormFactor in a unique position to enable the ongoing reduction in the cost of wafer test for our customers and for continuing long-term growth."

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. 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 29, 2006 at 6:30 p.m. PDT and can be accessed by dialing (888) 286-8010 or (617) 801-6888 and entering confirmation code 57967229.

About FormFactor:

Founded in 1993, FormFactor, Inc. (Nasdaq:FORM) is the leader in advanced wafer probe cards, which are used by semiconductor manufacturers to electrically test ICs. The company's wafer sort, burn-in and device performance testing products move IC testing upstream from post-packaging to the wafer level, enabling semiconductor manufacturers to lower their overall production costs, improve yields, and bring next-generation devices to market. 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 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, operations, demand for our products and future growth. 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 implement manufacturing capability changes, make the transition to smaller nanometer technology nodes and implement tooling cycles; the company's ability to add manufacturing capacity, ramp production volume and expand globally, including to execute on its global manufacturing roadmap; the company's ability to develop and deliver innovative technologies, and to enforce its intellectual property rights; and the company's ability to implement and execute processes and structures for increasing productivity and supporting growth. 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 period ended December 31, 2005 and the company's Form 10-Q for the quarterly period ended April 1, 2006, filed with the Securities and Exchange Commission ("SEC"), and subsequent SEC filings. 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.

                           FORMFACTOR, INC.
                  CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data)
                             (Unaudited)

                   Three Months Ended            Six Months Ended
              July 1, 2006  June 25, 2005  July 1, 2006  June 25, 2005
              ---------------------------  ---------------------------
                                        
Revenues       $  92,433     $  52,337        $ 173,763    $  103,302
Cost of 
 revenues         43,707        30,561           84,207        59,396
              ---------------------------  ---------------------------
Gross margin      48,726        21,776           89,556        43,906
              ---------------------------  ---------------------------

Operating expenses:
  Research 
   and 
   development    11,627         5,701           21,403        11,580
  Selling, 
   general and 
   administrative 17,965         9,817           33,713        19,412
              ---------------------------  ---------------------------
    Total 
     operating 
     expenses     29,592        15,518           55,116        30,992
              ---------------------------  ---------------------------
Operating 
 income           19,134         6,258           34,440        12,914


Interest income    3,889           980            5,711         1,796
Other income 
 (expense), net      327          (112)             (14)          (25)
              ---------------------------  ---------------------------
                   4,216           868            5,697         1,771


Income before 
 income taxes     23,350         7,126           40,137        14,685
Provision for 
 income taxes      8,069         2,114           14,088         4,762
              ---------------------------  ---------------------------

Net income     $  15,281     $   5,012        $  26,049    $    9,923
              ===========================  ===========================


Net income 
 per share:
  Basic        $    0.33     $    0.13        $    0.60    $     0.25
              ===========================  ===========================

  Diluted      $    0.32     $    0.12        $    0.57    $     0.24
              ===========================  ===========================


Weighted-average 
 number of shares
 used in per share 
 calculations:

Basic             45,920        39,274           43,730        39,146
              ===========================  ===========================

Diluted           48,165        41,497           45,792        41,355
              ===========================  ===========================



                             FORMFACTOR, INC.
                        CONSOLIDATED BALANCE SHEETS
              (In thousands, except share and per share data)
                               (Unaudited)

                                                July 1,   December 31,
                                                 2006        2005
ASSETS
Current assets:
   Cash and cash equivalents                   $270,338    $ 31,217
   Marketable securities                        160,306     180,391
   Accounts receivable, net of allowance 
    for doubtful accounts of $74 as of 
    July 1, 2006 and December 31, 2005           44,884      43,967  
   Inventories                                   24,057      18,404

   Deferred tax assets                           11,339      11,396
   Prepaid expenses and other current assets     11,771       7,169
                                               -----------------------
      Total current assets                      522,695     292,544

   Restricted cash                                2,250       2,250

Property and equipment, net                      88,586      81,588

Deferred tax assets                               6,524       4,518
Other assets                                        739         461
                                               -----------------------

      Total assets                             $620,794    $381,361
                                               =======================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                            $ 29,034    $ 26,369
   Accrued liabilities                           23,214      20,467
   Income tax payable                             9,016       9,697
   Deferred rent                                    313         313
   Deferred revenue and customer advances         5,186       3,588
                                               -----------------------
      Total current liabilities                  66,763      60,434

Deferred rent and other long term liabilities     3,652       3,138
                                               -----------------------
      Total liabilities                          70,415      63,572
                                               -----------------------

Stockholders' equity:
   Common stock, $0.001 par value                    47          40
   Additional paid in capital                   472,778     268,291
   Deferred stock-based compensation                  -      (2,495)
   Accumulated other comprehensive loss            (807)       (359)
   Retained Earnings                             78,361      52,312
                                               -----------------------
      Total stockholders' equity                550,379     317,789
      Total liabilities and 
       stockholders' equity                    $620,794    $381,361
                                               =======================

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