What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 251 added, 146 removed, 472 unchanged (46% of the section changed)

8 unchanged sentences

Current assets held for sale

Receivable from Purchaser of the Mobility business unit

Prepaid expenses and other current assets

22 unchanged sentences

300,000 shares authorized, 106,701 and 105,510

shares issued and outstanding as of March 30, 2020 and December 30, 2019,

shares issued and outstanding as of June 29, 2020 and December 30, 2019,

Additional paid-in capital

5 unchanged sentences

Consolidated Condensed Statements of Operations

For the Quarters Ended March 30, 2020 and April 1, 2019

For the Quarter and Two Quarters Ended June 29, 2020 and July 1, 2019

Quarter Ended

Two Quarters Ended

(In thousands, except per share data)

7 unchanged sentences

Operating income

Other expense:

Other (expense) income:

Interest expense

Total other expense, net

(Loss) income from continuing operations before income taxes

Income tax provision

Net (loss) income from continuing operations

Income from continuing operations before income taxes

Income tax benefit (provision)

Net income from continuing operations

Income (loss) from discontinued operations, net of income taxes

Loss per share:

Basic (loss) earnings per share from continuing operations

Earnings per share:

Basic earnings per share from continuing operations

Basic earnings (loss) per share from discontinued operations

Basic loss per share

Diluted (loss) earnings per share from continuing operations

Basic earnings per share

Diluted earnings per share from continuing operations

Diluted earnings (loss) per share from discontinued operations

Diluted loss per share

Diluted earnings per share

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive Loss

For the Quarters Ended March 30, 2020 and April 1, 2019

Consolidated Condensed Statements of Comprehensive Income (Loss)

For the Quarter and Two Quarters Ended June 29, 2020 and July 1, 2019

Quarter Ended

Two Quarters Ended

(In thousands)

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net

Other comprehensive income (loss), net of tax:

Pension obligation adjustments, net

Derecognition of foreign currency translation adjustments

due to sale of Mobility business unit

Foreign currency translation adjustments, net

Derecognition of unrealized losses on cash flow hedge

due to sale of Mobility business unit

Net unrealized losses on cash flow hedges:

1 unchanged sentence

the period, net

Loss realized in the statement of operations

Loss realized in the statement of operations, net

Other comprehensive loss, net of tax

Comprehensive loss, net of tax

Comprehensive income (loss), net of tax

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Stockholders’ Equity

For the Quarters Ended March 30, 2020 and April 1, 2019

For the Two Quarters Ended June 29, 2020 and July 1, 2019

Comprehensive

Stockholders'

(In thousands)

8 unchanged sentences

Balance, March 30, 2020

Other comprehensive loss

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, June 29, 2020

Comprehensive

Stockholders'

(In thousands)

9 unchanged sentences

Balance, April 1, 2019

Other comprehensive loss

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, July 1, 2019

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Cash Flows

For the Quarters Ended March 30, 2020 and April 1, 2019

Quarter Ended

March 30, 2020

April 1, 2019

For the Two Quarters Ended June 29, 2020 and July 1, 2019

Two Quarters Ended

June 29, 2020

(In thousands)

6 unchanged sentences

Stock-based compensation

Gain on sale of the Mobility business unit

Changes in operating assets and liabilities:

7 unchanged sentences

Cash flows from investing activities:

Refundable deposit related to sale of the Mobility business unit

Proceeds from sale of the Mobility business unit, net of cash disposed

Purchase of property, plant and equipment and other assets

3 unchanged sentences

Repayment of long-term debt borrowing

Payment of debt issuance costs

Redemption of convertible notes

1 unchanged sentence

Effect of foreign currency exchange rates on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Cash and cash equivalents and restricted cash in assets held for sale

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Cash and cash equivalents in assets held for sale

Cash and cash equivalents as presented on the consolidated condensed balance sheet

15 unchanged sentences

TTM Technologies, Inc.

(the Company or TTM) is a leading global printed circuit board (PCB) manufacturer, focusing on quick-turn and volume production of technologically complex PCBs, backplane assemblies and electro-mechanical solutions (E-M Solutions) as well as a global designer and manufacturer of radio-frequency (RF) and microwave components and assemblies.

(the Company or TTM) is a leading global printed circuit board (PCB) manufacturer, focusing on quick-turn and volume production of technologically advanced PCBs and backplane assemblies as well as a global designer and manufacturer of high-frequency radio frequency (RF) and microwave components and assemblies.

The Company provides time-to-market and volume production of advanced technology products and offers a one-stop design, engineering and manufacturing solution to customers.

This one-stop design and manufacturing solution enables the Company to align technology developments with the diverse needs of the Company’s customers and to enable them to reduce the time required to develop new products and bring them to market.

The Company serves a diversified customer base in various markets throughout the world, including aerospace and defense, automotive components, medical, industrial and instrumentation related products, as well as networking/communications infrastructure products.

The Company serves a diversified customer base in various markets throughout the world, including aerospace and defense, computing, automotive components, medical, industrial and instrumentation related products, as well as networking/communications infrastructure products.

The Company’s customers include both original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) providers.

15 unchanged sentences

(GME) (collectively, the Mobility business unit).

For all periods presented in the consolidated condensed balance sheet, all assets and liabilities attributable to the Mobility business unit have been aggregated under the captions “Current assets held for sale”, “Non-current assets held for sale”, “Current liabilities held for sale” and “Non-current liabilities held for sale”.

For all periods presented in the consolidated condensed statements of operations, all sales, costs, expenses and income taxes attributable to the Mobility business unit have been aggregated under the caption “Income from discontinued operations, net of income taxes”.

Prior to the closing of the sale of the Company’s Mobility business unit, all assets and liabilities attributable to the Mobility business unit have been aggregated under the captions “Current assets held for sale”, “Non-current assets held for sale”, “Current liabilities held for sale” and “Non-current liabilities held for sale”.

For all periods presented in the consolidated condensed statements of operations, all sales, costs, expenses, income taxes and gain on sale attributable to the Mobility business unit have been aggregated under the caption “Income from discontinued operations, net of income taxes”.

Prior year results have been recast to conform with the current presentation.

4 unchanged sentences

Reclassifications

Certain prior year amounts in the condensed consolidated financial statements have been reclassified due to the sale of the Company’s Mobility business unit.

Certain prior year amounts in the consolidated condensed financial statements have been reclassified due to the sale of the Company’s Mobility business unit.

Refer to Note 2, Discontinued Operations , for further information regarding this sale and the resulting prior year reclassifications.

30 unchanged sentences

Early adoption is permitted.

The Company does not anticipate the adoption will have a material impact on the consolidated condensed financial statements and related disclosures.

The Company does not anticipate the adoption will have a material impact on its consolidated condensed financial statements and related disclosures.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(2) Discontinued Operations

On January 19, 2020, the Company entered into a definitive equity interests purchase agreement for the sale of the Company’s Mobility business unit.

The sale was completed on April 17, 2020 for a base purchase price of $ 550,000 in cash, subject to customary purchase price adjustments.

The sale was completed on April 17, 2020 for a base purchase price of $ 550,000 , subject to customary purchase price adjustments.

The base purchase price does not include certain accounts receivable of the divested business, which are estimated to total approximately $ 95,000 .

On April 18, 2020, the Company also entered into a Transition Services Agreement (TSA) with the Purchaser pursuant to which the Purchaser is receiving certain services (the Services) to enable it to operate the Mobility business unit after the closing of the sale of the Mobility business unit.

The Services include finance and accounting, human resources, legal and compliance, sales, information technology, and other corporate support services.

Under the TSA, the Services are being provided at cost for a period of up to 24 months.

The Company does not anticipate this will have a material impact on its consolidated condensed financial statements.

Further, on June 29, 2020, the Company entered into a Sales Force Agreement with the Purchaser pursuant to which the Company’s sales representatives will assist the Purchaser in selling PCBs manufactured by the Purchaser to certain customers for a commission for a period up to April 17, 2021.

The Company does not anticipate this will have a material impact on its consolidated condensed financial statements.

As the sale of the Company’s Mobility business unit represents a strategic shift that will have a major effect on the Company’s operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Mobility business unit results are classified as discontinued operations in the consolidated condensed statements of operations for all periods presented.

Prior year results have been recast to conform with the current presentation.

The Mobility business unit is part of the Company’s PCB reportable segment.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The following table summarizes the results of Mobility operations for each period prior to sale:

Quarter Ended

Two Quarters Ended

(In thousands, except per share data)

7 unchanged sentences

Operating income (loss)

Other income (expense):

Other (expense) income:

Interest expense

Total other income (expense), net

Income (loss) from discontinued operations before income taxes

Gain on sale of the Mobility business unit

Total other income, net

Income (loss) from discontinued operations

before income taxes

Income tax (provision) benefit

Income (loss) from discontinued operations, net of income taxes

Income (loss) from discontinued operations,

net of income taxes

Earnings (loss) per share from discontinued operations:

1 unchanged sentence

Diluted earnings (loss) per share

Depreciation expense related to the discontinued operations for the quarter ended March 30, 2020 and April 1, 2019 was $ 18,265 and $ 18,075 , respectively.

Depreciation expense related to the discontinued operations for the quarters ended June 29, 2020 and July 1, 2019 was $ 3,117 and $ 17,866 , respectively, and $ 21,382 and $ 35,941 for the two quarters ended June 29, 2020 and July 1, 2019, respectively.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Assets being sold and liabilities being assumed by the Purchaser in the sale of the Company’s Mobility business unit include substantially all assets and liabilities, with the exception of certain accounts receivable .

The following table summarizes the major categories of assets and liabilities classified as held for sale in the consolidated condensed balance sheets as of the end of each period:

(In thousands)

During the quarter and two quarters ended June 29, 2020, the Company’s income tax expense related to the discontinued operations was impacted by a net discrete expense of $ 65,774 .

As a result of the sale of the Mobility business unit, the discrete income tax expense is related mainly to (i) China withholding tax related to gain on sale, (ii) U.S.

income tax related to Global Intangible Low Taxed Income (GILTI) inclusion net of IRC Section 250 deduction and foreign tax credits, and offset by (iii) release of U.S.

FIN 48 uncertain tax positions.

Proceeds from the sale of the Company’s Mobility business unit have been presented in the consolidated condensed statements of cash flows within net cash provided by investing activities from discontinued operations.

As of June 29, 2020, the Company’s consolidated condensed balance sheet included $ 314,585 of receivable from Purchaser of the Mobility business unit.

Subsequent to June 29, 2020, the Company received the remaining portion of the proceeds.

The following is a reconciliation of the gain recorded for the sale of the Company’s Mobility business unit (in thousands) :

Net proceeds from the sale of the Mobility business unit (1)

Mobility business unit assets:

Cash and cash equivalents

4 unchanged sentences

Property, plant and equipment, net

Operating lease right-of-use assets

Definite-lived intangibles, net

Deposits and other non-current assets

Total assets classified as held for sale

Total Mobility business unit assets

Mobility business unit liabilities:

Accounts payable

1 unchanged sentence

Other current liabilities

Operating lease liabilities

Other long-term liabilities

Total liabilities classified as held for sale

Total Mobility business unit liabilities

Derecognition of foreign currency translation adjustments and unrealized losses

on cash flow hedges recorded in accumulated other comprehensive loss

Other transaction costs incurred as part of the sale of the Mobility business unit (2)

Gain on sale of the Mobility business unit before income taxes

Net proceeds from the sale of the Mobility business unit are net of customary purchase price adjustments.

As of June 29, 2020, the Company received a portion of the proceeds amounting to $ 253,000 .

Costs directly incurred as a result of the sale of the Company’s Mobility business unit, including legal fees, professional fees, and other costs.

The Company leases some of its manufacturing and assembly plants, sales offices and equipment under non-cancellable operating leases that expire at various dates through 2049.

6 unchanged sentences

The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The components of lease expense were as follows:

Quarter Ended

March 30, 2020

April 1, 2019

Two Quarters Ended

June 29, 2020

(In thousands)

2 unchanged sentences

Short-term lease cost

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Supplemental cash flow information related to leases was as follows:

Quarter Ended

March 30, 2020

April 1, 2019

Two Quarters Ended

June 29, 2020

(In thousands)

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 30, 2020

June 29, 2020

December 30, 2019

4 unchanged sentences

Total operating lease liabilities

March 30, 2020

June 29, 2020

December 30, 2019

7 unchanged sentences

Excludes $ 851 of legally binding minimum lease payments for leases signed but not yet commenced.

As of March 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 23,014 .

The Company expects to recognize revenue on approximately 44 % of the remaining performance obligations for the Company’s long-term contracts over the next twelve months with the remaining amount recognized thereafter.

The remaining performance obligations for the Company’s short-term contracts are expected to be recognized within one year.

Revenue from products and services transferred to customers over time and at a point in time accounted for 98 % and 2 %, respectively, of the Company’s revenue for the quarter ended March 30, 2020, and 97 % and 3 %, respectively, of the Company’s revenue for the quarter ended April 1, 2019.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

As of June 29, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 19,172 .

The Company expects to recognize revenue on approximately 83 % of the remaining performance obligations for the Company’s long-term contracts over the next twelve months with the remaining amount recognized thereafter.

The remaining performance obligations for the Company’s short-term contracts are expected to be recognized within one year.

Revenue from products and services transferred to customers over time and at a point in time accounted for 98 % and 2 %, respectively, of the Company’s revenue for the quarter and two quarters ended June 29, 2020.

Revenue from products and services transferred to customers over time and at a point in time accounted for 97 % and 3 %, respectively, of the Company’s revenue for the quarter ended July 1, 2019, and 96 % and 4 %, respectively, of the Company’s revenue for the two quarters ended July 1, 2019.

The following tables represent a disaggregation of revenue by principal end markets with the reportable segments:

Quarter Ended March 30, 2020

Quarter Ended June 29, 2020

Quarter Ended July 1, 2019

E-M Solutions

(In thousands)

4 unchanged sentences

Networking/Communications

Quarter Ended April 1, 2019

Two Quarters Ended June 29, 2020

Two Quarters Ended July 1, 2019

E-M Solutions

(In thousands)

4 unchanged sentences

Networking/Communications

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(5) Composition of Certain Consolidated Condensed Financial Statement Captions

March 30, 2020

June 29, 2020

December 30, 2019

10 unchanged sentences

Accumulated depreciation

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

As of March 30, 2020 and December 30, 2019, goodwill was as follows:

As of June 29, 2020 and December 30, 2019, goodwill was as follows:

(In thousands)

Balance as of December 30, 2019 and March 30, 2020

Balance as of December 30, 2019 and June 29, 2020

Accumulated impairment loss

Goodwill in assets held for sale

Goodwill related to the Mobility business unit

All goodwill relates to the Company’s PCB reportable segment.

(7) Definite-lived Intangibles

As of March 30, 2020 and December 30, 2019, the components of definite-lived intangibles were as follows:

As of June 29, 2020 and December 30, 2019, the components of definite-lived intangibles were as follows:

(In thousands)

March 30, 2020

June 29, 2020

Customer relationships

3 unchanged sentences

Customer relationships

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Definite-lived intangibles are generally amortized using the straight-line method of amortization over the estimated useful life.

Amortization expense was $ 10,945 and $ 17,331 for the quarters ended March 30, 2020 and April 1, 2019, respectively.

For the quarters ended March 30, 2020 and April 1, 2019, $ 1,383 and $ 1,179 , respectively, of amortization expense is included in cost of goods sold.

Amortization expense was $ 10,945 and $ 11,773 for the quarters ended June 29, 2020 and July 1, 2019, respectively, and $ 21,890 and $ 29,104 for the two quarters ended June 29, 2020 and July 1, 2019, respectively.

For the quarter and two quarters ended June 29, 2020, $ 1,384 and $ 2,767 , respectively, of amortization expense is included in cost of goods sold.

For the quarter and two quarters ended July 1, 2019, $ 1,180 and $ 2,359 , respectively, of amortization expense is included in cost of goods sold.

Estimated aggregate amortization for definite-lived intangible assets for the next five years and thereafter is as follows:

1 unchanged sentence

Remaining 2020

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(8) Long-term Debt and Letters of Credit

The following table summarizes the long-term debt of the Company as of March 30, 2020 and December 30, 2019:

The following table summarizes the long-term debt of the Company as of June 29, 2020 and December 30, 2019:

Interest Rate as of

March 30, 2020

June 29, 2020

Interest Rate as of

15 unchanged sentences

The Company plans to use the cash proceeds for debt repayment and reinvestment.

As of June 29, 2020, the Term Loan had an outstanding balance of $ 805,879 , of which $ 400,000 is included in short-term debt.

Subsequent to June 29, 2020, the Company made a debt principal prepayment for the Term Loan of $ 400,000 .

Permitted investments, as defined in the Term Loan Credit Agreement, include extensions of trade credit in the ordinary course of business, investments in cash and cash equivalents, permitted acquisitions, investments in assets useful in the business of the Company and its restricted subsidiaries, investments in joint ventures and unrestricted subsidiaries among others.

4 unchanged sentences

ABL) and Asia Asset-Based Lending Credit Agreement (Asia ABL) (collectively, the ABL Revolving Loans), are subject to various financial and operational covenants, including maintaining minimum fixed charge coverage ratios.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Debt Issuance and Debt Discount

As of March 30 , 2020 and December 30, 2019, remaining unamortized debt discount and debt issuance costs for the Term Loan Facility, Senior Notes and Convertible Senior Notes are as follows:

As of March 30, 2020

As of June 29 , 2020 and December 30, 2019, remaining unamortized debt discount and debt issuance costs for the Term Loan Facility, Senior Notes and Convertible Senior Notes are as follows:

As of June 29, 2020

As of December 30, 2019

8 unchanged sentences

The above debt discount and debt issuance costs are recorded as a reduction of the debt and are amortized into interest expense using an effective interest rate over the duration of the debt.

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $ 2,369 and $ 2,511 as of March 30 , 2020 and December 30, 2019, respectively, are included in other non-current assets and are amortized to interest expense over the duration of the ABL Revolving Loans using the straight-line method of amortization.

As of March 30 , 2020 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 3.4 years.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $ 2,226 and $ 2,511 as of June 29 , 2020 and December 30, 2019, respectively, are included in other non-current assets and are amortized to interest expense over the duration of the ABL Revolving Loans using the straight-line method of amortization.

As of June 29 , 2020 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 3.5 years.

(9) Income Taxes

2 unchanged sentences

Additionally, no tax benefit was recorded on the losses incurred in certain foreign jurisdictions as a result of corresponding increases in the valuation allowances in these jurisdictions.

During the quarter ended March 30, 2020, the Company’s effective tax rate was impacted by a net discrete expense of $ 2,053 .

This is related to retroactive approval of the Company’s renewal application for High and New Tax Enterprise status for two of the Company’s manufacturing subsidiaries in China (including the impact on the respective Company’s deferred tax assets) and by the accrued interest expense on existing uncertain tax positions.

During the quarter and two quarters ended June 29, 2020, the Company’s effective tax rate was impacted by a net discrete benefit of $ 6,871 and $ 4,818 , respectively.

This is related mainly to release of uncertain tax positions due to the expiration of the statute of limitation in foreign jurisdictions netted against (i) an increase of valuation allowance and withholding tax expense related to the announced closure of two of the E-M Solutions plants, (ii) retroactive approval of the Company’s renewal application for High and New Tax Enterprise status for two of the Company’s manufacturing subsidiaries in China (including the impact on the respective Company’s deferred tax assets) and (iii) by the accrued interest expense on existing uncertain tax positions.

The Company has various foreign subsidiaries formed or acquired to conduct or support its business outside the United States.

10 unchanged sentences

At inception, the Company designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero .

As of March 30, 2020, the fair value of the interest rate swap was recorded as a liability in the amount of $ 19,341 and included as a component of other long-term liabilities.

As of June 29, 2020, the fair value of the interest rate swap was recorded as a liability in the amount of $ 19,582 and included as a component of other long-term liabilities.

The change in the fair value of the interest rate swap is recorded as a component of accumulated other comprehensive loss, net of tax.

No ineffectiveness was recognized for the quarters ended March 30, 2020 and April 1, 2019.

The interest rate swap increased interest expense by $ 1,175 and $ 339 for the quarters ended March 30, 2020 and April 1, 2019, respectively.

No ineffectiveness was recognized for the quarter and two quarters ended June 29, 2020 and July 1, 2019.

The interest rate swap increased interest expense by $ 2,342 and $ 367 for the quarters ended June 29, 2020 and July 1, 2019, respectively, and $ 3,517 and $ 706 for the two quarters ended June 29, 2020 and July 1, 2019, respectively.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Foreign Exchange Contracts

1 unchanged sentence

The Company’s foreign subsidiaries may at times purchase forward exchange contracts to manage their foreign currency risks in relation to certain purchases of machinery denominated in foreign currencies other than the Company’s functional currencies.

The notional amount of the foreign exchange contracts as of March 30, 2020 and December 30, 2019 was approximately $ 787 and $ 1,994 , respectively.

The notional amount of the foreign exchange contracts as of June 29, 2020 and December 30, 2019 was approximately $ 1,361 and $ 1,994 , respectively.

The Company has designated certain of these foreign exchange contracts as cash flow hedges.

2 unchanged sentences

Balance Sheet Location

March 30, 2020

June 29, 2020

December 30, 2019

8 unchanged sentences

Other current liabilities

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The following table provides information about the amounts recorded in accumulated other comprehensive loss related to derivatives designated as cash flow hedges, as well as the amounts recorded in each caption in the consolidated condensed statements of operations when derivative amounts are reclassified out of accumulated other comprehensive loss for the quarters ended March 30, 2020 and April 1, 2019:

Quarter Ended March 30, 2020

Quarter Ended April 1, 2019

Quarter Ended June 29, 2020

Quarter Ended July 1, 2019

Loss Recognized

6 unchanged sentences

Interest expense

The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the quarters ended March 30, 2020 and April 1, 2019:

Quarter Ended

Two Quarters Ended June 29, 2020

Two Quarters Ended July 1, 2019

Loss Recognized

Comprehensive Loss

Loss Recognized

Comprehensive Loss

(In thousands)

Cash flow hedge:

Interest rate swap

Interest expense

The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the two quarters ended June 29, 2020 and July 1, 2019:

Two Quarters Ended

(In thousands)

Beginning balance, net of tax

Changes in fair value loss, net of tax

Reclassification to earnings

Reclassification to earnings, net of tax

Derecognition of unrealized losses on cash flow hedge

due to sale of Mobility business unit

Ending balance, net of tax

Based on the current yield curve, the Company expects that losses of approximately $ 7,588 of the accumulated other comprehensive loss will be reclassified into the statement of operations, net of tax, in the next twelve months.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(11) Accumulated Other Comprehensive Loss

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of March 30, 2020 and December 30, 2019:

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of June 29, 2020 and December 30, 2019:

(Losses) Gains

4 unchanged sentences

Amounts reclassified from accumulated

other comprehensive income

other comprehensive loss

Derecognition of foreign currency

translation adjustments due to sale

of Mobility business unit

Derecognition of unrealized losses on

cash flow hedge due to sale of

Mobility business unit

Other comprehensive (loss) income

Ending balance as of March 30, 2020

Ending balance as of June 29, 2020

(12) Significant Customers and Concentration of Credit Risk

5 unchanged sentences

While the Company’s customers include both OEM and EMS providers, the Company measures customer concentration based on OEM companies, as they are the ultimate end customers.

There were no customers that accounted for 10% or more of net sales for the quarters ended March 30, 2020 and April 1, 2019.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

For the quarter ended June 29, 2020, one customer accounted for approximately 11 % of the Company’s net sales.

There were no other customers that accounted for 10% or more of net sales for the quarter ended June 29, 2020.

There were no customers that accounted for 10% or more of net sales for the quarter ended July 1, 2019 and two quarters ended June 29, 2020 and July 1, 2019.

(13) Fair Value Measures

1 unchanged sentence

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability.

The carrying amount and estimated fair value of the Company’s financial instruments as of March 30, 2020 and December 30, 2019 were as follows:

March 30, 2020

The carrying amount and estimated fair value of the Company’s financial instruments as of June 29, 2020 and December 30, 2019 were as follows:

June 29, 2020

December 30, 2019

7 unchanged sentences

ABL Revolving Loans

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The fair value of the derivative instruments was determined using pricing models developed based on the LIBOR swap rate, foreign currency exchange rates, and other observable market data, including quoted market prices, as appropriate using Level 2 inputs.

The values were adjusted to reflect non-performance risk of both the counterparty and the Company, as necessary.

The fair value of the long-term debt was estimated based on quoted market prices or discounting the debt over its life using current market rates for similar debt as of March 30, 2020 and December 30, 2019, which are considered Level 2 inputs.

The fair value of the long-term debt was estimated based on quoted market prices or discounting the debt over its life using current market rates for similar debt as of June 29, 2020 and December 30, 2019, which are considered Level 2 inputs.

The fair value of the Convertible Senior Notes was estimated based on quoted market prices of the securities on an active exchange, which are considered Level 2 inputs.

As of March 30, 2020 and December 30, 2019, the Company’s other financial instruments also included cash and cash equivalents, accounts receivable, and accounts payable.

As of June 29, 2020 and December 30, 2019, the Company’s other financial instruments also included cash and cash equivalents, accounts receivable, and accounts payable.

Due to short-term maturities, the carrying amount of these instruments approximates fair value.

The Company’s cash and cash equivalents as of March 30, 2020 consisted of $ 36,525 held in the U.S., with the remaining $ 325,467 held by foreign subsidiaries.

The Company’s cash and cash equivalents as of June 29, 2020 consisted of $ 305,263 held in the U.S., with the remaining $ 389,405 held by foreign subsidiaries.

The majority of the Company’s non-financial assets and liabilities, which include goodwill, intangible assets, inventories, and property, plant and equipment, are not required to be carried at fair value on a recurring basis.

5 unchanged sentences

In the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on the Company’s financial condition or results of operations in a particular period.

The Company has accrued amounts for its loss contingencies which are probable and estimable as of March 30, 2020 and December 30, 2019.

The Company has accrued amounts for its loss contingencies which are probable and estimable as of June 29, 2020 and December 30, 2019.

However, these amounts are not material to the consolidated condensed financial statements of the Company.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(15) (Loss) Earnings Per Share

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the quarters ended March 30, 2020 and April 1, 2019:

(15) Earnings Per Share

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share from continuing operations for the quarter and two quarters ended June 29, 2020 and July 1, 2019:

Quarter Ended

March 30, 2020

April 1, 2019

Two Quarters Ended

June 29, 2020

(In thousands, except per share amounts)

Net (loss) income

Basic earnings:

Basic earnings

Diluted earnings:

Interest expense from Convertible Senior Notes, net of tax

Diluted earnings

Basic weighted average shares

Dilutive effect of performance-based restricted stock units, restricted

stock units and stock options

Dilutive effect of performance-based restricted stock units,

restricted stock units and stock options

Dilutive effect of assumed conversion of

Convertible Senior Notes outstanding

Diluted shares

(Loss) earnings per share:

For the quarter ended March 30, 2020, potential shares of common stock, consisting of stock options to purchase approximately 100 shares of common stock at exercise prices ranging from $ 9.54 to $ 16.60 per share, 2,459 restricted stock units (RSUs), and 216 performance-based restricted stock units (PRUs) were not included in the computation of diluted earnings per share because the Company incurred a net loss and, as a result, the impact would be anti-dilutive.

PRUs, RSUs, and stock options to purchase 1,089 shares of common stock for the quarter ended April 1, 2019 was not included in the computation of diluted earnings per share because the options’ exercise prices or the total expected proceeds under the treasury stock method for PRUs, RSUs, or stock options was greater than the average market price of common shares during the applicable quarter and, as a result, the impact would be anti-dilutive.

Outstanding warrants for the quarters ended March 30, 2020 and April 1, 2019, to purchase common stock were not included in the computation of dilutive earnings per share because the strike price of the warrants to purchase the Company’s common stock were greater than the average market price of common shares during the applicable quarter, and therefore, the effect would be anti-dilutive.

For the quarters ended March 30, 2020 and April 1, 2019, the effect of shares of common stock related to the Company’s Convertible Senior Notes, based on the if-converted method, were not included in the computation of dilutive earnings per share as the impact would be anti-dilutive.

Earnings per share:

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

PRUs, RSUs, and stock options to purchase 1,162 and 1,089 shares of common stock for the quarters ended June 29, 2020 and July 1, 2019, respectively, and 750 and 1,089 shares of common stock for the two quarters ended June 29, 2020 and July 1, 2019, respectively, were not included in the computation of diluted earnings per share.

The PRUs were not included in the computation of diluted earnings per share because the performance conditions had not been met at June 29, 2020 and July 1, 2019, and for RSUs and stock options, the options’ exercise prices or the total expected proceeds under the treasury stock method was greater than the average market price of common shares during the applicable quarter and two quarters and, as a result, the impact would be anti-dilutive.

Outstanding warrants for the quarter and two quarters ended June 29, 2020 and July 1, 2019, to purchase common stock were not included in the computation of dilutive earnings per share because the strike price of the warrants to purchase the Company’s common stock were greater than the average market price of common shares during the applicable quarter, and therefore, the effect would be anti-dilutive.

For the quarter and two quarters ended June 29, 2020 and for the two quarters ended July 1, 2019, the effect of shares of common stock related to the Company’s Convertible Senior Notes, based on the if-converted method, were not included in the computation of dilutive earnings per share as the impact would be anti-dilutive.

(16) Stock-Based Compensation

1 unchanged sentence

Quarter Ended

Two Quarters Ended

(In thousands)

Cost of goods sold

1 unchanged sentence

General and administrative

Research and development

Stock-based compensation expense recognized

Summary of Unrecognized Compensation Costs

The following is a summary of total unrecognized compensation costs as of March 30, 2020:

The following is a summary of total unrecognized compensation costs as of June 29, 2020:

Unrecognized Stock-Based Compensation Cost

3 unchanged sentences

Stock options

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(17) Segment Information

4 unchanged sentences

Factors considered to determine whether operating segments can be aggregated into reportable segments included similarity regarding economic characteristics, products, production processes, type or classes of customers, distribution methods, and regulatory environments.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The Company, including the chief operating decision maker, evaluates segment performance based on reportable segment income, which is operating income before amortization of intangibles.

2 unchanged sentences

Quarter Ended

March 30, 2020

April 1, 2019

Two Quarters Ended

June 29, 2020

(In thousands)

7 unchanged sentences

Total other expense

(Loss) income before income taxes

Income before income taxes

Amortization of definite-lived intangibles relates to the PCB reportable segment.

For the quarters ended March 30, 2020 and April 1, 2019, $ 1,383 and $ 1,179 , respectively, of amortization expense is included in cost of goods sold.

For the quarter and two quarters ended June 29, 2020, $ 1,384 and $ 2,767 , respectively, of amortization expense is included in cost of goods sold.

For the quarter and two quarters ended July 1, 2019, $ 1,180 and $ 2,359 , respectively, of amortization expense is included in cost of goods sold.

The Corporate category primarily includes operating expenses that are not included in the segment operating performance measures.

1 unchanged sentence

(18) Related Party Transactions

In the normal course of business, the Company’s foreign subsidiaries purchase laminate and prepreg from related parties in which a member of the Board of Directors of the Company holds an equity interest.

The Company’s foreign subsidiaries purchased laminate and prepreg from these related parties in the amount of $ 6,272 and $ 8,312 for the quarters ended March 30, 2020 and April 1, 2019, respectively.

As of March 30, 2020 and December 30, 2019, the Company’s consolidated condensed balance sheets included $ 6,895 and $ 9,220 , respectively, in accounts payable due to related parties for purchases of laminate and prepreg and such balances are included as a component of accounts payable on the consolidated condensed balance sheets.

In the normal course of business, the Company’s foreign subsidiaries purchase laminate and prepreg from related parties in which a former member of the Board of Directors of the Company holds an equity interest.

The Company’s foreign subsidiaries purchased laminate and prepreg from these related parties in the amount of $ 5,986 and $ 8,193 for the quarters ended June 29, 2020 and July 1, 2019, respectively, and $ 11,767 and $ 15,696 for the two quarters ended June 29, 2020 and July 1, 2019, respectively.

As of June 29, 2020 and December 30, 2019, the Company’s consolidated condensed balance sheets included $ 7,601 and $ 9,220 , respectively, in accounts payable due to related parties for purchases of laminate and prepreg and such balances are included as a component of accounts payable on the consolidated condensed balance sheets.

(19) Restructuring Charges

On April 29, 2020, the Company announced the restructuring of its E-M Solutions business unit.

The E-MS business unit consists of three Chinese manufacturing facilities with two being in Shanghai (SH BPA and SH E-MS) and one in Shenzhen (SZ).

The Company will discontinue operations at the SH E-MS and SZ facilities while integrating the SH BPA facility into its PCB operations.

The restructuring is another step in advancing the Company’s stated strategy of increasing its focus on differentiated higher margin products that more fully leverage the Company’s early engagement capabilities and industry leading engineering-based technology solutions.

The closure of the SH E-MS and SZ facilities will not be immediate as the Company has obligations to fulfill with customers.

The Company anticipates phasing out production over the remainder of 2020.

As of June 29, 2020, the Company has incurred approximately $ 13,414 of restructuring charges since the April 29, 2020 announcement.

The Company estimates that it will incur total charges related to restructuring of its E-M Solutions business unit of approximately $ 18,500 and accelerated depreciation expense of approximately $ 8,000 .

In connection with the restructuring of its E-M Solutions business unit and other global realignment restructuring efforts, the Company recognized employee separation, contract termination and other costs during the quarter and two quarters ended June 29, 2020 and July 1, 2019.

Contract termination and other costs primarily represented plant closure costs.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(19) Subsequent Events

On April 17, 2020, the Company completed the sale of its Mobility business unit for a base purchase price of $ 550,000 in cash, subject to customary purchase price adjustments.

The base purchase price does not include certain accounts receivable of the divested business, which is estimated to total approximately $ 95,000 .

On April 29, 2020, the Company announced the restructuring of its E-M Solutions business unit, which consists of three Chinese manufacturing facilities with two being in Shanghai (SH BPA and SH E-MS) and one in Shenzhen (SZ).

The Company will discontinue operations at the SH E-MS and SZ facilities while integrating the SH BPA facility into its PCB operations.

No goodwill is allocated to the E-M Solutions reportable segment.

The cash outlay for severance and other shutdown costs is estimated to be approximately $ 17,000 and is expected to be incurred over the next 12 to 15 months .

The Company also expects to incur approximately $ 8,000 related to non-cash asset impairments.

At this time, these amounts are estimates and subject to change as the Company carries out the restructuring.

This subsequent event has not been recognized in these consolidated condensed financial statements and will be recognized in the Company’s consolidated financial statements in the upcoming quarters.

The below table summarizes such restructuring costs by reportable segment, which are included as a component of general and administrative expenses in the consolidated condensed statements of operations, for the quarter and two quarters ended

June 29, 2020 and July 1, 2019:

Quarter Ended June 29, 2020

Two Quarters Ended June 29, 2020

(In thousands)

Reportable Segment:

E-M Solutions

Quarter Ended July 1, 2019

Two Quarters Ended July 1, 2019

(In thousands)

Reportable Segment:

E-M Solutions

Accrued restructuring costs are included as a component of other current liabilities in the consolidated condensed balance sheet.

The below table shows the utilization of the accrued restructuring costs during the two quarters ended June 29, 2020:

(In thousands)

Accrued as of December 30, 2019

Charged to expense

Accrued as of June 29, 2020

(20) Subsequent Event

Subsequent to June 29, 2020, the Company made a $ 400,000 debt principal prepayment for its Term Loan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements