What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-05 · 230 added, 404 removed, 431 unchanged (60% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

As of September 28, 2020 and December 30, 2019

September 28,

As of March 29, 2021 and December 28, 2020

(In thousands, except par value)

1 unchanged sentence

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Contract assets

Current assets held for sale

Prepaid expenses and other current assets

3 unchanged sentences

Definite-lived intangibles, net

Non-current assets held for sale

Deposits and other non-current assets

1 unchanged sentence

Current liabilities:

Short-term debt, including current portion of long-term debt

Accounts payable

1 unchanged sentence

Accrued salaries, wages and benefits

Current liabilities held for sale

Other current liabilities

2 unchanged sentences

Operating lease liabilities

Non-current liabilities held for sale

Other long-term liabilities

3 unchanged sentences

300,000 shares authorized, 107,113 and 106,770

shares issued and outstanding as of September 28, 2020 and December 30, 2019,

shares issued and outstanding as of March 29, 2021 and December 28, 2020,

Additional paid-in capital

6 unchanged sentences

Consolidated Condensed Statements of Operations

For the Quarter and Three Quarters Ended September 28, 2020 and September 30, 2019

For the Quarters Ended March 29, 2021 and March 30, 2020

Quarter Ended

Three Quarters Ended

September 28,

September 30,

September 28,

September 30,

(In thousands, except per share data)

5 unchanged sentences

Amortization of definite-lived intangibles

Impairment of goodwill

Total operating expenses

Operating (loss) income

Operating income

Other (expense) income:

Interest expense

Loss on extinguishment of debt

Total other expense, net

(Loss) income from continuing operations before income taxes

Loss from continuing operations before income taxes

Income tax benefit (provision)

Net (loss) income from continuing operations

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

Net (loss) income

Net loss from continuing operations

Income from discontinued operations, net of income taxes

(Loss) earnings per share:

Basic (loss) earnings per share from continuing operations

Basic earnings (loss) per share from discontinued operations

Basic (loss) earnings per share

Diluted (loss) earnings per share from continuing operations

Diluted earnings (loss) per share from discontinued operations

Diluted (loss) earnings per share

Basic loss per share from continuing operations

Basic earnings per share from discontinued operations

Basic loss per share

Diluted loss per share from continuing operations

Diluted earnings per share from discontinued operations

Diluted loss per share

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive (Loss) Income

For the Quarter and Three Quarters Ended September 28, 2020 and September 30, 2019

Consolidated Condensed Statements of Comprehensive Loss

For the Quarters Ended March 29, 2021 and March 30, 2020

Quarter Ended

Three Quarters Ended

September 28,

September 30,

September 28,

September 30,

(In thousands)

Net (loss) income

Other comprehensive income (loss), net of tax:

Pension obligation adjustments, net

Reclassification adjustment for foreign currency translation

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:

3 unchanged sentences

Other comprehensive income (loss), net of tax

Comprehensive (loss) income, net of tax

Comprehensive loss, net of tax

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended September 28, 2020

For the Quarters Ended March 29, 2021 and March 30, 2020

Comprehensive

2 unchanged sentences

Balance, December 28, 2020

Other comprehensive loss

Other comprehensive income

Issuance of common stock for

3 unchanged sentences

restricted stock units

Fair value of warrants

reclassified to

warrant liabilities

Issuance of common stock from

warrant exercises

Stock-based compensation

Balance, March 29, 2021

Other comprehensive loss

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, June 29, 2020

Other comprehensive income

Exercise of stock options

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, September 28, 2020

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended September 30, 2019

Comprehensive

3 unchanged sentences

Other comprehensive loss

Redemption of convertible

Issuance of common stock for

4 unchanged sentences

Stock-based compensation

Balance, April 1, 2019

Other comprehensive loss

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, July 1, 2019

Other comprehensive loss

Issuance of common stock for

restricted stock units

Stock-based compensation

Balance, September 30, 2019

Balance, March 30, 2020

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Cash Flows

For the Three Quarters Ended September 28, 2020 and September 30, 2019

Three Quarters Ended

September 28, 2020

September 30, 2019

For the Quarters Ended March 29, 2021 and March 30, 2020

Quarter Ended

March 29, 2021

March 30, 2020

(In thousands)

4 unchanged sentences

Amortization of debt discount and issuance costs

Loss on extinguishment of debt

Deferred income taxes

Stock-based compensation

Impairment of goodwill

Gain on sale of the Mobility business unit

Changes in operating assets and liabilities:

8 unchanged sentences

Cash flows from investing activities:

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

Refundable deposit related to sale of the Mobility business unit

Purchase of property, plant and equipment and other assets

Proceeds from sale of property, plant and equipment and other assets

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Repayment of long-term debt borrowing

Proceeds from exercise of stock options

Proceeds from long-term debt borrowing

Repayment of long-term debt borrowings

Payment of debt issuance costs

Redemption of convertible notes

Net cash used in financing activities

Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

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

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

Net cash provided by financing activities

Effect of foreign currency exchange rates on cash and cash equivalents

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

Supplemental cash flow information:

2 unchanged sentences

Net cash provided by operating activities from discontinued operations

Net cash provided by (used in) investing activities from discontinued operations

Net cash provided by investing activities from discontinued operations

Net cash used in financing activities from discontinued operations

Supplemental disclosure of noncash investing activities:

Supplemental disclosure of noncash investing and financing activities:

Property, plant and equipment recorded in accounts payable

Issuance of common stock for warrant settlement

Supplemental disclosure of noncash investing activities from discontinued operations:

8 unchanged sentences

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, computing, automotive components, medical, industrial and instrumentation related products, as well as networking/communications infrastructure products.

This one-stop design, engineering and manufacturing solution allows 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, data center 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).

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 (loss) from discontinued operations, net of income taxes”.

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

Refer to Note 2, Discontinued Operations , for additional information.

3 unchanged sentences

Reclassifications

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.

During the quarter ended September 28, 2020, the Company’s RF and Specialty Components (RF&S Components) operating segment met the quantitative threshold for separate presentation of a reportable segment.

In prior periods, the Company had two reportable segments:

PCB and E-M Solutions.

The RF&S Components reportable segment was previously aggregated with the PCB reportable segment.

As a result, certain prior year amounts and prior quarters within the current year have been reclassified to conform with this new presentation.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Further, in 2020, the Company began presenting research and development expenses as a separate line item on the consolidated condensed statements of operations to better align with similar presentation made by peers and to provide additional disclosure that is meaningful for investors.

The prior year consolidated condensed statements of operations were adjusted to conform with this new presentation.

Research and development expense were previously presented within general and administrative expense on the consolidated condensed statements of operations.

Immaterial Correction of Error

During the quarter ended September 28, 2020, the Company paid for certain transaction costs related to the sale of the Mobility business unit totaling $ 11,043 .

This should have been recorded as an expense, which would have reduced the gain on sale of Mobility business unit, during the quarter ended June 29, 2020.

The Company overstated both the income from discontinued operations, net of income taxes and net income by $ 11,043 , both basic earnings per share from discontinued operations and basic earnings per share of $ 0.10 and $ 0.11 in the quarter and two quarters ended June 29, 2020, respectively, and both diluted earnings per share from discontinued operations and diluted earnings per share of $ 0.10 in the quarter and two quarters ended June 29, 2020.

Further, total current liabilities were understated by $ 11,043 and retained earnings were overstated by $ 11,043 as of June 29, 2020.

Management concluded that this error was not material to the consolidated condensed financial statements for the quarter and two quarters ended June 29, 2020.

Prior period amounts have been revised to correct the error.

The Company currently has two reportable segments:

PCB and RF and Specialty Components (RF&S Components).

In fiscal 2020, subsequent to the quarter ended March 30, 2020, RF&S Components was added as a reportable segment.

As a result, the Company had three reportable segments as of December 28, 2020:

PCB, RF&S Components, and E-M Solutions.

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

In prior periods, the Company’s E-M Solutions business unit consisted of three Chinese manufacturing facilities with two being in Shanghai (SH BPA and SH E-MS) and one in Shenzhen (SZ).

The Company closed the SH E-MS and SZ facilities at the end of 2020 and integrated the SH BPA facility into its PCB operations.

As of March 29, 2021, E-M Solutions no longer meets the criteria for segment reporting.

As a result of the addition of the RF&S Components reportable segment and the restructuring of the E-M Solutions business unit, certain prior year amounts have been reclassified to conform to this new presentation.

Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary relief to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative rates.

This guidance became effective beginning on March 12, 2020 and will remain in effect through December 31, 2022.

The guidance on contract modifications can be applied prospectively from any date beginning March 12, 2020 and may also be applied to modifications of existing contracts made earlier in the interim period that included March 12, 2020.

The guidance on hedging can be applied to eligible hedging relationships existing at the beginning of the interim period that included March 12, 2020 and to new eligible hedging relationships entered into after the beginning of that interim period.

The Company adopted this ASU and it did not have a material impact on its financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts.

For trade receivables, loans, and other financial instruments, the Company will be required to use a forward-looking expected loss model that reflects losses that are probable rather than the incurred loss model for recognizing credit losses.

The standard became effective for interim and annual periods beginning after December 15, 2019.

Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date.

The Company adopted this ASU as of December 31, 2019 and it did not have a material impact on its financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

1 unchanged sentence

Early adoption is permitted.

The Company has evaluated the new guidance to determine the impact it may have on its consolidated condensed financial statements and related disclosures and the impact is not expected to be material.

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)—Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans .

The amendments in this update change the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans.

It eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new disclosures that the FASB considers pertinent.

The guidance is effective for fiscal years ending after December 15, 2020.

Early adoption is permitted.

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)

The Company adopted this ASU as of December 29, 2020 and it did not have a material impact on its consolidated condensed financial statements and related disclosures.

(2) Discontinued Operations

3 unchanged sentences

Subsequently, the final purchase price was $ 569,246 after customary purchase price adjustments, which did not include approximately $ 83,000 accounts receivable of the divested business.

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.

On April 18, 2020, the Company 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.

In addition, the Company entered into a Manufacturing Supply Agreement with the Purchaser pursuant to which the Purchaser will supply products to a few customers of the Company.

There was no material impact on the Company’s 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.

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

There was no material impact on the Company’s 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 following table summarizes the results of Mobility operations for each period prior to sale:

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The following table summarizes the results of Mobility operations for the quarter ended March 30, 2020 prior to sale:

Quarter Ended

Three Quarters Ended

September 28,

September 30,

September 28,

September 30,

(In thousands, except per share data)

(In thousands)

Cost of goods sold

5 unchanged sentences

Total operating expenses

Operating income (loss)

Operating income

Other (expense) income:

Interest expense

Gain on sale of the Mobility business unit

Total other income, net

Income (loss) from discontinued operations

Income from discontinued operations

before income taxes

Income tax benefit (provision)

Income (loss) from discontinued operations,

Income tax provision

Income from discontinued operations,

net of income taxes

Earnings (loss) per share from discontinued operations:

Basic earnings (loss) per share

Diluted earnings (loss) per share

There was no depreciation expense related to the discontinued operations for the quarter ended September 28, 2020 and depreciation expense for the quarter ended September 30, 2019 was $ 18,704 .

Depreciation expense related to the discontinued operations for the three quarters ended September 28, 2020 and September 30, 2019 was $ 21,382 and $ 54,645 , respectively.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

During the quarter and three quarters ended September 2 8 , 2020, the Company’s income tax expense related to the discontinued operations was impacted by a net discrete tax benefit of $ 20,021 and a net discrete tax expense of $ 46,686 , respectively .

As a result of the sale of the Mobility business unit, the discrete income tax benefit during the quarter ended September 28, 2020 is due to recognition of additional Internal Revenue Code (IRC) Section 250 deduction and foreign tax credit benefits.

The net income tax expense for the three quarters ended September 28, 2020 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.

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.

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

Restricted cash

Accounts receivable, net

Contract assets

Prepaid expenses and other current assets

Property, plant and equipment, net

Definite-lived intangibles, net

Deposits and other non-current assets

Total Mobility business unit assets

Mobility business unit liabilities:

Accounts payable

Accrued salaries, wages and benefits

Other current liabilities

Other long-term liabilities

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.

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

Earnings per share from discontinued operations:

Basic earnings per share

Diluted earnings per share

Depreciation expense related to the discontinued operations for the quarter ended March 30, 2020 was $ 18,265 .

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

Three Quarters Ended

September 28, 2020

September 30, 2019

September 28, 2020

September 30, 2019

March 29, 2021

March 30, 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:

Three Quarters Ended

September 28, 2020

September 30, 2019

Quarter Ended

March 29, 2021

March 30, 2020

(In thousands)

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

September 28, 2020

March 29, 2021

December 28, 2020

4 unchanged sentences

Total operating lease liabilities

September 28, 2020

March 29, 2021

December 28, 2020

7 unchanged sentences

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

As of March 29, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 12,850 .

The Company expects to recognize revenue on approximately 100 % of the remaining performance obligations for the Company’s long-term contracts over the next twelve months .

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 both the quarters ended March 29, 2021 and March 30, 2020.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

As of September 28, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 19,606 .

The Company expects to recognize revenue on approximately 86 % 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 three quarters ended September 28, 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 and three quarters ended September 30, 2019.

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

Quarter Ended September 28, 2020

Quarter Ended September 30, 2019

RF&S Components

E-M Solutions

Quarter Ended March 29, 2021

RF&S Components

E-M Solutions

(In thousands)

Aerospace and Defense

Cellular Phone

Computing/Storage/

Medical/Industrial/

Instrumentation

Data Center Computing (2)

Medical/Industrial/Instrumentation

Networking/Communications

Three Quarters Ended September 28, 2020

Three Quarters Ended September 30, 2019

RF&S Components

E-M Solutions

Quarter Ended March 30, 2020

RF&S Components

E-M Solutions

(In thousands)

1 unchanged sentence

Cellular Phone

Computing/Storage/

Medical/Industrial/

Instrumentation

Communications

Data Center Computing (2)

Medical/Industrial/Instrumentation

Networking/Communications

Other represents SH E-MS and SZ results.

In the current period, the Computing/Storage/Peripherals end market was renamed to Data Center Computing to better reflect the customer mix and growth prospects.

There was no change to the customers included in this end market.

TTM TECHNOLOGIES, INC.

1 unchanged sentence

(5) Composition of Certain Consolidated Condensed Financial Statement Captions

September 28, 2020

March 29, 2021

December 28, 2020

11 unchanged sentences

Other current liabilities:

Sales returns and allowances

Income taxes payable

Sales return and allowances

Warrant liabilities

Restructuring

As of September 28, 2020 and December 30, 2019, goodwill by reportable segment was as follows:

Other long-term liabilities:

Deferred income taxes

Derivative liabilities

Defined benefit pension plan liability

As of March 29, 2021 and December 28, 2020, goodwill by reportable segment was as follows:

RF&S Components

(In thousands)

Balance as of December 30, 2019

Accumulated impairment loss

Impairment loss during the three quarters ended September 28, 2020

Balance as of September 28, 2020

Accumulated impairment loss

The Company evaluates its goodwill on an annual basis during its fourth fiscal quarter and at other times when events or changes in circumstances – such as significant adverse changes in the business climate or operating results or changes in management strategy, coupled with a decline in the market price of its stock and market capitalization – indicate that there may be a potential impairment.

During the third quarter of 2020, the Company determined that there was a permanent loss of a key customer in the RF&S Components reporting unit that coupled with the impact of COVID-19, resulted in lower than anticipated results and continued decline in sales.

The Company considered these factors to be indicators of potential impairment requiring the Company to test the related goodwill for impairment.

As of September 28, 2020, the Company completed a quantitative goodwill impairment analysis related to its RF&S Components reporting unit by comparing the fair value of the reporting unit with its carrying amount.

The Company determined the fair value of the reporting unit by using both a discounted cash flow (DCF) and a market approach.

Under the market

Balance as of December 28, 2020 and March 29, 2021

Accumulated impairment losses

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

approach, the Company used revenue and earnings multiples based on comparable industry multiples to estimate the fair value of the reporting unit.

Under the DCF approach, the Company estimated the future cash flows, as well as selected a risk-adjusted discount rate to measure the present value of the anticipated cash flows.

When determining future cash flow estimates, the Company considered historical results adjusted to reflect current and anticipated future operating conditions.

The Company estimated cash flows for the reporting unit over a discrete period and a terminal period (considering expected long-term growth rates and trends).

Based on its analysis, the Company determined that the fair value of the RF&S Components reporting unit was less than its carrying value and recorded a non-cash goodwill impairment charge of $ 69,200 during the quarter ended September 28, 2020.

If the Company’s future cash flow projections and other fair value assumptions for its reporting unit change, the Company may be subject to potential additional impairment in subsequent quarters.

Estimating the fair value of the reporting unit requires the Company to make assumptions and estimates in such areas as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures.

The use of different assumptions or estimates for future cash flows, discount rates, or terminal growth rates could produce substantially different estimates of the fair value of the reporting unit.

(7) Definite-lived Intangibles

As of September 28, 2020 and December 30, 2019, the components of definite-lived intangibles were as follows:

As of March 29, 2021 and December 28, 2020, the components of definite-lived intangibles were as follows:

(In thousands)

September 28, 2020

March 29, 2021

Customer relationships

1 unchanged sentence

Customer relationships

Acquired intangibles from acquisition in 2019

Customer relationships

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

Amortization expense was $ 11,510 and $ 10,680 for the quarters ended September 28, 2020 and September 30, 2019, respectively, and $ 33,400 and $ 39,784 for the three quarters ended September 28, 2020 and September 30, 2019, respectively.

For the quarter and three quarters ended September 28, 2020, $ 1,384 and $ 4,151 , respectively, of amortization expense is included in cost of goods sold.

For the quarter and three quarters ended September 30, 2019, $ 1,180 and $ 3,539 , respectively, of amortization expense is included in cost of goods sold.

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

Amortization expense was $ 10,905 and $ 10,945 for the quarters ended March 29, 2021 and March 30, 2020, respectively.

For the quarters ended March 29, 2021 and March 30, 2020, $ 1,384 and $ 1,383 , 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 2021

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 September 28, 2020 and December 30, 2019:

The following table summarizes the long-term debt of the Company as of March 29, 2021 and December 28, 2020:

Interest Rate as of

September 28, 2020

March 29, 2021

Interest Rate as of

2 unchanged sentences

(In thousands)

Senior Notes due March 2029

Term Loan due September 2024

Senior Notes due October 2025

Convertible Senior Notes due December 2020

ABL Revolving Loan due June 2024

5 unchanged sentences

Long-term debt, less current maturities

As of September 28, 2020, the Company’s restricted cash balance of $ 249,975 consisted of a specific deposit account to be used for principal payment on the Convertible Senior Notes due December 2020.

The Company has twelve months to reinvest the cash proceeds received from the sale of the Mobility business unit.

The Company has twelve months from September 3, 2020 to reinvest the cash proceeds received from the sale of the Mobility business unit.

If the proceeds are not reinvested, the Company is required to use the proceeds to prepay the Term Loan.

The Company used a portion of the cash proceeds to repay $ 400,000 of the Term Loan during the quarter ended September 28, 2020 and plans to use the remaining cash proceeds for reinvestment.

The Company used a portion of the cash proceeds to repay $ 400,000 of the Term Loan during the year ended December 28, 2020 and plans to use

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

the remaining cash proceeds for reinvestment.

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 .

Senior Notes due 2029

On March 10, 2021, the Company issued $ 500,000 of Senior Notes due 2029, which are included in long-term debt and bear interest at a rate of 4.0 % per annum.

Interest is payable semiannually in arrears on March 1 and September 1 of each year beginning September 1, 2021.

The Senior Notes due 2029 will mature on March 1, 2029 .

The Company used a portion of the net proceeds from the issuance of the Senior Notes due 2029 during the quarter ended March 29, 2021 to:

(i) fund the early retirement of $ 375,000 Senior Notes due 2025, (ii) fund the repayment of $ 40,000 outstanding under the U.S.

Asset-Based Lending Credit Agreement (U.S.

ABL) Revolving credit facility (but not terminate the commitments thereunder), and (iii) pay related premiums, fees and expenses.

The Company intends to use the remaining net proceeds for general corporate purposes.

Asset-Based Lending Agreements

As of March 29, 2021, letters of credit in the amount of $ 10,753 were outstanding under the U.S.

ABL and $ 11,721 were outstanding under the Asia ABL with various expiration dates through July 2021 .

Available borrowing capacity under the U.S.

ABL and the Asia ABL was $ 139,247 and $ 108,279 , respectively, which considers letters of credit outstanding as of March 29, 2021.

Debt Covenants

Borrowings under the Term Loan and Senior Notes are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments and dispositions, and share payments.

Borrowings under the Term Loan and Senior Notes due 2029 are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and share payments.

Under the occurrence of certain events, the U.S.

Asset-Based Lending Credit Agreement (U.S.

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.

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

Debt Issuance and Debt Discount

As of September 28 , 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 September 28, 2020

As of March 29 , 2021 and December 28, 2020, remaining unamortized debt discount and debt issuance costs for the Senior Notes due 2029, Term Loan Facility and Senior Notes due 2025 are as follows:

As of March 29, 2021

As of December 28, 2020

4 unchanged sentences

(In thousands, except interest rates)

Senior Notes due March 2029

Term Loan due September 2024

Senior Notes due October 2025

Convertible Senior Notes

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 $ 2,084 and $ 2,511 as of September 28 , 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.

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $ 1,778 and $ 1,919 as of March 29 , 2021 and December 28, 2020, 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 29 , 2021 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 5.9 years.

Loss on Extinguishment of Debt

During the quarter ended March 29, 2021, the Company recognized losses of $ 15,217 associated with the premium paid on extinguishment of debt and the write-off of the remaining unamortized debt issuance costs as a result of the repayment of the remaining outstanding balance of the Senior Notes due 2025.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

As of September 28 , 2020 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 3.6 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 and three quarters ended September 28, 2020, the Company’s effective tax rate was impacted by a net discrete benefit of $ 1,072 and $ 5,890 , respectively.

This is related mainly to release of uncertain tax positions due to the expiration of the statute of limitation in foreign jurisdictions, change in the estimated tax benefits in the United States for GILTI and in Hong Kong related to unrealized foreign exchange gain and loss, netted against (i) an increase of valuation allowance and withholding tax expense related to the announced closure of two of the Company’s 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.

During the quarter ended March 29, 2021, the Company’s effective tax rate was impacted by a net discrete benefit of $ 383 .

This benefit resulted from the 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 amounts, partially offset by tax expense on stock based compensation releases and 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.

8 unchanged sentences

On May 15, 2018, the Company entered into a four-year pay-fixed, receive floating (1-month LIBOR), interest rate swap arrangement with a notional amount of $ 400,000 for the period beginning June 1, 2018 and ending on June 1, 2022 .

Under the terms of the interest rate swap, the Company pays a fixed rate of 2.84 % against the first interest payments of a portion of its LIBOR-based debt and receives floating 1-month LIBOR during the swap period.

Under the terms of the interest rate swap, the Company pays a fixed rate of 2.84 % against a portion of its LIBOR-based debt and receives floating 1-month LIBOR during the swap period.

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 September 28, 2020, the fair value of the interest rate swap was recorded as a liability in the amount of $ 17,461 and included as a component of other long-term liabilities.

As of March 29, 2021, the fair value of the interest rate swap was recorded as a liability in the amount of $ 12,579 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 quarter and three quarters ended September 28, 2020 and September 30, 2019.

The interest rate swap increased interest expense by $ 2,707 and $ 602 for the quarters ended September 28, 2020 and September 30, 2019, respectively, and $ 6,224 and $ 1,308 for the three quarters ended September 28, 2020 and September 30, 2019, respectively.

No ineffectiveness was recognized for the quarters ended March 29, 2021 and March 30, 2020.

The interest rate swap increased interest expense by $ 2,740 and $ 1,175 for the quarters ended March 29, 2021 and March 30, 2020, respectively.

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 September 28, 2020 and December 30, 2019 was approximately $ 1,968 (Japanese Yen (JPY) 209.0 million) and $ 1,994 (JPY 215.8 million), respectively.

The notional amount of the foreign exchange contracts as of March 29, 2021 and December 28, 2020 was approximately $ 1,852 (Japanese Yen (JPY) 196.3 million) and $ 1,181 (JPY 125.0 million), respectively.

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

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The fair values of derivative instruments in the consolidated condensed balance sheets are as follows:

1 unchanged sentence

Balance Sheet Location

September 28, 2020

March 29, 2021

December 28, 2020

8 unchanged sentences

Other current liabilities

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 quarter and three quarters ended September 28, 2020 and September 30, 2019:

Quarter Ended September 28, 2020

Quarter Ended September 30, 2019

Loss Recognized

Comprehensive Loss

Loss Recognized

Comprehensive Loss

(In thousands)

Cash flow hedge:

Interest rate swap

Interest expense

Three Quarters Ended September 28, 2020

Three Quarters Ended September 30, 2019

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Quarter Ended March 29, 2021

Quarter Ended March 30, 2020

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 three quarters ended September 30, 2020 and September 30, 2019:

Three Quarters Ended

September 28,

September 30,

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 29, 2021 and March 30, 2020:

Quarter Ended

(In thousands)

1 unchanged sentence

Changes in fair value loss, net of tax

Reclassification to earnings, net of tax

Derecognition of unrealized losses on cash flow hedge

due to sale of Mobility business unit

Reclassification to earnings

Ending balance, net of tax

Based on the current yield curve, the Company expects that losses of approximately $ 8,092 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 September 28, 2020 and December 30, 2019:

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of March 29, 2021 and December 28, 2020:

(Losses) Gains

1 unchanged sentence

Ending balance as of December 28, 2020

Other comprehensive income (loss)

Other comprehensive loss

before reclassifications

1 unchanged sentence

other comprehensive loss

Reclassification adjustment for

foreign currency translation

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 September 28, 2020

Ending balance as of March 29, 2021

(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.

For the quarter and three quarters ended September 28, 2020, one customer accounted for approximately 13 % and 10 % of the Company’s net sales, respectively.

There were no other customers that accounted for 10% or more of net sales for the quarter and three quarters ended September 28, 2020.

There were no customers that accounted for 10% or more of net sales for the quarter and three quarters ended September 30, 2019.

For the quarter ended March 29, 2021, other than one customer that accounted for approximately 13 % of the Company’s net sales, there were no other customers that accounted for 10% or more of net sales.

For the quarter ended March 30, 2020, there were no customers that accounted for 10% or more of net sales.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(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.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

The carrying amount and estimated fair value of the Company’s financial instruments as of September 28, 2020 and December 30, 2019 were as follows:

September 28, 2020

The carrying amount and estimated fair value of the Company’s financial instruments as of March 29, 2021 and December 28, 2020 were as follows:

March 29, 2021

December 28, 2020

3 unchanged sentences

Derivative liabilities, non-current

Warrant liabilities, current

Senior Notes due March 2029

Term Loan due September 2024

Senior Notes due October 2025

Convertible Senior Notes due December 2020

ABL Revolving Loans

1 unchanged sentence

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 September 28, 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 September 28, 2020 and December 30, 2019, the Company’s other financial instruments also included cash and cash equivalents, restricted cash, accounts receivable, and accounts payable.

The fair value of the warrant liabilities was valued using the Black-Scholes model with the following weighted-average assumptions:

expected term of 0.25 years, expected volatility of 35 %, risk-free interest rate of 0.032 %, and expected dividend yield of 0 %.

The inputs used in the warrant valuation are considered Level 3 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 March 29, 2021 and December 28, 2020, which are considered Level 2 inputs.

As of March 29, 2021 and December 28, 2020, the Company’s other financial instruments 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, cash equivalents, and restricted cash as of September 28, 2020 consisted of $ 429,470 held in the U.S., with the remaining $ 233,815 held by foreign subsidiaries.

The Company’s cash and cash equivalents as of March 29, 2021 consisted of $ 305,841 held in the U.S., with the remaining $ 233,807 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.

However, if certain triggering events occur (or are tested at least annually in the case of goodwill) such that a non-financial instrument is required to be evaluated for impairment, based upon a comparison of the non-financial instrument’s fair value to its carrying value, an impairment is recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value.

As of September 28, 2020, the Company’s goodwill balance related to its RF&S Components reporting unit of $ 108,000 was measured at fair value on a nonrecurring basis.

The Company recorded a non-cash goodwill impairment charge of $ 69,200 during the quarter and three quarters ended September 28, 2020.

The fair value of goodwill was determined using both a DCF and a market approach, which are considered Level 3 inputs.

(14) Commitments and Contingencies

3 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 September 28, 2020 and December 30, 2019.

The Company has accrued amounts for its loss contingencies which are probable and estimable as of March 29, 2021 and December 28, 2020.

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

1 unchanged sentence

Notes to Consolidated Condensed Financial Statements—(Continued)

(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 three quarters ended September 28, 2020 and September 30, 2019:

(15) Loss Per Share

Quarter Ended

Three Quarters Ended

September 28, 2020

September 30, 2019

September 28, 2020

September 30, 2019

March 29, 2021

March 30, 2020

(In thousands, except per share amounts)

Net (loss) income from continuing operations

Net loss from continuing operations

Basic weighted average shares

2 unchanged sentences

Diluted shares

(Loss) earnings per share:

For the quarter and three quarters ended September 28, 2020, potential shares of common stock, consisting of stock options to purchase approximately 80 shares of common stock at exercise prices ranging from $ 11.83 to $ 16.60 per share, 3,187 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 407 and 862 shares of common stock for the quarter and three quarters ended September 30, 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 September 30, 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 three quarters and, as a result, the impact would be anti-dilutive.

Outstanding warrants for the quarter and three quarters ended September 28, 2020 and September 30, 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 or because the Company incurred a net loss.

During the quarter ended September 28, 2020, the Company calculated the dilutive effect of Convertible Senior Notes using the treasury stock method because the Company now has the intent and ability to settle the Convertible Senior Notes in cash.

This change in policy from the if-converted method to treasury stock method is applied on a prospective basis.

For the quarter and three quarters ended September 28, 2020, the effect of shares of common stock related to the Company’s Convertible Senior Notes, based on the treasury stock method, were not included in the computation of dilutive earnings per share as the impact would be anti-dilutive.

For the quarter and three quarters ended September 30, 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.

Loss per share:

For the quarter ended March 29, 2021, potential shares of common stock, consisting of stock options to purchase approximately 60 shares of common stock at exercise prices ranging from $ 11.83 to $ 16.60 per share, 2,897 restricted stock units (RSUs), and 289 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.

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 RSUs, and 216 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.

Outstanding warrants for the quarters ended March 29, 2021 and March 30, 2020, 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 was greater than the average market price of common shares during the applicable quarter and because the Company incurred a net loss, and therefore, the effect would be anti-dilutive.

(16) Stock-Based Compensation

1 unchanged sentence

Quarter Ended

Three Quarters Ended

September 28,

September 30,

September 28,

September 30,

(In thousands)

Cost of goods sold

3 unchanged sentences

Stock-based compensation expense recognized

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

Summary of Unrecognized Compensation Costs

The following is a summary of total unrecognized compensation costs as of September 28, 2020:

The following is a summary of total unrecognized compensation costs as of March 29, 2021:

Unrecognized Stock-Based Compensation Cost

3 unchanged sentences

Stock options

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

(17) Segment Information

The reportable segments shown below are the Company’s segments for which separate financial information is available and upon which operating results are evaluated by the chief operating decision maker to assess performance and to allocate resources.

During the quarter ended September 28, 2020, the Company’s RF&S Components operating segment met the quantitative threshold for separate presentation of a reportable segment.

In prior periods, the Company had two reportable segments:

PCB and E-M Solutions.

The RF&S Components reportable segment was previously aggregated with the PCB reportable segment.

As a result, certain prior year amounts have been reclassified to conform with this new presentation.

The PCB reportable segment is comprised of multiple operating segments.

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.

In fiscal 2020, subsequent to the quarter ended March 30, 2020, RF&S Components was added as a reportable segment.

As a result, the Company had three reportable segments as of December 28, 2020:

PCB, RF&S Components, and E-M Solutions.

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

In prior periods, the Company’s E-M Solutions business unit consisted of three Chinese manufacturing facilities with two being in Shanghai (SH BPA and SH E-MS) and one in Shenzhen (SZ).

The Company closed the SH E-MS and SZ facilities at the end of 2020 and integrated the SH BPA facility into its PCB operations.

As of March 29, 2021, E-M Solutions no longer meets the criteria for segment reporting.

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

Three Quarters Ended

September 28, 2020

September 30, 2019

September 28, 2020

September 30, 2019

March 29, 2021

March 30, 2020

(In thousands)

RF&S Components

E-M Solutions

Total net sales

Operating Segment (Loss) Income:

Operating Segment Loss:

RF&S Components

E-M Solutions

Corporate and Other (1)

Total operating segment income

Amortization of definite-lived intangibles (2)

Total operating (loss) income

Total operating income

Total other expense

(Loss) income before income taxes

Loss before income taxes

March 29, 2021

December 28, 2020

(In thousands)

Segment Assets:

RF&S Components

Corporate and Other (1)

Other represents SH E-MS and SZ results.

Amortization of definite-lived intangibles primarily relates to the PCB and RF&S Components reportable segments.

For the quarter and three quarters ended September 28, 2020, $ 1,384 and $ 4,151 , respectively, of amortization expense is included in cost of goods sold.

For the quarter and three quarters ended September 30, 2019, $ 1,180 and $ 3,539 , respectively, of amortization expense is included in cost of goods sold.

During the quarter and three quarters ended September 28, 2020, the Company recorded an impairment charge for goodwill of $ 69,200 related to its RF&S Components reportable segment.

For the quarters ended March 29, 2021 and March 30, 2020, $ 1,384 and $ 1,383 , 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.

Corporate consists primarily of corporate governance functions such as finance, accounting, information technology, facilities and human resources personnel, as well as global sales and marketing personnel, research and development costs, and acquisition and integration costs associated with acquisitions.

TTM TECHNOLOGIES, INC.

4 unchanged sentences

Quarter Ended

Three Quarters Ended

September 28, 2020

September 30, 2019

September 28, 2020

September 30, 2019

March 29, 2021

March 30, 2020

(In thousands)

2 unchanged sentences

Net sales are attributed to countries by country invoiced.

(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 significant shareholder of the Company holds an equity interest.

The Company’s foreign subsidiaries purchased laminate and prepreg from these related parties in the amount of $ 5,760 and $ 7,151 for the quarters ended September 28, 2020 and September 30, 2019, respectively, and $ 17,527 and $ 22,847 for the three quarters ended September 28, 2020 and September 30, 2019, respectively.

As of September 28, 2020 and December 30, 2019, the Company’s consolidated condensed balance sheets included $ 6,786 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.

(18) Restructuring Charges

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

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

The Company ceased 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 September 28, 2020, the Company has incurred approximately $ 14,671 of restructuring charges and $ 5,694 of accelerated depreciation expense 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 three quarters ended September 28, 2020 and September 30, 2019.

The Company closed the SH E-MS and SZ facilities at the end of 2020.

As of March 29, 2021, the Company has incurred approximately $ 19,272 of restructuring charges and $ 6,702 of accelerated depreciation expense since the April 29, 2020 announcement.

Contract termination and other costs primarily represented plant closure costs.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

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 three quarters ended

September 28, 2020 and September 30, 2019:

Quarter Ended September 28, 2020

Three Quarters Ended September 28, 2020

Quarter Ended March 29, 2021

(In thousands)

Reportable Segment:

E-M Solutions

Quarter Ended September 30, 2019

Three Quarters Ended September 30, 2019

Corporate and Other (1)

Quarter Ended March 30, 2020

(In thousands)

Reportable Segment:

RF&S Components

Corporate and Other (1)

Other represents SH E-MS and SZ results.

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements—(Continued)

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 three quarters ended September 28, 2020:

The below table shows the utilization of the accrued restructuring costs during the quarter ended March 29, 2021:

(In thousands)

1 unchanged sentence

Charged to expense

Accrued as of September 28, 2020

Accrued as of March 29, 2021

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