What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-02 compared with 2021-08-04 · 229 added, 171 removed, 577 unchanged (41% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

As of June 28, 2021 and December 28, 2020

As of September 27, 2021 and December 28, 2020

September 27,

(In thousands, except par value)

24 unchanged sentences

108,165 and 106,770

shares issued as of June 28, 2021 and December 28, 2020, respectively;

106,770 shares outstanding as of June 28, 2021 and December 28, 2020, respectively

shares issued as of September 27, 2021 and December 28, 2020, respectively;

105,692 and 106,770 shares outstanding as of September 27, 2021 and

December 28, 2020, respectively

Treasury stock – common stock at cost;

361 shares as of June 28, 2021

2,473 shares as of September 27, 2021

Additional paid-in capital

6 unchanged sentences

Consolidated Condensed Statements of Operations

For the Quarter and Two Quarters Ended June 28, 2021 and June 29, 2020

For the Quarter and Three Quarters Ended September 27, 2021 and September 28, 2020

Quarter Ended

Two Quarters Ended

Three Quarters Ended

September 27,

September 28,

September 27,

September 28,

(In thousands, except per share data)

5 unchanged sentences

Amortization of definite-lived intangibles

Impairment of goodwill

Total operating expenses

Operating income

Operating income (loss)

Other (expense) income:

2 unchanged sentences

Total other expense, net

Income from continuing operations before income taxes

Income (loss) from continuing operations before income taxes

Income tax (provision) benefit

Net income from continuing operations

Net income (loss) from continuing operations

Income from discontinued operations, net of income taxes

Earnings per share:

Basic earnings per share from continuing operations

Net income (loss)

Earnings (loss) per share:

Basic earnings (loss) per share from continuing operations

Basic earnings per share from discontinued operations

Basic earnings per share

Diluted earnings per share from continuing operations

Basic earnings (loss) per share

Diluted earnings (loss) per share from continuing operations

Diluted earnings per share from discontinued operations

Diluted earnings per share

Diluted earnings (loss) per share

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive Income

For the Quarter and Two Quarters Ended June 28, 2021 and June 29, 2020

Consolidated Condensed Statements of Comprehensive Income (Loss)

For the Quarter and Three Quarters Ended September 27, 2021 and September 28, 2020

Quarter Ended

Two Quarters Ended

Three Quarters Ended

September 27,

September 28,

September 27,

September 28,

(In thousands)

Net income (loss)

Other comprehensive income (loss), net of tax:

Pension obligation adjustments, net

Reclassification adjustment for foreign currency translation

Derecognition of foreign currency translation adjustments

8 unchanged sentences

Other comprehensive income (loss), net of tax

Comprehensive income, 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 Two Quarters Ended June 28, 2021 and June 29, 2020

For the Three Quarters Ended September 27, 2021

Treasury Stock

24 unchanged sentences

Balance, June 28, 2021

Other comprehensive income

Issuance of common stock for

restricted stock units

Repurchases of common stock

Fair value of warrants

reclassified to

warrant liabilities

Issuance of stock

from warrant exercises

Stock-based compensation

Balance, September 27, 2021

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended September 28, 2020

Comprehensive

15 unchanged sentences

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.

1 unchanged sentence

Consolidated Condensed Statements of Cash Flows

For the Two Quarters Ended June 28, 2021 and June 29, 2020

Two Quarters Ended

June 28, 2021

June 29, 2020

For the Three Quarters Ended September 27, 2021 and September 28, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

(In thousands)

7 unchanged sentences

Stock-based compensation

Impairment of goodwill

Gain on sale of the Mobility business unit

17 unchanged sentences

Payment of debt issuance costs

Proceeds from exercise of stock options

Repurchases of common stock

Cash used to settle warrants

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of foreign currency exchange rates on cash and cash equivalents

11 unchanged sentences

Issuance of common stock for warrant settlement

Repurchases of common stock recorded in accounts payable

See accompanying notes to consolidated condensed financial statements.

15 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated condensed financial statements and accompanying notes.

Due to the coronavirus (COVID-19) global pandemic, the global economy and financial markets have been volatile and there is a significant amount of uncertainty about the length and severity of the consequences caused by the on-going pandemic.

Due to the coronavirus (COVID-19) global pandemic, the global economy and financial markets have been volatile, have contributed to disruptions in global supply chains and labor shortages, and there is a significant amount of uncertainty about the length and severity of the consequences caused by the on-going pandemic.

The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities.

Actual results could differ materially from those estimates.

The Company uses a 13-week fiscal quarter accounting period with the fourth quarter ending on the Monday nearest December 31.

On January 19, 2020, the Company entered into a definitive equity interests purchase agreement with AKMMeadville Electronics (Xiamen) Co., Ltd (the Purchaser) for the sale of the Company’s following subsidiaries, which was completed on April 17, 2020:

The Company uses a 52/53 week fiscal calendar with the fourth quarter ending on the Monday nearest December 31.

Fiscal 2021 ending on January 3, 2022 will be a 53-week year with the additional week included in the fourth quarter.

Fiscal 2020 was a 52-week year.

On January 19, 2020, the Company entered into a definitive equity interests purchase agreement with AKMMeadville Electronics (Xiamen) Co., Ltd (the Purchaser) for the sale that was completed on April 17, 2020 of the following now former Company subsidiaries:

Shanghai Kaiser Electronics Co., Ltd.

11 unchanged sentences

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

In fiscal 2020, subsequent to the quarter ended June 29, 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.

2 unchanged sentences

As of March 29, 2021, E-M Solutions no longer met 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.

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 .

These transaction costs should have been recorded as an expense earlier in the year and recorded in the period ending June 29, 2020, 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.

Management concluded that this error in the timing of recording the expense 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.

As a result of 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

18 unchanged sentences

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.

The following table summarizes the results of Mobility operations for the quarter and two quarters ended June 29, 2020 prior to sale:

As the sale of the Company’s Mobility business unit represented a strategic shift that had 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.

The following table summarizes the results of Mobility operations for the quarter and three quarters ended September 28, 2020 prior to sale:

Quarter Ended

Two Quarters Ended

Three Quarters Ended

September 28,

(In thousands, except per share data)

13 unchanged sentences

before income taxes

Income tax provision

Income tax benefit (provision)

Income from discontinued operations,

3 unchanged sentences

Diluted earnings per share

Depreciation expense related to the discontinued operations for the quarter and two quarters ended June 29, 2020 was $ 3,117 and $ 21,382 , respectively.

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.

There was no depreciation expense related to the discontinued operations for the quarter ended September 28, 2020.

Depreciation expense related to the discontinued operations for the three quarters ended September 28, 2020 was $ 21,382 .

During the quarter and three quarters ended September 28, 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, offset by (iii) release of U.S.

FIN 48 uncertain tax positions.

24 unchanged sentences

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.

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.

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 and a manufacturing plant under a finance lease.

The majority of the Company’s lease arrangements are comprised of fixed payments, and certain leases consist of variable payments based on equipment usage.

7 unchanged sentences

Quarter Ended

Two Quarters Ended

June 28, 2021

June 29, 2020

June 28, 2021

June 29, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

September 27, 2021

September 28, 2020

(In thousands)

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Two Quarters Ended

June 28, 2021

June 29, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

(In thousands)

3 unchanged sentences

Operating leases

Finance lease

Supplemental balance sheet information related to leases was as follows:

June 28, 2021

Balance Sheet Location

September 27, 2021

December 28, 2020

(In thousands)

Operating leases

Operating lease right-of-use assets

Finance lease

Property, plant and equipment, net

Total lease assets

Operating leases

Other current liabilities

Finance lease

Other current liabilities

Operating leases

Operating lease liabilities

Total operating lease liabilities

June 28, 2021

Finance lease

Other long-term liabilities

Total lease liabilities

September 27, 2021

December 28, 2020

Weighted average remaining lease term

Weighted average remaining lease term (years):

Operating leases

Finance lease

Weighted average discount rate:

Maturities of operating lease liabilities were as follows (1) :

Operating leases

Finance lease

Maturities of the Company’s lease liabilities were as follows (1) :

(In thousands)

3 unchanged sentences

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

As of June 28, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 11,905 .

As of September 27, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 11,008 .

The Company expects to recognize revenue on approximately 84 % 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 both quarter and two quarters ended June 28, 2021 and 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 and three quarters ended September 27, 2021, and 98 % and 2 %, respectively, of the Company’s revenue for the quarter and three quarters ended September 28, 2020.

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

Quarter Ended June 28, 2021

Quarter Ended June 29, 2020

Quarter Ended September 27, 2021

Quarter Ended September 28, 2020

RF&S Components

2 unchanged sentences

Aerospace and Defense

Cellular Phone

Data Center Computing (2)

1 unchanged sentence

Networking/Communications

Two Quarters Ended June 28, 2021

Two Quarters Ended June 29, 2020

Three Quarters Ended September 27, 2021

Three Quarters Ended September 28, 2020

RF&S Components

6 unchanged sentences

Networking/Communications

Other represents SH E-MS and SZ results.

Other represents results from the now closed SH E-MS and SZ facilities.

Beginning in the first quarter of 2021, the Computing/Storage/Peripherals end market was renamed to Data Center Computing to better reflect the customer mix and growth prospects.

1 unchanged sentence

(5) Composition of Certain Consolidated Condensed Financial Statement Captions

June 28, 2021

September 27, 2021

December 28, 2020

20 unchanged sentences

Derivative liabilities

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

Finance lease

As of September 27, 2021 and December 28, 2020, goodwill by reportable segment was as follows:

RF&S Components

(In thousands)

Balance as of December 28, 2020 and June 28, 2021

Balance as of September 27, 2021 and December 28, 2020

Accumulated impairment losses

(7) Definite-lived Intangibles

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

As of September 27, 2021 and December 28, 2020, the components of definite-lived intangibles were as follows:

(In thousands)

June 28, 2021

September 27, 2021

Customer relationships

2 unchanged sentences

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

Amortization expense was $ 10,425 and $ 10,945 for the quarters ended June 28, 2021 and June 29, 2020, respectively, and $ 21,330 and $ 21,890 for the two quarters ended June 28, 2021 and June 29, 2020, respectively.

For the quarter and two quarters ended June 28, 2021, $ 1,383 and $ 2,767 , 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.

Amortization expense was $ 9,658 and $ 11,510 for the quarters ended September 27, 2021 and September 28, 2020, respectively, and $ 30,988 and $ 33,400 for the three quarters ended September 27, 2021 and September 28, 2020, respectively.

For both the quarter and three quarters ended September 27, 2021 and September 28, 2020, $ 1,384 and $ 4,151 , 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:

2 unchanged sentences

(8) Long-term Debt and Letters of Credit

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

The following table summarizes the long-term debt of the Company as of September 27, 2021 and December 28, 2020:

Interest Rate as of

June 28, 2021

September 27, 2021

Interest Rate as of

13 unchanged sentences

Pursuant to the Term Loan Credit Agreement, the Company may reinvest the cash proceeds received from the sale of the Mobility business unit for a period of twelve months commencing September 3, 2020.

If the proceeds are not reinvested during that time, 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 year ended December 28, 2020 and used the remaining cash proceeds for reinvestment pursuant to the Term Loan Credit Agreement .

If the proceeds are not reinvested during that

time , 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 year ended December 28, 2020 and used the remaining cash proceeds for reinvestment pursuant to the Term Loan Credit Agreement .

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 .

7 unchanged sentences

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.

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

Asset-Based Lending Agreements

As of June 28, 2021, letters of credit in the amount of $ 12,201 were outstanding under the U.S.

ABL and $ 3,475 were outstanding under the Asia Asset-Based Lending Credit Agreement (Asia ABL) with various expiration dates through July 2021 .

As of September 27, 2021, letters of credit in the amount of $ 12,346 were outstanding under the U.S.

ABL and $ 2,606 were outstanding under the Asia Asset-Based Lending Credit Agreement (Asia ABL) with various expiration dates through September 2021 .

Available borrowing capacity under the U.S.

ABL and the Asia ABL was $ 137,799 and $ 116,525 , respectively, which considers letters of credit outstanding as of June 28, 2021.

ABL and the Asia ABL was $ 137,654 and $ 117,394 , respectively, which considers letters of credit outstanding as of September 27, 2021.

Debt Covenants

3 unchanged sentences

Debt Issuance and Debt Discount

As of June 28 , 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 June 28, 2021

As of September 27 , 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 September 27, 2021

As of December 28, 2020

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 $ 1,637 and $ 1,919 as of June 28 , 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 June 28 , 2021 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 5.7 years.

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $ 1,496 and $ 1,919 as of September 27 , 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 September 27 , 2021 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 5.5 years.

Loss on Extinguishment of Debt

During the two quarters ended June 28, 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.

During the three quarters ended September 27, 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.

(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 two quarters ended June 28, 2021, the Company’s effective tax rate was impacted by a net discrete benefit of $ 1,843 and $ 2,226 , respectively.

This is related mainly to (i) the release of uncertain tax positions due to the expiration of the statute of limitation in foreign jurisdictions, (ii) stock based compensation releases, (iii) 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), and (iv) accrued interest for existing uncertain tax positions.

During the quarter and three quarters ended September 27, 2021, the Company’s effective tax rate was impacted by a net discrete expense of $ 1,157 and a net tax benefit of $ 1,069 , respectively.

This is related mainly due to an increase in uncertain tax positions in the United States netted against (i) the release of uncertain tax positions due to the expiration of the statute of limitation in foreign jurisdictions, (ii) stock based compensation releases, (iii) 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), and (iv) the reduction in the deferred tax liability for the foreign withholding tax accrual with respect to the Company’s indefinite reinvestment policy outside of the United States.

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

4 unchanged sentences

Interest Rate Swaps

The Company’s business is exposed to interest rate risk resulting from fluctuations in interest rates on certain LIBOR-based variable rate debt.

The Company’s business is exposed to risk resulting from fluctuations in interest rates on certain LIBOR-based variable rate debt.

Increases in interest rates would increase interest expenses relating to the outstanding variable rate borrowings and increase the cost of debt.

3 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 June 28, 2021, the fair value of the interest rate swap was recorded as a liability in the amount of $ 10,000 and included as a component of other current liabilities.

As of September 27, 2021, the fair value of the interest rate swap was recorded as a liability in the amount of $ 7,372 and included as a component of other current 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 two quarters ended June 28, 2021 and June 29, 2020.

The interest rate swap increased interest expense by $ 2,763 and $ 2,342 for the quarters ended June 28, 2021 and June 29, 2020, respectively, and $ 5,503 and $ 3,517 for the two quarters ended June 28, 2021 and June 29, 2020, respectively.

No ineffectiveness was recognized for the quarter and three quarters ended September 27, 2021 and September 28, 2020.

The interest rate swap increased interest expense by $ 2,775 and $ 2,707 for the quarters ended September 27, 2021 and September 28, 2020, respectively, and $ 8,278 and $ 6,224 for the three quarters ended September 27, 2021 and September 28, 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 June 28, 2021 and December 28, 2020 was approximately $ 1,245 (Japanese Yen (JPY) 132.3 million) and $ 1,181 (JPY 125.0 million), respectively.

The notional amount of the foreign exchange contracts as of September 27, 2021 and December 28, 2020 was approximately $ 1,245 (Japanese Yen (JPY) 132.3 million) and $ 1,181 (JPY 125.0 million), respectively.

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

Commodity Price Risk Management

The Company uses copper in the manufacturing of PCBs.

In order to reduce the impact of volatility of copper prices, the Company enters into commodity contracts.

As of June 28, 2021, the Company has commodity contracts with a notional quantity of 0.5 metric tonnes each for the periods (i) beginning June 29, 2021 and ending on September 23, 2021 , (ii) beginning September 28, 2021 and ending on December 30, 2021 , (iii) beginning January 4, 2022 and ending on March 31, 2022 , and (iv) beginning April 5, 2022 and ending on June 29, 2022 .

As of June 28, 2021, the fair value of the commodity contracts was recorded as an asset in the amount of $ 99 and included as a component of prepaid expenses and other current assets.

The changes in the fair value of these commodity contracts are recorded in cost of goods sold in the consolidated condensed statements of operations.

The commodity contracts decreased cost of goods sold by $ 99 for both the quarter and two quarters ended June 28, 2021.

The Company uses various raw materials in the manufacturing of PCBs.

In particular, the Company has been experiencing increasing prices and lead times of copper clad laminates (CCLs), a key raw material for the manufacture of PCBs.

CCLs are made from epoxy resin, glass cloth and copper foil, all of which are seeing limited supply and resulting increased prices.

The Company only buys a small amount of copper directly.

However, copper is a major driver of laminate cost.

As such, the Company enters into commodity contracts to hedge copper as a proxy for hedging laminate.

As of September 27, 2021, the Company has commodity contracts with a notional quantity of 0.5 metric tonnes each for the periods (i) beginning September 28, 2021 and ending on December 30, 2021 , (ii) beginning January 4, 2022 and ending on March 31, 2022 , and (iii) beginning April 5, 2022 and ending on June 29, 2022 , and 0.6 metric tonnes for the period beginning June 30, 2022 and ending on October 3, 2022 .

As of September 27, 2021, the fair value of the commodity contracts was recorded as a liability in the amount of $ 65 and included as a component of other current liabilities.

The changes in the fair value of these commodity contracts are recorded in cost of goods sold in the consolidated

condensed statements of operations.

The commodity contracts increased cost of goods sold by $ 164 and $ 65 for the quarter and three quarters ended September 27 , 2021 , respectively .

These commodity contracts are not designated as accounting hedges.

2 unchanged sentences

Balance Sheet Location

June 28, 2021

September 27, 2021

December 28, 2020

11 unchanged sentences

Commodity contracts

Prepaid expenses and other current assets

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 two quarters ended June 28, 2021 and June 29, 2020:

Quarter Ended June 28, 2021

Quarter Ended June 29, 2020

Other current liabilities

Quarter Ended September 27, 2021

Quarter Ended September 28, 2020

Loss Recognized

6 unchanged sentences

Interest expense

Two Quarters Ended June 28, 2021

Two Quarters Ended June 29, 2020

Three Quarters Ended September 27, 2021

Three Quarters Ended September 28, 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 two quarters ended June 28, 2021 and June 29, 2020:

Two Quarters Ended

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 27, 2021 and September 28, 2020:

Three Quarters Ended

September 27,

September 28,

(In thousands)

7 unchanged sentences

(11) Accumulated Other Comprehensive Loss

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

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of September 27, 2021 and December 28, 2020:

(Losses) Gains

6 unchanged sentences

Other comprehensive income

Ending balance as of June 28, 2021

Ending balance as of September 27, 2021

(12) Significant Customers and Concentration of Credit Risk

2 unchanged sentences

The Company performs ongoing credit evaluations of customers, does not require collateral, and considers the credit risk profile of the entity from which the receivable is due in further evaluating collection risk.

As of June 28, 2021, there was one customer that accounted for 10% of the Company’s accounts receivable.

There were no customers that accounted for 10% or more of accounts receivable as of December 28, 2020.

The Company’s customers include both OEMs and EMS companies.

1 unchanged sentence

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 quarter ended June 28, 2021 and two quarters ended June 29, 2020.

For the two quarters ended June 28, 2021 and the quarter ended June 29, 2020, there was one customer that accounted for approximately 11 % of the Company’s net sales.

There were no customers that accounted for 10% or more of net sales for the quarter ended September 27, 2021.

For the three quarters ended September 27, 2021, one customer accounted for approximately 10 % of the Company’s net sales.

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.

(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 June 28, 2021 and December 28, 2020 were as follows:

June 28, 2021

The carrying amount and estimated fair value of the Company’s financial instruments as of September 27, 2021 and December 28, 2020 were as follows:

September 27, 2021

December 28, 2020

9 unchanged sentences

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 June 28, 2021 and December 28, 2020, which are considered Level 2 inputs.

As of June 28 , 2021 and December 28 , 20 20 , the Company’s other financial instruments included cash and cash equivalents, accounts receivable, and accounts payable.

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 27, 2021 and December 28, 2020, which are considered Level 2 inputs.

As of September 27 , 2021 and December 28 , 20 20 , 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 and cash equivalents as of June 28 , 2021 consisted of $ 319,388 held in the U.S., with the remaining $ 238,903 held by foreign subsidiaries.

The Company’s cash and cash equivalents as of September 27 , 2021 consisted of $ 355,243 held in the U.S., with the remaining $ 174,573 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 June 28, 2021 and December 28, 2020.

The Company has accrued amounts for its loss contingencies which are probable and estimable as of September 27, 2021 and December 28, 2020.

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

(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 28, 2021 and June 29, 2020:

Quarter Ended

Two Quarters Ended

June 28, 2021

June 29, 2020

June 28, 2021

June 29, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

September 27, 2021

September 28, 2020

(In thousands, except per share amounts)

Net income from continuing operations

Net income (loss) from continuing operations

Basic weighted average shares

3 unchanged sentences

Diluted shares

Earnings per share:

PRUs, RSUs, and stock options to purchase 1,452 and 802 shares of common stock for the quarter and two quarters ended June 28, 2021, respectively, and 1,162 and 750 shares of common stock for the quarter and two quarters ended June 29, 2020, 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 28, 2021 and June 29, 2020, 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 stock 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 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 stock during the applicable quarter, and therefore, the effect would be anti-dilutive.

Earnings (loss) per share:

Performance-based restricted stock units (PRUs), restricted stock units (RSUs), and stock options to purchase 997 and 866 shares of common stock for the quarter and three quarters ended September 27, 2021, 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 27, 2021, 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 stock during the applicable quarter and three quarters and, as a result, the impact would be anti-dilutive.

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 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 quarter ended September 27, 2021, and the quarter and three quarters ended September 28, 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 stock during the applicable quarter, and therefore, the effect would be anti-dilutive.

(16) Stock-Based Compensation

1 unchanged sentence

Quarter Ended

Two Quarters Ended

(In thousands)

Three Quarters Ended

September 27,

September 28,

September 27,

September 28,

(In thousands)

5 unchanged sentences

Summary of Unrecognized Compensation Costs

The following is a summary of total unrecognized compensation costs as of June 28, 2021:

The following is a summary of total unrecognized compensation costs as of September 27, 2021:

Unrecognized Stock-Based Compensation Cost

5 unchanged sentences

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.

In fiscal 2020, subsequent to the quarter ended June 29, 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.

2 unchanged sentences

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

As a result of the restructuring of the E-M Solutions business unit, certain prior year amounts have been reclassified to conform to this new presentation.

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

Two Quarters Ended

June 28, 2021

June 29, 2020

June 28, 2021

June 29, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

September 27, 2021

September 28, 2020

(In thousands)

1 unchanged sentence

Total net sales

Operating Segment Income:

Operating Segment Income (Loss):

RF&S Components

Corporate and Other (1)

Total operating segment income

Total operating segment income (loss)

Amortization of definite-lived intangibles (2)

Total operating income

Total operating income (loss)

Total other expense

Income before income taxes

June 28, 2021

Income (loss) before income taxes

September 27, 2021

December 28, 2020

3 unchanged sentences

Corporate and Other (1)

Other represents SH E-MS and SZ results.

Other represents results from the now closed SH E-MS and SZ facilities.

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

For the quarter and two quarters ended June 28, 2021, $ 1,383 and $ 2,767 , 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 both the quarter and three quarters ended September 27, 2021 and September 28, 2020, $ 1,384 and $ 4,151 , 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.

4 unchanged sentences

Quarter Ended

Two Quarters Ended

June 28, 2021

June 29, 2020

June 28, 2021

June 29, 2020

Three Quarters Ended

September 27, 2021

September 28, 2020

September 27, 2021

September 28, 2020

(In thousands)

8 unchanged sentences

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

As of June 28, 2021, the Company has incurred approximately $ 19,625 of restructuring charges and $ 6,702 of accelerated depreciation expense since the April 29, 2020 announcement.

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 28, 2021 and June 29, 2020.

As of September 27, 2021, the Company had incurred approximately $ 19,868 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.

The table below 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 28, 2021 and June 29, 2020:

Quarter Ended June 28, 2021

Two Quarters Ended June 28, 2021

Quarter Ended September 27, 2021

Three Quarters Ended September 27, 2021

(In thousands)

1 unchanged sentence

Corporate and Other (1)

Quarter Ended June 29, 2020

Two Quarters Ended June 29, 2020

Quarter Ended September 28, 2020

Three Quarters Ended September 28, 2020

(In thousands)

1 unchanged sentence

Corporate and Other (1)

Other represents SH E-MS and SZ results.

Other represents results from the now closed SH E-MS and SZ facilities.

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

The table below shows the utilization of the accrued restructuring costs during the two quarters ended June 28, 2021:

The table below shows the utilization of the accrued restructuring costs during the three quarters ended September 27, 2021:

(In thousands)

1 unchanged sentence

Charged to expense

Accrued as of June 28, 2021

Accrued as of September 27, 2021

(19) Share Repurchase Program

5 unchanged sentences

The repurchase program does not obligate the Company to acquire any specific number of shares.

During the quarter and two quarters ended June 28, 2021, the Company repurchased 411 shares of common stock for a total cost of $ 6,145 .

As of June 28, 2021, the remaining amount available to be repurchased under the Company’s share repurchase program was $ 93,855 .

During the quarter ended September 27, 2021, the Company repurchased 2,114 shares of common stock for a total cost of $ 28,971 and during the three quarters ended September 27, 2021, the Company has repurchased a total of 2,525 shares of common stock for a total cost of $ 35,116 .

As of September 27, 2021, the remaining amount available to be repurchased under the Company’s share repurchase program was $ 64,884 .

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