What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-11 · 213 added, 120 removed, 446 unchanged (43% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

As of April 4, 2022 and January 3, 2022

As of July 4, 2022 and January 3, 2022

(In thousands, except par value)

24 unchanged sentences

109,555 and 108,194

shares issued as of April 4, 2022 and January 3, 2022, respectively;

101,387 and 103,533 shares outstanding as of April 4, 2022 and

shares issued as of July 4, 2022 and January 3, 2022, respectively;

102,185 and 103,533 shares outstanding as of July 4, 2022 and

January 3, 2022, respectively

Treasury stock – common stock at cost;

6,996 and 4,661 shares as of April 4, 2022

7,370 and 4,661 shares as of July 4, 2022

and January 3, 2022, respectively

7 unchanged sentences

Consolidated Condensed Statements of Operations

For the Quarters Ended April 4, 2022 and March 29, 2021

For the Quarter and Two Quarters Ended July 4, 2022 and June 28, 2021

Quarter Ended

Two Quarters Ended

(In thousands, except per share data)

11 unchanged sentences

Total other expense, net

Income (loss) before income taxes

Income tax benefit

Net income (loss)

Earnings (loss) per share:

Basic earnings (loss) per share

Diluted earnings (loss) per share

Income before income taxes

Income tax provision

Earnings per share:

Basic earnings per share

Diluted earnings per share

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

For the Quarters Ended April 4, 2022 and March 29, 2021

Consolidated Condensed Statements of Comprehensive Income

For the Quarter and Two Quarters Ended July 4, 2022 and June 28, 2021

Quarter Ended

Two Quarters Ended

(In thousands)

Net income (loss)

Other comprehensive income, net of tax:

Other comprehensive income (loss), net of tax:

Pension obligation adjustments, net

Foreign currency translation adjustments, net

Net unrealized gain on cash flow hedges:

Unrealized gain (loss) on effective cash flow hedges during

Unrealized (loss) gain on effective cash flow hedges during

the period, net

Loss realized in the statement of operations, net

Other comprehensive income, net of tax

Comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Comprehensive income, net of tax

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Stockholders’ Equity

For the Quarters Ended April 4, 2022 and March 29, 2021

For the Two Quarters Ended July 4, 2022

Treasury Stock

18 unchanged sentences

Balance, April 4, 2022

Other comprehensive income

Issuance of common stock

for restricted stock units

Repurchases of common stock

Stock-based compensation

Balance, July 4, 2022

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Two Quarters Ended June 28, 2021

Treasury Stock

Comprehensive

15 unchanged sentences

Balance, March 29, 2021

Other comprehensive income

Issuance of common stock

for restricted stock units

Repurchases of common stock

Issuance of stock

from warrant exercises

Stock-based compensation

Balance, June 28, 2021

See accompanying notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Cash Flows

For the Quarters Ended April 4, 2022 and March 29, 2021

Quarter Ended

April 4, 2022

March 29, 2021

For the Two Quarters Ended July 4, 2022 and June 28, 2021

Two Quarters Ended

June 28, 2021

(In thousands)

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

15 unchanged sentences

Cash flows from investing activities:

Acquisition of Gritel Holding Co., Inc.

and ISC Farmingdale Corp.

Purchase of property, plant and equipment and other assets

2 unchanged sentences

Cash flows from financing activities:

Proceeds from borrowings of revolving loan

Repayment of revolving loan

Repurchases of common stock

20 unchanged sentences

TTM Technologies, Inc.

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

(the Company or TTM) is a leading global manufacturer of technology solutions including engineered systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and printed circuit boards (PCB).

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.

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

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

8 unchanged sentences

The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment (or if adopted early as of an interim period, as of the beginning of the fiscal year that includes the interim period of early application).

The Company early adopted ASU 2021-08 on April 4, 2022 and any impact on the condensed consolidated financial statements will be dependent on the magnitude and nature of future acquired entities.

The Company early adopted ASU 2021-08 on April 4, 2022 and did not have an impact on its consolidated condensed financial statements and related disclosures.

The new guidance will be applied to the acquisition of Gritel Holding Co., Inc.

(Gritel) and ISC Farmingdale Corp.

Recently Issued Accounting Standards Not Yet Adopted

4 unchanged sentences

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

(2) Share Repurchase Program

On February 3, 2021, the Company’s Board of Directors authorized and approved a share repurchase program.

Under the program, the Company may repurchase up to $ 100,000 in value of the Company’s outstanding shares of common stock from time to time through February 3, 2023 .

The Company may repurchase shares through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) which sets certain restrictions on the method, timing, price, and volume of open market stock repurchases.

In addition, the Company adopted a trading plan, which may be amended from time to time, in accordance with Rule 10b5-1 of the Exchange Act to facilitate certain purchases that may be effected under the share repurchase program.

The timing, manner, price, and amount of any repurchases are determined at the Company’s discretion, and the share repurchase program may be suspended, terminated, or modified at any time for any reason.

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

During the quarter ended April 4, 2022, the Company repurchased 2,373 shares of common stock for a total cost of $ 30,232 (including commissions).

As of April 4, 2022, the remaining amount available to be repurchased under the Company’s share repurchase program was $ 5,184 .

Subsequent to April 4, 2022, the Company repurchased 374 shares of common stock for a total cost of $ 5,192 (including commissions) and there are no amounts available for repurchase as of May 4, 2022.

(2) Acquisition of Gritel and ISC Farmingdale Corp.

On June 27, 2022 , the Company completed its acquisition of all of the issued and outstanding capital stock of Gritel and ISC Farmingdale Corp.

for a preliminary total consideration of $ 299,212 in cash.

Telephonics Corporation is wholly-owned by Gritel, and as a result of the acquisition, became an indirect, wholly-owned subsidiary of the Company (collectively with ISC Farmingdale Corp., Telephonics).

For the quarter and two quarters ended July 4, 2022, bank fees and legal, accounting, and other professional service costs associated with the acquisition of $ 9,854 and $ 10,708 , respectively, have been expensed and recorded as general and administrative expense in the consolidated condensed financial statements.

There were no bank fees or legal, accounting, or other professional service costs associated with the acquisition for the quarter and two quarters ended June 28, 2021.

Preliminary Purchase Price Allocation

The purchase price was allocated to tangible and intangible assets acquired, and liabilities assumed based on preliminary estimates of fair value at the date of the acquisition, June 27, 2022.

The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill.

The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

The fair values assigned are based on reasonable methods applicable to the nature of the assets acquired and liabilities assumed.

The following summarizes the preliminary estimated fair values of net assets acquired:

(In thousands)

Accounts receivable

Contract assets

Prepaid expenses and other current assets

Property, plant and equipment

Operating lease right-of-use assets

Identifiable intangible assets

Deposits and other non-current assets

Accounts payable

Contract liabilities

Accrued salaries, wages and benefits

Other current liabilities

Operating lease liabilities

Non-current deferred tax liabilities

Other long-term liabilities

Because the acquisition closed shortly prior to the end of the Company’s second fiscal quarter, the magnitude of the transaction, and the significant information to be obtained and analyzed, the Company’s fair value estimates for all of the acquired assets and liabilities are preliminary and may change during the allowable measurement period, which is up to the point the Company obtains and analyzes the information that existed as of the date of the acquisition necessary to determine the fair values of the assets acquired and liabilities assumed, but in no case to exceed more than one year from the date of acquisition.

Any subsequent changes to the purchase price allocation during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined.

Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in material adjustments to goodwill.

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.

The Company believes that the acquisition of Telephonics will strengthen the Company’s differentiated position in the Aerospace and Defense market and complement existing RF and microwave business.

The Company believes that these factors support the amount of goodwill recognized as a result of the purchase price paid for Telephonics, in relation to other acquired tangible and intangible assets.

The goodwill acquired in the acquisition is not deductible for income tax purposes.

The results of operations of Telephonics since the acquisition date are not material to the Company’s consolidated condensed financial statements.

Preliminary Pro forma Financial Information

The unaudited preliminary pro forma financial information below gives effect to this acquisition as if it had occurred at the beginning of fiscal 2021, or December 29, 2020.

The preliminary pro forma financial information presented includes the effects of adjustments related to the amortization of acquired identifiable intangible assets and other non-recurring transactions costs directly associated with the acquisition such as legal, accounting and banking fees.

The Company will include the full pro forma financial information and historical financial statements of Telephonics as required by SEC rules by filing an amendment to its Current Report on Form 8-K dated June 27, 2022.

The preliminary pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the actual results that would have been achieved had the acquisition occurred at the beginning of the earliest period presented, or the results that may be achieved in future periods.

Quarter Ended

Two Quarters Ended

June 28, 2021

(In thousands, except per share amounts)

Basic earnings per share

Diluted earnings per share

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

8 unchanged sentences

Quarter Ended

April 4, 2022

March 29, 2021

Two Quarters Ended

June 28, 2021

(In thousands)

6 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Quarter Ended

April 4, 2022

March 29, 2021

Two Quarters Ended

June 28, 2021

(In thousands)

5 unchanged sentences

Balance Sheet Location

April 4, 2022

January 3, 2022

14 unchanged sentences

Total lease liabilities

April 4, 2022

January 3, 2022

11 unchanged sentences

Excludes $ 884 of legally binding minimum lease payments for leases signed but not yet commenced.

As of April 4, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 11,877 .

As of July 4, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $ 308,915 .

The Company expects to recognize revenue on approximately 64 % 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 97 % and 3 %, respectively, of the Company’s revenue for the quarter ended April 4, 2022, and 98 % and 2 %, respectively, of the Company’s revenue for the quarter ended March 29, 2021.

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 two quarters ended July 4, 2022, and 98 % and 2 %, respectively, of the Company’s revenue for the quarter and two quarters ended June 28, 2021.

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

Quarter Ended April 4, 2022

Quarter Ended July 4, 2022

Quarter Ended June 28, 2021

RF&S Components

(In thousands)

3 unchanged sentences

Networking/Communications

Quarter Ended March 29, 2021

Two Quarters Ended July 4, 2022

Two Quarters Ended June 28, 2021

RF&S Components

(In thousands)

5 unchanged sentences

(5) Composition of Certain Consolidated Condensed Financial Statement Captions

April 4, 2022

January 3, 2022

11 unchanged sentences

Other current liabilities:

Sales return and allowances

Income taxes payable

Sales return and allowances

Operating lease

5 unchanged sentences

Defined benefit pension plan liability

As of April 4, 2022 and January 3, 2022, goodwill by reportable segment was as follows:

As of July 4, 2022 and January 3, 2022, goodwill by reportable segment was as follows:

RF&S Components

Unallocated Telephonics Goodwill

(In thousands)

Balance as of January 3, 2022 and April 4, 2022

Balance as of January 3, 2022

Accumulated impairment losses

Goodwill recognized during the two quarters ended July 4, 2022

Balance as of July 4, 2022

Accumulated impairment losses

The assignment of goodwill related to the Telephonics acquisition to the Company’s reporting units has not yet been completed.

See Note 2, Acquisition of Gritel and ISC Farmingdale Corp.

and Note 17, Segment Information , for further information.

(7) Definite-lived Intangibles

As of April 4, 2022 and January 3, 2022, the components of definite-lived intangibles were as follows:

As of July 4, 2022 and January 3, 2022, the components of definite-lived intangibles were as follows:

(In thousands)

April 4, 2022

Customer relationships

Acquired intangibles from acquisition

Customer relationships

January 3, 2022

Customer relationships

The Company has acquired customer relationships and trade names as a result of the acquisition.

See Note 2, Acquisition of Gritel and ISC Farmingdale Corp.

, for further information.

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

Amortization expense was $ 9,658 and $ 10,905 for the quarters ended April 4, 2022 and March 29, 2021, respectively.

For both the quarters ended April 4, 2022 and March 29, 2021, $ 1,384 of amortization expense is included in cost of goods sold.

Amortization expense was $ 9,658 and $ 10,425 for the quarters ended July 4, 2022 and June 28, 2021, respectively, and $ 19,316 and $ 21,330 for the two quarters ended July 4, 2022 and June 28, 2021, respectively.

For the quarter and two quarters ended July 4, 2022, $ 1,383 and $ 2,767 , respectively, of amortization expense is included in cost of goods sold.

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.

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 April 4, 2022 and January 3, 2022:

The following table summarizes the long-term debt of the Company as of July 4, 2022 and January 3, 2022:

Interest Rate as of

April 4, 2022

Interest Rate as of

1 unchanged sentence

January 3, 2022

(In thousands)

(In thousands, except interest rates)

Senior Notes due March 2029

12 unchanged sentences

Debt Issuance and Debt Discount

As of April 4 , 2022 and January 3, 2022, remaining unamortized debt discount and debt issuance costs for the Senior Notes due 2029 and Term Loan Facility are as follows:

As of April 4, 2022

As of July 4 , 2022 and January 3, 2022, remaining unamortized debt discount and debt issuance costs for the Senior Notes due 2029 and Term Loan Facility are as follows:

As of July 4, 2022

As of January 3, 2022

7 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 $ 1,214 and $ 1,355 as of April 4 , 2022 and January 3, 2022, 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 April 4 , 2022 , the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 5.1 years.

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $ 1,073 and $ 1,355 as of July 4 , 2022 and January 3, 2022, 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 July 4, 2022, the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 4.9 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.

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.

(9) Income Taxes

1 unchanged sentence

federal income tax rate, apportioned state income tax rates, generation of credits and deductions available to the Company as well as changes in valuation allowances and certain non-deductible items.

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

During the quarter ended April 4, 2022, the Company’s effective tax rate was impacted by a net discrete benefit of $ 2,047 .

This is mainly related to 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, and windfall tax benefit of the stock-based compensation releases, which are offset by 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.

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 July 4, 2022, the Company’s effective tax rate was impacted by a net discrete expense of $ 1,222 and a net discrete benefit of $ 825 , respectively.

This is mainly related to 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 and a windfall tax benefit of the stock-based compensation releases, which were partially offset by 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 U.S.

The Company expects its earnings attributable to most foreign subsidiaries may be repatriated back to the U.S.

and so a deferred tax liability has been recorded for foreign withholding and the estimated federal/state tax impact.

and so a deferred tax liability has been recorded for foreign withholding taxes and the estimated federal/state tax impact on any repatriation.

For those other companies with earnings currently being reinvested outside of the U.S., no deferred tax liabilities on undistributed earnings are recorded.

2 unchanged sentences

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.

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

Fluctuations in interest rates can also lead to significant fluctuations in the fair value of the debt obligations.

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 a portion of its LIBOR-based debt and receives floating 1-month LIBOR during the swap period.

During the term of the interest rate swap, the Company paid a fixed rate of 2.84 % against a portion of its LIBOR-based debt and received 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 April 4, 2022, the fair value of the interest rate swap was recorded as a liability in the amount of $ 1,385 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, in the Company’s consolidated condensed balance sheets.

No ineffectiveness was recognized for the quarters ended April 4, 2022 and March 29, 2021.

The interest rate swap increased interest expense by $ 2,706 and $ 2,740 for the quarters ended April 4, 2022 and March 29, 2021, respectively.

No ineffectiveness was recognized for the quarter and two quarters ended July 4, 2022 and June 28, 2021.

The interest rate swap increased interest expense by $ 1,399 and $ 2,763 for the quarters ended July 4, 2022 and June 28, 2021, respectively, and $ 4,105 and $ 5,503 for the two quarters ended July 4, 2022 and June 28, 2021, respectively.

Foreign Exchange Contracts

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 April 4, 2022 was approximately $ 1,625 (Euro (EUR) 1.4 million).

The notional amount of the foreign exchange contracts as of July 4, 2022 was approximately $ 1,625 (Euro (EUR) 1.4 million).

There were no foreign exchange contracts as of January 3, 2022.

6 unchanged sentences

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

As of April 4, 2022, the Company has commodity contracts with a notional quantity of (i) 0.5 metric tonnes for the period beginning April 5, 2022 and ending on June 29, 2022 , (ii) 0.6 metric tonnes for the period beginning June 30, 2022 and ending on October 3, 2022 , (iii) 0.7 metric tonnes for the period beginning October 4, 2022 and ending on January 3, 2023 , and (iv) 0.7 metric tonnes for the period beginning January 1, 2023 and ending on March 31, 2023 .

As of April 4, 2022, the fair value of the commodity contracts was recorded as an asset in the amount of $ 1,699 and included as a component of prepaid expenses and other current assets.

As of July 4, 2022, the Company has commodity contracts with a notional quantity of (i) 0.6 metric tonnes for the period beginning June 30, 2022 and ending on October 3, 2022 , (ii) 0.7 metric tonnes for the period beginning October 4, 2022 and ending on January 3, 2023 (iii) 0.7 metric tonnes for the period beginning January 1, 2023 and ending on March 31, 2023 , and (iv) 0.7 metric tonnes for the period beginning April 1, 2023 and ending on June 30, 2023 .

As of July 4, 2022, the fair value of the commodity contracts was recorded as a liability in the amount of $ 3,511 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 decreased cost of goods sold by $ 1,402 for the quarter ended April 4, 2022.

The commodity contracts increased cost of goods sold by

$ 5,209 and $ 3,807 for the quarter and two quarters ended July 4 , 202 2 , respectively.

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

These commodity contracts are not designated as accounting hedges.

2 unchanged sentences

Balance Sheet Location

April 4, 2022

January 3, 2022

1 unchanged sentence

Cash flow derivative instruments designated as hedges:

Foreign exchange contracts

Other current liabilities

Interest rate swap

3 unchanged sentences

Prepaid expenses and other current assets

Foreign exchange contracts

Commodity contracts

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 quarters ended April 4, 2022 and March 29, 2021:

Quarter Ended April 4, 2022

Quarter Ended March 29, 2021

Gain Recognized in Other Comprehensive Income

Quarter Ended July 4, 2022

Quarter Ended June 28, 2021

Loss Recognized in Other Comprehensive Loss

Loss Recognized

4 unchanged sentences

Interest expense

The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the quarters ended April 4, 2022 and March 29, 2021:

Quarter Ended

Two Quarters Ended July 4, 2022

Two Quarters Ended June 28, 2021

Gain Recognized

Comprehensive Income

Loss Recognized

Comprehensive Loss

(In thousands)

Cash flow hedge:

Interest rate swap

Interest expense

The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the two quarters ended July 4, 2022 and June 28, 2021:

Two Quarters Ended

(In thousands)

Beginning balance, net of tax

2 unchanged sentences

Ending balance, net of tax

Based on the current yield curve, the Company expects that losses of approximately $ 1,087 of the accumulated other comprehensive loss will be reclassified into the statement of operations, net of tax, in the next quarter since the interest rate swap arrangement is expiring on June 1, 2022.

(11) Accumulated Other Comprehensive Loss

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of April 4, 2022 and January 3, 2022:

The following provides a summary of the components of accumulated other comprehensive loss, net of tax, as of July 4, 2022 and January 3, 2022:

(Losses) Gains

6 unchanged sentences

Other comprehensive (loss) income

Ending balance as of April 4, 2022

Ending balance as of July 4, 2022

(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 quarters ended April 4, 2022 and March 29, 2021, one customer accounted for approximately 10 % and 13 % of the Company’s net sales, respectively.

For the quarter and two quarters ended July 4, 2022, one customer accounted for approximately 11 % and 10 % of the Company’s net sales, respectively.

There were no customers that accounted for 10 % or more of net sales for the quarter ended June 28, 2021.

For the two quarters ended June 28, 2021, one customer accounted for approximately 11 % of the Company’s net sales.

(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 April 4, 2022 and January 3, 2022 were as follows:

April 4, 2022

The carrying amount and estimated fair value of the Company’s financial instruments as of July 4, 2022 and January 3, 2022 were as follows:

January 3, 2022

7 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 April 4, 2022 and January 3, 2022, which are considered Level 2 inputs.

As of April 4, 2022 and January 3, 2022, the Company’s other financial instruments included cash and cash equivalents, accounts receivable, contract assets, accounts payable, and contract liabilities.

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 July 4, 2022 and January 3, 2022, which are considered Level 2 inputs.

As of July 4, 2022 and January 3, 2022, the Company’s other financial instruments included cash and cash equivalents, accounts receivable, contract assets, accounts payable, and contract liabilities.

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

The Company’s cash and cash equivalents as of April 4, 2022 consisted of $ 332,757 held in the U.S., with the remaining $ 186,322 held by foreign subsidiaries.

The Company’s cash and cash equivalents as of July 4, 2022 consisted of $ 67,175 held in the U.S., with the remaining $ 199,371 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 April 4, 2022 and January 3, 2022.

The Company has accrued amounts for its loss contingencies which are probable and estimable as of July 4, 2022 and January 3, 2022.

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

(15) Earnings (Loss) Per Share

The following is a reconciliation of the numerator and denominator used to calculate basic earnings (loss) per share and diluted earnings (loss) per share for the quarters ended April 4, 2022 and March 29, 2021:

(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 for the quarter and two quarters ended July 4, 2022 and June 28, 2021:

Quarter Ended

April 4, 2022

March 29, 2021

Two Quarters Ended

June 28, 2021

(In thousands, except per share amounts)

Net income (loss)

Basic weighted average shares

3 unchanged sentences

Diluted shares

Earnings (loss) per share:

Performance-based restricted stock units (PRUs), restricted stock units (RSUs), and stock options to purchase 975 shares of common stock for the quarter ended April 4, 2022 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 April 4, 2022, 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, as a result, the impact would be anti-dilutive.

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 RSUs, and 289 PRUs were not included in the computation of diluted earnings per share because the Company incurred a net loss during that quarter and as a result, the impact would be anti-dilutive.

Outstanding warrants for the quarter ended March 29, 2021 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 during that quarter, and therefore, the effect would be anti-dilutive.

Earnings per share:

Performance-based restricted stock units (PRUs), restricted stock units (RSUs), and stock options to purchase 1,054 and 1,014 shares of common stock for the quarter and two quarters ended July 4, 2022, respectively, and 1,452 and 802 shares of common stock for the quarter and two quarters ended June 28, 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 July 4, 2022 and June 28, 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 two quarters and, as a result, the impact would be anti-dilutive.

(16) Stock-Based Compensation

1 unchanged sentence

Quarter Ended

Two Quarters Ended

(In thousands)

5 unchanged sentences

Summary of Unrecognized Compensation Costs

The following is a summary of total unrecognized compensation costs as of April 4, 2022:

The following is a summary of total unrecognized compensation costs as of July 4, 2022:

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.

On June 27, 2022, the Company completed its acquisition of Telephonics.

As of July 4, 2022, the chief operating decision maker is still in the process of determining how to allocate resources and assess performance in relation to the acquisition of Telephonics.

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

April 4, 2022

March 29, 2021

Two Quarters Ended

June 28, 2021

(In thousands)

8 unchanged sentences

Total other expense

Income (loss) before income taxes

April 4, 2022

Income before income taxes

January 3, 2022

4 unchanged sentences

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

As of July 4, 2022, Other includes assets acquired from the acquisition of Telephonics.

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

For both the quarters ended April 4, 2022 and March 29, 2021, $ 1,384 of amortization expense is included in cost of goods sold.

For the quarter and two quarters ended July 4, 2022, $1,383 and $2,767, respectively, of amortization expense is included in cost of goods sold.

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.

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

4 unchanged sentences

Quarter Ended

April 4, 2022

March 29, 2021

Two Quarters Ended

June 28, 2021

(In thousands)

2 unchanged sentences

Net sales are attributed to countries by country invoiced.

(18) Subsequent Events

On April 18, 2022 , the Company entered into a definitive share purchase agreement to purchase all of the issued and outstanding capital stock of Telephonics Corporation and ISC Farmingdale Corp.

for an aggregate purchase price of $ 330,000 in cash, subject to customary working capital and certain other adjustments.

The transaction is expected to close in the second quarter of 2022.

(18) Share Repurchase Program

On February 3, 2021, the Company’s Board of Directors authorized and approved a share repurchase program.

Under the program, the Company was authorized to repurchase up to $ 100,000 in value of the Company’s outstanding shares of common stock from time to time through February 3, 2023 .

The program permitted the Company to repurchase shares through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) which sets certain restrictions on the method, timing, price, and volume of open market stock repurchases.

In addition, the Company adopted a trading plan, which may be amended from time to time, in accordance with Rule 10b5-1 of the Exchange Act to facilitate certain purchases effected under the share repurchase program.

The timing, manner, price, and amount of any repurchases were determined at the Company’s discretion.

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

During the quarter ended July 4, 2022, the Company repurchased 374 shares of common stock for a total cost of $ 5,192 (including commissions) and during the two quarters ended July 4, 2022, the Company has repurchased a total of 2,747 shares of common stock for a total cost of $ 35,424 (including commissions).

As of July 4, 2022, there are no amounts available for repurchase.

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