2 0 1 5 A N N U A L R E P O R T
GLOBAL PRESENCE
LOCAL KNOWL EDG E
LETTER TO OUR SHAREHOLDERS
DEAR SHAREHOLDERS,
Our strategic mission for the past several years has called for
“industry leading growth and profitability.” On May 31, 2015 we
took another critical step toward that goal with the acquisition
of Viasystems, adding Viasystems’ strength in the Automotive
market to our portfolio and building on our already leading
positions in the Networking/Communications, Aerospace and
Defense, and Cellular Phone end markets.
The process of integrating the two companies is now well
under way. We spent the first several months completing our
organizational planning, making key management decisions, and
beginning to deliver on our promised corporate and operational
synergies by eliminating duplicative headquarters costs and
closing plants in Milpitas, Cleveland, and Juarez. By the end of
2015 we had announced or implemented 80% of our committed
first year synergies of at least $55 million.
In January of 2016, we adopted a global business unit structure
which aligns our business units with our customers end markets.
Going forward, TTM’s customer facing business units will
be managed by an executive team that represents the best of
both companies, including the presidents of our four new
business units: Doug Soder, President of Communications and
Computing; Jon Pereira, President of Automotive, Medical,
Industrial and Instrumentation; Phil Titterton, President of
Aerospace and Defense; and Tony Princiotta, President of E-M
Solutions. Corporate functions that serve all the business units
will be led by Todd Scull, CFO; Brian Barber, COO; Kent
Hardwick, Sales; Dale Knecht, IT; Dan Weber, Legal, and Shawn
Powers, HR. This “best of the best” approach extends throughout
the organization and the combination of legacy TTM and
legacy Viasystems talent will create tremendous operational and
technical depth for our company.
Completion of the Viasystems acquisition represents a significant
step toward achieving the three pillars of the strategy we outlined
in 2015:
• To continue to diversify our business and attain leadership
positions in the markets we serve while building on our
advanced technology capabilities. On a pro forma basis after the
acquisition, each of our markets now represents less than 25% of
our revenue and we have six markets each of which is at least 10%
of our business. We are also working to introduce our advanced
technologies into more traditional markets that are increasingly
adopting compact package sizes with high information content
requirements.
• To leverage the acquisition to realize growth opportunities
in the Automotive market. The Automotive PCB market is
projected to grow to over $8 billion by 2020 and selecting the right
technologies within this market will be key to achieving our goal
of outpacing the industry’s overall projected growth rate of 6-8%.
Since the acquisition of Viasystems we have made tangible progress
by signing strategic supply agreements with several major OEMs,
thereby setting the framework for growth as a supply partner; by
introducing our HDI capabilities for cameras and infotainment
to four major customers who are now in varying stages of
qualification; and by launching four new radar programs at our
facility in Guangzhou. These steps are essential for us to build on
our 2015 growth rate of 10% as we carry momentum into 2016
and beyond.
• To continue our drive towards operational excellence.
During 2015, we announced changes to our manufacturing
footprint that will reduce our worldwide manufacturing facilities
to 25 from 28 in order to improve our overall plant utilization,
our profitability, and our customer focus. Effective January 1st
of this year, we also adopted a new global operating model with
four customer facing business units. This new structure is market-
focused and aligns our advanced technologies and application-
specific expertise to bolster our competitive strength across
our footprint. We believe these changes will better support our
customer’s businesses and optimize our position for today’s macro
environment. This in turn will give us the capacity to increase
production as demand dynamics change over time. Finally, we will
continue to share best practices across our global footprint with an
emphasis on cost and quality initiatives.
With these strategic initiatives, coupled with our previously-
announced synergies commitment, we will be able to generate
sufficient cash flow to deleverage our balance sheet by paying
down our debt. We have already demonstrated our progress on
this front by repaying $74.1 million of principal on our term
loan in March of 2016, fueled by the $183 million in adjusted
EBITDA generated by the combined company in the last two
quarters of 2015.
2015 RESULTS
Our financial results benefitted from the addition of Viasystems
in June of 2015, coupled with a strong year for sales to our
customers in the cellular phone, automotive, and aerospace and
defense end markets.
Net sales for fiscal year 2015 increased to $2.1 billion compared to
$1.3 billion in fiscal year 2014. Non-GAAP net income for 2015
was $81.1 million compared to $39.3 million in 2014. Adjusted
EBITDA for fiscal year 2015 was $285.7 million, or 13.6 percent
of net sales, compared to $166.0 million, or 12.5 percent of net
sales, for fiscal year 2014.
Diversity in our end markets paid off for TTM in 2015, as we
realized the benefit of growth in the automotive, cellular phone,
and aerospace and defense end markets against a backdrop of an
increasingly challenging economic environment particularly in
China.
On a pro forma basis, our largest end market Networking/
Communications represented 22% of revenue for the year
and declined 14%. This market was particularly affected by
soft demand from the telecommunications market as the 4G
infrastructure build out in China slowed beginning in the spring
of 2015. We expect early 2016 to offer better prospects as China
telecommunications service provider auctions picked up pace in
November and December of 2015. At TTM, we continue to focus
on the benefits of our global footprint in servicing this market
with our Chippewa Falls, Wisconsin based engineering and
new product development capability coupled with our volume
manufacturing footprint in China.
With the acquisition of Viasystems, the automotive market is
now our second largest market representing 18% of pro forma
revenue in 2015. Our revenues in this market grew by 10% in
2015, primarily due to growth from our legacy Viasystems
manufacturing plants. With the addition of TTM’s advanced
technology capabilities, we expect sales to our automotive end
market to continue to serve as a growth engine.
The cellular phone market accounted for 17% of pro forma
revenues in 2015, growing by 43% from 2014. This remarkable
growth rate stemmed largely from end market strength, but also
reflects a successful, high quality production ramp by TTM’s
legacy Asia Pacific production facilities. While we anticipate
softer demand in the first half of 2016, we expect to once again
leverage our ramping capabilities and capacity in the second half
of the year with the onset of new product introductions.
Aerospace and Defense market dynamics continued to provide
positive momentum for us in 2015 as we grew pro forma revenues
by 4%, to a level representing 14% of pro forma revenue. At the end
of the year we had approximately $185 million in total program
backlog compared to $140 million at the end of 2014, reflecting
a positive budget climate in Washington D.C. and the resultant
funding of critical programs in which we participate.
Finally, the Medical, Industrial and Instrumentation end market
declined by 7% on a pro forma basis and represented 14% of 2015
revenues. The Industrial side of this business was negatively
impacted in 2015, largely due to the dramatic decline in oil and
gas related revenues and further impacted by in-sourcing of a large
wind power system by one of our customers. We expect a return
to a moderate level of growth for this market in 2016, particularly
as industrial demand begins to recover.
We maintained a solid balance sheet, with cash and cash equivalents
at the end of 2015 totaling $259 million. We increased our cash
flow from operations during 2015, generating $282 million in
total adjusted operating cash flow for the year compared to $133
million in 2014.1
2016 OUTLOOK
Entering 2016, we are enthusiastic about the opportunities to grow
our business. While macroeconomic conditions are uncertain, we
believe that our diverse end market exposure, broad technology
capabilities, and ability to support our customers throughout their
product lifecycle will carry us through the challenges in any given
market. We have significantly expanded our total serviceable
market through the Viasystems acquisition and materially reduced
our exposure to the risks associated with the highly volatile
consumer electronic product markets.
We are also tremendously excited about the management and
technical depth of talent in the company after the Viasystems
acquisition. This wealth of talent will enable us to better service
our customers around the globe and to respond to the inevitable
ever-changing market conditions they and we will face.
Lastly, our combined global footprint gives us the unparalleled
capability to leverage our resources to address our customers’
global needs, from early product design to prototyping to volume
production.
While 2015 certainly represented a transformative year for
TTM, our unwavering commitment to our core values of being
customer-driven, profit-focused, cost-disciplined and growth-
oriented remain constant. We have a talented team of nearly
30,000 employees around the globe to serve our customers from
25 manufacturing sites. We would like to thank our employees
for their hard work and dedication this past year. We also greatly
appreciate our shareholders, customers and suppliers for their
ongoing commitment, loyalty and support.
Thomas T. Edman
Robert E. Klatell
President and Chief Executive Officer
Chairman of the Board
1Adjusted cash flow from operations adds back to cash flow from operations disbursements associated with the repurchase
of our 2015 convertible notes and acquisition related costs of $3.4 million in 2014 and $44.9 million in 2015.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 2015
Commission file number 0-31285
TTM TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
1665 Scenic Avenue Suite 250,
Costa Mesa, California
(Address of Principal Executive Offices)
91-1033443
(I.R.S. Employer
Identification No.)
92626
(Zip Code)
(714) 327-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value
Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ‘ No Í
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act. Yes ‘ No Í
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
the past 90
days. Yes Í No ‘
to such filing requirements for
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes ‘ No Í
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Í
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í
Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant
Act). Yes ‘ No Í
is a shell company (as defined in Rule 12b-2 of the
The aggregate market value of Common Stock held by non-affiliates of the registrant (based on the closing price
of the registrant’s Common Stock as reported on the Nasdaq Global Select Market on June 29, 2015, the last business
day of the most recently completed second fiscal quarter), was $708,483,813 . For purposes of this computation, all
officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates of the registrant. Such
determination should not be deemed to be an admission that such officers, directors, or 10% beneficial owners are, in
fact, affiliates of the registrant.
As of February 18, 2016, there were outstanding 99,431,192 shares of the registrant’s Common Stock, $0.001 par
value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for its 2016 Annual Meeting of Stockholders are
incorporated by reference into Part III of this report. Such Proxy Statement will be filed with the Securities and
Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
TTM TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2.
ITEM 3.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
ITEM 9.
AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . .
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
ITEM 14.
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
15
35
36
37
37
37
39
41
54
56
57
57
58
58
58
58
58
58
59
65
66
2
PART I
Statement Regarding Forward-Looking Statements
This report on Form 10-K contains forward-looking statements regarding future events or our future
financial and operational performance. Forward-looking statements include statements regarding markets for
our products; trends in net sales, gross profits and estimated expense levels; liquidity and anticipated cash needs
and availability; and any statement that contains the words “anticipate,” “believe,” “plan,” “forecast,”
“foresee,” “estimate,” “project,” “expect,” “seek,” “target,” “intend,” “goal” and other similar expressions.
The forward-looking statements included in this report reflect our current expectations and beliefs, and we do
not undertake publicly to update or revise these statements, even if experience or future changes make it clear
that any projected results expressed in this annual report or future quarterly reports to stockholders, press
releases or company statements will not be realized. In addition, the inclusion of any statement in this report
does not constitute an admission by us that the events or circumstances described in such statement are material.
Furthermore, we wish to caution and advise readers that these statements are based on assumptions that may not
materialize and may involve risks and uncertainties, many of which are beyond our control that could cause
actual events or performance to differ materially from those contained or implied in these forward-looking
statements. These risks and uncertainties include the business and economic risks described in “Item 1A — Risk
Factors”.
Unless otherwise indicated or unless the context requires otherwise, all references in this document to
“TTM,” “our company,” “we,” “us,” “our,” and similar names refer to TTM Technologies, Inc. and its
subsidiaries.
ITEM 1. BUSINESS
General
We are a leading global printed circuit board (PCB) manufacturer,
focusing on quick-turn and
technologically advanced PCBs and electro-mechanical solutions (E-M Solutions). We are the largest PCB
manufacturer in North America and one of the largest PCB manufacturers in the world, in each case based on
revenue, according to the 2014 rankings from N.T. Information LTD (NTI). In 2015 we generated $2.1 billion in
net sales and ended the year with approximately 29,570 employees worldwide. We operate a total of 28
specialized facilities in the United States, the People’s Republic of China (China), Canada and Mexico. We focus
on providing time-to-market and advanced technology products and offer a one-stop manufacturing solution to
our customers from engineering support to prototype development through final volume production. This one-
stop manufacturing solution allows us to align technology development with the diverse needs of our customers
and to enable them to reduce the time required to develop new products and bring them to market. We serve a
diversified customer base consisting of approximately 1,500 customers in various markets over a wide range of
end products throughout the world, including networking/communications infrastructure equipment, mobile
devices such as smartphones, tablets and ultra notebooks, aerospace and defense systems, automotive controls
and information systems, high-end computing, and medical, industrial and instrumentation related products. Our
customers include both original equipment manufacturers (OEMs) and electronic manufacturing services (EMS)
providers.
As a result of our acquisition of Viasystems Group, Inc., we now manage our worldwide operations based
on two reportable operating segments: (1) PCB, which consists of 15 domestic PCB fabrication plants, including
a facility that provides follow-on value-added services primarily for one of the PCB fabrication plants; eight PCB
fabrication plants in China and one in Canada, and (2) E-M Solutions, which consists of four custom electronic
assembly plants; three in China and one in Mexico. Each segment operates predominantly in the same industry
with production facilities that produce customized products for our customers and use similar means of product
distribution. See Note 19 of the Notes to Consolidated Financial Statements.
As part of our integration strategy to improve total plant utilization, operational performance and customer
focus following our recent acquisition of Viasystems Group, Inc., two domestic PCB fabrication plants and the
custom electronic assembly plant in Mexico are scheduled to close during the first half of 2016.
3
Acquisition of Viasystems Group, Inc.
On May 31, 2015, we completed the acquisition of Viasystems Group, Inc. (Viasystems), for total
consideration of $248.8 million in cash and 15.1 million shares of TTM common stock with a fair value of
$149.0 million, to acquire all of the outstanding shares of capital stock and other equity rights of Viasystems.
Additionally, in connection with the completion of the acquisition, we assumed and refinanced Viasystems’ debt,
which was approximately $669.0 million as of May 31, 2015. Viasystems was a worldwide provider of complex
multi-layer rigid, flexible, and rigid-flex PCBs and custom electronic assemblies. Viasystems’ products were
found in a wide variety of commercial products, including automotive engine controls, hybrid converters,
automotive electronics for navigation, safety, and entertainment, telecommunications switching equipment, data
networking equipment, computer storage equipment, semiconductor test equipment, wind and solar energy
applications, off-shore drilling equipment, communications applications, flight control systems, and complex
industrial, medical, and other technical instruments. Viasystems’ E-M Solutions services were bundled with its
PCB products to provide an integrated solution to customers. Viasystems operated 15 manufacturing facilities
worldwide: eight in the United States, five in the People’s Republic of China (China), and one each in Canada
and Mexico. Viasystems served a diversified customer base of over 1,000 customers in various markets
throughout the world.
Industry Overview
PCBs are manufactured in panels from sheets of laminated material. Each panel is typically subdivided into
multiple PCBs, each consisting of a pattern of electrical circuitry etched from copper to provide an electrical
connection between the components mounted to it. PCBs serve as the foundation for virtually all electronic
products, ranging from consumer electronics products (such as cameras, smartphones, and tablets) to high-end
commercial electronic equipment (such as medical instruments, data communications equipment and servers)
and aerospace and defense electronic systems.
In recent years, the demand for smaller sized electronic devices with more features and functionality has
been increasing. Products designed to offer faster data transmission, thinner and more lightweight packaging, and
reduced power consumption generally require increasingly complex PCBs to meet these criteria. By using High
Density Interconnect (HDI) technology, circuit densities can be increased, thereby providing for smaller products
with higher packaging densities. Furthermore, flexible circuits technology, which includes flexible circuits, rigid-
flex circuits, and flex assemblies, and substrate PCBs, can be found in small and lightweight mobile devices,
such as smartphones, tablets and ultra notebooks and also increasingly are used in other end markets such as
automotive, medical, and aerospace and defense. We collectively refer to these new technologies as “advanced
technologies,” and they have growth rates that are typically higher than other PCB products that we refer to as
“conventional technologies”.
According to estimates in a November 2015 report by Prismark Partners LLC (Prismark Partners),
worldwide demand for PCBs was approximately $56.4 billion in 2015, and worldwide PCB revenue is expected
to increase at a rate of 2.0% in 2016. Of the worldwide demand for production in 2015, the Americas accounted
for approximately 5% (approximately $3 billion), China accounted for approximately 47% (approximately $26.2
billion), and the rest of the world accounted for approximately 48% (approximately $27.3 billion), according to
estimates by Prismark Partners. While Prismark Partners expects long-term growth to occur in all PCB
technologies, they forecast more robust growth in the HDI, flexible and rigid-flex segments. This growth
expectation stems from the increase in the number of applications that can utilize, and in many cases require,
smaller, denser interconnects.
The PCB manufacturing business is highly fragmented. According to a 2015 report by NTI, a PCB industry
research firm, there were approximately 2,400 PCB manufacturers worldwide at the end of the first half of 2015,
with the top 20 companies representing approximately 45% of the global market (by revenue) in 2014. As a
result of global economic trends, the number of PCB producers operating in China has increased significantly
since 2000. This corresponds with a significant decline in the number of North American and European PCB
producers during the same time period.
4
Industry Trends
We believe that several trends are impacting the PCB manufacturing industry. These trends include:
Shorter electronic product life cycles. Rapid advances in technology have shortened the life cycles of
complex commercial electronic products, placing greater pressure on OEMs to quickly bring new products to
market. The accelerated time-to-market and ramp-to-volume needs of OEMs for high-end commercial equipment
create opportunities for PCB manufacturers that can offer engineering support in the prototype stage and
manufacturing scalability throughout the production life cycle.
Increasing complexity of electronic products. OEMs continue to design higher performance electronic
products which take advantage of advances in semiconductor technology. In turn, this requires technologically
complex PCBs that can accommodate higher speeds and component densities, often found in HDI, flexible, and
substrate PCBs. These complex PCBs can also require very high layer counts, miniaturized circuit connections,
advanced manufacturing processes and materials, and high-mix production capabilities, which involve
processing small lots in a flexible manufacturing environment.
Increasing concentration of global PCB production in Asia.
In recent years, many electronics
manufacturers have moved their commercial production to Asia to take advantage of its large and relatively
lower cost labor pool and well-developed electronics infrastructure. In particular, the trend has favored China,
which was expected to be the largest PCB market in terms of revenue in 2015 according to NTI. China has
emerged as a global production center for cellular phones, smartphones, tablets, computers and computer
peripherals, and high-end consumer electronics. According to Prismark Partners, approximately 91% of the
world’s PCB production for 2015 was estimated to come from Asia, in part due to proximity to the region’s
expansive electronic manufacturing operations. We believe that
the expected continued concentration of
consumer electronic production in China should result in additional commercial market share potential for PCB
manufacturers with a strong presence and reputation in China.
Decreased reliance on multiple PCB manufacturers by commercial OEMs. Commercial OEMs
traditionally have relied on multiple PCB manufacturers to provide different services as an electronic product
progresses through its life cycle. The physical transfer of a product among different PCB manufacturers often
results in increased costs and inefficiencies due to potentially incompatible technologies and manufacturing
processes, which results in production delays. In addition, commercial OEMs generally find it easier and less
costly to manage fewer PCB manufacturers. As a result, commercial OEM and EMS providers often reduce the
number of PCB manufacturers and providers on which they rely, presenting an opportunity for those that can
offer one-stop manufacturing capabilities — from prototype to volume production.
Our Strategy
Our goal is to be the leading global provider of time-critical, one-stop manufacturing services for highly
complex PCBs. Our core strategy includes the following elements:
Maintain our customer-driven culture and provide superior service to our customers in our core markets
of networking communications, automotive, mobile devices, aerospace and defense and medical, industrial
and instrumentation. Our customer-oriented culture is designed to achieve extraordinary service, competitive
differentiation, and superior execution. Our customer-oriented strategies include engaging in co-development of
new products, capturing new technology products for next generation equipment, and continuing to invest in and
enhance our broad offering of PCB technologies. Our ability to anticipate and meet customers’ needs is critical to
retaining existing customers and attracting leading companies as new customers.
Drive operational efficiency and productivity. We are constantly focused on improving our operational
execution to increase efficiency, productivity and yields. We strongly believe in the benefits of sharing best
practices across our extensive manufacturing footprint and rely on stringent goals for throughput, quality and
customer satisfaction to measure our effectiveness. The fast paced nature of our business requires a disciplined
approach to manufacturing that is rooted in continuous improvement.
Accelerate customer and end market diversification through strategic mergers and acquisitions.
TTM
has a history of successful acquisitions that have been key to our growth and profitability. We continuously look
5
for strategic opportunities that could facilitate our efforts to diversify into other growing end markets including
automotive and medical/industrial/instrumentation end markets. Our recent acquisition of Viasystems which has
increased our diversification into automotive and medical/industrial/instrumentation end markets demonstrates
our commitment to this strategy.
Accelerate our expansion into the automotive and other growing markets using our advanced technology
position to differentiate our operations. With rising requirements for faster data transmission, shrinking
features (i.e., lightweight and thin), and lower power consumption, many PCB designs have migrated to more
complex HDI PCBs from conventional multi-layer PCB technologies. This trend began with PCBs used in
portable devices such as smartphones and tablets, but has become an increasing trend in other end markets, such
as automotive, networking/communications, industrial, and aerospace and defense. We are focused in particular
on the automotive opportunity where the Viasystems acquisition brings us strong market access to major
automotive OEM part suppliers. The combination of the strength of Viasystems in highly reliable conventional
PCBs and TTM’s advanced technology PCBs meet our automotive customers’ growing demand in such areas as
infotainment, radar systems for sensors, cameras for advanced driver assistance systems (ADAS) and electric
vehicles. As our customers consolidate their supply chain, our objective is to emerge as a supplier with the
technology breadth to meet most or all of our automotive customers PCB requirements.
Address customer needs in all stages of the product life cycle. By providing a one-stop solution, we work
to service our customers’ needs from the earliest stages of product development through volume production. We
believe that by servicing our customers early in the development process, we are able to demonstrate our
capabilities and establish an incumbent position early in the product development cycle, which translates into
additional opportunities as our customers move into volume production. Our expertise is enhanced by our ability
to deliver highly complex PCBs to customers in significantly compressed lead times. This rapid delivery service
enables OEMs to develop sophisticated electronic products more quickly and reduce their time to market.
Deliver strong financial performance and delever the balance sheet. Our strategy is to be a company that
delivers industry-leading financial performance. We expect to achieve this by servicing our customers’ needs in
higher-growth end markets — meeting their product needs in a cost-efficient and effective manner. We believe
that this strategy will allow us to generate strong cash flows which will enable us to reduce financial leverage
while at the same time providing us with the financial flexibility to continue to invest in our business.
Products and Services
We offer a wide range of PCB products and electro-mechanical solutions,
including HDI PCBs,
conventional PCBs, flexible PCBs, rigid-flex PCBs, custom assemblies, and IC substrates. We also offer certain
value-added services to support our customers’ needs. These include design for manufacturability (DFM), PCB
layout design, simulation and testing services, and quick turnaround (QTA) services. By providing these value-
added services to customers, we are able to provide our customers with a “one-stop” manufacturing solution,
which enhances our relationships with our customers.
Conventional PCBs
A conventional PCB is made from a composite laminate that is metalized with a conductive material such as
copper. The PCB becomes an electrical circuit when electronic components are attached to it. It is the basic
platform used to interconnect components in most electronic products including computers, communications
equipment, cellular phones, high-end consumer electronics, automotive controls and medical and industrial
equipment. Conventional PCBs can be classified as single-sided, double-sided and multi-layer boards.
We focus on high layer count conventional PCBs. A multi-layer PCB can accommodate more complex
circuitry than a single-sided or double-sided PCB and as such requires more sophisticated production techniques.
The number of layers comprising a PCB often increases with the complexity of the end product. For example, a
simple consumer device such as a garage door controller may use a single-sided or double-sided PCB, while a
high-end network router or computer server may use a PCB with 30 layers or more.
6
High density interconnect or HDI PCBs
Our facilities in North America and Asia Pacific can produce HDI PCBs, which are PCBs with higher
interconnect density per unit area requiring more sophisticated technology and manufacturing processes for their
production than conventional PCB products. HDI PCBs are boards with high-density characteristics including
micro-sized holes, or microvias (diameter at or less than 0.15 mm), and may also include fine lines (circuit line
width and spacing at or less than 0.075 mm) and fabricated with thin high performance materials, thereby
enabling more interconnection functions per unit area. HDI PCBs generally are manufactured using a sequential
build-up process in which circuitry is formed in the PCB one layer at a time through successive drilling, plating
and lamination cycles. In general, a board’s complexity is a function of interconnect and circuit density, layer
count, laminate material type and surface finishes. As electronic devices have become smaller and more portable
with higher functionality, demand for advanced HDI PCB products has increased dramatically. We define
advanced HDI PCBs as those having more than one layer of microvia interconnection structure.
Flexible PCBs
Flexible PCBs are printed circuits produced on flexible films, allowing them to be folded or bent to fit the
available space or allow relative movement. We manufacture circuits on flexible substrates that can be installed
in three-dimensional applications for electronic packaging systems. Use of flexible circuitry can enable improved
reliability, improved electrical performance, reduced weight and reduced assembly costs when compared with
traditional wire harness or ribbon cable packaging. Flexible PCBs can provide flexible electronic connectivity of
an electrical device’s apparatus such as printer heads, cameras, camcorders, TVs, mobile handsets, and tablets.
For some of our flexible PCB customers we also assemble components onto the flexible PCBs we manufacture.
Rigid-flex PCBs
Rigid-flex circuitry provides a simple means to integrate multiple PCB assemblies and other elements such
as display,
input or storage devices without wires, cables or connectors, replacing them with thin, light
composites that integrate wiring in ultra-thin, flexible ribbons between rigid sections. In rigid-flex packaging, a
flexible circuit substrate provides a backbone of wiring with rigid multilayer circuit sections built up as modules
where needed.
Since the ribbons can be bent or folded, rigid-flex provides a means to compactly package electronics in
three dimensions with dynamic or static bending functions as required, enabling miniaturization and thinness of
product design. The simplicity of rigid-flex integration also generally reduces the number of parts required,
which can improve reliability. The increasing popularity of mobile electronics coupled with the design trend of
developing increasingly thinner, lighter and more feature-rich products is expected to further drive growth in the
rigid-flex and flex sector, where these PCBs are the backbone of miniaturization.
Rigid-flex technology is essential to a broad range of applications including aerospace, industrial and
transportation systems requiring high reliability; hand-held and wearable electronics such as mobile phones,
video cameras and music players where thinness and mechanical articulation are essential; and ultra-miniaturized
products such as headsets, medical
implants and semiconductor packaging where size and reliability are
paramount.
Custom assemblies & system integration
Our assembly facilities produce custom electronic assemblies as well as fully integrated electronic systems.
Custom electronic assemblies refer to a variety of PCB assemblies such as backplane and midplane assemblies,
flexible and rigid-flex assemblies and RF assemblies. Each of these assemblies involves mounting electronic
components to a printed circuit board and then testing the assembly for electrical continuity. Our services also go
beyond the PCB assembly to fully integrated systems. A fully integrated system often includes installing the PCB
assembly into a metal enclosure and adding fans for cooling the system, a power supply and cable assemblies to
create a fully assembled and tested system that will be shipped to our customers.
7
IC substrates
IC substrates provide mechanical support and electrical interconnect for very small ICs (integrated circuits
or semiconductors) and up to comparatively larger PCBs for assembly into electronic end products such as
memory modules, cellular phones, digital cameras, automotive GPS and engine controls. IC substrates, also
known as chip carriers, are highly miniaturized circuits manufactured by a process largely similar to that for
PCBs but requiring the use of ultra-thin materials and including micron-scale features, because they must bridge
the gap between sub-micron IC features and millimeter scale PCBs. Consequently, IC substrates are generally
manufactured in a semiconductor-grade clean room environment to ensure products are free of defects and
contamination.
IC substrates are a basic component of IC packages which, combined with other electronic components in
an assembly, control functions of an electronic appliance. IC packages can be broadly divided into single chip
modules (or SCMs) and multi-chip modules (or MCMs), with the former containing one IC chip, and the latter
containing multiple chips and other electronic components.
Quick turnaround services
We refer to our rapid delivery services as “quick turnaround” or “QTA”, because we provide custom-
fabricated PCBs to our customers within as little as 24 hours to ten days. As a result of our ability to rapidly and
reliably respond to the critical time requirements of our customers, we generally receive premium pricing for our
QTA services as compared to standard lead time prices.
• Prototype production.
In the design, testing, and launch phase of a new electronic product’s life cycle,
our customers typically require limited quantities of PCBs in a very short period of time. We satisfy this
need by manufacturing prototype PCBs in small quantities, with delivery times ranging from as little as 24
hours to ten days.
• Ramp-to-volume production. After a product has successfully completed the prototype phase, our
customers introduce the product to the market and require larger quantities of PCBs in a short period of
time. This transition stage between low-volume prototype production and volume production is known as
ramp-to-volume. Our ramp-to-volume services typically include manufacturing up to a few hundred PCBs
per order with delivery times ranging from five to 15 days.
RF and microwave circuits
We produce and test specialized circuits used in radio-frequency or microwave emission and collection
applications. These products are typically used for radar,
transmit/receive antennas and similar wireless
applications. Markets for these products include automotive, defense, avionics, satellite, and commercial
applications. The manufacture of these products requires advanced materials, equipment, and methods that are
highly specialized and distinct from conventional printed circuit manufacturing techniques. We also offer
specialized radio-frequency assembly and test services.
Thermal management
Increased component density on circuit boards often requires improved thermal dissipation to reduce
operating temperatures. We produce printed circuits with heavy copper cores and both embedded and press-fit
coins. In addition, we produce printed circuit boards with electrically passive heat sinks laminated externally on a
circuit board or between two circuit boards, as well as printed circuit boards with electrically active thermal
cores.
Manufacturing Technologies
The market for our products is characterized by rapidly evolving technology. In recent years, the trend in the
electronic products industry has been to increase the speed, complexity, and performance of components while
reducing their size. We believe our technological capabilities allow us to address the needs of manufacturers to
bring complicated electronic products to market faster.
8
To manufacture PCBs, we generally receive circuit designs directly from our customers in the form of
computer data files, which we review to ensure data accuracy and product manufacturability. Processing these
computer files with computer aided manufacturing (CAM) technology, we generate images of the circuit patterns
that we then physically develop on individual layers, using advanced photographic processes. Through a variety
of plating and etching processes, we selectively add and remove conductive materials to form horizontal layers of
thin circuitry, which are separated by electrical insulating material. A multilayer circuit board is produced by
laminating together multiple layers of circuitry, using intense heat and pressure under vacuum. Vertical
connections between layers are achieved by drilling and plating through small holes, called vias. Vias are made
by highly specialized drilling equipment capable of achieving extremely fine tolerances with high accuracy. We
specialize in high layer count PCBs with extremely fine geometries and tolerances. Because of the tolerances
involved, we employ clean rooms in certain manufacturing processes where tiny particles might otherwise create
defects on the circuit patterns. We also use automated optical inspection systems and electrical testing systems to
ensure consistent quality of the circuits we produce.
We believe that our highly specialized equipment and advanced manufacturing processes enable us to
reliably produce PCBs with the following characteristics:
• High layer count. Manufacturing PCBs with a large number of layers is difficult to accomplish due to
the accumulation of manufacturing tolerances and registration systems required. In our PCB operating
segment, we regularly manufacture PCBs with more than 30 layers on a quick-turn and volume basis.
Approximately 13% of our 2015 PCB net sales involved the manufacture of PCBs with at least 18 layers
or more, compared to 16% in 2014.
• Blind and buried vias. Vias are drilled holes that provide electrical connectivity between layers of
circuitry in a PCB. Blind vias connect the surface layer of the PCB to an internal layer and terminate at the
internal layer. Buried vias are holes that do not reach either surface of the PCB but allow inner layers to be
interconnected. Products with blind and buried vias can be made thinner, smaller, lighter and with higher
component density and more functionality than products with traditional vias.
• Microvias. HDI technology utilizes microvias, which are small vias with diameters generally less than
0.005 inches after plating. Advanced HDI products may also require the microvias to be fully filled using
a specialized plating process so that additional microvia structures can be stacked on top to form more
complex interconnections. These microvias consume much less space on the layers they interconnect,
thereby providing for greater wiring densities and flexibility, and also providing closer spacing of
components and their attachment pads. The fabrication of PCBs with microvias requires specialized
equipment, such as laser drills, and highly developed process knowledge. Applications such as handheld
wireless devices employ microvias to obtain a higher degree of functionality from a given surface area.
• Embedded passives. Embedded passive technology involves embedding either the capacitive or resistive
elements inside the PCB, which allows for removal of passive components from the surface of the PCB
and thereby leaves more surface area for active components. Use of this technology provides greater
surface area for surface-mounted ICs and better signal performance, as well as increased functionality of
products with higher component density.
• Fine line traces and spaces. Traces are the connecting copper lines between the different components of
the PCB, and spaces are the distances between traces. The smaller the traces and the tighter the spaces, the
higher the density on the PCB and the greater the expertise required to achieve a desired final yield on an
order. We are able to manufacture PCBs with traces and spaces less than 0.002 inches.
• High aspect ratios. The aspect ratio is the ratio between the thickness of the PCB and the diameter of a
drilled hole. As the aspect ratio increases, it becomes difficult to reliably form, electroplate and finish all
the holes on a PCB. In production, we are able to provide aspect ratios of up to 30:1.
• Thin core processing. A core is the basic inner-layer building block material from which PCBs are
constructed. A core consists of a flat sheet of material comprised of glass-reinforced resin with copper foil
laminated on either side. The thickness of inner-layer cores is typically determined by the overall
thickness of the PCB and the number of layers required. The demand for thinner cores derives from the
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requirements for thinner PCBs, higher layer counts and various electrical parameters. Core thickness in
our PCBs ranges from as little as 0.002 inches up to 0.062 inches.
• Advanced hole fill process. Our advanced hole fill processes provide designers the opportunity to
increase the density of component placements by reducing the surface area required to place many types
of components. In traditional design, components are routed from their surface interfaces through via
connections in order to access power and ground connections and the internal circuitry used to connect to
other discrete components. Our advanced hole fill processes provide methods to allow for vias to be
placed inside their respective surface mount pads by filling the vias with a thermoset epoxy and plating
flat copper surface mount pads directly over the filled hole.
• Advanced materials. We manufacture circuit boards using a wide variety of advanced dielectric
materials. These high-performance materials offer electrical, thermal, and long-term reliability advantages
over conventional materials but are more difficult to manufacture. We are certified by Underwriters
Laboratories to manufacture PCBs using many types and combinations of these specialty materials. This
wide offering allows us to manufacture complex boards for niche and high-end commercial and aerospace
and defense markets.
Customers and Markets
Our customers
include both OEMs and EMS companies
that primarily serve the networking/
communications, cellular phone, computing, aerospace and defense, and medical/industrial/instrumentation end
markets of the electronics industry. Included in the end markets that our OEM and EMS customers serve is the
U.S. government. As a result, we are a supplier, primarily as a subcontractor, to the U.S. government.
The following table shows the percentage of our net sales in each of the principal end markets we served for
the periods indicated:
End Markets(1)(2)
Aerospace and Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cellular Phone(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computing/Storage/Peripherals(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medical/Industrial/Instrumentation/Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Networking/Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
2013
14% 16% 15%
2
13
23
21
13
12
10
13
33
25
3
2
2
20
20
8
32
3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100% 100% 100%
(1) Sales to EMS companies are classified by the end markets of their OEM customers.
(2) Certain reclassifications of prior year end market percentages have been made to conform to the current year
presentation. Beginning 2015, Automotive has been reclassified from the Other end market. Additionally,
beginning in the first quarter of 2013, we reclassified substrate PCBs, which were included in the Other end
market, into the end markets that the substrate PCBs are sold into — predominantly Cellular Phone.
(3) Smartphones are included in the Cellular Phone end market, tablets are included in the Computing/Storage/
Peripherals end market and other mobile devices such as e-readers are included in the Other end market.
(4) Amounts include 211 days of activity of Viasystems, which we acquired on May 31, 2015.
Sales attributable to our five largest OEM customers, which can vary from year to year, collectively accounted
for 37%, 44%, and 41%, of our net sales in fiscal years 2015, 2014 and 2013, respectively. Our five largest OEM
customers in 2015 were, in alphabetical order, Apple Inc., Cisco Systems, Inc., Huawei Technology Co. Ltd.,
Juniper Networks, Inc., and Robert Bosch GmbH. For the year ended December 28, 2015, Apple accounted for 20%
of our net sales. Sales attributed to OEMs include sales made through EMS providers. Sales to EMS providers
comprised approximately 35%, 39%, and 38% of our net sales in fiscal years 2015, 2014 and 2013, respectively.
Although our contractual relationships are with the EMS companies, we typically negotiate price and volume
10
requirements directly with the OEMs. In addition, we are on the approved vendor lists of several of our EMS
providers. This positions us to participate in business that is awarded at the discretion of the EMS provider.
During fiscal years 2015, 2014 and 2013, our net sales by country invoiced were as follows:
Country
2015
2014
2013
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46% 43% 42%
27
26
30
28
29
29
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100% 100% 100%
Net sales to other countries, individually, for the fiscal years 2015, 2014 and 2013, did not exceed 10% of
total net sales.
Our sales and marketing strategy focuses on building long-term relationships with our customers’
engineering and new product introduction personnel early in the product development phase, frequently through
strategic account management teams. As the product moves from the prototype stage through ramp-to-volume
and volume production, we shift our focus to the customers’ procurement departments in order to capture sales at
each point in the product’s life cycle.
Our staff of engineers, sales support personnel, and managers assists our sales representatives in advising
customers with respect to manufacturing feasibility, design review, and technological capabilities through direct
communication and visits. We combine our sales efforts with customer service at each facility to better serve our
customers. Each large customer is typically assigned an account manager to coordinate all of the company’s
services across all of our facilities. Additionally, the largest and most strategic customers are also supported by
selected program management and engineering resources. Our global sales force is comprised of direct sales
personnel, complemented by commission-based independent representatives, and supports customers throughout
North America, Europe, Asia and the Middle East.
Our domestic North America footprint comprises a significant amount of our PCB operating segment with
sixteen PCB fabrication plants located in California, Colorado, Connecticut, Ohio, Oregon, Utah, Virginia,
Wisconsin and Ontario, Canada. The footprint includes a facility that provides follow-on value-added assembly
services primarily to our Connecticut PCB fabrication plant; an outsourcing operation that provides brokered
sourcing of lower cost, off-shore PCB companies as an additional option for our customers; and a custom
electronic assembly facility in Mexico that is part of our E-M Solutions segment. As part of our integration
strategy to improve total plant utilization, operational performance and customer focus following our recent
acquisition of Viasystems, two domestic PCB fabrication plants and the custom electronic assembly plant in
Mexico are scheduled to close during the first half of 2016.
Our Asia Pacific footprint includes facilities from both our PCB and E-M Solutions operating segment with
eight PCB fabrication plants located in Hong Kong, Huiyang, Dongguan, Guangzhou, Shanghai, and Zhongshan
China, and three custom assembly and system integration operations in Shanghai and Shenzhen China.
For information regarding credit
to customers, see Note 12 of the Notes to Consolidated Financial
Statements.
For information about net sales,
total assets and capital
expenditures of each of our segments, and geographical information, including net sales to customers and long-
lived assets, see Note 19 of the Notes to Consolidated Financial Statements.
income before income taxes, depreciation,
Suppliers
The primary raw materials we use in PCB manufacturing include copper-clad laminate; chemical solutions
such as copper and gold for plating operations; photographic film; carbide drill bits; and plastic for testing
fixtures. Although we have preferred suppliers for some raw materials used in the manufacture of PCBs, most of
our raw materials are generally readily available in the open market from numerous other potential suppliers.
11
The primary raw materials we use in backplane assemblies and other PCB assemblies are manufactured
components such as PCBs, connectors, capacitors, resistors, diodes and integrated circuits, many of which are
custom made and controlled by our customers’ approved vendors. These components for backplane assemblies
and other PCB assemblies in some cases have limited or sole sources of supply. For example, in some instances
our customers will require us to use a specific component from a particular supplier or require us to use a
component provided by the customer itself, in which case we may have a single or limited number of suppliers
for these specific components. The backplane assemblies, PCB assemblies and precision metal fabricated chassis
and enclosures produced by us may be incorporated into a fully integrated and tested system delivered to our
customer. These products often incorporate procured power, thermal, interconnect and mechanical components
sourced from customer directed or our selected suppliers.
We typically use just-in-time procurement practices to maintain our raw materials inventory at low levels
and work closely with our suppliers to obtain technologically advanced raw materials. In addition, we
periodically seek alternative supply sources to ensure that we are receiving competitive pricing and service.
Adequate amounts of all raw materials have been available in the past, and we believe this availability will
continue into the foreseeable future.
Competition
Despite industry consolidation,
the PCB industry remains fragmented and characterized by intense
competition. Our principal PCB and substrate competitors include AT & S Austria Technologie & Systemtechnik
AG, Chin Poon Industrial Co., LTD., Compeq Manufacturing Co., Ltd., IBIDEN Co., Ltd., ISU Petasys Co.,
Ltd., Multek Corporation, Sanmina Corporation, Tripod Technology Corp., Unimicron Technology Corp., and
Wus Printed Circuit Co., Ltd. Our principal E-M Solutions competitors include Amphenol Corp, Flex, Jabil
Circuit, Inc. and Sanmina Corporation.
We believe we compete favorably based on the following competitive factors:
• status as a top global PCB manufacturer;
• capability and flexibility to produce technologically complex products;
• ability to offer a one-stop manufacturing solution;
• specialized and integrated manufacturing facilities;
• ability to offer time-to-market capabilities;
• leading edge aerospace and defense capabilities;
• flexibility to manufacture low volume, high-mix products;
• consistent high-quality product; and
• outstanding customer service.
In addition, we believe our continuous evaluation and early adoption of new manufacturing and production
technologies give us a competitive advantage. We believe that our ability to manufacture PCBs using advanced
technologies, including our HDI, flexible PCBs and substrate capabilities, provides us with a competitive
advantage over manufacturers that do not possess this advanced technological expertise. Our future success will
depend in large part on our ability to maintain and enhance our manufacturing capabilities and production
technologies.
Seasonality
As manufacturers of electronic components, orders for our products generally correspond to the production
schedules of our customers. We historically experience higher net sales in the third and fourth quarters due to end
customer demand in the fourth quarter for consumer electronics products. Seasonal fluctuations also include the
Chinese New Year holidays in the first quarter, which typically results in lower net sales. We attribute this
decline to shutdowns of our customers’ manufacturing facilities surrounding the Chinese New Year public
holidays, which normally occur in January or February of each year.
12
Backlog
Backlog consists of purchase orders received, including, in some instances, demand agreements released for
production under customer contracts. We obtain firm purchase orders from our customers for all products.
However, for some of these purchase orders, customers do not make firm schedules for delivery more than 90
days in advance. Therefore, we measure backlog as orders with deliveries scheduled over the next 90 days. At
December 28, 2015, total backlog was $365.8 million, compared with $201.0 million at the end of 2014.
Substantially all backlog at December 28, 2015 is expected to be converted to sales in the first quarter of 2016.
Additionally, we typically experience a higher amount of backlog in the second half of the year due to increased
end customer demand for consumer electronics products in the fourth quarter, which is consistent with our
seasonal patterns as discussed above.
Intellectual Property
We believe our business depends on the effectiveness of our fabrication techniques and our ability to
continue to improve our manufacturing processes. We have limited patent or trade secret protection for our
manufacturing processes. We rely on the collective experience of our employees in the manufacturing process to
ensure that we continuously evaluate and adopt the new technologies available in our industry. In addition, we
depend on training, recruiting, and retaining our employees, who are required to have sufficient know-how to
operate advanced equipment and to conduct complicated manufacturing processes.
National Security Matters
A portion of our business consists of manufacturing defense and defense-related items for various
departments and agencies of the U.S. government, including the U.S. Department of Defense, or the DoD, which
requires that we maintain facility security clearances under the National Industrial Security Program Operating
Manual, or NISPOM. The NISPOM requires that a corporation with significant foreign ownership maintaining a
facility security clearance take steps to mitigate foreign ownership, control or influence, referred to as “FOCI.”
Pursuant to these laws and regulations, effective October 2010, we entered into a Special Security Agreement
(SSA) with the DoD; Su Sih (BVI) Limited, or Su Sih (a significant foreign owner of our capital stock); and
Mr. Tang Hsiang Chien (as the beneficial owner of Su Sih). The purpose of the SSA is to deny Mr. Tang, Su Sih,
and other persons affiliated with our Asia Pacific operations, from unauthorized access to classified and export
controlled unclassified information and to mitigate any influence over our business or management in a manner
that could result in the compromise of classified information or could adversely affect the performance of
classified contracts.
Other Governmental Regulations
Our operations, particularly those in North America, are subject to a broad range of regulatory requirements
relating to export control, environmental compliance, waste management, and health and safety matters. In
particular, we are subject to the following:
• U.S. Department of State regulations, including the Arms Export Control Act (AECA) and International
Traffic In Arms Regulations (ITAR) located at 22 CFR Parts 120-130;
• U.S. Department of Commerce regulations, including the Export Administration Regulations (EAR)
located at 15 CFR Parts 730-744;
• Office of Foreign Asset Control (OFAC) regulations located at 31 CFR Parts 500-599;
• U.S. Occupational Safety and Health Administration (OSHA), and state OSHA and Department of Labor
laws pertaining to health and safety in the workplace;
• U.S. Environmental Protection Agency regulations pertaining to air emissions; wastewater discharges; and
the use, storage, discharge, and disposal of hazardous chemicals used in the manufacturing processes; the
reporting of chemical releases to the environment; and the reporting of chemicals manufactured in by-
products that are beneficially recycled;
13
• Department of Homeland Security regulations regarding the storage of certain chemicals of interest;
• corresponding state laws and regulations, including site investigation and remediation;
• corresponding U.S. county and city agencies;
• corresponding regulations and agencies in China for our Chinese facilities;
• material content directives and laws that ban or restrict certain hazardous substances in products sold in
member states of the European Union, China, other countries, and jurisdictions;
• SEC rules that require reporting of the use of certain metals from “conflict minerals” originating in the
Democratic Republic of the Congo and the 9 countries surrounding it pursuant to Section 1502 of the
Dodd-Frank Act; and
• reporting requirements of the California Transparency in Supply Chains Act of 2010 that requires
reporting on efforts to eradicate slavery and human trafficking in retailers’ and manufacturers’ supply
chains.
The process to manufacture PCBs requires adherence to city, county, state,
federal and foreign
environmental regulations regarding the storage, use, handling and disposal of chemicals, solid wastes and other
hazardous materials, as well as compliance with air quality standards and chemical use reporting. We believe that
our facilities in the United States comply in all material respects with applicable environmental laws and
regulations. In China, governmental authorities are taking various steps to tighten the rules and regulations
governing environmental issues. An update to Chinese environmental waste water law was issued in late 2012,
allowing for an interim period in which plants subject to such law may install equipment that meets the new
regulatory regime. Our plants in China are not yet in full compliance with the current environmental regulations.
We believe we have developed plans acceptable to the Chinese government, and we are in the process of
implementing these plans. We do not anticipate any immediate risk of government fines or temporary closure of
Chinese plants. We have established and enacted an investment plan related to the efforts to come into full
compliance with the new regulations. There can be no assurance that violations will not occur in the future.
Employees
As of December 28, 2015, we had approximately 29,570 employees. Of our employees, approximately
27,100 were involved in manufacturing and engineering, 640 worked in sales and marketing, and approximately
1,830 worked in accounting, systems and other support capacities. None of our U.S. employees are represented
by unions. In China, approximately 11,250 employees are members of the All-China Federation of Trade Unions
and accordingly are considered to be represented by a labor union. We have not experienced any labor problems
resulting in a work stoppage, except for a work stoppage associated with the announcement of the closure of our
Suzhou, China facility in 2013, and we believe that we have good relations with our employees.
Availability of Reports Filed with the Securities and Exchange Commission
We are a Delaware corporation founded in 1998, with our principal executive offices located at 1665 Scenic
Avenue, Suite 250, Costa Mesa, CA 92626. Our telephone number is (714) 327-3000. Our website address is
www.ttm.com. Information included on our website is not incorporated into this report. Our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are
available without charge on our website at www.ttm.com/investors/investor_sec.aspx, as soon as reasonably
practicable after they are filed electronically with the Securities and Exchange Commission (SEC). Copies are
also available without charge by (i) telephonic request by calling our Investor Relations Department at (714) 327-
3000, (ii) e-mail request
to investor@ttmtech.com, or (iii) a written request to TTM Technologies, Inc.,
Attention: Investor Relations, 1665 Scenic Avenue, Suite 250, Costa Mesa, CA 92626.
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ITEM 1A. RISK FACTORS.
An investment in our common stock involves a high degree of risk. You should carefully consider the
factors described below, in addition to those discussed elsewhere in this report, in analyzing an investment in our
common stock. If any of the events described below occurs, our business, financial condition, and results of
operations would likely suffer, the trading price of our common stock could fall, and you could lose all or part of
the money you paid for our common stock. The risk factors described below are not the only ones we face. Risks
and uncertainties not known to us currently, or that may appear immaterial, also may have a material adverse
effect on our business, financial condition, and results of operations.
In addition, the following risk factors and uncertainties could cause our actual results to differ materially
from those projected in our forward-looking statements, whether made in this annual report or future quarterly
reports to stockholders, press releases, or oral statements, whether in presentations, responses to questions, or
otherwise.
Risks Related to our Business
We have substantial outstanding indebtedness, and our outstanding indebtedness could adversely impact
our liquidity and flexibility in obtaining additional financing, our ability to fulfill our debt obligations and
our financial condition and results of operations.
We have substantial debt and, as a result, we have significant debt service obligations. On May 31, 2015, we
entered into a $950.0 million Term Loan, a $150.0 million U.S. ABL, and a $150.0 million Asia ABL. We drew
$80.0 million of the U.S. ABL at the closing of the acquisition of Viasystems. In addition, we and a number of
our direct and indirect subsidiaries have various credit, letters of credit and guarantee facilities. The agreements
governing these facilities have certain provisions that require us to repay borrowings in scheduled quarterly
installments, which began on October 1, 2015. We may also be required to make an additional principal payment
on an annual basis, based on certain parameters defined these agreements. For 2015, we are required to make an
additional annual payment of $61.1 million, which is required to be paid in March 2016. Such agreements also
contain certain financial covenants which require us to maintain a specified consolidated leverage ratio and under
the occurrence of certain events, a consolidated fixed charge coverage ratio.
Our indebtedness could have important consequences to us and our shareholders because in certain
circumstances we may need to comply with the covenants in the agreements governing such indebtedness and
dedicate funds to service our outstanding debt. For example, it could:
• make it more difficult for us to satisfy our obligations with respect to our indebtedness, which could in
turn result in an event of default on such indebtedness;
• require us to use a substantial portion of our cash flow from operations for debt service payments, thereby
reducing the availability of cash for working capital, capital expenditures, acquisitions and other general
corporate purposes;
• impair our ability to obtain additional financing in the future for working capital, capital expenditures,
acquisitions and other investments or general corporate purposes, which may limit our ability to execute
our business strategy;
• diminish our ability to withstand a downturn in our business, the industry in which we operate or the
economy generally and restrict us from exploiting business opportunities or making acquisitions;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate or the general economy;
• increase our vulnerability to general adverse economic and industry conditions, including movements in
interest rates, which could result in increased borrowing costs;
• limit management’s discretion in operating our business; and
• place us at a competitive disadvantage as compared to our competitors that have less debt as it could limit
our ability to capitalize on future business opportunities and to react to competitive pressures or adverse
changes.
15
We may be able to incur substantial additional debt in the future, some or all of which may be secured by a
lien on our assets. If new debt or other liabilities or obligations are added to our current debt levels, the related
risks that we and our subsidiaries now face could intensify.
Servicing our debt requires a significant amount of cash and we may not be able to generate sufficient cash
to service all of our debt and may be forced to take other actions to satisfy our obligations under our debt,
which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations and to fund planned capital
expenditures and expansion efforts depends on our ability to generate cash in the future and our financial
condition and operating performance, which are subject to prevailing economic and competitive conditions and
to certain regulatory, competitive, financial, business and other factors beyond our control. We cannot assure you
that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal,
premium, if any, and interest on our debt.
If we are unable to meet our debt service obligations, we may be forced to reduce or delay investments or to
sell assets, seek additional capital (which could include obtaining additional equity capital on terms that may be
onerous or highly dilutive) or restructure or refinance our debt. These alternative measures may not be successful
and may not permit us to meet our scheduled debt service obligations. Our operating results and available cash
may in the future be insufficient to meet our debt service obligations. We could face substantial liquidity
challenges and might be required to dispose of material assets or operations to meet our debt service and other
obligations. We may not be able to consummate those dispositions or, if consummated, the proceeds of such
dispositions may not be adequate to meet any debt service obligations then due.
We have pursued and intend to continue to pursue acquisitions of other businesses and may encounter risks
associated with these activities, which could harm our business and operating results.
On May 31, 2015, we consummated the acquisition of Viasystems. This transaction and any other
acquisitions we may pursue in the future involve numerous risks. As part of our business strategy, we expect that
we will continue to grow by pursuing acquisitions of businesses, technologies, assets, or product lines that
complement or expand our business. Risks related to an acquisition may include:
• the potential inability to successfully integrate acquired operations and businesses or to realize anticipated
synergies, economies of scale, or other expected value;
• diversion of management’s attention from normal daily operations of our existing business to focus on
integration of the newly acquired business;
• unforeseen expenses associated with the integration of the newly acquired business;
• difficulties in managing production and coordinating operations at new sites;
• the potential loss of key employees of acquired operations;
• the potential inability to retain existing customers of acquired companies when we desire to do so;
• insufficient revenues to offset increased expenses associated with acquisitions;
• the potential decrease in overall gross margins associated with acquiring a business with a different
product mix;
• the inability to identify certain unrecorded liabilities;
• the potential need to restructure, modify, or terminate customer relationships of the acquired company;
• an increased concentration of business from existing or new customers; and
• the potential inability to identify assets best suited to our business plan.
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Acquisitions may cause us to:
• enter lines of business and/or markets in which we have limited or no prior experience;
• issue debt and be required to abide by stringent loan covenants;
• assume liabilities; record goodwill and indefinite-lived intangible assets that will be subject to impairment
testing and potential periodic impairment charges;
• become subject
to litigation and environmental
issues, which include product material content
certifications related to conflict minerals;
• incur unanticipated costs;
• incur large and immediate write-offs; and
• incur substantial transaction-related costs, whether or not a proposed acquisition is consummated.
Acquisitions of high technology companies are inherently risky, and no assurance can be given that our
recent or future acquisitions will be successful. Failure to manage and successfully integrate acquisitions we
make could have a material adverse effect on our business, financial condition, and results of operations. Even
when an acquired company has already developed and marketed products, product enhancements may not be
made in a timely fashion. In addition, unforeseen issues might arise with respect to such products after any such
acquisition.
Uncertainty and adverse changes in the economy and financial markets could have an adverse impact on
our business and operating results.
Uncertainty or adverse changes in the economy could lead to a significant decline in demand for the end
products manufactured by our customers, which, in turn, could result in a decline in the demand for our products
and pressure to reduce our prices. As a result of the recent global economic downturn, many businesses appear to
be experiencing weaker demand for their products and services and, as a result, are taking a more conservative
stance in ordering component inventory. Any decrease in demand for our products could have an adverse impact
on our financial condition, operating results and cash flows. Uncertainty and adverse changes in the economy
could also increase the cost and decrease the availability of potential sources of financing and increase our
exposure to losses from bad debts, either of which could have a material adverse effect on our financial
condition, operating results and cash flows.
We may not fully realize the anticipated positive impacts to future financial results from our restructuring
efforts.
In our Form 8-K filed on September 29, 2015, we announced restructuring plans that are designed to align
capacity, overhead costs and operating expenses with market demand. Our ability to achieve the anticipated cost
savings and other benefits from our restructuring efforts within expected time frames is subject to many estimates
and assumptions, and may vary materially based on factors such as market conditions and the effect of our
restructuring efforts on our work force. These estimates and assumptions are subject to significant economic,
competitive and other uncertainties, some of which are beyond our control. There can be no assurance that we
will fully realize the anticipated positive impacts to future financial results from our current or future
restructuring efforts. If our estimates and assumptions are incorrect or if other unforeseen events occur, we may
not achieve the cost savings expected from such restructurings, and our business and results of operations could
be adversely affected.
We may not realize the anticipated cost savings from the acquisition of Viasystems or may incur additional
costs because of integration difficulties and other challenges, which could materially adversely affect our
business, financial condition, and results of operations.
On May 31, 2015, we closed our acquisition of Viasystems. The success of the acquisition of Viasystems
will depend, in part, on our ability to integrate Viasystems’ business with our existing business and achieve
efficiencies and cost savings, and no assurances can be given that we will be able to do so. For example, costs
17
associated with Viasystems’ legal proceedings and other loss contingencies may be greater than expected. In
addition, in order to obtain the benefits of the acquisition of Viasystems, we must integrate Viasystems’
operations. Such integration may be complex, and the failure to do so quickly and effectively may negatively
affect earnings. The integration process may be complex, costly and time-consuming. The difficulties of
integrating the operations of Viasystems’ business include, among others:
• failure to implement our business plan for the combined business;
• unanticipated changes in applicable laws and regulations;
• failure to retain key employees;
• failure to retain customers;
• operating, competitive and market risks inherent in Viasystems’ business and our business;
• the impact of the acquisition of Viasystems on our internal controls and compliance with the regulatory
requirements under the Sarbanes-Oxley Act of 2002; and
• unanticipated issues, expenses and liabilities.
Although we expect to realize strategic, operational, and financial benefits as a result of the acquisition of
Viasystems, we cannot be certain whether, and to what extent, such benefits will be achieved in the future. We
may not accomplish the integration of Viasystems’ business smoothly, successfully or within the anticipated cost
range or timeframe. The diversion of our management’s attention from our current operations to the integration
effort and any difficulties encountered in combining operations could prevent us from realizing the full benefits
anticipated to result from the acquisition of Viasystems and could adversely affect our business, financial
condition, and results of operations.
We have identified $55 million in annual cost savings, which are expected to be implemented within the
first 12 months following the consummation of the acquisition of Viasystems. While our management believes
these cost savings are achievable, our ability to achieve such estimated cost savings in the timeframe described is
subject to various assumptions by management, which may or may not be realized. As a consequence, we may
not be able to realize all of these cost savings within the time frame expected or at all. In addition, we may incur
additional and/or unexpected costs in order to realize these cost savings.
We are subject to risks of currency fluctuations.
A portion of our cash and other current assets is held in currencies other than the U.S. dollar. As of
December 28, 2015, we had an aggregate of approximately $217.4 million in current assets denominated in
Chinese Renminbi (RMB) and the Hong Kong Dollar (HKD). Changes in exchange rates among other currencies
and the U.S. dollar will affect the value of these assets as translated to U.S. dollars on our balance sheet. To the
extent that we ultimately decide to repatriate some portion of these funds to the United States, the actual value
transferred could be impacted by movements in exchange rates. Any such type of movement could negatively
impact the amount of cash available to fund operations or to repay debt. To the extent that we may have
outstanding indebtedness denominated in the U.S. dollar or in the HKD, the depreciation of the RMB against the
U.S. dollar or the HKD may have a material adverse effect on our business, financial condition, and results of
operations (including the cost of servicing, and the value on our balance sheet of, the U.S. dollar and HKD-
denominated indebtedness). Additionally, we have revenues and costs denominated in currencies other than the
U.S. dollar (primarily the RMB). Fluctuations in the exchange rates between the U.S. dollar and the RMB could
result in increases or decreases in our costs or revenues which could negatively impact our business, financial
condition, and results of operations. Significant inflation or disproportionate changes in foreign exchange rates
could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental
monetary or tax policy, or changes in local interest rates. The impact of future exchange rate fluctuations
between the U.S. dollar and the RMB and the U.S. dollar and the HKD cannot be predicted. Further, China’s
government imposes controls over the convertibility of RMB into foreign currencies, which subjects us to further
currency exchange risk.
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Products we manufacture may contain design or manufacturing defects, which could result in reduced
demand for our services and liability claims against us.
We manufacture products to our customers’ specifications, which are highly complex and may contain
design or manufacturing errors or failures, despite our quality control and quality assurance efforts. Defects in the
products we manufacture, whether caused by a design, manufacturing, or materials failure or error, may result in
delayed shipments, customer dissatisfaction, a reduction or cancellation of purchase orders, or liability claims
against us. If these defects occur either in large quantities or too frequently, our business reputation may be
impaired. Since our products are used in products that are integral to our customers’ businesses, errors, defects,
or other performance problems could result in financial or other damages to our customers beyond the cost of the
PCB, for which we may be liable. Although our invoices and sales arrangements generally contain provisions
designed to limit our exposure to product liability and related claims, existing or future laws or unfavorable
judicial decisions could negate these limitation of liability provisions. See “— We depend upon a relatively small
number of OEM customers for a large portion of our sales, and a decline in sales to major customers would
materially adversely affect our business, financial condition, and results of operations.”
In addition, we manufacture products for a range of automotive customers. If any of our products are or are
alleged to be defective, we may be required to participate in a recall of such products. As suppliers become more
integral to the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers
are increasingly looking to their suppliers for contributions when faced with product liability claims or recalls. In
addition, vehicle manufacturers, which have traditionally borne the costs associated with warranty programs
offered on their vehicles, are increasingly requiring suppliers to guarantee or warrant their products and may seek
to hold us responsible for some or all of the costs related to the repair and replacement of parts supplied by us to
the vehicle manufacturer.
We are heavily dependent upon the worldwide electronics industry, which is characterized by economic
cycles and fluctuations in product demand. A downturn in the electronics industry or prolonged global
economic crisis could result in decreased demand for our manufacturing services and materially adversely
affect our business, financial condition, and results of operations.
A majority of our revenue is generated from the electronics industry, which is characterized by intense
competition, relatively short product life cycles, and significant fluctuations in product demand. The industry is
subject to economic cycles and recessionary periods. Due to the uncertainty in the end markets served by most of
our customers, we have a low level of visibility with respect to future financial results. Consequently, our past
operating results, earnings, and cash flows may not be indicative of our future operating results, earnings, and
cash flows.
We depend upon a relatively small number of OEM customers for a large portion of our sales, and a decline
in sales to major customers would materially adversely affect our business, financial condition, and results
of operations.
A small number of customers are responsible for a significant portion of our sales. Our five largest OEM
customers accounted for approximately 37%, 44% and 41% of our net sales for the years ended December 28,
2015, December 29, 2014 and December 30, 2013, respectively, and one customer represented 20% of our sales
for the year ended December 28, 2015. Sales attributed to OEMs include both direct sales as well as sales that the
OEMs place through EMS providers. Our customer concentration could fluctuate, depending on future customer
requirements, which will depend in large part on market conditions in the electronics industry segments in which
our customers participate. The loss of one or more significant customers or a decline in sales to our significant
customers would materially adversely affect our business, financial condition, and results of operations. In
addition, we generate significant accounts receivable in connection with providing manufacturing services to our
customers. If one or more of our significant customers were to become insolvent or were otherwise unable to pay
for the manufacturing services provided by us, our business, financial condition, and results of operations would
be materially adversely affected.
In addition, during industry downturns, we may need to reduce prices to limit the level of order losses, and
we may be unable to collect payments from our customers. There can be no assurance that key customers would
19
not cancel orders, that they would continue to place orders with us in the future at the same levels as experienced
by us in prior periods, that they would be able to meet their payment obligations, or that the end-products that use
our products would be successful. This concentration of customer base may materially adversely affect our
business, financial condition, and results of operations due to the loss or cancellation of business from any of
these key customers, significant changes in scheduled deliveries to any of these customers, or decreases in the
prices of the products sold to any of these customers.
If we are unable to maintain satisfactory capacity utilization rates, our business, financial condition, and
results of operations would be materially adversely affected.
Given the high fixed costs of our operations, decreases in capacity utilization rates can have a significant
effect on our business. Accordingly, our ability to maintain or enhance gross margins will continue to depend, in
part, on maintaining satisfactory capacity utilization rates. In turn, our ability to maintain satisfactory capacity
utilization will depend on the demand for our products, the volume of orders we receive, and our ability to offer
products that meet our customers’ requirements at competitive prices. If current or future production capacity
fails to match current or future customer demands, our facilities would be underutilized, our sales may not fully
cover our fixed overhead expenses, and we would be less likely to achieve expected gross margins. If forecasts
and assumptions used to support the realizability of our long-lived assets change in the future, significant
impairment charges could result that would materially adversely affect our business, financial condition, and
results of operations.
In addition, we generally schedule our quick turnaround production facilities at less than full capacity to
retain our ability to respond to unexpected additional quick-turn orders. However, if these orders are not
received, we may forego some production and could experience continued excess capacity. If we conclude we
have significant, long-term excess capacity, we may decide to permanently close one or more of our facilities and
lay off some of our employees. Closures or lay-offs could result in our recording restructuring charges such as
severance, other exit costs, and asset impairments, as well as potentially causing disruptions in our ability to
supply customers.
Our results of operations are often subject to demand fluctuations and seasonality. With a high level of
fixed operating costs, even small revenue shortfalls would decrease our gross margins.
Our results of operations fluctuate for a variety of reasons, including:
• timing of orders from and shipments to major customers;
• the levels at which we utilize our manufacturing capacity;
• price competition;
• changes in our mix of revenues generated from quick-turn versus standard delivery time services;
• expenditures, charges or write-offs, including those related to acquisitions, facility restructurings, or asset
impairments; and
• expenses relating to expanding existing manufacturing facilities.
A significant portion of our operating expenses is relatively fixed in nature, and planned expenditures are
based in part on anticipated orders. Accordingly, unexpected revenue shortfalls may decrease our gross margins.
In addition, we have experienced sales fluctuations due to seasonal patterns in the capital budgeting and
purchasing cycles, as well as inventory management practices of our customers and the end markets we serve. In
particular, the seasonality of the cellular phone and tablet industries and quick-turn ordering patterns affect the
overall PCB industry. These seasonal trends have caused fluctuations in our operating results in the past and may
continue to do so in the future. Results of operations in any period should not be considered indicative of the
results that may be expected for any future period. In addition, our future quarterly operating results may
fluctuate and may not meet the expectations of securities analysts or investors.
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We rely on the telecommunications industry for a significant portion of sales. Accordingly, the economic
volatility in this industry has had, and may continue to have, a material adverse effect on our ability to
forecast demand and production and to meet desired sales levels.
A large percentage of our business is conducted with customers who are in the telecommunications industry.
This industry is characterized by intense competition, relatively short product life cycles, and significant
fluctuations in product demand. This industry is heavily dependent on the end markets it serves and therefore can
be affected by the demand patterns of those markets. If the volatility in this industry continues, it would have a
material adverse effect on our business, financial condition, and results of operations.
Our results can be adversely affected by rising labor costs.
There is uncertainty with respect to rising labor costs, particularly within China, where we have most of our
manufacturing facilities. In recent periods there have been regular and significant increases in the minimum wage
payable in various provinces of China. In addition, we have experienced very high employee turnover in our
manufacturing facilities in China, generally after the Chinese New Year, and we are experiencing ongoing
difficulty in recruiting employees for these facilities. Furthermore, labor disputes and strikes based partly on
wages have in the past slowed or stopped production by certain manufacturers in China. In some cases,
employers have responded by significantly increasing the wages of workers at such plants. Any increase in labor
costs due to minimum wage laws or customer requirements about scheduling and overtime that we are unable to
recover in our pricing to our customers could materially adversely affect our business, financial condition, and
results of operations. In addition, the high turnover rate and our difficulty in recruiting and retaining qualified
employees and the other labor trends we are noting in China could result in a potential for defects in our
products, production disruptions or delays, or the inability to ramp production to meet increased customer orders,
resulting in order cancellation or imposition of customer penalties if we are unable to deliver products in a timely
manner.
To respond to competitive pressures and customer requirements, we may further expand internationally in
lower-cost locations. If we pursue such expansions, we may be required to make additional capital expenditures.
In addition, the cost structure in certain countries that are now considered to be favorable may increase as
economies develop or as such countries join multinational economic communities or organizations, causing local
wages to rise. As a result, we may need to continue to seek new locations with lower costs and the employee and
infrastructure base to support PCB manufacturing. We cannot assure investors that we will realize the anticipated
strategic benefits of our international operations or that our international operations will contribute positively to
our operating results.
In our North America operations, rising health care costs pose a significant labor-related risk. We work with
our insurance brokers and carriers to control the cost of health care for our employees. However, there can be no
assurance that our efforts will succeed, especially given recent and pending changes in government oversight of
health care.
Unanticipated changes in our tax rates or in our assessment of the realizability of our deferred income tax
assets or exposure to additional income tax liabilities could affect our business, financial condition, and
results of operations.
We are subject to income taxes in the United States and various foreign jurisdictions. Significant judgment
is required in determining our provision for income taxes and, in the ordinary course of business, there are many
transactions and calculations in which the ultimate tax determination is uncertain. Our effective tax rates could be
materially adversely affected by changes in the mix of earnings in countries and states with differing statutory tax
rates, changes in the valuation of deferred income tax assets and liabilities, changes in tax laws, as well as other
factors. Our tax determinations are regularly subject to audit by tax authorities, and developments in those audits
could adversely affect our income tax provision. Although we believe that our tax estimates are reasonable, the
final determination of tax audits or tax disputes may be different from what is reflected in our historical income
tax provisions, which could materially adversely affect our business, financial condition, and results of
operations.
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If our net earnings do not remain at or above recent levels, or we are not able to predict with a reasonable
degree of probability that they will continue, we may have to record a valuation allowance against our net
deferred income tax assets.
Certain of our foreign subsidiaries have deferred income tax assets. Based on our forecast for future taxable
earnings for these foreign subsidiaries, we believe we will utilize the deferred income tax assets in future periods.
However, if our estimates of future earnings decline, we may have to increase our valuation allowance against
our net deferred income tax assets, resulting in a higher income tax provision, which would reduce our cash
flows.
As a result of the acquisition of Viasystems, our goodwill, indefinite-lived intangible assets, and other
intangible assets on our consolidated balance sheet have increased. If our goodwill, indefinite-lived
intangible assets, or other intangible assets become impaired in the future, we would be required to record a
material, non-cash charge to earnings, which would also reduce our stockholders’ equity.
As of December 28, 2015, our consolidated balance sheet reflected $497.9 million of goodwill and definite-
lived intangible assets. We periodically evaluate whether events and circumstances have occurred, such that the
potential for reduced expectations for future cash flows coupled with further decline in the market price of our
stock and market capitalization may indicate that the remaining balance of goodwill and definite-lived intangible
assets may not be recoverable. If factors indicate that assets are impaired, we would be required to reduce the
carrying value of our goodwill and definite-lived intangible assets, which could harm our results during the
periods in which such a reduction is recognized.
We will perform our fiscal year 2016 annual impairment test during our fourth fiscal quarter. Given the
recent volatility of our market capitalization, it is reasonably possible that we could record an impairment charge
by fiscal year end when we conduct our annual impairment test.
Employee strikes and other labor-related disruptions may materially adversely affect our business, financial
condition, and results of operations.
Our business is labor intensive, utilizing large numbers of engineering and manufacturing personnel. Strikes
or labor disputes with our unionized employees, primarily in China, may adversely affect our ability to conduct
our business. If we are unable to reach agreement with any of our unionized work groups on future negotiations
regarding the terms of their collective bargaining agreements, we may be subject to work interruptions or
stoppages. Any of these events could be disruptive to our operations and could result in negative publicity, loss
of contracts, and a decrease in revenues. We may also become subject to additional collective bargaining
agreements in the future if more employees or segments of our workforce become unionized, including any of
our employees in the United States. We have not experienced any labor problems resulting in a work stoppage,
except for a brief work stoppage associated with the announcement of the closure of our Suzhou, China facility in
September 2013.
We are exposed to the credit risk of some of our customers and to credit exposures in weakened markets.
Most of our sales are on an “open credit” basis, with standard industry payment terms. We monitor
individual customer payment capability in granting such open credit arrangements, seek to limit such open credit
to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure
for doubtful accounts. During periods of economic downturn in the electronics industry and the global economy,
our exposure to credit risks from our customers increases. Although we have programs in place to monitor and
mitigate the associated risks, such programs may not be effective in reducing our credit risks.
Our five largest OEM customers accounted for approximately 37%, 44% and 41% of our net sales for the
years ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively. Additionally, our
OEM customers often direct a significant portion of their purchases through a relatively limited number of EMS
companies. Sales to EMS companies represented approximately 35%, 39% and 38% of our net sales for the years
ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively. Our contractual
relationship is often with the EMS companies, who are obligated to pay us for our products. Because we expect
22
our OEM customers to continue to direct our sales to EMS companies, we expect to continue to be subject to this
credit risk with a limited number of EMS customers. If one or more of our significant customers were to become
insolvent or were otherwise unable to pay us, our business, financial condition, and results of operations would
be materially adversely affected.
We rely on suppliers for the timely delivery of raw materials and components used in manufacturing our
PCBs and E-M Solutions. If a raw material supplier fails to satisfy our product quality standards, it could
harm our customer relationships.
Although we have preferred suppliers for most of our raw materials, the materials we use are generally
readily available in the open market, and other potential suppliers exist. The components for backplane
assemblies in some cases have limited or sole sources of supply. Consolidations and restructuring in our supplier
base may result in adverse materials pricing due to reduction in competition among our suppliers. Furthermore, if
a raw material or component supplier fails to satisfy our product quality standards, including standards relating to
“conflict minerals” (See “— We are subject to risks for the use of certain metals from “conflict minerals”
originating in the Democratic Republic of the Congo.”), it could harm our customer relationships. Suppliers may
from time to time extend lead times, limit supplies, or increase prices due to capacity constraints or other factors,
which could harm our ability to deliver our products on a timely basis.
We serve customers and have manufacturing facilities outside the United States and are subject to the risks
characteristic of international operations.
We have significant manufacturing operations in Asia and sales offices located in Asia and Europe, and we
continue to consider additional opportunities to make foreign investments and construct new foreign facilities.
For the year ended December 28, 2015, we generated 71% of our net sales from non-U.S. operations, and a
significant portion of our manufacturing material was provided by international suppliers during this period. As a
result, we are subject to risks relating to significant international operations, including but not limited to:
• managing international operations;
• imposition of governmental controls;
• unstable regulatory environments;
• compliance with employment laws;
• implementation of disclosure controls, internal controls, financial reporting systems, and governance
standards to comply with U.S. accounting and securities laws and regulations;
• limitations on imports or exports of our product offerings;
• fluctuations in the value of local currencies;
• inflation or changes in political and economic conditions;
• labor unrest, rising wages, difficulties in staffing, and geographical labor shortages;
• government or political unrest;
• longer payment cycles;
• language and communication barriers, as well as time zone differences;
• cultural differences;
• increases in duties and taxation levied on our products;
• other potentially adverse tax consequences;
• imposition of restrictions on currency conversion or the transfer of funds;
• travel restrictions;
23
• expropriation of private enterprises; and
• the potential reversal of current favorable policies encouraging foreign investment and trade.
Our operations in China subject us to risks and uncertainties relating to the laws and regulations of China.
Under its current leadership, the government of China has been pursuing economic reform policies,
including the encouragement of foreign trade and investment and greater economic decentralization. No
assurance can be given, however, that the government of China will continue to pursue such policies, that such
policies will be successful if pursued, or that such policies will not be significantly altered from time to time.
Despite progress in developing its legal system, China does not have a comprehensive and highly developed
system of laws, particularly with respect to foreign investment activities and foreign trade. Enforcement of
existing and future laws and contracts is uncertain, and implementation and interpretation thereof may be
inconsistent. As the Chinese legal system develops, the promulgation of new laws, changes to existing laws, and
the preemption of local regulations by national laws may adversely affect foreign investors. Further, any
litigation in China may be protracted and may result in substantial costs and diversion of resources and
management’s attention. In addition, though changes in government policies and rules are timely published or
communicated,
the duration of any grace period before which full
implementation and compliance will be required. As a result, we may operate our business in violation of new
rules and policies before full compliance can be achieved. These uncertainties could limit the legal protections
available to us.
there is usually no indication of
We depend on the U.S. government for a substantial portion of our business, which involves unique risks.
Changes in government defense spending or regulations could have a material adverse effect on our
business, financial condition, and results of operations.
A significant portion of our revenues is derived from products and services ultimately sold to the U.S.
government by our OEM and EMS customers and is therefore affected by, among other things, the federal budget
process. We are a supplier, primarily as a subcontractor, to the U.S. government and its agencies, as well as
foreign governments and agencies. The contracts between our direct customers and the government end user are
subject to political and budgetary constraints and processes, changes in short-range and long-range strategic
plans, the timing of contract awards, the congressional budget authorization and appropriation processes, the
government’s ability to terminate contracts for convenience or for default, as well as other risks, such as
contractor suspension or debarment in the event of certain violations of legal and regulatory requirements.
For the year ended December 28, 2015, aerospace and defense sales accounted for approximately 14% of
our total net sales. The substantial majority of these sales are related to both U.S. and foreign military and
defense programs. While we do not sell any significant volume of products directly to the U.S. government, we
are a supplier to the U.S. government and its agencies, as well as foreign governments and agencies.
Consequently, our sales are affected by changes in the defense budgets of the U.S. and foreign governments and
may be affected by federal budget sequestration measures.
The domestic and international threat of terrorist activity, emerging nuclear states, and conventional military
threats have led to an increase in demand for defense products and services and homeland security solutions in
the recent past. The U.S. government, however, is facing unprecedented budgeting constraints. The termination
or failure to fund one or more significant contracts by the U.S. government could have a material adverse effect
on our business, financial condition, and results of operations.
Future changes to the Munitions List could reduce or eliminate restrictions that currently apply to some of
the products we produce. If these regulations or others are changed in a manner that reduces restrictions on
products being manufactured overseas, we would likely face an increase in the number of competitors and
increased price competition from overseas manufacturers, who are restricted by the current export laws from
manufacturing products for U.S. defense systems.
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We are subject to the requirements of the National Industrial Security Program Operating Manual for our
facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the
U.S. government.
A facility security clearance is required in order to be awarded and perform on classified contracts for the
DoD and certain other agencies of the U.S. government. As a cleared entity, we must comply with the
requirements of the National Industrial Security Program Operating Manual (NISPOM), and any other applicable
U.S. government industrial security regulations. Further, due to the fact that a significant portion of our voting
equity is owned by a non-U.S. entity, we are required to be governed by and operate in accordance with the terms
and requirements of the Special Security Agreement (the SSA). The terms of the SSA have been previously
disclosed in our SEC filings.
If we were to violate the terms and requirements of the SSA, the NISPOM, or any other applicable U.S.
government industrial security regulations (which may apply to us under the terms of classified contracts), we
could lose our security clearance. We cannot be certain that we will be able to maintain our security clearance. If
for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform on
classified contracts and would not be able to enter into new classified contracts, which could materially adversely
affect our business, financial condition, and results of operations.
We participate in the competitive automotive industry, which has strict quality control standards.
As a result of the acquisition of Viasystems, a significant portion of our sales are to customers within the
automotive industry. If there was a destabilization of the automotive industry or a market shift away from our
automotive customers, it may have a materially adverse effect on our business, financial condition, and results of
operations.
In addition, for safety reasons, automotive customers have strict quality standards that generally exceed the
quality requirements of other customers. If such products do not meet these quality standards, our business,
financial condition, and results of operations may be materially adversely affected. These automotive customers
may require long periods of time to evaluate whether our manufacturing processes and facilities meet their
quality standards. If we were to lose automotive customers due to quality control issues, we might not be able to
regain those customers or gain new automotive customers for long periods of time, which could have a material
adverse effect on our business, financial condition, and results of operations. Moreover, we may be required
under our contracts with automotive industry customers to indemnify them for the cost of warranties and recalls
relating to our products.
Competition in the PCB market is intense, and we could lose market share if we are unable to maintain our
current competitive position in end markets using our quick-turn, high technology, and high-mix
manufacturing services.
The PCB industry is intensely competitive, highly fragmented, and rapidly changing. We expect
competition to continue, which could result in price reductions, reduced gross margins, and loss of market share.
Our principal PCB and substrate competitors include AT & S Austria Technologie & Systemtechnik AG, Chin
Poon Industrial Co., LTD., Compeq Manufacturing Co., Ltd., IBIDEN Co., Ltd., ISU Petasys Co., Ltd., Multek
Corporation, Sanmina Corporation, Tripod Technology Corp., Unimicron Technology Corp., and Wus Printed
Circuit Co., Ltd. Our principal E-M Solutions competitors include Amphenol Corp, Flex, Jabil Circuit, Inc. and
Sanmina Corporation. In addition, we increasingly compete on an international basis, and new and emerging
technologies may result in new competitors entering our markets.
Some of our competitors and potential competitors have advantages over us, including:
• greater financial and manufacturing resources that can be devoted to the development, production, and
sale of their products;
• more established and broader sales and marketing channels;
• more manufacturing facilities worldwide, some of which are closer in proximity to OEMs;
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• manufacturing facilities that are located in countries with lower production costs;
• lower capacity utilization, which in peak market conditions can result in shorter lead times to customers;
• ability to add additional capacity faster or more efficiently;
• preferred vendor status with existing and potential customers;
• greater name recognition; and
• larger customer bases.
In addition, these competitors may respond more quickly to new or emerging technologies or adapt more
quickly to changes in customer requirements than we do. We must continually develop improved manufacturing
processes to meet our customers’ needs for complex products, and our manufacturing process technology is
generally not subject to significant proprietary protection. During recessionary periods in the electronics industry,
our strategy of providing quick-turn services, an integrated manufacturing solution, and responsive customer
service may take on reduced importance to our customers. As a result, we may need to compete more on the
basis of price, which would cause our gross margins to decline.
If we are unable to respond to rapid technological change and process development, we may not be able to
compete effectively.
The market for our manufacturing services is characterized by rapidly changing technology and continual
implementation of new production processes. The future success of our business will depend in large part upon
our ability to maintain and enhance our technological capabilities, to manufacture products that meet changing
customer needs, and to successfully anticipate or respond to technological changes on a cost-effective and timely
basis. We expect that the investment necessary to maintain our technological position will increase as customers
make demands for products and services requiring more advanced technology on a quicker turnaround basis. For
example, in 2016 we expect to continue to make significant capital expenditures to expand our HDI and other
advanced manufacturing capabilities. We may not be able to obtain access to additional sources of funds in order
to respond to technological changes as quickly as our competitors.
In addition,
the PCB industry could encounter competition from new or revised manufacturing and
production technologies that render existing manufacturing and production technology less competitive or
obsolete. We may not respond effectively to the technological requirements of the changing market. If we need
new technologies and equipment to remain competitive, the development, acquisition, and implementation of
those technologies and equipment will require us to make significant capital investments.
An increase in the cost of raw materials could have a material adverse effect on our business, financial
condition, and results of operations and reduce our gross margins.
To manufacture PCBs, we use raw materials such as laminated layers of fiberglass, copper foil, chemical
solutions, gold, and other commodity products, which we order from our suppliers. In the case of backplane
assemblies, components include connectors, sheet metal, capacitors, resistors and diodes, many of which are
custom made and controlled by our customers’ approved vendors. If raw material and component prices increase,
it may reduce our gross margins.
If we are unable to provide our customers with high-end technology, high-quality products, and responsive
service, or if we are unable to deliver our products to our customers in a timely manner, our business,
financial condition, and results of operations may be materially adversely affected.
In order to maintain our existing customer base and obtain business from new customers, we must
demonstrate our ability to produce our products at the level of technology, quality, responsiveness of service,
timeliness of delivery, and cost that our customers require. If our products are of substandard quality, if they are
not delivered on time, if we are not responsive to our customers’ demands, or if we cannot meet our customers’
technological requirements, our reputation as a reliable supplier of our products would likely be damaged. If we
are unable to meet anticipated product and service standards, we may be unable to obtain new contracts or keep
our existing customers, and this would have a material adverse effect on our business, financial condition, and
results of operations.
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We are subject to risks for the use of certain metals from “conflict minerals” originating in the Democratic
Republic of the Congo.
During the third quarter of 2012, the SEC adopted rules implementing the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank). These rules impose diligence and disclosure requirements regarding
the use of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries as required
by Dodd-Frank. While these new rules continue to be the subject of ongoing litigation and, as a result,
uncertainty, we submitted a conflict minerals report on Form SD with the SEC on June 2, 2014 and May 14,
2015. Compliance with these rules is likely to result in additional costs and expenses, including costs and
expenses incurred for due diligence to determine and verify the sources of any conflict minerals used in our
products, in addition to the costs and expenses of remediation and other changes to products, processes, or
sources of supply as a consequence of such verification efforts. These rules may also affect the sourcing and
availability of minerals used in the manufacture of our PCBs, as there may be only a limited number of suppliers
offering “conflict free” minerals that can be used in our products. There can be no assurance that we will be able
to obtain such minerals in sufficient quantities or at competitive prices. Also, since our supply chain is complex,
we may, at a minimum, face reputational challenges with our customers, stockholders, and other stakeholders if
we are unable to sufficiently verify the origins of the minerals used in our products. We may also encounter
customers who require that all of the components of our products be certified as conflict free. If we are not able
to meet customer requirements, such customers may choose to disqualify us as a supplier, which could impact
our sales and the value of portions of our inventory.
Damage to our manufacturing facilities due to fire, natural disaster, or other events could materially
adversely affect our business, financial condition, and results of operations.
The destruction or closure of any of our facilities for a significant period of time as a result of fire,
explosion, blizzard, act of war or terrorism, flood, tornado, earthquake, lightning, other natural disasters, an
outbreak of epidemics such as Ebola or severe acute respiratory syndrome, required maintenance, or other events
could harm us financially, increasing our costs of doing business and limiting our ability to deliver our
manufacturing services on a timely basis.
Our insurance coverage with respect to damages to our facilities or our customers’ products caused by
natural disasters is limited and is subject to deductibles and coverage limits. Such coverage may not be adequate
or continue to be available at commercially reasonable rates and terms.
In the event one or more of our facilities is closed on a temporary or permanent basis as a result of a natural
disaster, required maintenance or other event, or in the event that an outbreak of a serious epidemic results in
quarantines, temporary closures of offices or manufacturing facilities, travel restrictions or the temporary or
permanent loss of key personnel, our operations could be significantly disrupted. Such events could delay or
prevent product manufacturing and shipment for the time required to transfer production or repair, rebuild or
replace the affected manufacturing facilities. This time frame could be lengthy and result in significant expenses
for repair and related costs. While we have disaster recovery plans in place, there can be no assurance that such
plans will be sufficient to allow our operations to continue in the event of every natural or man-made disaster,
pandemic, required repair or other extraordinary event. Any extended inability to continue our operations at
unaffected facilities following such an event would reduce our revenue and potentially damage our reputation as
a reliable supplier.
We face constant pricing pressure from our customers and competitors, which may decrease our profit
margins.
Competition in the PCB market is intense, and we expect that competition will continue to increase, thereby
creating a highly aggressive pricing environment. We and some of our competitors have reduced average selling
prices in the past. In addition, competitors may reduce their average selling prices faster than our ability to reduce
costs, which can also accelerate the rate of decline of our selling prices. When prices decline, we may also be
required to write down the value of our inventory.
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The effects of such pricing pressures on our business may be exacerbated by inflationary pressures that
affect our costs of supply. When we are unable to extract comparable concessions from our suppliers on prices
they charge us, this in turn reduces gross profit if we are unable to raise prices. Further, uncertainty or adverse
changes in the economy could also lead to a significant decline in demand for our products and pressure to
reduce our prices. As a result of the recent global economic downturn, many businesses have taken a more
conservative stance in ordering inventory. Any decrease in demand for our products, coupled with pressure from
the market and our customers to decrease our prices, would materially adversely affect our business, financial
condition, and results of operations.
The pricing pressure we face on our products requires us to introduce new and more advanced technology
products to maintain average selling prices or reduce any declines in average selling prices. As we shift
production to more advanced, higher-density PCBs, we tend to make significant investments in plants and other
capital equipment and incur higher costs of production, which may not be recovered.
The prominence of EMS companies as our customers could reduce our gross margins, potential sales, and
customers.
Sales to EMS companies represented approximately 35%, 39% and 38% of our net sales for the years ended
December 28, 2015, December 29, 2014 and December 30, 2013, respectively. Sales to EMS providers include
sales directed by OEMs as well as orders placed with us at the EMS providers’ discretion. EMS providers source
on a global basis to a greater extent than OEMs. The growth of EMS providers increases the purchasing power of
such providers and has in the past, and could in the future, result in increased price competition or the loss of
existing OEM customers. In addition, some EMS providers, including some of our customers, have the ability to
directly manufacture PCBs and create backplane assemblies. If a significant number of our other EMS customers
were to acquire these abilities, our customer base might shrink, and our sales might decline substantially.
Moreover, if any of our OEM customers outsource the production of PCBs and creation of backplane assemblies
to these EMS providers, our business, financial condition, and results of operations may be materially adversely
affected.
If we are unable to manage our growth effectively, our business, financial condition, and results of
operations could be materially adversely affected.
We have experienced, and expect to continue to experience, growth in the scope and complexity of our
operations. This growth may strain our managerial, financial, manufacturing, and other resources. In order to
manage our growth, we may be required to continue to implement additional operating and financial controls and
hire and train additional personnel. There can be no assurance that we will be able to do so in the future, and
failure to do so could jeopardize our expansion plans and seriously harm our operations. In addition, growth in
our capacity could result in reduced capacity utilization and a corresponding decrease in gross margins.
Our international sales are subject to laws and regulations relating to corrupt practices, trade, and export
controls and economic sanctions. Any non-compliance could have a material adverse effect on our
business, financial condition, and results of operations.
We operate on a global basis and are subject to anti-corruption, anti-bribery, and anti-kickback laws and
regulations, including restrictions imposed by the Foreign Corrupt Practices Act (the FCPA). The FCPA and
similar anti-corruption, anti-bribery, and anti-kickback laws in other jurisdictions generally prohibit companies
and their intermediaries and agents from making improper payments to government officials or any other persons
for the purpose of obtaining or retaining business. We operate and sell our products in many parts of the world
that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance
with anti-corruption, anti-bribery, and anti-kickback laws may conflict with local customs and practices. We also,
from time to time, undertake business ventures with state-owned companies or enterprises.
Our global business operations must also comply with all applicable domestic and foreign export control
laws, including International Traffic In Arms Regulations (ITAR), and Export Administration Regulations
(EAR). Some items we manufacture are controlled for export by the U.S. Department of Commerce’s Bureau of
Industry and Security under EAR.
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We train our employees concerning anti-corruption, anti-bribery, and anti-kickback laws and compliance
with international regulations regarding trades and exports, and we have policies in place that prohibit employees
from making improper payments. We cannot provide assurances that our internal controls and procedures will
guarantee compliance by our employees or third parties with whom we work. If we are found to be liable for
violations of the FCPA or similar anti-corruption, anti-bribery, or anti-kickback laws in international jurisdictions
or for violations of ITAR, EAR, or other similar regulations regarding trades and exports, either due to our own
acts or out of inadvertence, or due to the inadvertence of others, we could suffer criminal or civil fines or
penalties or other repercussions, including reputational harm, which could have a material adverse effect on our
business, financial condition, and results of operations.
Our global business operations also must be conducted in compliance with applicable economic sanctions
laws and regulations, such as laws administered by the U.S. Department of the Treasury’s Office of Foreign
Asset Control, the U.S. State Department, and the U.S. Department of Commerce. We must comply with all
applicable economic sanctions laws and regulations of the United States and other countries. Violations of these
laws or regulations could result in significant additional sanctions including criminal or civil fines or penalties,
more onerous compliance requirements, more extensive debarments from export privileges, or loss of
authorizations needed to conduct aspects of our international business.
In certain countries, we may engage third-party agents or intermediaries, such as customs agents, to act on
our behalf, and if these third-party agents or intermediaries violate applicable laws, their actions may result in
criminal or civil fines or penalties or other sanctions being assessed against us. We take certain measures
designed to ensure our compliance with U.S. export and economic sanctions laws, anti-corruption laws and
regulations, and export control laws. However, it is possible that some of our products were sold or will be sold
to distributors or other parties, without our knowledge or consent, in violation of applicable law. There can be no
assurances that we will be in compliance in the future. Any such violation could result in significant criminal or
civil fines, penalties, or other sanctions and repercussions, including reputational harm, which could have a
material adverse effect on our business, financial condition, and results of operations.
Our failure to comply with the requirements of environmental laws could result in litigation, fines,
revocation of permits necessary to our manufacturing processes, or debarment from our participation in
federal government contracts.
Our operations are regulated under a number of federal, state, local, and foreign environmental and safety
laws and regulations that govern, among other things, the discharge of hazardous materials into the air and water,
as well as the handling, storage, and disposal of such materials. These laws and regulations include the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Superfund Amendment and
Reauthorization Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic
Substances Control Act, and the Federal Motor Carrier Safety Improvement Act, as well as analogous state,
local, and foreign laws. Compliance with these environmental laws is a major consideration for us because our
manufacturing processes use and generate materials classified as hazardous. Because we use hazardous materials
and generate hazardous wastes in our manufacturing processes, we may be subject to potential financial liability
for costs associated with the investigation and remediation of our own sites, or sites at which we have arranged
for the disposal of hazardous wastes, if such sites become contaminated. Even if we fully comply with applicable
environmental laws and are not directly at fault for the contamination, we may still be liable. The wastes we
generate include spent ammoniacal and cupric etching solutions, metal stripping solutions, waste acid solutions,
waste alkaline cleaners, waste oil, and waste waters that contain heavy metals such as copper, tin, lead, nickel,
gold, silver, cyanide, and fluoride, and both filter cake and spent ion exchange resins from equipment used for
on-site waste treatment.
Environmental law violations, including the failure to maintain required environmental permits, could
subject us to fines, penalties, and other sanctions, including the revocation of our effluent discharge permits. This
could require us to cease or limit production at one or more of our facilities and could have a material adverse
financial condition, and results of operations. Even if we ultimately prevail,
effect on our business,
environmental lawsuits against us would be time consuming and costly to defend.
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Environmental laws have generally become more stringent and this trend may continue over time, imposing
greater compliance costs and increasing risks and penalties associated with violation. We operate in
environmentally sensitive locations, and we are subject to potentially conflicting and changing regulatory
agendas of political, business, and environmental groups. Changes or restrictions on discharge limits, emissions
levels, material storage, handling, or disposal might require a high level of unplanned capital investment or
relocation to another global location where prohibitive regulations do not exist. It is possible that environmental
compliance costs and penalties from new or existing regulations may materially adversely affect our business,
financial condition, and results of operations.
We are increasingly required to certify compliance with various material content restrictions in our products
based on laws of various jurisdictions or territories such as the Restriction of Hazardous Substances (RoHS) and
Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) directives in the European Union
and China’s RoHS legislation. Similar laws have been adopted in other jurisdictions and may become
increasingly prevalent. In addition, we must also certify as to the non-applicability of the EU’s Waste Electrical
and Electronic Equipment directive for certain products that we manufacture. The REACH directive requires the
identification of Substances of Very High Concern (SVHCs) periodically. We must survey our supply chain and
certify to the non-presence or presence of SVHCs to our customers. As with other types of product certifications
that we routinely provide, we may incur liability and pay damages if our products do not conform to our
certifications.
We are also subject to a variety of environmental laws and regulations in China, which impose limitations
on the discharge of pollutants into the air and water and establish standards for the treatment, storage, and
disposal of solid and hazardous wastes. The manufacturing of our products generates gaseous chemical wastes,
liquid wastes, waste water, and other industrial wastes from various stages of the manufacturing process.
Production sites in China are subject to regulation and periodic monitoring by the relevant environmental
protection authorities. Environmental claims or the failure to comply with current or future regulations could
result in the assessment of damages or imposition of fines against us, suspension of production, or cessation of
operations.
The process to manufacture PCBs requires adherence to city, county, state,
federal, and foreign
environmental regulations regarding the storage, use, handling, and disposal of chemicals, solid wastes, and other
hazardous materials, as well as compliance with air quality standards and chemical use reporting. In China,
governmental authorities have adopted new rules and regulations governing environmental issues. An update to
Chinese environmental waste water law was issued in late 2012, allowing for an interim period in which plants
subject to such law may install equipment that meets the new regulatory regime. Our plants in China are not yet
in full compliance with the newly adopted environmental regulations. There can be no assurance that violations
will not occur in the future.
Employee theft or fraud could result in loss.
Certain of our employees have access to, or signature authority with respect to, bank accounts or other
company assets, which could expose us to fraud or theft. In addition, certain employees have access to certain
precious metals used in connection with our manufacturing and key information technology (IT) infrastructure
and to customer and other information that is commercially valuable. Should any employee, for any reason, steal
any such precious metals (which has occurred from time to time), compromise our IT systems, or misappropriate
customer or other information, we could incur losses, including losses relating to claims by our customers against
us, and the willingness of customers to do business with us may be damaged. Additionally, in the case of our
defense business, we could be debarred from future participation in government programs. Any such losses may
not be fully covered by insurance.
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Because we sell on a purchase order basis, we are subject to uncertainties and variability in demand by our
customers that could decrease revenues and harm our operating results.
Although we have long-term contracts with many customers, those contracts generally do not contain
volume commitments. We generally sell to customers on a purchase order basis. Our quick-turn orders are
subject to particularly short lead times. Consequently, our sales are subject to short-term variability in demand by
our customers. Customers submitting purchase orders may cancel, reduce, or delay their orders for a variety of
reasons, subject to negotiations. The level and timing of orders placed by our customers may vary due to:
• customer attempts to manage inventory;
• changes in customers’ manufacturing strategies, such as a decision by a customer to either diversify or
consolidate the number of PCB manufacturers or backplane assembly service providers used or to
manufacture or assemble its own products internally;
• variation in demand for our customers’ products; and
• changes in new product introductions.
We have periodically experienced terminations, reductions, and delays in our customers’ orders. Further
terminations, reductions, or delays in our customers’ orders could materially adversely affect our business,
financial condition, and results of operations.
Increasingly, our customers are requesting that we enter into supply agreements with them that have
restrictive terms and conditions. These agreements typically include provisions that increase our financial
exposure, which could result in significant costs to us.
Increasingly, our customers are requesting that we enter into supply agreements with them. These
agreements typically do not include volume commitments, but do include provisions that generally serve to
increase our exposure for product liability and limited sales returns, which could result in higher costs to us as a
result of such claims. In addition, these agreements typically contain provisions that seek to limit our operational
and pricing flexibility and extend payment terms, which could materially adversely affect our cash flow,
business, financial condition, and results of operations.
Our business has benefited from OEMs deciding to outsource their PCB manufacturing and backplane
assembly needs to us. If OEMs choose to provide these services in-house or select other providers, our
business could suffer.
Our future revenue growth partially depends on new outsourcing opportunities from OEMs. Current and
prospective customers continuously evaluate our performance against other providers. They also evaluate the
potential benefits of manufacturing their products themselves. To the extent that outsourcing opportunities are
not available either due to OEM decisions to produce these products themselves or to use other providers, our
financial results and future growth could be materially adversely affected.
Consolidation among our customers could materially adversely affect our business, financial condition, and
results of operations.
Recently, some of our large customers have consolidated, and further consolidation of customers may occur.
Depending on which organization becomes the controller of
the supply chain function following the
consolidation, we may not be retained as a preferred or approved supplier. In addition, product duplication could
result in the termination of a product line that we currently support. While there is potential for increasing our
position with the combined customer, there does exist the potential for decreased revenue if we are not retained
as a continuing supplier. We also face the risk of increased pricing pressure from the combined customer because
of its increased market share.
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We may need additional capital in the future to fund investments in our operations, refinance our
indebtedness, and to maintain and grow our business, and such capital may not be available on a timely
basis, on acceptable terms, or at all.
Our business is capital-intensive, and our ability to increase revenue, profit, and cash flow depends upon
continued capital spending. To the extent that the funds generated by our ongoing operations are insufficient to
cover our liquidity requirements, we may need to raise additional funds through financings. If we are unable to
fund our operations and make capital expenditures as currently planned or if we do not have sufficient liquidity
to service the interest and principal payments on our debt, it would have a material adverse effect on our
business, financial condition, and results of operations. If we do not achieve our expected operating results, we
would need to reallocate our sources and uses of operating cash flows. This may include borrowing additional
funds to service debt payments, which may impair our ability to make investments in our business. Looking
ahead at long-term needs, we may need to raise additional funds for a number of purposes, including the
following:
• to fund capital equipment purchases to increase production capacity, upgrade and expand our
technological capabilities and replace aging equipment or introduce new products;
• to refinance our existing indebtedness;
• to fund our operations beyond 2016;
• to fund working capital requirements for future growth that we may experience;
• to enhance or expand the range of services we offer;
• to increase our sales and marketing activities; or
• to respond to competitive pressures or perceived opportunities, such as investment, acquisition, and
international expansion activities.
Should we need to raise funds through incurring additional debt, we may become subject to covenants even
more restrictive than those contained in our current debt instruments. There can be no assurance that additional
capital, including any future equity or debt financing, would be available on a timely basis, on favorable terms, or
at all. If such funds are not available to us when required or on acceptable terms, our business, financial
condition, and results of operations could be materially adversely affected.
Our operations could be materially adversely affected by a shortage of utilities or a discontinuation of
priority supply status offered for such utilities.
The manufacturing of PCBs requires significant quantities of electricity and water. Our Asia Pacific
operations have historically purchased substantially all of the electrical power for their manufacturing plants in
China from local power plants. Because China’s economy has recently been in a state of growth, the strain on the
nation’s power plants is increasing, which has led to continuing power outages in various parts of the country.
There may be times when our operations in China may be unable to obtain adequate sources of electricity to meet
production requirements. Various regions in China have in the past experienced shortages of both electricity and
water and unexpected interruptions of power supply. From time to time, the Chinese government rations
electrical power, which can lead to unscheduled production interruptions at our manufacturing facilities.
In addition, certain of the areas in which our North America operations have manufacturing facilities,
particularly in California, have experienced power and resource shortages from time to time,
including
mandatory periods without electrical power, changes to water availability, and significant increases in utility and
resource costs. California has also recently experienced drought conditions, prompting the Governor of
California to proclaim a Drought State of Emergency. Due to the severe drought conditions, some local and
regional water districts and the state government are implementing policies or regulations that restrict water
usage and increase the cost of water.
We do not generally maintain any back-up power generation facilities or reserves of water for our
operations, so if we were to lose supplies of power or water at any of our facilities, we would be required to cease
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operations until such supply was restored. Any resulting cessation of operations could materially adversely affect
our ability to meet our customers’ orders in a timely manner, thus potentially resulting in a loss of business,
along with increased costs of manufacturing, and under-utilization of capacity. In addition, the sudden cessation
of our power or water supply could damage our equipment, resulting in the need for costly repairs or
maintenance, as well as damage to products in production, resulting in an increase in scrapped products.
For example, in the third quarter of 2014, one of our principal plants was affected by a five day unexpected
power outage, which increased our manufacturing costs and caused delivery delays. There can be no assurance
that our required utilities would not in the future experience material interruptions, which could have a material
adverse effect on our business, financial condition, and results of operations.
Outages, computer viruses, break-ins, and similar events could disrupt our operations, and breaches of our
security systems may cause us to incur significant legal and financial exposure.
including worldwide financial reporting,
We rely on information technology networks and systems, some of which are owned and operated by third
parties, to process, transmit, and store electronic information. In particular, we depend on our information
technology infrastructure for a variety of functions,
inventory
management, procurement, invoicing, and email communications. Any of these systems may be susceptible to
outages due to fire, floods, power loss, telecommunications failures, terrorist attacks, and similar events. Despite
the implementation of network security measures, our systems and those of third parties on which we rely may
also be vulnerable to computer viruses, break-ins, and similar disruptions. If we or our vendors are unable to
prevent such outages and breaches, our operations could be disrupted. If unauthorized parties gain access to our
information systems or such information is used in an unauthorized manner, misdirected, lost, or stolen during
transmission, any theft or misuse of such information could result in, among other things, unfavorable publicity,
governmental inquiry and oversight, difficulty in marketing our services, allegations by our customers that we
have not performed our contractual obligations, litigation by affected parties, and possible financial obligations
for damages related to the theft or misuse of such information, any of which could have a material adverse effect
on our business, financial condition, and results of operations.
We may be unable to hire and retain sufficient qualified personnel, and the loss of any of our key executive
officers could materially adversely affect our business, financial condition, and results of operations.
We believe that our future success will depend in large part on our ability to attract and retain highly skilled,
knowledgeable, sophisticated, and qualified managerial and professional personnel. We may not be able to retain
our executive officers and key personnel or attract additional qualified management in the future. We can make
no assurances that future changes in executive management will not have a material adverse effect on our
business, financial condition, or results of operations. Our business also depends on our continuing ability to
recruit, train, and retain highly qualified employees, particularly engineering and sales and marketing personnel.
The competition for these employees is intense, and the loss of these employees could harm our business.
Further, our ability to successfully integrate acquired companies depends in part on our ability to retain key
management and existing employees at the time of the acquisition.
In addition, key employees may depart for a variety of reasons, including because of issues relating to the
difficulty of integration or accelerated retirement in connection with our acquisition of Viasystems. If key
employees depart, the integration process may be more difficult and could have a material adverse effect on our
business, financial condition, and results of operations. Furthermore, we may have to incur significant costs in
identifying and hiring replacements for departing employees and may lose significant expertise and talent
relating to our businesses, and our ability to realize the anticipated benefits of the acquisition of Viasystems may
be adversely affected. In addition, there could be disruptions to or distractions for the workforce and management
associated with integrating employees. Accordingly, no assurance can be given that we will be able to attract or
retain key employees or that the loss of any key executive officers would not materially adversely affect our
business, financial condition, and results of operations.
33
Our manufacturing processes depend on the collective industry experience of our employees. If a
significant number of these employees were to leave us, it could limit our ability to compete effectively and
could materially adversely affect our business, financial condition, and results of operations.
We have limited patent or trade secret protection for our manufacturing processes. We rely on the collective
experience of our employees involved in our manufacturing processes to ensure that we continuously evaluate
and adopt new technologies in our industry. Although we are not dependent on any one employee or a small
number of employees, if a significant number of our employees involved in our manufacturing processes were to
leave our employment, and we were not able to replace these people with new employees with comparable
experience, our manufacturing processes might suffer as we might be unable to keep up with innovations in the
industry. As a result, we may lose our ability to continue to compete effectively. For example, we have
experienced a significant amount of employee attrition in our China operations each year, which has negatively
impacted our yield, costs of production, and service times.
We may be exposed to intellectual property infringement claims by third parties that could be costly to
defend, could divert management’s attention and resources, and if successful, could result in liability.
We rely on a combination of copyright, patent, trademark, and trade secret laws, confidentiality procedures,
contractual provisions, and other measures to protect our proprietary information. All of these measures afford
only limited protection. These measures may be invalidated, circumvented, or challenged, and others may
develop technologies or processes that are similar or superior to our technology. We may not have the controls
and procedures in place that are needed to adequately protect proprietary information. Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy our products or obtain or use information
that we regard as proprietary, which could materially adversely affect our business, financial condition, and
results of operations.
Furthermore, there is a risk that we may infringe on the intellectual property rights of others. As is the case
with many other companies in the PCB industry, we from time to time receive communications from third parties
asserting patent rights to our products and enter into discussions with such third parties. Irrespective of the
validity or the successful assertion of such claims, we could incur costs in either defending or settling any
intellectual property disputes alleging infringement. If any claims are brought against the customers for such
infringement, whether or not these have merit, we could be required to expend significant resources in defending
such claims. In the event we are subject to any infringement claims, we may be required to spend a significant
amount of money to develop non-infringing alternatives or obtain licenses. We may not be successful in
developing such alternatives or in obtaining such licenses on reasonable terms or at all, which could disrupt the
production processes, damage our reputation, and materially adversely affect our business, financial condition,
and results of operations.
Our business, financial condition, and results of operations could be materially adversely affected by
climate change initiatives.
Our manufacturing processes require that we purchase significant quantities of energy from third parties,
which results in the generation of greenhouse gases, either directly on-site or indirectly at electric utilities. Both
domestic and international legislation to address climate change by reducing greenhouse gas emissions could
create increases in energy costs and price volatility. Considerable international attention is now focused on
development of an international policy framework to guide international action to address climate change.
Proposed and existing legislative efforts to control or limit greenhouse gas emissions could affect our energy
sources and supply choices, as well as increase the cost of energy and raw materials that are derived from sources
that generate greenhouse gas emissions.
Our business relationships may be subject to disruption due to uncertainty associated with the acquisition of
Viasystems.
Parties with which we do business may experience uncertainty associated with our acquisition of
Viasystems, including current or future business relationships with the combined company. Our business
34
relationships may be subject to disruption, as customers, distributors, suppliers, vendors, and others may attempt
to negotiate changes in existing business relationships or consider entering into business relationships with
parties other than the combined company. These disruptions could have a material adverse effect on the business,
financial condition, or results of operations of the combined company, including a material adverse effect on our
ability to realize the anticipated benefits of the acquisition of Viasystems.
Failure to maintain good relations with the noncontrolling interest holder of a majority-owned subsidiary of
TTM in China could materially adversely affect our ability to manage that operation.
A noncontrolling interest holder owns a 5% interest in a subsidiary of TTM that operates the Huiyang,
China facility that became a part of our operations through the acquisition of Viasystems. The noncontrolling
interest holder is affiliated with the Chinese government and has close ties to local economic development and
other Chinese government agencies. The noncontrolling interest holder has certain rights to be consulted and to
consent to certain operating and investment matters concerning the Huiyang facility and the board of directors of
our subsidiary that operates the Huiyang facility. Failure to maintain good relations with the noncontrolling
interest holder could materially adversely affect our ability to manage the operations of the plant.
Security breaches and other disruptions could compromise our information and expose us to liability, which
could cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data in our data centers and on our
networks, including intellectual property, our proprietary business information and that of our customers,
suppliers and business partners, and personally identifiable information of our employees. The secure processing,
maintenance and transmission of this information is critical to our operations. Despite our security measures, our
information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee
error, malfeasance or other disruptions. Any such breach could compromise our networks and the information
stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of
information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause
a loss of confidence in our products and services, which could have a material adverse effect on our business,
financial condition, results of operations or cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
35
ITEM 2. PROPERTIES
The following table describes our principal manufacturing facilities and our drilling and tooling process
facility.
U.S. Locations
Operating
Segment
Leased
Square Feet
Owned
Square Feet
Total
Square Feet
Anaheim, CA (ANA) . . . . . . . . . . . . . . . . . .
Cleveland, OH (CLE)(2) . . . . . . . . . . . . . . .
Costa Mesa, CA(1) . . . . . . . . . . . . . . . . . . . .
Chippewa Falls, WI (CF) . . . . . . . . . . . . . . .
El Paso, TX(2) . . . . . . . . . . . . . . . . . . . . . . .
Forest Grove, OR (FG)
. . . . . . . . . . . . . . . .
Littleton, Colorado (DEN) . . . . . . . . . . . . . .
Logan, UT (LG) . . . . . . . . . . . . . . . . . . . . . .
Milpitas, CA (MIL)(2) . . . . . . . . . . . . . . . . .
North Jackson, OH (NJ) . . . . . . . . . . . . . . . .
San Diego, CA (SD) . . . . . . . . . . . . . . . . . . .
San Jose, CA (SJ) . . . . . . . . . . . . . . . . . . . . .
Santa Ana, CA (SA) . . . . . . . . . . . . . . . . . . .
Santa Clara, CA (SC) . . . . . . . . . . . . . . . . . .
Stafford, CT (ST) . . . . . . . . . . . . . . . . . . . . .
Stafford Springs, CT (SS)
. . . . . . . . . . . . . .
Sterling,VA (STE) . . . . . . . . . . . . . . . . . . . .
PCB
PCB
Headquarters
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
PCB
—
—
11,775
—
29,000
—
2,000
—
62,000
9,000
38,739
40,000
—
18,304
21,251
9,000
101,000
97,000
40,000
—
281,000
—
310,500
26,000
129,300
—
75,000
—
—
82,550
49,115
136,000
110,328
—
97,000
40,000
11,775
281,000
29,000
310,500
28,000
129,300
62,000
84,000
38,739
40,000
82,550
67,419
157,251
119,328
101,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
342,069
1,336,793
1,678,862
Foreign Locations
Mexico
Juarez, Chihuahua (JZ)(2) . . . . . . . . . . . . . .
Canada
Toronto (TOR) . . . . . . . . . . . . . . . . . . . . . . .
China
Hong Kong (OPCM) . . . . . . . . . . . . . . . . . .
Dongguan (DMC)
. . . . . . . . . . . . . . . . . . . .
Guangzhou (GME) . . . . . . . . . . . . . . . . . . . .
Guangzhou (GZ)
. . . . . . . . . . . . . . . . . . . . .
Huiyang (HY) . . . . . . . . . . . . . . . . . . . . . . . .
Shanghai(SH) . . . . . . . . . . . . . . . . . . . . . . . .
Shanghai (SH E-MS) . . . . . . . . . . . . . . . . . .
Shanghai (SME) . . . . . . . . . . . . . . . . . . . . . .
Shanghai (SMST/SP) . . . . . . . . . . . . . . . . . .
Shanghai (SKE)(3) . . . . . . . . . . . . . . . . . . . .
Shenzhen (SZ) . . . . . . . . . . . . . . . . . . . . . . .
Zhongshan (ZS) . . . . . . . . . . . . . . . . . . . . . .
E-M
Solutions
205,000
—
205,000
PCB
15,000
93,000
108,000
PCB
PCB
PCB
PCB
PCB
E-M
Solutions
E-M
Solutions
PCB
PCB
PCB
E-M
Solutions
PCB
86,982
—
—
106,000
—
—
1,322,803
968,028
2,250,000
400,000
86,982
1,322,803
968,028
2,356,000
400,000
85,745
—
85,745
—
—
—
3,294
430,000
416,761
521,257
135,207
430,000
416,761
521,257
138,501
286,000
—
—
1,140,000
286,000
1,140,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
788,021
7,677,056
8,465,077
36
We maintain our properties in good operating condition. We believe that our properties are suitable and
adequate for us to operate at present levels, and the productive capacity and extent of utilization of the facilities
are appropriate for our existing manufacturing requirements.
(1) Location of our headquarters and not a manufacturing facility
(2) Facility / warehouse to be shutdown or consolidated into other facilities in 2016
(3) Drilling and tooling process facility
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become a party to various legal proceedings arising in the ordinary course of our
business. There can be no assurance that we will prevail in any such litigation. We believe that the amount of any
reasonably possible loss for known matters would not be material to our financial statements; however, the
outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate
potential loss could have a material adverse effect on our financial condition, results of operations, or cash flows
in a particular period.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Historical Trading Price
Our common stock has been listed on the Nasdaq Global Select Market under the symbol “TTMI” since
September 21, 2000. The following table sets forth the quarterly high and low sales prices of our common stock
as reported on the Nasdaq Global Select Market for the periods indicated.
2015:
First Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014:
First Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High
Low
$ 9.27
$10.93
$10.18
$ 8.31
$ 8.75
$ 8.49
$ 8.44
$ 7.73
$6.87
$8.77
$6.09
$5.96
$7.33
$7.24
$6.72
$5.59
As of February 18, 2016, there were approximately 293 holders of record of our common stock. The closing
sale price of our common stock on the Nasdaq Global Select Market on February 18, 2016 was $6.46.
Dividend Policy
TTM Technologies, Inc. has not declared or paid any dividends since 2000 and does not anticipate paying
any cash dividends in the foreseeable future. TTM Technologies, Inc. presently intends to retain any future
earnings to service debt and to finance future operations and the expansion of its business. In addition, TTM
Technologies, Inc. debt agreements contain restrictions and limitations on the declaration and payment of
dividends and distributions.
37
STOCK PRICE PERFORMANCE GRAPH
The performance graph below compares, for the period from December 31, 2010 to December 28, 2015, the
cumulative total stockholder return on our common stock against the cumulative total return of:
• the NASDAQ Composite Index; and
• the Dow Jones U.S. Electrical Components & Equipment Index.
The graph assumes $100 was invested in our common stock on December 31, 2010, and an investment in
NASDAQ Composite Index and the Dow Jones US Electrical Components & Equipment Index. The stock
performance shown on the graph below represents historical stock performance and is not necessarily indicative
of future stock performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among TTM Technologies, Inc., the NASDAQ Composite Index,
and the Dow Jones US Electrical Components & Equipment Index
$250
$200
$150
$100
$50
$0
12/31/10
12/31/11
12/31/12
12/30/13
12/29/14
12/28/15
TTM Technologies, Inc.
NASDAQ Composite
Dow Jones US Electrical Components & Equipment
* $100 invested on December 31, 2010 in stock or index, including reinvestment of dividends.
12/31/10 12/31/11 12/31/12 12/30/13 12/29/14 12/28/15
TTM Technologies, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 73.46 61.60 57.57 50.60 45.64
NASDAQ Composite . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 100.53 116.92 166.19 188.78 199.95
Dow Jones US Electrical Components & Equipment . . . 100.00 89.60 109.78 151.78 163.83 154.73
The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act,
or otherwise subject
to the liability of that section. The performance graph above will not be deemed
incorporated by reference into any filing of our company under the Securities Act of 1933, as amended, or the
Exchange Act.
38
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial data presented below are derived from our consolidated financial
statements. The selected financial data should be read in conjunction with “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the
notes thereto included elsewhere in this report.
Year Ended
December 28,
2015(1)(2)
December 29,
2014(2)
December 30,
2013(2)
December 31,
2012
December 31,
2011
(In thousands, except per share data)
Consolidated Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,095,488 $1,325,717 $1,368,215 $1,348,668 $1,428,639
1,127,326
1,785,351
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . .
1,123,669
1,150,372
1,131,028
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . .
310,137
194,689
217,843
224,999
301,313
Operating expenses:
Selling and marketing . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . .
Amortization of definite-lived intangibles . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . .
Impairment of goodwill and definite-lived
intangibles . . . . . . . . . . . . . . . . . . . . . . . . .
57,361
167,669
18,888
(2,504)
7,381
—
36,919
100,999
8,387
—
—
1,845
37,149
105,924
9,332
(17,917)
3,445
10,782
35,957
98,005
14,637
—
—
18,082
36,891
92,682
17,311
—
—
48,125
Total operating expenses . . . . . . . . . . . . . .
248,795
148,150
148,715
—
—
—
200,335
367,016
15,184
210,193
Operating income (loss) . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other expense, net . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net (income) loss attributable to the non-
controlling interest . . . . . . . . . . . . . . . . . . . . .
61,342
46,539
69,128
(142,017)
91,120
(59,753)
(802)
8,189
(52,366)
8,976
(34,594)
(25,618)
(23,830)
(506)
88
(24,248)
22,291
(7,598)
(24,031)
(10,743)
5,418
(29,356)
39,772
(15,879)
(25,784)
(5,527)
4,956
(26,355)
(168,372)
(12,728)
(26,504)
—
8,616
(17,888)
73,232
(26,005)
14,693
23,893
(181,100)
47,227
(264)
—
(2,016)
6,505
(5,359)
Net (loss) income attributable to TTM
Technologies, Inc. stockholders . . . . . . . . . . . $ (25,882) $
14,693 $
21,877 $ (174,595) $
41,868
(Loss) earnings per common share attributable
to TTM Technologies, Inc. stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average common shares:
(0.28) $
(0.28) $
0.18 $
0.18 $
0.27 $
0.26 $
(2.13) $
(2.13) $
0.52
0.51
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,675
92,675
83,238
83,941
82,506
83,132
81,800
81,800
81,176
81,944
Other Financial Data:
Depreciation of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,508 $
95,349 $
92,120 $
84,286 $
69,698
(1) Our results for the year ended December 28, 2015 include 211 days of activity of Viasystems Group, Inc.,
which we acquired on May 31, 2015. Additionally, our results include $34.4 million of bank fees and legal,
accounting and other professional service costs associated with the acquisition of Viasystems.
(2) Beginning in 2013, we operate on a 52 or 53 week year ending on the Monday nearest December 31. Fiscal
2015, 2014 and 2013 were 52 weeks and ended on December 28, 2015, December 29, 2014 and
December 30, 2013, respectively. Prior to 2013, our fiscal year always ended on December 31.
39
As of
December 28,
2015
December 29,
2014
December 30,
2013
December 31,
2012
December 31,
2011
(In thousands)
Consolidated Balance Sheet Data:
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 277,526 $ 302,111 $ 346,988 $ 395,732 $ 234,394
1,749,069
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,671,304
489,400
Long-term debt, including current maturities . . . . . . . 1,201,957
808,917
819,105
TTM Technologies, Inc. stockholders’ equity . . . . . .
1,673,575
573,743
705,295
1,676,962
557,545
653,947
1,601,289
502,687
715,464
Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
December 31,
2012
December 31,
2011
(In thousands)
Supplemental Data:
Adjusted EBITDA(1)
Net cash provided by operating activities . . . . . . . . . .
Net cash (used in) provided by investing activities . . .
Net cash (used in) provided by financing activities . .
. . . . . . . . . . . . . . . . . . . . . . . . . $ 285,673 $ 166,044 $ 181,293 $ 190,592 $ 258,245
179,345
(140,617)
(55,215)
129,810
(108,571)
(77,141)
237,462
(247,660)
(5,756)
182,565
(136,444)
45,068
71,388
(35,689)
12,985
(1) “EBITDA” means earnings before interest expense, income taxes, depreciation and amortization. Adjusted
income taxes, depreciation, amortization, stock-based
EBITDA means earnings before interest expense,
compensation, gain on sale of assets, acquisition-related costs, and impairments, restructuring and other charges.
This is a non-GAAP financial measurement used by us to enhance the understanding of our operating results.
Adjusted EBITDA is a key measure we use to evaluate our operations. We provide our adjusted EBITDA
because we believe that investors and securities analysts will find adjusted EBITDA to be a useful measure for
evaluating our operating performance and comparing our operating performance with that of similar companies
that have different capital structures and for evaluating our ability to meet our future debt service, capital
expenditures, and working capital requirements. However, adjusted EBITDA should not be considered as an
alternative to cash flows from operating activities as a measure of liquidity or as an alternative to net income as
a measure of operating results in accordance with accounting principles generally accepted in the United States.
The following provides a reconciliation of adjusted EBITDA to the financial information in our consolidated
statements of operations.
December 28,
2015
December 29,
2014
December 30,
2013
December 31,
2012
December 31,
2011
Year Ended
Net (loss) income . . . . . . . . . . . . . . . . . . . . $ (25,618) $ 14,693
Add back items:
Income tax provision . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . .
Depreciation of property, plant and
7,598
23,830
34,594
59,753
(In thousands)
$ 23,893
$(181,100) $ 47,227
15,879
24,031
12,728
25,784
26,005
26,504
equipment . . . . . . . . . . . . . . . . . . . . . . . .
133,508
95,349
92,120
84,286
69,698
Amortization of definite-lived
intangibles . . . . . . . . . . . . . . . . . . . . . . . .
18,888
8,387
9,332
14,684
17,427
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . .
Impairments, restructuring, and other
221,125
9,661
(2,504)
34,448
149,857
7,800
165,255
8,985
— (17,917)
—
5,981
(43,618)
10,266
—
—
186,861
8,075
—
—
charges . . . . . . . . . . . . . . . . . . . . . . . . . .
22,943
2,406
24,970
223,944
63,309
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . $285,673
$166,044
$181,293
$ 190,592
$258,245
40
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This financial review presents our operating results for each of our three most recent fiscal years and our
financial condition at December 28, 2015. Except for historical information contained herein, the following
discussion contains forward-looking statements which are subject to known and unknown risks, uncertainties and
other factors that may cause our actual results to differ materially from those expressed or implied by such
forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and
specifically under Item 1A of Part I of this report, Risk Factors. In addition, the following discussion should be
read in connection with the information presented in our consolidated financial statements and the related notes
to our consolidated financial statements.
COMPANY OVERVIEW
We are a leading global printed circuit board (PCB) manufacturer,
focusing on quick-turn and
technologically advanced PCBs and electro-mechanical solutions (E-M Solutions). We focus on providing time-
to-market and advanced technology products and offer a one-stop manufacturing solution to our customers from
engineering support to prototype development through final volume production. This one-stop manufacturing
solution allows us to align technology development with the diverse needs of our customers and to enable them
to reduce the time required to develop new products and bring them to market. We serve a diversified customer
base consisting of approximately 1,500 customers in various markets throughout
including
manufacturers of networking/communications infrastructure products, smartphones, tablets and ultra notebooks,
as well as the aerospace and defense, automotive controls and information systems, high-end computing, and
medical,
industrial and instrumentation related products. Our customers include both original equipment
manufacturers (OEMs) and electronic manufacturing services (EMS) providers.
the world,
RECENT DEVELOPMENTS
On May 31, 2015, we completed the acquisition of Viasystems Group, Inc. (Viasystems), for total
consideration of $248.8 million in cash and 15.1 million shares of TTM common stock. Additionally, in
connection with the completion of the acquisition, we assumed and refinanced Viasystems’ debt, which was
approximately $669.0 million. Viasystems was a worldwide provider of complex multi-layer rigid, flexible, and
rigid-flex PCBs and custom electronic assemblies. Viasystems’ products were found in a wide variety of
commercial products,
including automotive engine controls, hybrid converters, automotive electronics for
navigation, safety, and entertainment, telecommunications switching equipment, data networking equipment,
computer storage equipment, semiconductor test equipment, wind and solar energy applications, off-shore
drilling equipment, communications applications, flight control systems, and complex industrial, medical, and
other technical instruments. Viasystems’ E-M Solutions services were bundled with its PCB products to provide
an integrated solution to customers. Viasystems operated 15 manufacturing facilities worldwide: eight in the
United States, five in the People’s Republic of China (China), one each in Canada and Mexico. Viasystems
served a diversified customer base of over 1,000 customers in various markets throughout the world.
On September 29, 2015, we announced a consolidation plan that will result in the closure of our facilities in
Cleveland, Ohio, Milpitas, California and Juarez, Mexico (the Plan). The Plan is part of our integration strategy
to improve total plant utilization, operational performance and customer focus following our recent acquisition of
Viasystems. In accordance with the Plan, we will combine our Cleveland and Milpitas facilities into our North
Jackson, Ohio and Silicon Valley, California facilities, respectively, and close our Juarez facility. As a result,
during the year ended December 28, 2015, we recognized total restructuring charges of $7.4 million. These
realignment
charges primarily represent severance expense associated with the Plan and other global
restructuring efforts, and are expected to be paid out by June 2016. We estimate that we will incur total charges
of approximately $10.0 million to $15.0 million related to these closures. Additionally, our first quarter 2016
financial results will be negatively impacted as a result of the planned closure of these facilities.
41
FINANCIAL OVERVIEW
For the fiscal year ended 2015, we experienced higher demand in our Cellular Phone end market compared
to that of the same period in 2014. This increase in demand resulted in higher capacity utilization at our advanced
technology plants resulting in higher net sales and gross margins. Additionally, we had improved operating
efficiencies at certain of our North American plants.
While our customers include both OEMs and EMS providers, we measure customers based on OEM
companies as they are the ultimate end customers. Sales to our 5 largest customers accounted for 37%, 44% and
41% of our net sales in fiscal years 2015, 2014 and 2013, respectively. We sell to OEMs both directly and
indirectly through EMS providers.
The following table shows the percentage of our net sales attributable to each of the principal end markets
we served for the periods indicated:
End Markets(1)(2)
Aerospace and Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cellular Phone(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computing/Storage/Peripherals(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medical/Industrial/Instrumentation/Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Networking/Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015(4)
2014
2013
14%
13
21
12
13
25
2
16% 15%
2
23
13
10
33
3
2
20
20
8
32
3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100% 100% 100%
(1) Sales to EMS companies are classified by the end markets of their OEM customers.
(2) Certain reclassifications of prior year end market percentages have been made to conform to the current year
presentation. Beginning 2015, Automotive has been reclassified from the Other end market. Additionally,
beginning in the first quarter of 2013, we reclassified substrate PCBs, which were included in the Other end
market, into the end markets that the substrate PCBs are sold into — predominantly Cellular Phone.
(3) Smartphones are included in the Cellular Phone end market, tablets are included in the Computing/Storage/
Peripherals end market and other mobile devices such as e-readers are included in the Other end market.
(4) Amounts includes 211 days of activity of Viasystems, which we acquired on May 31, 2015.
We derive revenues primarily from the sale of PCBs and custom electronic assemblies using customer-
supplied engineering and design plans. We recognize revenues when persuasive evidence of a sales arrangement
exists, the sales terms are fixed or determinable, title and risk of loss have transferred, and collectability is
reasonably assured — generally when products are shipped to the customer. Net sales consist of gross sales less
an allowance for returns, which typically have been less than 3% of gross sales. We provide our customers a
limited right of return for defective PCBs and backplane assemblies. We record an estimate for sales returns and
allowances at the time of sale based on historical results. Purchase orders may be cancelled prior to shipment. We
generally charge customers a fee, based on the percentage completed, if an order is cancelled once it has entered
production.
Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the
manufacture and testing of our products. Shipping and handling fees and related freight costs and supplies
associated with shipping products are also included as a component of cost of goods sold. Many factors affect our
gross margin, including capacity utilization, product mix, production volume, and yield. We generally do not
participate in any significant long-term contracts with suppliers, and we believe there are a number of potential
suppliers for the raw materials we use.
Selling and marketing expenses consist primarily of salaries, labor related benefits, and commissions paid to
our internal sales force, independent sales representatives, and our sales support staff, as well as costs associated
with marketing materials and trade shows.
42
General and administrative costs primarily include the salaries for executive, finance, accounting,
information technology, facilities and human resources personnel, as well as insurance expenses, expenses for
accounting and legal assistance, incentive compensation expense, and gains or losses on the sale or disposal of
property, plant and equipment.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements included in this report have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities,
net sales and expenses, and related disclosure of contingent assets and liabilities.
A critical accounting policy is defined as one that is both material to the presentation of our consolidated
financial statements and requires us to make judgments that could have a material effect on our financial
condition or results of operations. These policies require us to make assumptions about matters that are highly
uncertain at the time of the estimate. Different estimates we could reasonably have used, or changes in the
estimates that are reasonably likely to occur, or could have a material effect on our financial condition or results
of operations.
We base our estimates on historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Management has discussed the
development, selection and disclosure of these estimates with the audit committee of our board of directors.
Actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies include asset valuation related to bad debts and inventory; sales returns and
allowances; impairment of long-lived assets, including goodwill and intangible assets; derivative instruments and
hedging activities; realizability of deferred tax assets; and determining self-insurance reserves.
Allowance for Doubtful Accounts
We provide customary credit terms to our customers and generally do not require collateral. We perform
ongoing credit evaluations of the financial condition of our customers and maintain an allowance for doubtful
accounts based upon historical collections experience and judgments as to expected collectability of accounts.
Our actual bad debts may differ from our estimates.
Inventories
In assessing the realizability of inventories, we are required to make judgments as to future demand
requirements and compare these with current and committed inventory levels. When the market value of
inventory is less than the carrying value, the inventory cost is written down to its estimated net realizable value,
thereby establishing a new cost basis. Our inventory requirements may change based on our projected customer
demand, market conditions, technological and product life cycle changes, longer or shorter than expected usage
periods, and other factors that could affect the valuation of our inventories. We maintain certain finished goods
inventories near certain key customer locations in accordance with agreements with those customers. Although
this inventory is typically supported by valid purchase orders, should these customers ultimately not purchase
these inventories, our results of operations and financial condition would be adversely affected.
Sales Returns and Allowances
We derive revenues primarily from the sale of PCBs and custom electronic assemblies using customer-
supplied engineering and design plans. We recognize revenue when persuasive evidence of a sales arrangement
exists, the sales terms are fixed or determinable, title and risk of loss have transferred, and collectability is
reasonably assured — generally when products are shipped to the customer. We provide our customers a limited
right of return for defective PCBs and backplane assemblies. We accrue an estimate for sales returns and
allowances at the time of sale using our judgment based on historical results and anticipated returns as a result of
current period sales. To the extent actual experience varies from our historical experience, revisions to these
allowances may be required.
43
Long-lived Assets
We have significant long-lived tangible and intangible assets consisting of property, plant and equipment,
definite-lived intangibles, and goodwill. We review these assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. In addition, we perform
an impairment test related to goodwill at least annually. As necessary, we make judgments regarding future cash
flow forecasts in the assessment of impairment.
During the fourth quarter of each year, and when events and circumstances warrant an evaluation, we
perform an impairment assessment of goodwill, which may require the use of a fair-value based analysis. We
first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting
units is less than its carrying amount, we conduct a two-step quantitative goodwill impairment test. We determine
the fair value of our reporting units based on discounted cash flows and market approach analyses as considered
necessary. We consider factors such as the state of the economy and reduced expectations for future cash flows
coupled with a decline in our market capitalization for a sustained period as indicators for potential goodwill
impairment. If the reporting unit’s carrying amount exceeds its estimated fair value, a second step must be
performed to measure the amount of the goodwill impairment loss, if any. The second step compares the implied
fair value of the reporting unit’s goodwill, determined in the same manner as the amount of goodwill recognized
in a business combination, with the carrying amount of such goodwill. If the carrying amount of the reporting
unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount
equal to that excess. We periodically evaluate whether events and circumstances have occurred, such that the
potential for reduced expectations for future cash flows coupled with a further decline in the market price of our
stock and market capitalization may indicate that the remaining balance of goodwill and definite-lived intangible
assets may not be recoverable. If factors indicate that assets are impaired, we would be required to reduce the
carrying value of our goodwill and definite-lived intangible assets which may result in an impairment charge.
We also assess other long-lived assets, specifically definite-lived intangibles and property, plant and
equipment, for potential impairment given similar impairment indicators. When indicators of impairment exist
related to our long-lived tangible assets and definite-lived intangible assets, we use an estimate of the
undiscounted net cash flows and comparison to like-kind assets, as appropriate, in measuring whether the
carrying amount of the assets is recoverable. Measurement of the amount of impairment, if any, is based upon the
difference between the asset’s carrying value and estimated fair value. Fair value is determined through various
valuation techniques, including cost-based, market and income approaches as considered necessary, which
involve judgments related to future cash flows and the application of the appropriate valuation model. During the
years ended 2014 and 2013 we recorded impairment charges to reduce the carrying value of certain long-lived
assets in the PCB operating segment. See Note 4 to our consolidated financial statements.
Assets Held for Sale — We classify assets to be sold as assets held for sale when (i) we have approved and
commit to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an
active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the
asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its
current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be
withdrawn. Assets classified as held for sale are recorded at the lower of the carrying amount or fair value less
the cost to sell.
Assets Held for Use — If a decision to dispose of an asset or a business is made and the held for sale criteria
are not met, it is considered held for use. Assets of the business are evaluated for recoverability in the following
to
order: (i) assets other than goodwill, property and intangibles; (ii) property and intangibles subject
amortization; and (iii) goodwill. In evaluating the recoverability of property and intangible assets subject to
amortization, in a held for use business, the carrying value is first compared to the sum of the undiscounted cash
flows expected to result from the use and eventual disposition. If the carrying value exceeds the undiscounted
expected cash flows, then a fair value analysis is performed. An impairment charge is recognized if the carrying
value exceeds the fair value.
44
Derivative Instruments and Hedging Activities
As a matter of policy, we use derivatives for risk management purposes, and we do not use derivatives for
speculative purposes. Derivatives are typically entered into as hedges of changes in interest rates, currency
exchange rates, and other risks.
When we determine to designate a derivative instrument as a cash flow hedge, we formally document the
hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging
instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in
offsetting the hedged risk will be assessed, and a description of the method of measuring ineffectiveness. We also
formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivative that is used in
hedging transactions is highly effective in offsetting changes in cash flows of hedged items.
Derivative financial instruments are recognized as either assets or liabilities on the consolidated balance
sheet with measurement at fair value. Fair value of the derivative instruments is determined using pricing models
developed based on the underlying swap interest rate, foreign currency exchange rates, and other observable
market data as appropriate. The values are also adjusted to reflect nonperformance risk of the counterparty and
our company, as necessary. For derivatives that are designated as a cash flow hedge, changes in the fair value of
the derivative are recognized in accumulated other comprehensive income, to the extent the derivative is
effective at offsetting the changes in cash flow being hedged until the hedged item affects earnings. To the extent
there is any hedge ineffectiveness, changes in fair value relating to the ineffective portion are immediately
recognized in earnings. Changes in the fair value of derivatives that are not designated as hedges are recorded in
earnings each period.
Income Taxes
Deferred income tax assets are reviewed for recoverability, and valuation allowances are provided, when
necessary, to reduce deferred income tax assets to the amounts that are more likely than not to be realized based
on our estimate of future taxable income. At December 28, 2015, we have net noncurrent deferred income tax
liabilities of $13.1 million, which is net of the $84.7 million net noncurrent deferred tax assets. At December 28,
2015, our net noncurrent deferred income tax assets of $84.7 million are net of a valuation allowance of
approximately $234.2 million. Should our expectations of taxable income change in future periods, it may be
necessary to adjust our valuation allowance, which could affect our results of operations in the period such a
determination is made. We record income tax provision or benefit during interim periods at a rate that is based on
expected results for the full year. If future changes in market conditions cause actual results for the year to be
more or less favorable than those expected, adjustments to the effective income tax rate could be required.
In addition, we are subject to income taxes in the United States and foreign jurisdictions. Significant
judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our
business, there are many transactions for which the ultimate tax determination is uncertain. Additionally, our
calculations of income taxes are based on our interpretations of applicable tax laws in the jurisdictions in which
we file.
Self Insurance
We are primarily self-insured in North America for group health insurance and worker’s compensation
benefits provided to our U.S. employees, and we purchase insurance to protect against annual claims at the
individual and aggregate level. We estimate our exposure for claims incurred but not reported at the end of each
reporting period. We use our judgment using our historical claim data and information and analysis provided by
actuarial and claim advisors, our insurance carriers and brokers on an annual basis to estimate our liability for
these claims. This liability is subject to individual insured stop-loss coverage of $200,000 per individual for the
recently acquired Viasystems subsidiaries and $300,000 per individual for existing TTM subsidiaries for group
health insurance and $250,000 for worker’s compensation benefits. Our actual claims experience may differ from
our estimates.
45
RESULTS OF OPERATIONS
The Viasystems acquisition occurred on May 31, 2015. Accordingly, the results of operations of Viasystems
are not included in our fiscal years ended 2014 and 2013, and our fiscal year ended 2015 only includes the last
seven fiscal months Viasystems’ 2015 results of operations. The acquisition has had and will continue to have a
significant effect on our operations as discussed in the various comparisons noted below:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0%
85.2
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.8
100.0%
85.3
14.7
100.0%
84.1
15.9
Operating expenses:
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of definite-lived intangibles . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other expense, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to the non-controlling
2.7
8.0
0.9
(0.1)
0.4
—
11.9
2.9
(2.9)
—
0.4
(2.5)
0.4
(1.6)
(1.2)
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
2.8
7.6
0.7
—
—
0.1
11.2
3.5
(1.8)
—
—
(1.8)
1.7
(0.6)
1.1
—
2.7
7.7
0.7
(1.3)
0.3
0.8
10.9
5.0
(1.7)
(0.8)
0.4
(2.1)
2.9
(1.2)
1.7
(0.1)
Net (loss) income attributable to TTM Technologies, Inc.
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.2)%
1.1%
1.6%
As a result of the May 31, 2015 acquisition of Viasystems and the ongoing integration activities, we have
reassessed our reportable operating segments and determined that we have two reportable operating segments:
PCB and E-M Solutions. This determination was made based on the criteria of earning revenues and incurring
expenses, our organizational structure which has segment managers who report to the chief operating decision
maker and discrete financial information, and the aggregation of similar operating segments into reportable
operating segments.
46
The following table compares net sales by reportable segment for fiscal years ended 2015, 2014 and 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
Net Sales:
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,944,041
158,655
$1,251,665
76,545
$1,305,862
65,202
Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,102,696
(7,208)
1,328,210
(2,493)
1,371,064
(2,849)
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,095,488
$1,325,717
$1,368,215
Net Sales
Total net sales increased $769.8 million, or 58.1%, from $1,325.7 million for the year ended December 29,
2014 to $2,095.5 million for the year ended December 28, 2015. Net sales for the PCB operating segment,
excluding inter-segment sales, increased $687.7 million, or 55.0%, from $1,249.5 million for the year ended
December 29, 2014 to $1,937.2 million for the year ended December 28, 2015. This increase is primarily due to
the additional sales resulting from the acquisition of Viasystems, which accounted for $582.3 million in PCB
sales for the year ended December 28, 2015. Additionally, the increase in PCB sales is due to higher demand in
our Cellular Phone end markets, partially offset with lower demand in our Networking/Communications end
market. These changes, including the sales from Viasystems, resulted in a 110% increase in PCB shipments from
the year ended December 29, 2014. In addition, the average PCB selling price decreased 25%, which was driven
by a product mix shift resulting from the acquisition. Net sales for the E-M Solutions operating segment,
excluding inter-segment sales, increased $82.1 million, from $76.2 million for the year ended December 29, 2014
to $158.3 million for the year ended December 28, 2015. This increase is due to the acquisition of Viasystems,
which accounted for $82.0 million in E-M Solutions sales for the year ended December 28, 2015.
Total net sales decreased $42.5 million, or 3.1%, from $1,368.2 million for the year ended December 30,
2013 to $1,325.7 million for the year ended December 29, 2014. Net sales for the PCB operating segment,
excluding inter-segment sales, decreased $53.5 million, or 4.1%, from $1,303.0 million for the year ended
December 30, 2013 to $1,249.5 million for the year ended December 29, 2014. This decrease was primarily due
to the absence of net sales resulting from the sale of a controlling equity interest in a subsidiary in the second
quarter of 2013, combined with lower demand in our Computing/Storage/Peripherals and Cellular Phone end
markets in the first and second quarters of 2014. This decrease was partially offset by higher demand in our
Cellular Phone end market in the second half of 2014. The overall decline in demand resulted in a 12% decrease
in PCB shipments from the year December 30, 2013, and was partially offset by a 9% increase in the average
PCB selling price, which was driven by product mix shift. Net sales for the E-M Solutions operating segment,
excluding inter-segment sales, increased $11.0 million, or 16.9%, from $65.2 million for the year ended
December 30, 2013 to $76.2 million for the year ended December 29, 2014. This increase was primarily due to
the demand for backplane assemblies predominantly in our Networking/Communications end market.
The inter-segment sales are primarily sales from the PCB operating segment to the E-M Solutions operating
segment.
Gross Margin
Overall gross margin increased from 14.7% for the year ended December 29, 2014 to 14.8% for the year
ended December 28, 2015. Gross margin for the PCB operating segment increased from 15.0% for the year
ended December 29, 2014 to 15.5% for the year ended December 28, 2015 primarily due to higher utilization at
our advanced technology plants, partially offset by the acquisition of Viasystems with lower margins than our
existing business and the $13.3 million of increased costs due to the fair value mark up of acquired inventory
47
associated with the acquisition of Viasystems. Gross margin for the E-M Solutions operating segment decreased
from 9.4% for the year ended December 29, 2014 to 6.6% for the year ended December 28, 2015 primarily due
to the acquisition of Viasystems.
Overall gross margin decreased from 15.9% for the year ended December 30, 2013 to 14.7% for the year
ended December 29, 2014. Gross margin for the PCB operating segment decreased from 16.3% for the year
ended December 30, 2013 to 15.0% for the year ended December 29, 2014 primarily due to underutilization in
the first and second quarters of 2014 caused by an increase in capacity to service an expected higher level of
business which did not materialize. Additionally, in the third quarter of 2014, the PCB operating segment
experienced a 5 day production shut down due to an unexpected power outage at one of our advanced technology
production facilities which negatively impacted our productivity and yield improvement efforts as we were
launching new products and significantly ramping for increased volumes. Gross margin for the E-M Solutions
operating segment increased from 8.5% for the year ended December 30, 2013 to 9.4% for the year ended
December 29, 2014 primarily due to higher volumes.
Selling and Marketing Expenses
Selling and marketing expenses increased $20.5 million,
the year ended
December 29, 2014 to $57.4 million for the year ended December 28, 2015. The increase primarily relates to
additional marketing activity resulting from the acquisition of Viasystems. As a percentage of net sales, selling
and marketing expenses were 2.8% for the year ended December 29, 2014, as compared to 2.7% for the year
ended December 28, 2015. The decrease in selling and marketing expense as a percentage of net sales for the
periods noted is primarily due to higher net sales.
from $36.9 million for
Selling and marketing expenses decreased $0.2 million, or 0.5%, from $37.1 million for the year ended
December 30, 2013 to $36.9 million for the year ended December 29, 2014. The decrease in selling and
marketing expenses for the year ended December 29, 2014, was primarily due to reduced commissions and lower
travel expenses over the comparable periods of the prior year. As a percentage of net sales, selling and marketing
expenses were 2.7% and 2.8% for the years ended December 30, 2013 and December 29, 2014, respectively. The
increase in selling and marketing expense as a percentage of net sales for the year ended December 29, 2014 was
primarily due to lower net sales.
General and Administrative Expenses
General and administrative expenses increased $66.7 million from $101.0 million, or 7.6% of net sales, for
the year ended December 30, 2014 to $167.7 million, or 8.0% of net sales, for the year ended December 28,
2015. The increase in expense is primarily due to $34.4 million of acquisition-related costs for the year ended
December 28, 2015 related to the acquisition of Viasystems and seven months of general and administrative
expense incurred related to Viasystems post acquisition through December 28, 2015.
General and administrative expenses decreased $4.9 million from $105.9 million, or 7.7% of net sales, for
the year ended December 30, 2013 to $101.0 million, or 7.6% of net sales, for the year ended December 29,
2014. The decrease in general and administrative expense for the year ended December 29, 2014 is primarily due
to costs savings resulting from the sale of our controlling equity interest in a subsidiary in the PCB operating
segment and lower incentive compensation expense, offset by the $6.0 million of acquisition-related costs
recorded in the third and fourth quarters of 2014.
Impairment of Long-Lived Assets and Restructuring Charges
For the year ended December 28, 2015, we incurred restructuring charges of $7.4 million related to the Plan
announced on September 29, 2015, that will result in the closure of our facilities in Cleveland, Ohio, Milpitas,
California, Juarez, Mexico and other global realignment efforts.
In connection with the Plan, during the year ended December 28, 2015, we recognized restructuring charges
of $2.0 million in both our PCB and E-M Solutions segments and $3.4 million in our Corporate segment. These
realignment
charges primarily represent severance expense associated with the Plan and other global
restructuring efforts and are expected to be paid out by June 2016. We estimate that we will incur total charges of
approximately $10.0 million to $15.0 million related to these closures.
48
For the year ended December 29, 2014 and December 30, 2013, in conjunction with the shutdown of the
Suzhou, China facility, we recorded charges of $1.8 million and $10.8 million, respectively, primarily arising
from the impairment of certain machinery and equipment. Additionally, in conjunction with the shutdown, we
recorded restructuring charges of $3.4 million during the year ended December 30, 2013, consisting of separation
costs associated with the layoff of 774 employees.
If forecasts and assumptions used to support the realizability of our long-lived assets change in the future,
significant impairment or restructuring charges could result that would adversely affect our results of operations
and financial condition.
Other Income (Expense)
Other expense, net increased $28.2 million from $24.2 million for the year ended December 29, 2014 to
$52.4 million for the year ended December 28, 2015. The increase in other expense, net was primarily due to an
increase in interest expense related to a new long-term borrowing and a revolver loan totaling $1,030.0 million at
a weighted average interest rate of 5.7% that we secured in connection with the acquisition of Viasystems. The
increase in other expense, net was partially offset by $6.4 million foreign currency and derivative transaction
gains for the year ended December 28, 2015 compared to $1.2 million for the year ended December 29, 2014.
Other expense, net decreased $5.2 million from $29.4 million for the year ended December 30, 2013 to
$24.2 million for year ended December 29, 2014. The decrease in other expense, net was primarily due to the
absence of a $10.7 million loss on the extinguishment of debt related to repurchase of a portion of convertible
senior notes due 2015 for the year ended December 30, 2013, offset by an increase in foreign currency
transaction and derivative losses of $5.5 million, which includes a $3.6 million foreign currency transaction and
derivative loss recognized in the first quarter of 2014 primarily due to the rapid depreciation of the RMB against
the U.S. Dollar.
Income Taxes
Our effective tax rate for the years ended December 28, 2015 and December 29, 2014 was 385.4% and
34.1%, respectively. The provision for income taxes increased $27.0 million from an income tax expense of $7.6
million for the year ended December 29, 2014 to $34.6 million for the year ended December 28, 2015. The
increase in income tax expense in 2015 is primarily due to the provision of a full valuation allowance on existing
U.S. deferred tax assets, partially offset by the reversal of deferred tax liabilities related to our decision to
indefinitely reinvest the foreign earnings attributable to our backplane assembly facility in Shanghai, China.
Further, the income tax expense in 2015 is higher due to inclusion of Viasystems earnings from foreign
subsidiaries in the second, third and fourth quarters of 2015.
Our effective tax rate is primarily impacted by tax rates in China and Hong Kong, the U.S. federal income
tax rate, apportioned state income tax rates, generation of other credits and deductions available to us, valuation
allowance establishment, and certain non-deductible items. Certain foreign losses generated are not more likely
than not to be realizable, and thus no income tax benefit has been recognized on these losses. As of December 28,
2015, we had net deferred income tax liabilities of approximately $13.1 million; and as of December 29, 2014,
we had net deferred income tax assets of approximately $2.9 million. As of the end of 2015, based on our
forecast for future taxable earnings, we believe it is more likely than not that we will utilize the deferred income
tax assets in future periods.
Our effective tax rate for the years ended December 29, 2014 and December 30, 2013 was 34.1% and
39.9%, respectively. The provision for income taxes decreased $8.3 million from an income tax expense of $15.9
million for the year ended December 30, 2013 to $7.6 million for the year ended December 29, 2014. The
decrease in our provision for income taxes was primarily due to losses incurred for the first three quarters of
2014 compared to income in the same period of the prior year, combined with (i) a $1.5 million discrete tax
benefit recorded in the first quarter of 2014 resulting from the retroactive approval of the high technology
enterprise status for a Chinese subsidiary, (ii) a $0.7 million discrete tax benefit recorded in the third quarter of
2014 resulting from the research and development deduction at a Chinese subsidiary, and (iii) the absence of
local withholding taxes of approximately $4.9 million related to the sale of a controlling equity interest in a
subsidiary in the second quarter of 2013.
49
Liquidity and Capital Resources
Our principal sources of liquidity have been cash provided by operations, the issuance of convertible senior
notes, and term and revolving debt. Our principal uses of cash have been to acquire Viasystems, finance capital
expenditures, meet debt service requirements, fund working capital requirements, and refinance existing debt.
We anticipate that servicing debt, financing capital expenditures, financing acquisitions, and funding working
capital requirements will continue to be the principal demands on our cash in the future.
Cash flow provided by operating activities during the year ended December 28, 2015 was $237.5 million as
compared to $129.8 million in the same period in 2014. The improved cash flow was the result of stronger
operational performance. As of December 28, 2015, we had net working capital of approximately $277.5 million
compared to $302.1 million as of December 29, 2014. For the year ended December 28, 2015, cash cycle days of
46 days were held constant as compared to the previous year.
Net cash used in investing activities was approximately $247.7 million for the year ended December 28,
2015 primarily reflecting the acquisition of Viasystems, net of cash acquired, in the amount of $169.2 million,
and purchases of property, plant and equipment, net of proceeds from sales of property, plant and equipment and
assets held for sale of $78.5 million.
Net cash used in financing activities was approximately $5.8 million for the year ended December 28, 2015
reflecting proceeds from long-term debt and a revolving loan totaling $1,030.0 million, offset by the repayment
of $968.9 million of debt, including the assumed long-term debt in the acquisition of $669.0 million, payoff of
the 2012 credit agreement term loan, the payoff of the remaining 2015 convertible senior notes, and payment of
debt issuance costs and original issue discount of $67.4 million associated with the new long-term debt and
revolver loans.
As of December 28, 2015, we had unrestricted cash and cash equivalents of approximately $259.1 million,
of which approximately $176.6 million was held by our foreign subsidiaries. Of the cash and cash equivalents
held by our foreign subsidiaries as of December 28, 2015, $175.0 million was located in Asia and $1.6 million
was located in Europe and other locations. Cash and cash equivalents held by our foreign locations are expected
to be used in local operations.
Our 2016 capital expenditure plan is expected to be in the range of $110.0 million to $120 million. The
expenditures will fund capital equipment purchases to increase production capacity, especially for advanced
technology manufacturing, comply with changing environmental regulations, replace aging equipment, and
expand our technological capabilities.
Term and Revolving Loans
On May 31, 2015, in conjunction with the acquisition of Viasystems, we entered into a $950.0 million Term
Loan Credit Agreement (Term Loan). Additionally, we entered into a $150.0 million U.S. Asset-Based Lending
Credit Agreement (U.S. ABL) and a $150.0 million Asia Asset-Based Lending Credit agreement (Asia ABL).
We drew $80.0 million of the U.S. ABL at the closing of the acquisition of Viasystems.
The Term Loan Credit agreement was issued at a discount at 96.5% and bears interest at a floating rate of
LIBOR, with a 1.0% LIBOR floor, plus an applicable interest margin of 5.0%. At December 28, 2015, the
weighted average interest rate on the outstanding borrowings under the Term Loan was 6.0%. There is no
provision, other than an event of default, for the interest margin to increase. The Term Loan will mature on
May 31, 2021. The Term Loan is secured by a significant amount of our assets and our domestic subsidiaries and
a pledge of 65% of the voting stock of our first tier foreign subsidiaries and is structurally senior to our
convertible senior notes. See Convertible Senior Notes due 2020 below.
The U.S. ABL consists of three tranches comprised of a revolving credit facility of up to $150.0 million, a
letter of credit facility of up to $75.0 million, and swingline loans of up to $30.0 million, provided that at no time
may amounts outstanding under the tranches exceed in aggregate $150.0 million or the applicable borrowing
base, which is a percentage of the principal amount of Eligible Accounts, as defined in the U.S. ABL agreement.
Borrowings under the U.S. ABL bear interest at a floating rate of LIBOR plus a margin of 175 basis points. At
50
December 28, 2015, the weighted average interest rate on the outstanding borrowings under the U.S. ABL was
2.17%. Beginning in 2016, the applicable margin can vary based on the remaining availability of the facility,
from 150 to 200 basis points for LIBOR-based loans. The U.S. ABL will mature on May 31, 2020. Loans made
under the U.S. ABL are secured first by all of our domestic cash, receivables and inventories as well as by a
second position against a significant amount of our assets and our domestic subsidiaries and a pledge of 65% of
the voting stock of our first tier foreign subsidiaries and are structurally senior to our convertible senior notes.
See Convertible Senior Notes due 2020 below. At December 28, 2015, $80.0 million of the U.S. ABL was
outstanding and classified as a current liability.
We and our domestic subsidiaries have fully and unconditionally guaranteed the full and timely payment of
all Term Loan and U.S. ABL related obligations.
The Asia ABL consists of two tranches comprised of a revolving credit facility of up to $150.0 million and a
letter of credit facility of up to $100.0 million provided that at no time may amounts outstanding under both
tranches exceed in aggregate $150.0 million or the applicable borrowing base, which is a percentage of the
principal amount of Eligible Accounts, as defined in the Asia ABL agreement. Borrowings under the Asia ABL
bear interest at a floating rate of LIBOR plus 175 basis points. There is no provision, other than an event of
default, for the interest margin to increase. The Asia ABL will mature on May 22, 2020. Loans made under the
Asia ABL are secured by a portion of our Asia Pacific cash and receivables and are structurally senior to our
domestic obligations, including our convertible senior notes. See Convertible Senior Notes due 2020 below. Our
Asia Pacific subsidiary and certain of its subsidiaries have fully and unconditionally guaranteed the full and
timely payment of all Asia ABL related obligations. At December 28, 2015, none of the Asia ABL was
outstanding.
We are required to make scheduled payments of the outstanding Term Loan balance on a quarterly basis
beginning October 1, 2015. On October 1, 2015 the scheduled principal payment of $2.4 million was made.
Based on certain parameters defined in the Term Loan agreement, we may be required to make an additional
principal payment on an annual basis. For 2015, we are required to make an additional annual payment of $61.1
million, which is required to be paid in March 2016. In addition to the $61.1 million additional annual payment,
we also intend to repay an additional $10 million to $20 million of the Term Loan in March 2016. As a result of
our intentions and including the already scheduled January 2016 payment, approximately $77.4 million has been
classified as short-term debt. This additional annual payment reduces future required quarterly scheduled
payments. Any other outstanding balances under the Term Loan are due at the maturity date of May 31, 2021.
Borrowings under the Term Loan are subject to various financial and operating covenants including maintaining
a maximum total leverage ratio. Under the occurrence of certain events, the U.S. ABL and the Asia ABL are
subject to various financial and operational covenants, including maintaining minimum fixed charge coverage
ratios. At December 28, 2015, we were in compliance with the covenants under the Term Loan, the U.S. ABL
and the Asia ABL.
We are also required to pay a commitment fee of 0.375% per annum on any unused portion of the U.S. ABL
or Asia ABL. The U.S. ABL commitment fee may vary from 0.25% to 0.375% based on utilization levels. We
incurred total commitment fees related to unused borrowing availability of $0.8 million, $0.6 million and $0.4
million for fiscal years ended 2015, 2014 and 2013, respectively. As of December 28, 2015, the outstanding
amount of the Term Loan was $947.6 million, of which $77.4 million we expect to pay within one year and is
included as short-term debt, with the remaining $870.2 million included as long-term debt. Additionally, $80.0
million of the U.S. ABL and none of the Asia ABL was outstanding as of December 28, 2015. Available
borrowing capacity under the U.S. ABL and Asia ABL was $65.4 million and $142.0 million, which includes
$4.6 million and $8.0 million, respectively, of outstanding letters of credit mentioned below at December 28,
2015.
Letters of Credit
We have up to $75.0 million and $100.0 million Letters of Credit Facilities available under the U.S. ABL
and the Asia ABL, respectively. As of December 28, 2015, letters of credit in the amount of $4.6 million were
outstanding under the U.S. ABL and $8.0 million were outstanding under the Asia ABL. We have other standby
51
letters of credit outstanding in the amount of $2.9 million which expire by April 2016. These other standby letters
of credit are securitized by cash collateral. As such, we have recorded such cash as restricted on the consolidated
condensed balance sheet as of December 28, 2015.
Chinese Revolver
We are party to a revolving loan credit facility with a lender in China. Under this arrangement, the lender
has made available to us approximately $35.5 million in unsecured borrowing with all terms of the borrowing to
be negotiated at the time the Chinese Revolver is drawn upon. There are no commitment fees on the unused
portion of the Chinese Revolver, and this arrangement expires in December 2016. As of December 28, 2015, the
Chinese Revolver had not been drawn upon.
Convertible Senior Notes due 2020
We issued 1.75% convertible senior notes due December 15, 2020, in a public offering for an aggregate
principal amount of $250.0 million. The convertible senior notes bear interest at a rate of 1.75% per annum.
Interest is payable semiannually in arrears on June 15 and December 15 of each year. The convertible senior
notes are senior unsecured obligations and rank equally to our future unsecured senior indebtedness and senior in
right of payment to any of our future subordinated indebtedness. Offering expenses are being amortized to
interest expense over the term of the convertible senior notes.
Conversion: At any time prior to March 15, 2020, holders may convert their convertible senior notes into
cash and, if applicable, into shares of our common stock based on a conversion rate of 103.7613 shares of our
common stock per $1,000 principal amount of convertible senior notes, subject to adjustment, under the
following circumstances: (1) during any calendar quarter beginning after March 31, 2014 (and only during such
calendar quarter), if the last reported sale price of our common stock for at least 20 trading days during the 30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater
than or equal to 130% of the applicable conversion price on each applicable trading day of such preceding
calendar quarter; (2) during the five business day period after any 10 consecutive trading day period in which the
trading price per note for each day of that 10 consecutive trading day period was less than 98% of the product of
the last reported sale price of our common stock and the conversion rate on such day; or (3) upon the occurrence
of specified corporate transactions described in the indenture governing the notes. As of December 28, 2015,
none of the conversion criteria had been met.
On or after March 15, 2020 until the close of business on the third scheduled trading day preceding the
maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon
conversion, for each $1,000 principal amount of notes, we will pay shares of our common stock, cash or a
combination of cash and shares of our common stock at our election, if applicable, based on a daily conversion
value calculated on a proportionate basis for each day of the 80 trading day observation period. All conversions
occurring on the same date or on or after March 15, 2020 shall be settled using the same settlement method.
Additionally, in the event of a fundamental change as defined in the indenture governing the notes, or other
conversion rate adjustments such as share splits or combinations, other distributions of shares, cash or other
assets to stockholders, including self-tender transactions (Other Conversion Rate Adjustments), the conversion
rate may be modified to adjust
the number of shares per $1,000 principal amount of the notes. As of
December 28, 2015, none of the criteria for a fundamental change or a conversion rate adjustment had been met.
The maximum number of shares issuable upon conversion, including the effect of a fundamental change and
subject to Other Conversion Rate Adjustments, would be 32.4 million.
Note Repurchase: We are not permitted to redeem the convertible senior notes at any time prior to
maturity. In the event of a fundamental change or certain default events, as defined in the indenture governing the
notes, holders may require us to repurchase for cash all or a portion of their convertible senior notes at a price
equal to 100% of the principal amount, plus any accrued and unpaid interest.
In connection with the issuance of the convertible senior notes due 2020, we entered into a convertible note
hedge and warrant transaction (the Call Spread Transaction), with respect to our common stock. The convertible
note hedge consists of our option to purchase up to 25.9 million common stock shares at a price of $9.64 per
52
share. The hedge expires on December 15, 2020 and can only be executed upon the conversion of the above
mentioned convertible senior notes due 2020. Additionally, we sold warrants to purchase 25.9 million shares of
our common stock at a price of $14.26 per share. The warrants expire ratably from March 2021 through January
2022. The Call Spread Transaction has no effect on the terms of the convertible senior notes due 2020 and
reduces potential dilution by effectively increasing the conversion price of the convertible senior notes due 2020
to $14.26 per share of our common stock.
Based on our current level of operations, we believe that cash generated from operations, cash on hand and
cash from the issuance of term and revolving debt will be adequate to meet our currently anticipated capital
expenditure, debt service, and working capital needs for the next 12 months.
Contractual Obligations and Commitments
The following table provides information on our contractual obligations as of December 28, 2015:
Contractual Obligations(1)
Total
Less Than
1 Year
1 - 3
Years
4 - 5
Years
After
5 Years
Long-term debt obligations . . . . .
Convertible debt obligations . . . .
Interest on debt obligations . . . . .
Foreign currency forward
contract liabilities . . . . . . . . . .
Equipment payables . . . . . . . . . .
Purchase obligations . . . . . . . . . .
Operating lease commitments . . .
$1,027,625
250,000
311,791
$157,375
—
61,164
(In thousands)
$ 27,125
$ 95,000
— 250,000
106,403
114,345
51
14,251
69,054
27,603
51
14,251
69,054
8,332
—
—
—
8,819
—
—
—
4,049
$748,125
—
29,879
—
—
—
6,403
Total contractual obligations . . . .
$1,700,375
$310,227
$150,289
$455,452
$784,407
(1) Unrecognized uncertain tax benefits of $15.4 million are not included in the table above as the settlement
timing is uncertain.
Off Balance Sheet Arrangements
We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As
a result, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had
engaged in these relationships.
Seasonality
As manufacturers of electronic components, orders for our products generally correspond to the production
schedules of our customers. We historically experience higher net sales in the third and fourth quarters due to end
customer demand in the fourth quarter for consumer electronics products. Seasonal fluctuations also include the
Chinese New Year holidays in the first quarter, which typically results in lower net sales. We attribute this
decline to shutdowns of our customers’ manufacturing facilities surrounding the Chinese New Year public
holidays, which normally occur in January or February of each year.
Recently Issued Accounting Standards
In November 2015 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities with a classified
balance sheet to present all deferred tax assets and liabilities as non-current. We adopted the provisions of this
53
update in the fourth quarter of 2015 on a prospective basis. The impact on our consolidated financial statements
was not material.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period
Adjustments, which requires that an acquirer recognize adjustments to provisional values of assets acquired and
liabilities assumed in a business combination in the reporting period in which the adjustment amounts are
determined and not on a retrospective basis. We adopted ASU 2015-16 in the third quarter of 2015, and our
adoption did not have a material impact on our consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Imputation of Interest, which requires an entity to record
debt issuance costs related to a note reported in the balance sheet as a direct deduction from the face amount of
that note. The update is effective for annual periods ending after December 15, 2015. Early application is
permitted. The standard requires the use of the retrospective transition method. The impact on our consolidated
financial statements is not expected to be material.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an
entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or
services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP
when it becomes effective. The new standard is effective for us at the beginning of fiscal year 2018, however
application of the standard is allowed as early as the beginning of fiscal 2017. The standard permits the use of
either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09
will have on our consolidated financial statements and related disclosures. We have not yet selected a transition
method nor have we determined the effect of the standard on our ongoing financial reporting.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business operations we are exposed to risks associated with fluctuations in interest
rates and foreign currency exchange rates. We address these risks through controlled risk management that
includes the use of derivative financial instruments to economically hedge or reduce these exposures. We do not
enter into derivative financial instruments for trading or speculative purposes.
We have not experienced any losses to date on any derivative financial instruments due to counterparty
credit risk.
To ensure the adequacy and effectiveness of our interest rate and foreign exchange hedge positions, we
continually monitor our interest rate swap positions and foreign exchange forward positions, both on a stand-
alone basis and in conjunction with their underlying interest rate and foreign currency exposures, from an
accounting and economic perspective. However, given the inherent limitations of forecasting and the anticipatory
nature of the exposures intended to be hedged, we cannot assure that such programs will offset more than a
portion of the adverse financial impact resulting from unfavorable movements in either interest or foreign
exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to mark-to-
market instruments for any given period may not coincide with the timing of gains and losses related to the
underlying economic exposures and, therefore, may adversely affect our consolidated operating results and
financial position.
Interest rate risk
Our business is exposed to interest rate risk resulting from fluctuations in interest rates. Our interest expense
is more sensitive to fluctuations in the general level of LIBOR interest rates than to changes in rates in other
markets. Increases in interest rates would increase interest expenses relating to the outstanding variable rate
borrowings of certain foreign subsidiaries and increase the cost of debt. Fluctuations in interest rates can also
lead to significant fluctuations in the fair value of the debt obligations.
As of December 28, 2015, approximately 19.6% of our long term debt was based on fixed rates. Based on
our borrowings as of December 28, 2015, an assumed 100 basis point change in variable rates would cause our
annual interest cost to change by $6.5 million.
54
Debt Instruments
The table below presents information about certain of our debt instruments as of December 28, 2015 and
December 29, 2014.
As of December 28, 2015
2016
2017
2018
2019
2020
Thereafter
Total
(In thousands)
Fair Market
Value
Weighted
Average
Interest Rate
US$ Variable Rate . . . . $157,375 $
US$ Fixed Rate . . . . . . .
—
— $27,125
—
—
$47,500 $ 47,500 $748,125 $1,027,625 $ 935,000
230,950
— 250,000
— 250,000
5.70%
1.75%
Total
. . . . . . . . . . . . . . . $157,375 $
— $27,125
$47,500 $297,500 $748,125 $1,277,625 $1,165,950
2015
2016
2017
2018
2019
Thereafter
Total
Fair Market
Value
Weighted
Average
Interest Rate
As of December 29, 2014
US$ Variable Rate . . . . $ 96,200 $177,600
—
US$ Fixed Rate . . . . . . .
32,399
Total
. . . . . . . . . . . . . . . $128,599 $177,600
—
—
—
—
—
—
Foreign currency risks
(In thousands)
—
— $250,000
— $ 273,800 $ 273,816
274,510
282,399
2.55%
1.92%
— $250,000 $ 556,199 $ 548,326
In the normal course of business we are exposed to risks associated with fluctuations in foreign currency
exchange rates associated with transactions that are denominated in currencies other than our functional currencies,
as well as the effects of translating amounts denominated in a foreign currency to the U.S. Dollar as a normal part of
our financial reporting process. Certain of our Asia Pacific operations utilize the Renminbi (RMB) and the Hong
Kong Dollar (HKD) as the functional currencies, which results in recognition of translation adjustments included as
a component of other comprehensive income. Our foreign exchange exposure results primarily from employee-
related and other costs of running operations in foreign countries, foreign currency denominated purchases and
translation of balance sheet accounts denominated in foreign currencies. Our primary foreign exchange exposure is
to the RMB. For the year ended December 28, 2015, our consolidated statement of operations includes a net
unrealized foreign exchange loss of approximately $0.4 million.
We enter into foreign currency forward contracts to mitigate the impact of changes in foreign currency
exchange rates and to reduce the volatility of purchases and other obligations generated in currencies other than the
functional currencies. Our 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 our
foreign functional currency. The notional amount of the foreign exchange contracts as of December 28, 2015 and
December 29, 2014 was approximately $1.6 million and $29.1 million, respectively. We have designated certain of
these foreign exchange contracts as cash flow hedges. To ensure the adequacy and effectiveness of our foreign
exchange hedge positions, we continually monitor our foreign exchange forward positions, both on a stand-alone
basis and in conjunction with their underlying foreign currency exposures, from an accounting and economic
perspective. However, given the inherent limitations of forecasting and the anticipatory nature of the exposures
intended to be hedged, we cannot assure that such programs will offset more than a portion of the adverse financial
impact resulting from unfavorable movements in foreign exchange rates. In addition, the timing of the accounting
for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide
with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely
affect our consolidated operating results and financial position.
We do not engage in hedging to manage foreign currency risk related to revenue and expenses denominated in
RMB and HKD, nor do we currently use derivative instruments to reduce exposure to foreign currency risk for a
majority of our loans due from our foreign subsidiaries. However, we may consider the use of derivatives in the
55
future. In general, our Chinese customers pay us in RMB, which partially mitigates this foreign currency
exchange risk. Additionally, loans due from our foreign subsidiaries are, in some cases, denominated in
currencies other than the RMB, thus providing a natural economic hedge, partially mitigating our RMB foreign
currency exposure.
The table below presents information about certain of the foreign currency forward contracts as of
December 28, 2015 and December 29, 2014:
As of December 28, 2015
As of December 29, 2014
Receive foreign currency/pay USD
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen . . . . . . . . . . . . . . . . . . . . .
Average Contract
Rate or Strike
Amount
1.23
0.01
Notional
Amount
(In thousands
in USD)
$ 502
1,112
$1,614
Estimated fair value, net liability . . . . .
$ (35)
Average Contract
Rate or Strike
Amount
1.35
0.01
Notional
Amount
(In thousands
in USD)
$ 1,233
27,909
$29,142
$ (5,062)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to our consolidated financial statements, the notes thereto, and the report thereon,
commencing on page 66 of this report, which consolidated financial statements, notes and report are incorporated
herein by reference.
We operate on a 52 or 53 week year ending on the Monday nearest December 31. Fiscal years 2015 and
2014 were 52 weeks and ended December 28, 2015 and December 29, 2014, respectively, and each quarter of
both fiscal years 2015 and 2014 contained 91 days.
Year Ended December 28, 2015:(1)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . . . . .
Net income (loss)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to TTM
Technologies, Inc. stockholders . . . . . . . . . . . . .
Earnings (loss) per share attributable to TTM
Technologies, Inc. stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted(2)
Year Ended December 29, 2014:(3)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
Net income (loss) attributable to TTM
Technologies, Inc. stockholders . . . . . . . . . . . . .
Earnings (loss) per share attributable to TTM
Technologies, Inc. stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands, except per share data)
$329,164
51,559
2,085
3,446
$445,445
61,190
(19,959)
(36,583)
$652,005
89,118
6,592
(2,138)
$668,874
108,270
20,258
9,657
3,446
(36,612)
(2,237)
9,521
$
$
0.04
0.04
$
$
(0.41)
(0.41)
$
$
(0.02)
(0.02)
$
$
0.10
0.09
$291,895
38,506
(5,654)
(3,799)
$297,635
38,600
(2,596)
(3,104)
$345,275
49,108
8,037
7,658
$390,912
68,475
22,504
13,938
(3,799)
(3,104)
7,658
13,938
$
$
(0.05)
(0.05)
$
$
(0.04)
(0.04)
$
$
0.09
0.09
$
$
0.17
0.17
(1) Includes a $2.5 million gain on sale of assets in first quarter, 211 days of activity of Viasystems which we
acquired May 31, 2015, acquisition costs of $34.4 million with a substantial portion recognized in the second
quarter, and restructuring charges of $7.4 during third and fourth quarters.
(2) For the fourth quarter, the dilutive effect of stock options or other common stock equivalents is calculated
using the treasury stock method, while the dilutive effect of convertible senior notes is calculated using the
if-converted method.
(3) Includes a $0.5 million loss on extinguishment of debt in the first quarter and a $1.8 long-lived asset
impairment charge in the second quarter.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer (CEO)
and Chief Financial Officer (CFO), has evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this Report. Based on this evaluation, our CEO and CFO have concluded that, as of December 28,
2015, such disclosure controls and procedures were effective to provide reasonable assurance that information we
are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and
communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions
regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding
the reliability of our financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles (GAAP). Under the supervision of and with the
participation of our CEO and CFO, management conducted an assessment of the effectiveness of our internal
control over financial reporting as of December 28, 2015 based on the criteria established in Internal Control —
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based on this assessment, management concluded that our internal control over
financial reporting was effective as of December 28, 2015.
We acquired Viasystems Group, Inc. (“Viasystems”) on May 31, 2015. Management excluded from its
evaluation of the effectiveness of our internal control over financial reporting as of December 28, 2015 the
acquired entity’s internal control over financial reporting associated with 32% of total assets and 32% of total net
sales included in our consolidated financial statements as of and for the year ended December 28, 2015.
The effectiveness of our internal control over financial reporting as of December 28, 2015 has been audited
by KPMG LLP, an independent registered public accounting firm, as stated in their report, which appears under
the heading “Report of Independent Registered Public Accounting Firm” on page 68 of this Report.
Inherent Limitations on Effectiveness of Controls
A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met. The design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further,
because of the inherent
internal control over financial reporting may not prevent or detect
misstatements due to error or fraud. These inherent limitations include the realities that judgments in decision-
limitations,
57
making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based in part on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future
periods are subject to risks that controls may become inadequate because of changes in conditions, or that the
degree of compliance with policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
As a result of the acquisition of Viasystems on May 31, 2015, we began implementing internal controls over
financial reporting to include consolidation of the acquired entity, as well as acquisition-related accounting and
disclosures. The integration of Viasystems represents a material change in our internal control over financial
reporting. Management continues to be engaged in substantial efforts to evaluate the effectiveness of our internal
control procedures and the design of those control procedures relating to the acquisition of Viasystems with the
plan to complete and report its evaluation of the Viasystems internal control over financial reporting by
January 2, 2017.
There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) during the quarter ended December 28, 2015 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement
to be filed pursuant to Regulation 14A of the Exchange Act for our 2016 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement
to be filed pursuant to Regulation 14A of the Exchange Act for our 2016 Annual Meeting of Stockholders.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement
to be filed pursuant to Regulation 14A of the Exchange Act for our 2016 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement
to be filed pursuant to Regulation 14A of the Exchange Act for our 2016 Annual Meeting of Stockholders.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement
to be filed pursuant to Regulation 14A of the Exchange Act for our 2016 Annual Meeting of Stockholders.
58
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
PART IV
Financial Statements are listed in the Index to Consolidated Financial Statements on page 66 of this
Report.
(b) Exhibits
Exhibit
Number
2.1
2.2**
Exhibits
English translation of Equity Interest Transfer Agreement in relation to Dongguan Meadville Circuits
Limited, dated March 13, 2013, by and between Shengyi Technology Co., Ltd. and the Registrant(1)
English translation of Equity Interest Transfer Agreement in relation to Dongguan Shengyi
Electronics Ltd., dated March 13, 2013, by and between Shengyi Technology Co., Ltd. and the
Registrant(1)
2.3**
Agreement and Plan of Merger, by and among the Registrant, Viasystems Group, Inc. and Vector
Acquisition Corp., dated September 21, 2014(2)
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Registrant’s Certificate of Incorporation, as amended June 3, 2011(3)
Registrant’s Fourth Amended and Restated Bylaws(4)
Indenture, dated as of May 14, 2008, between the Registrant and American Stock Transfer & Trust
Company(5)
First Supplemental Indenture, dated as of May 14, 2008, between the Registrant and American Stock
Transfer & Trust Company(5)
Form of Registrant’s common stock certificate(6)
Sell-Down Registration Rights Agreement, dated December 23, 2009, by and among Meadville
Holdings Limited, MTG Investment (BVI) Limited, and the Registrant(7)
Registration Rights Agreement, dated as of April 9, 2010, by and among Tang Hsiang Chien, Su Sih
(BVI) Limited, and the Registrant(8)
Shareholders Agreement, dated as of April 9, 2010, by and among Meadville Holdings Limited; Su
Sih (BVI) Limited; Tang Hsiang Chien; Tang Chung Yen, Tom; Tang Ying Ming, Mai; and the
Registrant(8)
First Amendment to Shareholders Agreement, dated September 14, 2012, by and among Tang
Hsiang Chien; Su Sih (BVI) Limited; Tang Chung Yen, Tom; Tang Ying Ming, Mai; and the
Registrant(9)
Indenture, dated as of December 20, 2013, between the Registrant and American Stock Transfer &
Trust Company, LLC(10)
Registration Rights Agreement Memorandum of Understanding, by and among the Registrant, Hicks,
Muse, Tate & Furst Equity Fund III, L.P., HM3 Coinvestors, L.P., HMTF Equity Fund IV (1999),
L.P., HMTF Private Equity Fund IV (1999), L.P., Hicks, Muse PG-IV (1999), C.V., HM 4-P (1999)
Coinvestors, L.P., HM 4-EQ (1999) Coinvestors, L.P., GSC Recovery II, L.P., and GSC Recovery
IIA, L.P., dated September 21, 2014(2)
4.10
Addendum to Registration Rights Agreement, by and among the Registrant, Su Sih (BVI) Limited,
and Tang Hsiang Chien, dated September 21, 2014(2)
59
Exhibit
Number
4.11
4.12
4.13
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Exhibits
Registration Rights Agreement, by and among TTM Technologies, Inc., Hicks, Muse, Tate & Furst
Equity Fund III, L.P., HM3 Coinvestors, L.P., HMTF Equity Fund IV (1999), L.P., HMTF Private
Equity Fund IV (1999), L.P., Hicks, Muse PG-IV (1999), C.V., HM 4-P (1999) Coinvestors, L.P.,
and HM 4-EQ (1999) Coinvestors, L.P. and GSC Recovery II, L.P. and GSC Recovery IIA, L.P.,
dated as of May 31, 2015(28)
The First Amendment to the Registration Rights Agreement, originally dated as of April 9, 2010, by
and among Meadville Holdings Limited, MTG Investment (BVI) Limited, and TTM Technologies,
Inc.(30)
The Second Amendment to the Shareholders Agreement, originally dated as of April 9, 2010, by and
among Meadville Holdings Limited; Su Sih (BVI) Limited; Tang Hsiang Chien; Tang Chung Yen,
Tom; Tang Ying Ming, Mai; and TTM Technologies, Inc.(30)
Call Option Transaction Confirmation, dated as of May 8, 2008, between the Registrant and
JPMorgan Chase Bank, National Association(5)
Warrant Transaction Confirmation, dated as of May 8, 2008, between the Registrant and JPMorgan
Chase Bank, National Association(5)
Call Option Transaction Confirmation, dated as of May 8, 2008, between the Registrant and UBS
AG(5)
Warrant Transaction Confirmation, dated as of May 8, 2008, between the Registrant and UBS AG(5)
Call Option Transaction Confirmation, dated as of May 16, 2008, between the Registrant and
JPMorgan Chase Bank, National Association(11)
Warrant Transaction Confirmation, dated as of May 16, 2008, between the Registrant and JPMorgan
Chase Bank, National Association(11)
Call Option Transaction Confirmation, dated as of May 16, 2008, between the Registrant and UBS
AG(11)
Warrant Transaction Confirmation, dated as of May 16, 2008, between the Registrant and UBS
AG(11)
10.9‡
2006 Incentive Compensation Plan(12)
10.10‡
Form of Stock Option Agreement pursuant to 2006 Incentive Compensation Plan(12)
10.11‡
10.12‡
Form of Restricted Stock Unit Award Grant Notice pursuant to 2006 Incentive Compensation
Plan(12)
Form of Performance-Based RSU Grant Notice and Award Agreement pursuant to 2006 Incentive
Compensation Plan and schedule of signatories(13)
10.13‡
TTM Technologies, Inc. 2014 Incentive Compensation Plan(14)
10.14‡
10.15
10.16
TTM Technologies, Inc. Form of Restricted Stock Unit Award Grant Notice pursuant to TTM
Technologies, Inc. 2014 Incentive Compensation Plan(14)
Form of Director and Officer Indemnification Agreement, dated December 10, 2014(15)
Stock Purchase Agreement, dated November 16, 2009, by and among Meadville Holdings Limited,
MTG Investment (BVI) Limited, the Registrant, TTM Technologies International, Inc., and TTM
Hong Kong Limited (now known as TTM Technologies (Asia Pacific) Limited)(16)
60
Exhibit
Number
Exhibits
10.17‡
Form of Executive Change in Control Severance Agreement and schedule of agreements(17)
10.18
10.19
10.20
10.21
Credit Agreement, dated November 16, 2009, as amended and restated on March 30, 2010 and as
further amended on August 3, 2010 and July 22, 2011, respectively, by and among certain PCB
Subsidiaries, the Registrant, the Lenders, and the other parties named therein(18)
Waiver and Amendment Letter with The Hongkong and Shanghai Banking Corporation Limited,
dated August 3, 2010(19)
Special Security Agreement by and among Tang Hsiang Chien, Su Sih (BVI) Limited, the Registrant
and the United States Department of Defense, dated October 19, 2010(20)
Amendment Letter with The Hongkong and Shanghai Banking Corporation Limited, dated July 22,
2011(21)
10.22‡
Executive and Director Deferred Compensation Plan(22)
10.23
10.24‡
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
Facility Agreement, dated September 14, 2012, by and among the PCB Subsidiaries, the lenders, and
the other parties named therein(9)
Equity Awards Amendment Agreement, dated April 24, 2013 by and between the Registrant and
Kent Alder(23)
Call Option Transaction Confirmation, dated as of December 16, 2013, between the Registrant and
JPMorgan Chase Bank, National Association, London Branch(10)
Warrant Transaction Confirmation, dated as of December 16, 2013, between the Registrant and
JPMorgan Chase Bank, National Association, London Branch(10)
Call Option Transaction Confirmation, dated as of December 16, 2013, between the Registrant and
RBC Capital Markets, LLC(10)
Warrant Transaction Confirmation, dated as of December 16, 2013, between the Registrant and RBC
Capital Markets, LLC(10)
Call Option Transaction Confirmation, dated as of December 16, 2013, between the Registrant and
Deutsche Bank AG, London Branch(10)
Warrant Transaction Confirmation, dated as of December 16, 2013, between the Registrant and
Deutsche Bank AG, London Branch(10)
Call Option Transaction Confirmation, dated as of January 9, 2014, between the Registrant and
JPMorgan Chase Bank, National Association, London Branch(24)
Warrant Transaction Confirmation, dated as of January 9, 2014, between the Registrant and
JPMorgan Chase Bank, National Association, London Branch(24)
Call Option Transaction Confirmation, dated as of January 9, 2014, between the Registrant and RBC
Capital Markets, LLC(24)
Warrant Transaction Confirmation, dated as of January 9, 2014, between the Registrant and RBC
Capital Markets, LLC(24)
Call Option Transaction Confirmation, dated as of January 9, 2014, between the Registrant and
Deutsche Bank AG, London Branch(24)
Warrant Transaction Confirmation, dated as of January 9, 2014, between the Registrant and Deutsche
Bank AG, London Branch(24)
61
Exhibit
Number
10.37
10.38
10.39
10.40
10.41
10.41
10.43
10.44
10.45
10.46
10.47
10.48
12.1*
21.1*
23.1*
23.2*
31.1*
31.2*
32.1*
32.2*
Exhibits
Voting Agreement, by and among the Company, Hicks, Muse, Tate & Furst Equity Fund III, L.P.,
HM3 Coinvestors, L.P., HMTF Equity Fund IV (1999), L.P., HMTF Private Equity Fund IV (1999),
L.P., Hicks, Muse PG-IV (1999), C.V., HM 4-P (1999) Coinvestors, L.P., and HM 4-EQ (1999)
Coinvestors, L.P., dated September 21, 2014(2)
Voting Agreement, by and among the Company, GSC Recovery II, L.P., and GSC Recovery IIA,
L.P., dated September 21, 2014(2)
Commitment Letter, by and among the Company, JPMorgan Chase Bank, N.A., J.P. Morgan
Securities LLC and Barclays Bank PLC, dated September 21, 2014(2)
Amended and Restated Commitment Letter, by and among the Registrant, JPMorgan Chase Bank,
N.A., J.P. Morgan Securities LLC, Barclays Bank PLC, and The Royal Bank of Scotland plc, dated
October 23, 2014(25)
TTM Technologies, Inc. Form of Restricted Stock Unit Award Grant Notice (for U.S. taxpayers)
pursuant to TTM Technologies, Inc. 2014 Incentive Compensation Plan(26)
TTM Technologies, Inc. Form of Restricted Stock Unit Award Grant Notice (for non-U.S. taxpayers)
pursuant to TTM Technologies, Inc. 2014 Incentive Compensation Plan(26)
TTM Technologies, Inc. Form of Performance-Based RSU Grant Notice and Award Agreement
pursuant to TTM Technologies, Inc. 2014 Incentive Compensation Plan(26)
Form of Executive Change in Control Severance Agreement and schedule of agreements(26)
Facility Agreement, dated May 22, 2015, by and among TTM Technologies Enterprises (HK)
Limited, The Hongkong and Shanghai Banking Corporation Limited, and the other parties named
therein(27)
Term Loan Credit Agreement, by and among TTM Technologies, Inc., as Borrower, the several
Lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent,
Barclays Bank PLC, as Syndication Agent, and The Royal Bank of Scotland plc and HCBS
Securities (USA) Inc., as Documentation Agents, dated as of May 31, 2015(28)
ABL Credit Agreement, by and among TTM Technologies, Inc., as Borrower, the several Lenders
from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Barclays
Bank PLC, as Syndication Agent, and The Royal Bank of Scotland plc and HCBS Securities (USA)
Inc., as Documentation Agents, dated as of May 31, 2015(28)
TTM Technologies, Inc. Form of Restricted Stock Unit Award Grant Notice (for non-employee
directors) pursuant to TTM Technologies, Inc. 2014 Incentive Compensation Plan(29)
Statement of Computation of Ratio of Earnings to Fixed Charges
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm
Consent of KPMG LLP, independent registered public accounting firm
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification of Chief Executive Officer
Certification of Chief Financial Officer
62
Exhibit
Number
Exhibits
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
(1) Incorporated by reference to the Registrant’s Form 10-Q as filed with the Securities and Exchange
Commission (the “Commission”) on May 7, 2013.
(2) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on September 22,
2014.
(3) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on June 6, 2011.
(4) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on March 2, 2011.
(5) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on May 14, 2008.
(6) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on August 30, 2005.
(7) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on December 23,
2009.
(8) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on April 13, 2010.
(9) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on September 19,
2012.
(10) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on December 20,
2013.
(11) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on May 22, 2008.
(12) Incorporated by reference to the Registrant’s Form 10-K as filed with the Commission on March 16, 2007.
(13) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on March 30, 2010.
(14) Incorporated by reference to the Registrant’s Form S-8 as filed with the Commission on August 13, 2014.
(15) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on December 15,
2014.
(16) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on November 16,
2009.
(17) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on August 5, 2014.
(18) Incorporated by reference to the Registrant’s Form 8-K/A as filed with the Commission on August 5, 2010.
(19) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on August 5, 2010.
(20) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on October 22, 2010.
(21) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on July 27, 2011.
(22) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on September 19,
2011.
(23) Incorporated by reference to the Registrant’s Form 10-Q as filed with the Commission on August 6, 2013.
(24) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on January 14, 2014.
(25) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on October 27, 2014.
(26) Incorporated by reference to the Registrant’s Form 10-Q as filed with the Commission on May 5, 2015.
(27) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on May 29, 2015.
(28) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on June 2, 2015.
63
(29) Incorporated by reference to the Registrant’s Form 10-Q as filed with the Commission on August 10, 2015.
(30) Incorporated by reference to the Registrant’s Form 8-K as filed with the Commission on January 4, 2016.
‡ Management contract or Compensation Plan
*
Filed herewith
** The appendices to this exhibit have been omitted in reliance on Item 601(b)(2) of Regulation S-K and will
be furnished supplementally to the SEC upon request.
(c) Financial Statement Schedules.
None.
64
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
TTM TECHNOLOGIES, INC.
By:
/s/ Thomas T. Edman
Thomas T. Edman
President and Chief Executive Officer
Date: February 24, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Thomas T. Edman
Thomas T. Edman
/s/ Todd B. Schull
Todd B. Schull
/s/ Robert E. Klatell
Robert E. Klatell
/s/ Kenton K. Alder
Kenton K. Alder
/s/ Philip G. Franklin
Philip G. Franklin
/s/ Ronald W. Iverson
Ronald W. Iverson
/s/ John G. Mayer
John G. Mayer
/s/ Tang Chung Yen, Tom
Tang Chung Yen, Tom
/s/ Dov S. Zakheim
Dov S. Zakheim
President, Chief Executive Officer and
Director (Principal Executive Officer)
February 24, 2016
Executive Vice President, Chief Financial
Officer and Treasurer (Principal
Financial Officer and Principal
Accounting Officer)
February 24, 2016
Chairman of the Board
February 24, 2016
Director
February 24, 2016
Director
February 24, 2016
Director
February 24, 2016
Director
February 24, 2016
Director
February 24, 2016
Director
February 24, 2016
65
TTM TECHNOLOGIES, INC.
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 28, 2015 and December 29, 2014 . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended December 28, 2015, December 29, 2014 and
67
70
December 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 28, 2015,
December 29, 2014 and December 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Consolidated Statements of Stockholders’ Equity for the Years Ended December 28, 2015, December 29,
2014 and December 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Consolidated Statements of Cash Flows for the Years Ended December 28, 2015, December 29, 2014 and
December 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
75
66
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
TTM Technologies, Inc.:
We have audited the accompanying consolidated balance sheets of TTM Technologies, Inc. and subsidiaries
as of December 28, 2015 and December 29, 2014, and the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of TTM Technologies, Inc. and subsidiaries as of December 28, 2015 and December 29,
2014, and the results of their operations and their cash flows for the years then ended, in conformity with U.S.
generally accepted accounting principles.
We also have audited the adjustments to the 2013 consolidated financial statements to retrospectively adjust
the disclosures for a change in the composition of reportable segments as described in Note 19. In our opinion,
such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply
any procedures to the 2013 consolidated financial statements of the Company other than with respect to the
restated segment information and, accordingly, we do not express an opinion or any other form of assurance on
the 2013 consolidated financial statements taken as a whole.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), TTM Technologies, Inc.’s internal control over financial reporting as of December 28, 2015,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 24, 2016,
expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Irvine, California
February 24, 2016
67
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
TTM Technologies, Inc.:
We have audited TTM Technologies, Inc.’s internal control over financial reporting as of December 28,
2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). TTM Technologies, Inc.’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion
on TTM Technologies, Inc.’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, TTM Technologies, Inc. maintained, in all material respects, effective internal control over
financial reporting as of December 28, 2015, based on criteria established in Internal Control — Integrated
Framework (2013) issued by COSO.
TTM Technologies, Inc. acquired Viasystems Group, Inc. during 2015, and management excluded from its
assessment of the effectiveness of TTM Technologies, Inc.’s internal control over financial reporting as of
December 28, 2015, Viasystems Group, Inc.’s internal control over financial reporting associated with 32% of
total assets and 32% of total net sales included in the consolidated financial statements of TTM Technologies,
Inc. and subsidiaries as of and for the year ended December 28, 2015. Our audit of internal control over financial
reporting of TTM Technologies, Inc. also excluded an evaluation of the internal control over financial reporting
of Viasystems Group, Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of TTM Technologies, Inc. and subsidiaries as of December 28,
2015 and December 29, 2014, and the related consolidated statements of operations, comprehensive income
(loss), stockholders’ equity, and cash flows for the years then ended, and our report dated February 24, 2016,
expressed an unqualified opinion on those consolidated financial statements.
Irvine, California
February 24, 2016
/s/ KPMG LLP
68
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of TTM Technologies, Inc.:
In our opinion, the consolidated statements of operations, comprehensive income (loss), stockholders’
equity, and cash flows for the year ended December 30, 2013, before the effects of the adjustments to
retrospectively reflect the change in the composition of reportable segments described in Note 19, present fairly,
in all material respects, the results of operations and cash flows of TTM Technologies, Inc. and its subsidiaries
for the year ended December 30, 2013, in conformity with accounting principles generally accepted in the United
States of America (the 2013 financial statements before the effects of the adjustments discussed in Note 19 are
not presented herein). These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit,
before the effects of the adjustments described above, of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively reflect
the change in the composition of reportable segments described in Note 19 and, accordingly, we do not express
an opinion or any other form of assurance about whether such adjustments are appropriate and have been
properly applied. Those adjustments were audited by other auditors.
/s/ PricewaterhouseCoopers LLP
Irvine, California
February 21, 2014
69
TTM TECHNOLOGIES, INC.
Consolidated Balance Sheets
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Definite-lived intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits and other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of
December 28,
2015
December 29,
2014
(In thousands, except par value)
$ 259,100
3,530
456,000
268,923
34,967
1,022,520
1,103,067
346,990
150,874
47,853
$ 279,042
—
312,867
145,187
61,027
798,123
754,718
12,111
19,250
17,087
$2,671,304
$1,601,289
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt, including current portion of long-term debt, net of discount . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued salaries, wages and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 157,375
377,222
108,649
101,748
$ 128,045
235,276
43,497
89,194
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
744,994
Long-term debt, net of discount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,044,582
55,059
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,099,641
Commitments and contingencies (Note 14)
Equity:
Common stock, $0.001 par value; 200,000 shares authorized, 99,137 and 83,345
shares issued and outstanding in 2015 and 2014, respectively . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total TTM Technologies, Inc. stockholders’ equity . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
745,608
45,963
25,812
1,623
819,105
7,564
826,669
496,012
374,642
15,171
389,813
83
586,709
76,421
21,236
31,015
715,464
—
715,464
$2,671,304
$1,601,289
See accompanying notes to consolidated financial statements.
70
TTM TECHNOLOGIES, INC.
Consolidated Statements of Operations
Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(In thousands, except per share amounts)
$1,325,717
1,131,028
$2,095,488
1,785,351
$1,368,215
1,150,372
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
310,137
194,689
217,843
Operating expenses:
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of definite-lived intangibles . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,361
167,669
18,888
(2,504)
7,381
—
36,919
100,999
8,387
—
—
1,845
37,149
105,924
9,332
(17,917)
3,445
10,782
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248,795
148,150
148,715
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,342
46,539
69,128
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(59,753)
(802)
8,189
(23,830)
(506)
88
(24,031)
(10,743)
5,418
Total other expense, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(52,366)
(24,248)
(29,356)
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to the non-controlling interest . . . . . . . . .
8,976
(34,594)
(25,618)
(264)
22,291
(7,598)
14,693
—
39,772
(15,879)
23,893
(2,016)
Net (loss) income attributable to TTM Technologies, Inc.
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (25,882) $
14,693
$
21,877
(Loss) earnings per share attributable to TTM Technologies, Inc.
stockholders:
Basic (loss) earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted (loss) earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares used in computing per share amounts:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(0.28) $
(0.28) $
0.18
0.18
$
$
0.27
0.26
92,675
92,675
83,238
83,941
82,506
83,132
See accompanying notes to consolidated financial statements.
71
TTM TECHNOLOGIES, INC.
Consolidated Statements of Comprehensive Income (Loss)
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
$(25,618)
(In thousands)
$ 14,693
$ 23,893
Unrealized (loss) gain during the year, net . . . . . . . . . . . . . . . . . . .
Gain realized in the statement of operations . . . . . . . . . . . . . . . . . .
(27,758)
(1,786)
(14,841)
—
16,172
(14,266)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(29,544)
(14,841)
1,906
Net unrealized gains (losses) on cash flow hedges:
Unrealized gain (loss) on effective cash flow hedges during the
year, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss realized in the statement of operations . . . . . . . . . . . . . . . . . .
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on available for sale securities:
Unrealized loss on available for sale securities during the year . . .
Loss realized in the statement of operations . . . . . . . . . . . . . . . . . .
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20)
172
152
—
—
—
43
146
189
(20)
83
63
Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . .
(29,392)
(14,589)
(1,726)
128
(1,598)
(105)
53
(52)
256
Comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . .
(55,010)
104
24,149
Less: Comprehensive (income) loss attributable to the non-controlling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(264)
—
(3,417)
Comprehensive (loss) income attributable to TTM Technologies, Inc.
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(55,274)
$
104
$ 20,732
See accompanying notes to consolidated financial statements.
72
TTM TECHNOLOGIES, INC.
Consolidated Statements of Stockholders’ Equity
Common Stock
Shares Amount
Additional
Paid-In
Capital
Retained
Earnings
Statutory
Surplus
Reserve
Accumulated
Other
Comprehensive
Income (Loss)
Total TTM
Technologies, Inc
Stockholders’
Equity
Non-controlling
Interest
Total
Equity
$546,029
$ 45,921
— 21,877
—
—
(In thousands)
$ 46,749
—
(1,145)
$15,166
—
—
$653,947
21,877
(1,145)
$ 98,883
2,016
1,401
$752,830
23,893
256
Balance, December 31, 2012 . . . . . . . 81,937
Net income . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . .
Transfer to statutory surplus
$82
— —
— —
reserve . . . . . . . . . . . . . . . . . . . . . . .
Sale of controlling equity interest . . . .
Purchase of non-controlling equity
interest
. . . . . . . . . . . . . . . . . . . . . .
— —
— —
— —
—
—
(71)
Issuance and repurchase of
convertible senior notes . . . . . . . . .
Purchase of convertible senior note
hedge, net of tax benefit of
$20,413 . . . . . . . . . . . . . . . . . . . . . .
Issuance of warrants related to
convertible senior notes . . . . . . . . .
Exercise of stock options . . . . . . . . . .
Tax shortfall from stock awards
exercised or released . . . . . . . . . . . .
Issuance of common stock for
performance-based restricted stock
units . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock for
restricted stock units . . . . . . . . . . . .
Stock-based compensation . . . . . . . . .
— —
30,310
— —
(37,909)
— —
47 —
29,722
323
— —
(744)
104 —
—
567
1
— —
(1)
8,985
(3,526)
—
3,526
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance, December 30, 2013 . . . . . . . 82,655
Net income . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . .
Transfer to statutory surplus
83
— —
— —
reserve . . . . . . . . . . . . . . . . . . . . . . .
— —
576,644
64,272
— 14,693
—
—
18,692
—
—
45,604
—
(14,589)
—
(2,544)
2,544
Issuance and repurchase of
convertible senior notes . . . . . . . . .
Purchase of convertible senior note
hedge, net of tax benefit of
$2,964 . . . . . . . . . . . . . . . . . . . . . . .
Issuance of warrants related to
convertible senior notes . . . . . . . . .
Tax shortfall from stock awards
exercised or released . . . . . . . . . . . .
Issuance of common stock for
performance-based restricted stock
units . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock for
restricted stock units . . . . . . . . . . . .
Stock-based compensation . . . . . . . . .
— —
4,216
— —
(4,989)
— —
4,053
— —
(1,015)
90 —
600 —
— —
—
—
7,800
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance, December 29, 2014 . . . . . . . 83,345
Net (loss) income . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . .
Transfer to statutory surplus
83
— —
— —
reserve . . . . . . . . . . . . . . . . . . . . . . .
— —
Acquisition of Viasystems, Group,
Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . 15,082
Exercise of stock options . . . . . . . . . .
Tax shortfall from stock awards
exercised or released . . . . . . . . . . . .
Issuance of common stock for
restricted stock units . . . . . . . . . . . .
Stock-based compensation . . . . . . . . .
15
68 —
— —
642
1
— —
586,709
76,421
— (25,882)
—
—
21,236
—
—
31,015
—
(29,392)
—
(4,576)
4,576
148,991
495
(247)
(1)
9,661
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(71)
30,310
(37,909)
29,722
323
(744)
—
—
8,985
705,295
14,693
(14,589)
—
4,216
(4,989)
4,053
(1,015)
—
—
7,800
715,464
(25,882)
(29,392)
—
149,006
495
(247)
—
9,661
—
(73,013)
—
(73,013)
(29,287)
(29,358)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
264
—
—
30,310
(37,909)
29,722
323
(744)
—
—
8,985
705,295
14,693
(14,589)
—
4,216
(4,989)
4,053
(1,015)
—
—
7,800
715,464
(25,618)
(29,392)
—
7,300
—
156,306
495
—
—
—
(247)
—
9,661
Balance, December 28, 2015 . . . . . . . 99,137
$99
$745,608
$ 45,963
$25,812
$ 1,623
$819,105
$ 7,564
$826,669
See accompanying notes to consolidated financial statements.
73
TTM TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
$ (25,618)
$ 14,693
$ 23,893
Cash flows from operating activities:
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of definite-lived intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of convertible senior notes discount, debt discount and debt issuance
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
Payment of accreted interest on convertible senior notes . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, net of disposition:
Accounts and notes receivable, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued salaries, wages and benefits and other accrued expenses . . . . . . . . . . . . .
133,508
18,888
15,451
23,892
9,661
802
(2,504)
—
(4,396)
(8,731)
66,062
8,482
15,781
(31,916)
18,100
95,349
8,387
10,165
2,018
7,800
506
—
1,845
1,882
(1,324)
(22,485)
(7,113)
2,292
23,937
(8,142)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
237,462
129,810
Cash flows from investing activities:
Acquisition, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Designation of cash and cash equivalents to restricted cash . . . . . . . . . . . . . . . . . . . . . .
Purchase of property, plant and equipment and equipment deposits . . . . . . . . . . . . . . . .
Proceeds from sale of property, plant and equipment and other assets . . . . . . . . . . . . . .
(169,162)
(19)
(99,925)
21,446
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(247,660)
Cash flows from financing activities:
Proceeds from long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings (repayments) of revolving loan . . . . . . . . . . . . . . . . . . . . . . .
Repayment of assumed long-term debt in acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt
Proceeds from issuance of convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of original issue discount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of convertible senior note hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of non-controlling interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rates on cash and cash equivalents . . . . . . . . . . . . . .
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year
950,000
80,000
(669,024)
(276,178)
—
(23,664)
(34,135)
(33,250)
—
—
—
495
(5,756)
(3,988)
(19,942)
279,042
—
—
(109,624)
1,053
(108,571)
—
—
—
(96,204)
30,000
(5,411)
(1,626)
—
(7,953)
4,053
—
—
(77,141)
4,390
(51,512)
330,554
92,120
9,332
8,466
8,116
8,985
10,743
(17,917)
10,782
518
(27,663)
(96,394)
(9,332)
(10,347)
35,362
24,724
71,388
—
—
(103,347)
67,658
(35,689)
—
(30,000)
—
—
220,000
(113,055)
(6,325)
—
(58,322)
29,722
(29,358)
323
12,985
(3,563)
45,121
285,433
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 259,100
$ 279,042
$ 330,554
Supplemental cash flow information:
Cash paid, net for interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid, net for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 34,052
14,495
Supplemental disclosure of noncash investing and financing activities:
Property, plant and equipment recorded in equipment and accounts payable . . . . . . . . .
Common stock issued in connection with Viasystems acquisition . . . . . . . . . . . . . . . . .
$ 24,515
149,006
$ 14,072
297
$ 49,144
—
$ 16,647
6,065
$ 80,063
—
See accompanying notes to consolidated financial statements.
74
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements
(Dollars and shares in thousands, except per share data)
(1) Nature of Operations and Basis of Presentation
TTM Technologies, Inc. (the Company or TTM) is a major global printed circuit board (PCB) manufacturer,
focusing on quick-turn and technologically advanced PCBs and electro-mechanical solutions (E-M Solutions).
The Company provides time-to-market and advanced technology products and offers a one-stop manufacturing
solution to customers from engineering support to prototype development through final volume production. This
one-stop 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
manufacturers of networking/communications infrastructure products, tablets and smartphones, as well as the
aerospace and defense, automotive controls and information systems, high-end computing, and medical,
industrial and instrumentation related products. The Company’s customers include both original equipment
manufacturers (OEMs) and electronic manufacturing services (EMS) providers.
The Company operates on a 52 or 53 week year ending on the Monday nearest December 31. Fiscal 2015,
2014 and 2013 were 52 weeks and ended on December 28, 2015, December 29, 2014, and December 30, 2013,
respectively. All references to years relate to fiscal years unless otherwise noted.
2)
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses during the reporting period. Such
estimates include the sales return reserve; accounts receivable; inventories; goodwill; intangible assets and other
long-lived assets; self insurance reserves; derivative instruments and hedging activities; product warranty
liabilities; environmental
income taxes; and others. These estimates and
assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and
including the economic
assumptions on an ongoing basis using historical experience and other factors,
environment, which management believes to be reasonable under the circumstances. Management adjusts such
estimates and assumptions when facts and circumstances dictate. Unpredictable spending by OEM and EMS
companies has also increased the uncertainty inherent in such estimates and assumptions. As future events and
their effects cannot be determined with precision, actual results could differ from those estimates.
legal contingencies;
liabilities;
Principles of Consolidation
The consolidated financial statements include the accounts of TTM Technologies, Inc. and its subsidiaries.
All intercompany accounts and transactions have been eliminated in consolidation.
Foreign Currency Translation and Transactions
The functional currency of certain of the Company’s subsidiaries is either the Chinese Renminbi (RMB) or
the Hong Kong Dollar. Accordingly, assets and liabilities are translated into U.S. dollars using period-end
exchange rates. Sales and expenses are translated at the average exchange rates in effect during the period. The
resulting translation gains or losses are recorded as a component of accumulated other comprehensive income in
the consolidated statement of stockholders’ equity and the consolidated statement of comprehensive income
(loss). Net gains resulting from foreign currency remeasurements and transactions are included in income as a
component of other, net in the consolidated statements of operations and totaled $6,766, $2,378, and $6,113 for
the years ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively.
75
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Cash Equivalents
The Company considers highly liquid investments with insignificant interest rate risk and original maturities
to the Company of three months or less to be cash equivalents. Cash equivalents consist primarily of interest-
bearing bank accounts and money market funds.
The Company considers highly liquid investments with an effective maturity to the Company of more than
three months and less than one year to be short-term investments.
As of December 28, 2015, the Company had $3,530 of restricted cash related to the collaterization of certain
letter of credit arrangements. These letter of credit arrangements are due to expire at various times during 2016.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are reflected at estimated net realizable value, do not bear interest and do not generally
require collateral. The Company performs credit evaluations of its customers and adjusts credit limits based upon
payment history and the customer’s current creditworthiness. The Company maintains an allowance for doubtful
accounts based upon a variety of factors. The Company reviews all open accounts and provides specific reserves
for customer collection issues when it believes the loss is probable, considering such factors as the length of time
receivables are past due, the financial condition of the customer, and historical experience. The Company also
records a reserve for all customers, excluding those that have been specifically reserved for, based upon
evaluation of historical losses.
The following summarizes the activity in the Company’s allowance for doubtful accounts for the years
ended December 28, 2015, December 29, 2014 and December 30, 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Additions charged to (reversals of) expense . . . . . . . . . . .
Sale of a majority owned subsidiary . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rates . . . . . . . . . . . .
$ 696
854
—
(26)
1
(In thousands)
$ 518
214
—
(34)
(2)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,525
$ 696
$1,680
(157)
(459)
(554)
8
$ 518
Inventories
Inventories are stated at the lower of cost (determined on a first-in, first-out and weighted average basis) or
market. Assessments to value the inventory at the lower of the actual cost to purchase and / or manufacture the
inventory, or the current estimated market value of the inventory, are based upon assumptions about future
demand and market conditions. As a result of the Company’s assessments, when the market value of inventory is
less than the carrying value, the inventory cost is written down to the market value and the write down is
recorded as a charge to cost of goods sold.
76
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Property, Plant and Equipment, Net
Property, plant and equipment are recorded at cost. Depreciation expense is computed using the straight-line
method over the estimated useful lives of the assets. Assets recorded under leasehold improvements are
amortized using the straight-line method over the lesser of their useful lives or the related lease term. The
Company uses the following estimated useful lives:
Land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50-99 years
7-50 years
3-12 years
3-7 years
Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated
depreciation are removed from the accounts. The resulting gain or loss is included in the determination of
operating income in the period incurred. Depreciation and amortization expense on property, plant and
equipment was $133,508, $95,349, and $92,120 for the years ended December 28, 2015, December 29, 2014 and
December 30, 2013, respectively.
The Company capitalizes interest on borrowings during the active construction period of major capital
projects. Capitalized interest is amortized over the average useful lives of such assets, which primarily consist of
buildings and machinery and equipment. The Company capitalized interest costs of $888, $551, and $1,125
during the years ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively, in
connection with various capital projects.
Major renewals and betterments are capitalized and depreciated over their estimated useful lives while
minor expenditures for maintenance and repairs are included in operating income as incurred.
Goodwill
Goodwill represents the excess of purchase price of an acquisition over the fair value of net assets acquired.
Goodwill is not amortized but instead is assessed for impairment, at a reporting unit level, annually and when
events and circumstances warrant an evaluation. In making this assessment, management relies on a number of
factors, including expected future operating results, business plans, economic projections, anticipated future cash
flows, business trends and market conditions.
The Company has two reportable operating segments consisting of seven reporting units. The Company
evaluates its goodwill on an annual basis in the fourth quarter or more frequently if it believes indicators of
impairment exist. The Company first assesses qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more
likely than not that the fair value of a reporting units is less than its carrying amount, it conducts a two-step
quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair values of
the applicable reporting units with their carrying values. The Company estimates the fair values of its reporting
units using a combination of the income and market approach. If the carrying amount of a reporting unit exceeds
the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test. The
second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting
unit’s goodwill with the carrying value of that goodwill. The amount, by which the carrying value of the
goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. In the fourth quarter of 2015,
the Company performed its annual impairment test qualitatively and concluded that goodwill was not impaired.
Intangible Assets
Intangible assets include customer relationships, technology and trade names, which are being amortized
over their estimated useful lives using straight-line and accelerated methods. The estimated useful lives of such
intangibles range from 3 years to 10 years.
77
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Impairment of Long-lived Assets
Long-lived tangible assets, including property, plant and equipment, assets held for sale, and definite-lived
intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of the asset or asset groups may not be recoverable. The Company regularly evaluates whether
events or circumstances have occurred that indicate possible impairment and relies on a number of factors,
including expected future operating results, business plans, economic projections, and anticipated future cash
flows. The Company uses an estimate of the future undiscounted net cash flows and comparisons to like-kind
assets, as appropriate, of the related asset or asset group over the remaining life in measuring whether the assets
are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the
asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques,
including cost-based, market and income approaches as considered necessary. See Note 4 for information
regarding the impairment of long-lived assets during the years ended 2014 and 2013.
The Company classifies assets to be sold as assets held for sale when (i) Company management has
approved and commits to a plan to sell the asset; (ii) the asset is available for immediate sale in its present
condition and is ready for sale; (iii) an active program to locate a buyer and other actions required to sell the asset
have been initiated; (iv) the sale of the asset is probable; (v) the asset is being actively marketed for sale at a price
that is reasonable in relation to its current fair value; and (vi) it is unlikely that significant changes to the plan
will be made or that the plan will be withdrawn. Assets classified as held for sale are recorded at the lower of the
carrying amount or fair value less the cost to sell and are a component of prepaid expenses and other current
assets in the consolidated balance sheet.
The Company classifies assets held for use when a decision to dispose of an asset or a business is made and
the held for sale criteria are not met. Assets of the business are evaluated for recoverability in the following
order: (i) assets other than goodwill, property and intangibles; (ii) property and intangibles subject
to
amortization; and (iii) goodwill. In evaluating the recoverability of property and intangible assets subject to
amortization, in a held for use business, the carrying value is first compared to the sum of the undiscounted cash
flows expected to result from the use and eventual disposition. If the carrying value exceeds the undiscounted
expected cash flows, then a fair value analysis is performed. An impairment charge is recognized if the carrying
value exceeds the fair value.
Revenue Recognition
The Company derives its revenue primarily from the sale of PCBs using customer supplied engineering and
design plans and recognizes revenue when: (i) persuasive evidence of a sales arrangement exists; (ii) the sales
terms are fixed or determinable; (iii) title and risk of loss have transferred; and (iv) collectability is reasonably
assured — generally when products are shipped to the customer, except in situations in which title passes upon
receipt of the products by the customer. In this case, revenues are recognized upon notification that customer
receipt has occurred. The Company does not have customer acceptance provisions, but it does provide its
customers a limited right of return for defective PCBs. The Company accrues an estimated amount for sales
returns and allowances related to defective PCBs at the time of sale based on its ability to estimate sales returns
and allowances using current and historical information. The reserve for sales returns and allowances is included
as a reduction to revenue and accounts receivable, net. Shipping and handling fees and related freight costs and
supplies associated with shipping products to customers are included as a component of cost of goods sold.
Incremental warranty costs that are not related to sales returns are recorded in accrued expenses and cost of
goods sold.
78
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The following summarizes the activity in the Company’s allowance for sales returns and allowances for the
years ended December 28, 2015, December 29, 2014 and December 30, 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Additions charged to expense . . . . . . . . . . . . . . . . . . . . . .
Sale of a majority owned subsidiary . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rates . . . . . . . . . . . .
$ 6,890
21,728
—
(20,832)
3
(In thousands)
$ 6,028
38,440
—
(37,578)
—
$ 9,320
33,154
(347)
(36,104)
5
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7,789
$ 6,890
$ 6,028
Stock-Based Compensation
The Company recognizes stock-based compensation expense in its consolidated financial statements for its
incentive compensation plan awards.
The incentive compensation plan awards include performance-based restricted stock units, restricted stock
units, and stock options and the associated compensation expense is based on the grant date fair value of the
awards, net of estimated forfeitures, as well as an assessment of probability of the performance-based awards
vesting. Compensation expense for the incentive compensation plan awards is recognized on a straight line basis
over the vesting period of the awards. The fair value of performance-based restricted stock units is estimated on
the grant date using a Monte Carlo simulation model based on the underlying common stock closing price as of
the date of grant, the expected term, stock price volatility, and risk-free interest rates. The fair value of restricted
stock units is measured on the grant date based on the quoted closing market price of the Company’s common
stock. The fair value of the stock options is estimated on the grant date using the Black-Scholes option pricing
model based on the underlying common stock closing price as of the date of grant, the expected term, stock price
volatility, and risk-free interest rates.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income tax assets or liabilities
are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be settled or realized. The
effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. Deferred income tax assets are reviewed for recoverability, and the Company
records a valuation allowance to reduce its deferred income tax assets when it is more likely than not that all or
some portion of the deferred income tax assets will not be realized.
The Company has various foreign subsidiaries formed or acquired to conduct or support its business outside
the United States. The Company does not provide for U.S. income taxes on undistributed earnings for certain
subsidiaries in China as management expects the foreign earnings will be indefinitely reinvested in such foreign
jurisdictions. For certain subsidiaries within the China, indefinite investment of undistributed earnings has not
been asserted between the respective subsidiaries and their foreign parent entity and therefore, a deferred tax
liability for the foreign tax impacts has been recorded on the undistributed earnings of these subsidiaries.
The Company recognizes the effect of income tax positions only if those positions are more likely than not
of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50
79
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
percent likely to be realized. Changes in recognition or measurement are reflected in the period in which the
change in judgment occurs. Estimated interest and penalties related to underpayment of income taxes are
recorded as a component of income tax provision in the consolidated statement of operations.
Self Insurance
The Company is primarily self insured in North America for group health insurance and workers
compensation benefits provided to U.S. employees. The Company also purchases stop loss insurance to protect
against annual claims per individual and at an aggregate level. The individual insured stop loss on the Company’s
self insurance is $200 per individual for the recently acquired Viasystems subsidiaries and $300 per individual
for the existing TTM subsidiaries for group health insurance and $250 per individual for worker’s compensation
benefits. Self insurance liabilities are estimated for claims incurred but not paid based on judgment, using the
Company’s historical claim data and information and analysis provided by actuarial and claim advisors, the
Company’s insurance carrier and brokers. The Company has accrued $5,182 and $5,032 for self insurance
liabilities as of December 28, 2015 and December 29, 2014, respectively, and these amounts are reflected within
accrued salaries, wages and benefits in the consolidated balance sheets.
Group health insurance and workers compensation benefits for the Company’s plants in China are fully
insured with third parties.
Convertible Debt
The accounting standards for convertible debt instruments that may be fully or partially settled in cash upon
conversion require the debt and equity components to be separately accounted for in a manner that reflects the
Company’s nonconvertible borrowing rate when interest expense is recognized in subsequent periods. The
amount recorded as debt is based on the fair value of the debt component as a standalone instrument, determined
using an average interest rate for similar nonconvertible debt issued by entities with credit ratings comparable to
the Company’s at the time of issuance. The difference between the debt recorded at inception and its principal
amount is to be accreted to principal through interest expense through the estimated life of the note.
Derivative Instruments and Hedging Activities
Derivative financial instruments are recognized as either assets or liabilities in the consolidated balance
sheet at their respective fair values. As a matter of policy, the Company uses derivatives for risk management
purposes. The Company does not use derivatives for speculative purposes.
Derivatives are typically entered into as hedges for changes in interest rates, currency exchange rates, and
other risks. When the Company determines to designate a derivative instrument as a cash flow hedge, the
Company formally documents the hedging relationship and its risk management objective and strategy for
undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the
hedging instrument’s effectiveness in offsetting the hedged risk will be assessed, and a description of the method
of measuring ineffectiveness. The Company also formally assesses, both at the hedge’s inception and on an
ongoing basis, whether the derivative that is used in hedging transactions is highly effective in offsetting changes
in cash flows of hedged items.
Fair value of the derivative instruments is determined using pricing models developed based on the
underlying swap interest rate, foreign currency exchange rates, and other observable market data as appropriate.
The values are also adjusted to reflect nonperformance risk of the counterparty and the Company, as necessary.
For derivatives that are designated as a cash flow hedge, changes in the fair value of the derivative are recognized
in accumulated other comprehensive income, to the extent the derivative is effective at offsetting the changes in
cash flow being hedged until the hedged item affects earnings. To the extent there is any hedge ineffectiveness,
changes in fair value relating to the ineffective portion are immediately recognized in earnings. Changes in the
fair value of derivatives that are not designated as hedges are recorded in earnings each period.
80
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Value Added and Sales Tax Collected from Customers
As a part of the Company’s normal course of business, value added and sales taxes are collected from
customers. Such taxes collected are remitted, in a timely manner, to the appropriate governmental tax authority
on behalf of the customer. The Company’s policy is to present revenue and costs, net of value added and sales
taxes.
Fair Value Measures
The Company measures at fair value certain of its financial and non-financial assets and liabilities by using
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. 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 levels of the fair value hierarchy are:
Level 1 — Quoted market prices in active markets for identical assets or liabilities;
Level 2 — Significant other observable inputs (e.g., quoted prices for similar items in active markets,
quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that
are observable, such as interest rate and yield curves, and market-corroborated inputs); and
Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting
unit to develop its own assumptions.
Environmental Accrual
Accruals for estimated costs for environmental obligations generally are recognized no later than the date
when the Company identifies what cleanup measures,
if any, are likely to be required to address the
environmental condition. Included in such obligations are the estimated direct costs to investigate and address the
conditions, and the associated engineering, legal and consulting costs. In making these estimates, the Company
considers information that is currently available, existing technology, enacted laws and regulations, and its
estimates of the timing of the required remedial actions. Such accruals are initially measured on a discounted
basis — and are adjusted as further information becomes available or circumstances change — and are accreted
to the payable amount over time.
Earnings Per Share
Basic earnings per common share excludes dilution and is computed by dividing net income attributable to
TTM Technologies, Inc. stockholders by the weighted average number of common shares outstanding during the
period. Diluted earnings per common share reflect the potential dilution that could occur if stock options,
convertible senior notes or other common stock equivalents were exercised or converted into common stock. The
dilutive effect of stock options or other common stock equivalents is calculated using the treasury stock method,
while the dilutive effect of convertible senior notes is calculated using the if-converted method.
Comprehensive Income
Comprehensive income includes changes to equity accounts that were not the result of transactions with
stockholders. Comprehensive income is comprised of net income (loss), changes in the cumulative foreign
currency translation adjustments and realized and unrealized gains or losses on hedged derivative instruments
and available for sale securities.
Loss Contingencies
The Company establishes an accrual for an estimated loss contingency when it is both probable that an asset
has been impaired or that a liability has been incurred and the amount of the loss can be reasonably estimated.
Any legal fees expected to be incurred in connection with a contingency are expensed as incurred.
81
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Recently Adopted and Issued Accounting Standards
In November 2015 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities with a classified
balance sheet to present all deferred tax assets and liabilities as non-current. We adopted the provisions of this
update in the fourth quarter of 2015 on a prospective basis. The impact on the Company’s consolidated financial
statements was not material.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period
Adjustments, which requires that an acquirer recognize adjustments to provisional values of assets acquired and
liabilities assumed in a business combination in the reporting period in which the adjustment amounts are
determined and not on a retrospective basis. The Company adopted ASU 2015-16 in the third quarter of 2015,
and the Company’s adoption did not have a material impact on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Imputation of Interest, which requires an entity to record
debt issuance costs related to a note reported in the balance sheet as a direct deduction from the face amount of
that note. The update is effective for annual periods ending after December 15, 2015. Early application is
permitted. The standard requires the use of the retrospective transition method. The impact on the Company’s
consolidated financial statements is not expected to be material.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an
entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or
services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it
becomes effective. The new standard is effective for the Company at the beginning of fiscal year 2018, however
application of the standard is allowed as early as the beginning of fiscal 2017. The standard permits the use of
either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU
2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet
selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
(3) Acquisition of Viasystems Group, Inc.
On May 31, 2015, the Company completed the acquisition of Viasystems Group, Inc. (Viasystems), for total
consideration of $248,824 in cash and 15,082 shares of TTM common stock with a fair value of $149,006, to
acquire all of the outstanding shares of capital stock and other equity rights of Viasystems. Additionally, in
connection with the completion of the acquisition, the Company assumed and refinanced Viasystems’ debt,
which was approximately $669,024 as of May 31, 2015. Viasystems was a worldwide provider of complex multi-
layer rigid, flexible, and rigid-flex PCBs and custom electronic assemblies. Viasystems’ products were found in a
wide variety of commercial products, including automotive engine controls, hybrid converters, automotive
electronics for navigation, safety, and entertainment, telecommunications switching equipment, data networking
equipment, computer storage equipment, semiconductor test equipment, wind and solar energy applications, off-
shore drilling equipment, communications applications, flight control systems, and complex industrial, medical,
and other technical instruments. Viasystems’ E-M Solutions services have been be bundled with its PCB
products to provide an integrated solution to customers. Viasystems operated 15 manufacturing facilities
worldwide: eight in the United States, five in the People’s Republic of China (China), and one each in Canada
and Mexico. Viasystems served a diversified customer base of over 1,000 customers in various markets
throughout the world.
Bank fees and legal, accounting, and other professional service costs associated with the acquisition of
Viasystems of $34,448 and $5,981 for the years ended December 28, 2015 and December 29, 2014, respectively,
have been expensed and recorded as general and administrative expense in the consolidated statements of
operations. There were no bank fees and legal, accounting, and other professional service costs associated with
the acquisition of Viasystems for the year ended December 30, 2013.
82
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The following summarizes the components of the purchase price:
Value of TTM common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 149,006
248,824
Debt assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397,830
669,024
Enterprise value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,066,854
(In thousands)
The value of the shares of the Company’s common stock used in determining the purchase price was $9.88
per share, the closing price of the Company’s common stock on May 29, 2015, the last business day prior to the
effective date of the acquisition.
Preliminary Purchase Price Allocation
The purchase price of the Viasystems acquisition was allocated to tangible and intangible assets acquired,
liabilities assumed and noncontrolling interest based on preliminary estimates the fair value at the date of the
acquisition (May 31, 2015). The excess of the purchase price over the fair value of net assets acquired and
noncontrolling interest was allocated to goodwill. The fair value assigned to intangible assets acquired was based
on estimates and assumptions made by management at the time of acquisition.
The fair values assigned are based on reasonable methods applicable to the nature of the assets acquired,
liabilities assumed and noncontrolling interest. The following summarizes the preliminary estimated fair values
of net assets acquired and noncontrolling interest:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts and notes receivables ($216,259 contractual gross receivables) . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identifiable intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
Deposits and other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest
(In thousands)
$ 79,662
3,510
209,196
132,216
30,633
427,457
150,500
334,870
1,157
(253,263)
(669,024)
(41,784)
(7,300)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 397,830
Due to the fact that the Viasystems acquisition has just recently occurred, the magnitude of the transaction,
and as significant information to be obtained and analyzed resides in a foreign jurisdiction, the Company’s fair
value estimates for the purchase price allocation 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, liabilities assumed and
noncontrolling interest, but in no case to exceed more than one year from the date of acquisition. As of
83
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
December 28, 2015, the Company had not finalized the determination of fair values allocated to deferred taxes,
goodwill, tax uncertainties, income taxes payable, and other liabilities. Any changes in the fair values of the
liabilities assumed during the measurement period may result in material adjustments to goodwill.
Inventories
The Company acquired $132,216 of inventories as a result of the acquisition, which includes a fair value
step up of $14,200. Finished goods were valued at estimated selling prices less costs of disposal and a reasonable
profit allowance for the selling effort. Work-in-process inventory was valued at estimated selling prices less costs
to complete, costs of disposal and a reasonable profit allowance for the completion and selling effort. The fair
value step amount was charged to cost of goods sold over normal inventory turn periods and as of December 28,
2015 has been fully absorbed into cost of goods sold. Raw materials were valued at estimated replacement cost.
Property, Plant and Equipment
The fair value of property, plant and equipment was determined by utilizing three approaches: the cost, sales
comparison, and income capitalization approaches, each including management assumptions. Each approach
assumes valuation of the property at the property’s highest and best use.
Noncontrolling Interest
Noncontrolling interest consists of a 5% equity interest in a manufacturing facility in Huiyang, China. The
fair value was determined by utilizing a combination of income and market comparable approaches. The income
approach was used to estimate the total enterprise value of the noncontrolling interest by estimating discounted
future cash flows. The market comparable approach indicates the fair value of the noncontrolling interest based
on a comparison to comparable enterprises in similar lines of business that are publicly traded.
Identifiable Intangible Assets
Acquired identifiable intangible assets include customer relationships and technology. The fair value of the
identifiable intangible assets was determined using various income approach methods including excess earnings
to determine the present value of expected future cash flows for each identifiable intangible asset based on
discount rates which incorporate a risk premium to take into account the risks inherent in those expected cash
flows. The expected cash flows were estimated based on forecasted revenues and costs adjusted based on the
expectations of market participants. The Company used risk adjusted discount rates between 13% and 14% to
discount the expected future cash flows under the income approach. The preliminary estimated fair value
assigned to each class of intangible assets and the related weighted average amortization periods are as follows:
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated fair
value
(In thousands)
$147,500
3,000
$150,500
Weighted-average
amortization period
8.1 years
3.0 years
Goodwill
Goodwill represents the excess of the Viasystems purchase price over the fair value of assets acquired,
liabilities assumed and noncontrolling interest. During the year ended December 28, 2015, goodwill was adjusted
to reflect:
• a decrease in cash by $2,561 and restricted cash by $32 as a result of additional information received
regarding the collateralization of specific letters of credit;
84
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
• an increase in trade and notes receivable by $1,063 as a result of additional information received regarding
the collectability of such trade and notes receivable;
• a decrease in fair value of inventory by $6,061 resulting from additional information received regarding
the valuation of inventory;
• a decrease in current assets of $390 as a result of additional information regarding value of current assets;
• a decrease in property, plant and equipment by $25,379 due to additional information received regarding
the valuation of certain property acquired;
• an increase in intangible assets by $4,000 resulting from additional information received regarding the
valuation of identifiable intangible assets;
• an increase in other noncurrent assets by $485 primarily related to a long-term below market lease asset;
• an increase in current liabilities by $5,423 due to a reassessment of product claims and other amounts due
to vendors, and an decrease in other noncurrent liabilities by $637 primarily related to noncurrent deferred
taxes; and
• an increase in noncontrolling interest by $3,277 resulting from additional information received regarding
the valuation.
Prior to the Company’s acquisition of Viasystems, the Company had two reportable operating segments
based on geographical location of operations, North America and Asia Pacific, consistent with the nature of its
operations. Due to the acquisition, the Company has reassessed its reportable operating segments and determined
that it has two reportable operating segments, PCB and E-M Solutions. The excess purchase price over the fair
value of assets acquired, liabilities assumed and noncontrolling interest has been allocated to the PCB reportable
operating segment given that Viasystems was primarily a worldwide provider of complex multi-layer rigid,
flexible, and rigid-flex PCBs.
The Company believes that the acquisition of Viasystems will produce the following significant benefits:
• Strengthens the Company’s Position as a Global Market Leader. The combination of the Company and
Viasystems is expected to create one of the largest and most diversified PCB manufacturers in the world.
The addition of Viasystems adds new product technologies, production and development solutions, and
customer base.
• Enhances End Market and Customer Diversification and Provides Entry to Attractive Automotive
Markets. The Company believes that
the combination will expand and diversify the Company’s
customer base, end markets served, and product suite. The combination should significantly increase the
Company’s presence in the automotive end market. In addition, the combination is expected to expand the
Company’s presence in the Medical, Industrial and Instrumentation, Networking / Communications, and
Aerospace / Defense end markets.
The Company believes that these primary factors support the amount of goodwill recognized as a result of
the purchase price paid for Viasystems, in relation to other acquired tangible and intangible assets. The goodwill
acquired in the acquisition is not expected to be deductible for income tax purposes subject to certain tax
elections that are currently being considered.
Results of Operations
Included in the consolidated statement of operations are net sales from the Viasystems operations of
$664,341, excluding intercompany sales, for the year ended December 28, 2015. Net losses included in the
consolidated statement of operations from the Viasystems operations for the year ended December 28, 2015 have
not been reported as it is impracticable to do so given the integration and other efficiency and cost saving
measures in process during the year ended December 28, 2015.
85
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Pro forma Financial Information
The unaudited pro forma financial information in the table below gives effect to this acquisition as if it had
occurred at the beginning of fiscal 2014. The pro forma financial information presented includes the effects of
adjustments related to the fair value step up of acquired inventory, amortization of acquired intangible assets and
depreciation of acquired fixed assets, and other non-recurring transactions costs directly associated with the
acquisitions such as legal, accounting and banking fees.
Year Ended
December 28,
2015
December 29,
2014
(In thousands, except per share data)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to TTM Technologies, Inc. stockholders . . . . .
Basic loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,602,304
(13,827)
(0.15)
$
$2,529,819
(12,186)
(0.12)
$
Dilutive loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(0.15)
$
(0.12)
The pro forma financial information as presented above is for informational purposes only and is not
necessarily indicative of the actual results that would have been achieved had the Viasystems acquisition
occurred at the beginning of the earliest period presented, or the results that may be achieved in future periods.
(4) Restructuring and Impairment Charges
Consolidation Plan and Restructuring Activities
On September 29, 2015, the Company announced a consolidation plan that will result in the closure of the
Company’s facilities in Cleveland, Ohio, Milpitas, California and Juarez, Mexico (the Consolidation Plan) and
the layoff of approximately 480 employees at these sites. The Consolidation Plan is part of the Company’s
integration strategy to improve total plant utilization, operational performance and customer focus following its
recent acquisition of Viasystems. In accordance with the Consolidation Plan, the Company will combine its
Cleveland and Milpitas facilities into its North Jackson, Ohio and Silicon Valley, California facilities,
respectively, and close its Juarez facility.
In connection with the Consolidation Plan and other global realignment restructuring efforts during the year
ended December 28, 2015, the Company recognized a total of $6,832 in employee separation costs. These costs
were classified as restructuring charges in the consolidated statement of operations. The Company recognized
$2,050 of employee separation costs in its PCB operating segment, $2,039 in its E-M Solutions operating
segment, and $2,743 in its Corporate operating segment. As of December 28, 2015, $6,044 of accrued separation
costs remain for employees yet to be separated and are included as a component of accrued salaries, wages and
benefits in the consolidated balance sheet. The Company expects the remaining employees to be separated and a
significant amount of the remaining accrued restructuring costs to be paid by June 2016.
Additionally, during the year ended December 28, 2015, the Company incurred $549 in contract termination
costs primarily related to building operating leases associated with the down-sizing of its St. Louis, Missouri
corporate office, which is included in the Corporate operating segment. These estimated contract termination
costs are included as a component of other accrued expenses in the consolidated balance sheet.
86
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The below table shows the utilization of the accrued restructuring costs during the year ended December 28
2015:
Accrued at December 29, 2014 . . . . . . . . . . . . . . . . . . . . . . .
Charged to expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance
$ —
6,832
(788)
Contract
Termination
(In thousands)
$ —
549
(14)
Accrued at December 28, 2015 . . . . . . . . . . . . . . . . . . . . . . .
$6,044
$ 535
Total
$ —
7,381
(802)
$6,579
The Company also recorded other exit costs of $878 related to inventory write-downs associated with the
consolidation of the Milpitas facility to other Silicon Valley, California facilities during the year ended
December 28, 2015. These costs have been recorded as a component of cost of goods sold in the consolidated
statement of operations.
The Company estimates that it will incur total charges related to the Plan of approximately $10,000 to
$15,000.
Impairment and Sale of Suzhou, China Manufacturing Facility
The Company ceased manufacturing at its Meadville Aspocomp (Suzhou) Electronic Co., Ltd. subsidiary,
which held its Suzhou, China manufacturing facility, and shut down its operations in 2013. As a result, the
Company determined that certain long-lived assets were impaired and as such, recorded charges of $1,845 and
$10,782 for the years ended December 29, 2014 and December 30, 2013, respectively, primarily related to
machinery and equipment held for sale.
Additionally, as a result of the shutdown, the Company laid-off 774 employees at this site and recorded
$3,445 in employee separation costs for the year ended December 30, 2013. These costs were classified as
restructuring charges in the consolidated statement of operations. As of December 28, 2015 all employees had
been separated.
In the fourth quarter of 2014, the Company commenced the process of selling this subsidiary and classified
its net assets of $21,031 as assets held for sale at December 29, 2014. Assets held for sale were included in
prepaid expenses and other current assets in the December 29, 2014 consolidated balance sheet.
During the year ended December 28, 2015, the Company sold its Meadville Aspocomp (Suzhou) Electronic
Co., Ltd. subsidiary for $21,275 and recognized a gain of $2,504.
The Suzhou, China manufacturing facility is included in the PCB operating segment.
87
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(5) Composition of Certain Consolidated Financial Statement Captions
As of
December 28,
2015
December 29,
2014
(In thousands)
Inventories:
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
70,577
97,193
101,153
$
44,477
57,544
43,166
$ 268,923
$ 145,187
Property, plant and equipment, net:
Land and land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction-in-progress, furniture and fixtures and other . . . . . . . . . .
$
91,571
446,763
1,058,565
39,550
$
31,093
247,404
854,829
43,527
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,636,449
(533,382)
1,176,853
(422,135)
$1,103,067
$ 754,718
Other accrued liabilities:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
$
14,473
14,251
73,024
$
581
47,212
41,401
$ 101,748
$
89,194
(6) Goodwill
As of December 28, 2015 and December 29, 2014, goodwill was as follows:
Balance as of December 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
(In thousands)
$ 12,120
(9)
Balance as of December 29, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill recognized during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,111
334,870
9
Balance as of December 28, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$346,990
Goodwill balances include foreign currency translation adjustments related to foreign subsidiaries with
functional currencies other than the U.S. Dollar. All of the Company’s goodwill is included as a component of
the PCB reportable operating segment.
In the fourth quarter of 2015, the Company performed its annual
test qualitatively and
concluded that it was more likely than not that there was no impairment to goodwill. The Company will continue
to evaluate its goodwill on an annual basis during its fourth fiscal quarter and whenever events or changes in
impairment
88
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
circumstances — such as significant adverse changes in business climate or operating results, changes in
management strategy, coupled with a decline in the market price of our stock and market capitalization —
indicate that there may be a potential impairment. If factors indicate that assets are impaired, we would be
required to reduce the carrying value of our goodwill and definite-lived intangible assets, which may result in an
impairment charge.
(7) Definite-lived Intangibles
As of December 28, 2015 and December 29, 2014, the components of definite-lived intangibles were as
follows:
Gross
Amount
Accumulated
Amortization
Foreign
Currency
Translation
Adjustment
Net
Carrying
Amount
(In thousands)
Weighted
Average
Amortization
Period
(years)
December 28, 2015:
Customer relationships . . . . . . .
Trade name . . . . . . . . . . . . . . . .
Acquired intangibles from
Viasystems acquisition
$ 91,492
10,302
$ (80,152)
(10,313)
$
426
11
$ 11,766
—
Customer relationships . . . . . . .
Technology . . . . . . . . . . . . . . . .
147,500
3,000
(10,815)
(577)
—
—
136,685
2,423
$252,294
$(101,857)
$
437
$150,874
December 29, 2014:
Customer relationships . . . . . . .
Trade name . . . . . . . . . . . . . . . .
$ 91,492
10,302
$ (74,486)
(8,520)
$
$101,794
$ (83,006)
$
445
17
462
$ 17,451
1,799
$ 19,250
9.2
6.0
8.1
3.0
9.2
6.0
The December 28, 2015 and December 29, 2014 definite-lived intangible balances include foreign currency
translation adjustments related to foreign subsidiaries with functional currencies other than the U.S. Dollar.
Definite-lived intangibles are generally amortized using the straight line method of amortization over the
useful life, with the exception of certain customer relationship intangibles, which are amortized using an
accelerated method of amortization based on estimated cash flows. Amortization expense was $18,888, $8,387,
and $9,332 for the years ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively.
Estimated aggregate amortization for definite-lived intangible assets for the next five years and thereafter is
as follows:
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
(In thousands)
$ 23,870
23,647
22,889
18,746
18,746
42,976
$150,874
89
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(8) Long-term Debt and Letters of Credit
The following table summarizes the long-term debt of the Company as of December 28, 2015 and
December 29, 2014:
Average Effective
Interest Rate
as of December 28,
2015
December 28,
2015
Average Effective
Interest Rate
as of December 29,
2014
December 29,
2014
(In thousands)
6.00%
2.17%
$ 947,625
80,000
—
—
—
—
Term loan due May 2021 . . . . . . . . . . . . . .
U.S. ABL revolving loan due May 2020 . .
Convertible Senior Notes due December
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.75%
250,000
1.75%
$ 250,000
Convertible Senior Notes due May
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan due September 2016 . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
3.25%
2.55%
6.00%
Less: Unamortized discount . . . . . . . . . . . .
Less: current maturities . . . . . . . . . . . . . . .
Long-term debt, less current maturities . . .
1,277,625
(75,668)
1,201,957
(157,375)
$1,044,582
The fiscal calendar maturities of long-term debt through 2020 and thereafter are as follows:
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
32,395
273,800
4
556,199
(53,512)
502,687
(128,045)
$ 374,642
(In thousands)
$ 157,375
—
27,125
47,500
297,500
748,125
$1,277,625
Term and Revolving Loans
On May 31, 2015, in conjunction with the acquisition of Viasystems, the Company entered into a $950,000
Term Loan Credit Agreement (Term Loan). Additionally, the Company entered into a $150,000 U.S. Asset-
Based Lending Credit Agreement (U.S. ABL) and a $150,000 Asia Asset-Based Lending Credit agreement (Asia
ABL) (collectively the ABL Revolving Loans). The Company drew $80,000 of the U.S. ABL at the closing of
the acquisition of Viasystems.
The Term Loan was issued at a discount at 96.5% and bears interest at a floating rate of LIBOR, with a
1.0% LIBOR floor, plus an applicable interest margin of 5.0%, or JP Morgan Chase Bank’s prime rate, with a
2% floor, plus a margin of 4%, at the Company’s option. At December 28, 2015, the weighted average interest
rate on the outstanding borrowings under the Term Loan was 6.0%. There is no provision, other than an event of
default, for the interest margin to increase. The Term Loan will mature on May 31, 2021. The Term Loan is
90
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
secured by a significant amount of the assets of the Company and its domestic subsidiaries and a pledge of 65%
of voting stock of the Company’s first tier foreign subsidiaries and is structurally senior to the Company’s
convertible senior notes. See Convertible Senior Notes below.
The U.S. ABL consists of three tranches comprised of a revolving credit facility of up to $150,000, a letter
of credit facility of up to $75,000, and swingline loans of up to $30,000, provided that at no time may amounts
outstanding under the tranches exceed in aggregate $150,000 or the applicable borrowing base, which is a
percentage of the principal amount of Eligible Accounts, as defined in the U.S. ABL agreement. Borrowings
under the U.S. ABL bear interest at either a floating rate of LIBOR plus a margin of 175 basis points or JP
Morgan Chase Bank’s prime rate plus a margin of 75 basis points, at the Company’s option. At December 28,
2015, the weighted average interest rate on the outstanding borrowings under the U.S. ABL was 2.17%.
Beginning in 2016, the applicable margin can vary based on the remaining availability of the facility, from 150 to
200 basis points for LIBOR-based loans and from 50 to 100 basis points for JP Morgan Chase Bank’s prime rate-
based loans. Other than availability and an event of default, there are no other provisions for the interest margin
to increase. The U.S. ABL will mature on May 31, 2020. Loans made under the U.S. ABL are secured first by all
of the Company’s domestic cash, receivables and inventories as well as by a second position against a significant
amount of the assets of the Company and its domestic subsidiaries and a pledge of 65% of voting stock of the
Company’s first tier foreign subsidiaries and are structurally senior to the Company’s convertible senior notes.
See Convertible Senior Notes below. At December 28, 2015, $80,000 of the U.S. ABL was outstanding and
classified as short-term debt.
The Company and its domestic subsidiaries have fully and unconditionally guaranteed the full and timely
payment of all Term Loan and U.S. ABL related obligations.
The Asia ABL consists of two tranches comprised of a revolving credit facility of up to $150,000 and a
letter of credit facility of up to $100,000, provided that at no time may amounts outstanding under both tranches
exceed in aggregate $150,000 or the applicable borrowing base, which is a percentage of the principal amount of
Eligible Accounts, as defined in the Asia ABL agreement. Borrowings under the Asia ABL bear interest at a
floating rate of LIBOR plus 175 basis points. There is no provision, other than an event of default, for the interest
margin to increase. The Asia ABL will mature on May 22, 2020. Loans made under the Asia ABL are secured by
a portion of the Company’s Asia Pacific cash and receivables and are structurally senior to the Company’s
domestic obligations,
including the convertible senior notes. See Convertible Senior Notes below. The
Company’s Asia Pacific subsidiary and certain of its subsidiaries have fully and unconditionally guaranteed the
full and timely payment of all Asia ABL related obligations. At December 28, 2015, none of the Asia ABL was
outstanding.
The Company is required to make scheduled payments of the outstanding Term Loan balance on a quarterly
basis beginning October 1, 2015. On October 1, 2015, the first scheduled principal payment of $2,375 was made.
Based on certain parameters defined in the Term Loan agreement, the Company may be required to make an
additional principal payment on an annual basis. For 2015, the Company is required to make an additional annual
payment of $61,107, which is required to be paid in March 2016. In addition to the $61,107 additional annual
payment, the Company also intends to repay an additional $10,000 to $20,000 of the Term Loan in March 2016.
As a result of the Company’s intentions and considering the already scheduled January 2016 payment, $77,375
has been classified as short-term debt. This additional annual payment reduces future required quarterly
scheduled payments. Any other outstanding balances under the Term Loan are due at the maturity date of
May 31, 2021. Borrowings under the Term Loan are subject to various financial and operating covenants
including maintaining a maximum total leverage ratio. Under the occurrence of certain events, the U.S. ABL and
the Asia ABL are subject to various financial and operational covenants, including maintaining minimum fixed
charge coverage ratios. At December 28, 2015, the Company was in compliance with the covenants under the
Term Loan, the U.S. ABL and the Asia ABL.
As of December 28, 2015, remaining unamortized debt discount and debt issuance costs were $30,242 and
$30,921, respectively. The debt discount is recorded as a reduction of the Term Loan and is amortized over the
91
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
duration of the Term Loan. The debt issuance costs are included in other non-current assets and are amortized to
interest expense over the duration of the Term Loan and ABL Revolving Loans. The debt discount and the debt
issuance costs related to the Term Loan are amortized into interest expense using an effective interest rate of
7.50%. The debt issuance costs related to the ABL Revolving Loans are amortized into interest expense using the
straight line method of amortization over the duration of the ABL Revolving Loans. At December 28, 2015, the
remaining amortization period for the unamortized debt discount and debt issuance costs was 5.4 years.
The Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the U.S.
ABL or Asia ABL. The U.S. ABL commitment fee may vary from 0.25% to 0.375% based on utilization levels.
Additionally, the Company also paid commitment fees of 0.5% per annum on the unused portion of the $90,000
senior secured revolving loan associated with the terminated 2012 credit agreement for the years ended
December 28, 2015, December 29, 2014 and December 30, 2013. The Company incurred total commitment fees
related to unused borrowing availability of $763, $600, and $442 for the years ended December 28,
2015, December 29, 2014 and December 30, 2013, respectively. As of December 28, 2015, the outstanding
amount of the Term Loan was $947,625, of which $77,375 the Company expects to repay within one year and is
included as short-term debt, with the remaining $870,250 included as long-term debt. Additionally, $80,000 of
the U.S. ABL and none of the Asia ABL was outstanding as of December 28, 2015. Available borrowing
capacity under the U.S. ABL and Asia ABL was $65,444 and $142,018, which considers letters of credit
outstanding of $4,556 and $7,982 mentioned below, respectively, at December 28, 2015.
Convertible Senior Notes
Convertible Senior Notes due 2020
The Company issued 1.75% convertible senior notes due December 15, 2020, in a public offering for an
aggregate principal amount of $250,000 in 2013. The convertible senior notes bear interest at a rate of 1.75% per
annum. Interest is payable semiannually in arrears on June 15 and December 15 of each year. The convertible
senior notes are senior unsecured obligations and rank equally to the Company’s future unsecured senior
indebtedness and are senior in right of payment to any of the Company’s future subordinated indebtedness.
Conversion: At any time prior to March 15, 2020, holders may convert their convertible senior notes into
cash and, if applicable, into shares of the Company’s common stock based on a conversion rate of 103.7613
shares of the Company’s common stock per $1 principal amount of convertible senior notes, subject to
adjustment, under the following circumstances: (1) during any calendar quarter beginning after March 31, 2014
(and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading
days during the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar
quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day of such
preceding calendar quarter; (2) during the five business day period after any 10 consecutive trading day period in
which the trading price per note for each day of that 10 consecutive trading day period was less than 98% of the
product of the last reported sale price of the Company’s common stock and the conversion rate on such day; or
(3) upon the occurrence of specified corporate transactions described in the indenture governing the notes. As of
December 28, 2015, none of the conversion criteria had been met.
On or after March 15, 2020 until the close of business on the third scheduled trading day preceding the
maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon
conversion, for each $1 principal amount of notes, the Company will pay shares of our common stock, cash or a
combination of cash and shares of our common stock at its election, if applicable, based on a daily conversion
value calculated on a proportionate basis for each day of the 80 trading day observation period. All conversions
occurring on the same date or on or after March 15, 2020 shall be settled using the same settlement method.
Additionally, in the event of a fundamental change as defined in the indenture governing the notes, or other
conversion rate adjustments such as share splits or combinations, other distributions of shares, cash or other
92
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
assets to stockholders, including self-tender transactions (Other Conversion Rate Adjustments), the conversion
rate may be modified to adjust the number of shares per $1 principal amount of the notes. As of December 28,
2015, none of the criteria for a fundamental change or a conversion rate adjustment had been met.
The maximum number of shares issuable upon conversion, including the effect of a fundamental change and
subject to Other Conversion Rate Adjustments, would be 32,425.
Note Repurchase: The Company is not permitted to redeem the convertible senior notes at any time prior
to maturity. In the event of a fundamental change or certain default events, as defined in the indenture governing
the notes, holders may require the Company to repurchase for cash all or a portion of their convertible senior
notes at a price equal to 100% of the principal amount, plus any accrued and unpaid interest.
Convertible Note Hedge and Warrant Transaction:
In connection with the issuance of the convertible
senior notes due 2020, the Company entered into a convertible note hedge and warrant transaction (Call Spread
to the Company’s common stock. The convertible note hedge consists of the
Transaction), with respect
Company’s option to purchase up to 25,940 common stock shares at a price of $9.64 per share. The hedge
expires on December 15, 2020 and can only be executed upon the conversion of the above mentioned convertible
senior notes due 2020. Additionally, the Company sold warrants to purchase 25,940 shares of its common stock
at a price of $14.26 per share. The warrants expire ratably from March 2021 through January 2022. The 2020
Call Spread Transaction has no effect on the terms of the convertible senior notes due 2020 and reduces potential
dilution by effectively increasing the conversion price of the convertible senior notes due 2020 to $14.26 per
share of the Company’s common stock.
Convertible Senior Notes due 2015
The Company issued 3.25% convertible senior notes due on May 15, 2015, in a public offering for an
aggregate principal amount of $175,000. During the year ended, 2015, the outstanding principal of $32,395 plus
accrued interest was paid in full.
As of December 28, 2015 and December 29, 2014, the following summarizes the equity components of the
convertible senior notes:
As of December 28, 2015
As of December 29, 2014
Embedded
conversion
option —
Convertible
Senior
Notes
Embedded
conversion
option —
Convertible
Senior
Notes
Issuance
Costs
Total
Embedded
conversion
option —
Convertible
Senior
Notes
Embedded
conversion
option —
Convertible
Senior
Notes
Issuance
Costs
Total
(in thousands)
Equity components:
Additional paid-in capital:
Convertible senior notes due 2020 . . . .
Convertible senior notes due 2015 . . . .
$60,227
—
$(1,916)
—
$58,311
—
$ 60,227
39,781
$(1,916)
(1,413)
$58,311
38,368
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
$60,227
$(1,916)
$58,311
$100,008
$(3,329)
$96,679
93
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The components of interest expense resulting from the convertible senior notes for the years ended
December 28, 2015, December 29, 2014 and December 30, 2013 were as follows:
Contractual coupon interest
Convertible Senior Notes due 2020 . . . . . . . . . . . . . . . . . .
Convertible Senior Notes due 2015 . . . . . . . . . . . . . . . . . .
Amortization of debt discount
Convertible Senior Notes due 2020 . . . . . . . . . . . . . . . . . .
Convertible Senior Notes due 2015 . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs
Convertible Senior Notes due 2020 . . . . . . . . . . . . . . . . . .
Convertible Senior Notes due 2015 . . . . . . . . . . . . . . . . . .
For the Year Ended
December 28,
2015
December 29
2014
December 30,
2013
(In thousands)
$4,375
395
$4,770
$7,532
554
$8,086
$ 755
56
$ 811
$4,367
1,053
$5,420
$7,102
1,395
$8,497
$ 712
141
$ 853
$ 107
5,559
$5,666
$ 167
6,780
$6,947
$
16
684
$ 700
As of December 28, 2015 and December 29, 2014, remaining unamortized debt issuance costs included in
other non-current assets were $4,552 and $5,363, respectively. The debt issuance costs and debt discount are
being amortized to interest expense over the term of the convertible senior notes using the effective interest rate
method. At December 28, 2015, the remaining weighted average amortization period for the unamortized senior
convertible note discount and debt issuance costs was 5.0 years.
For the years ended December 28, 2015, December 29, 2014 and December 30, 2013, the amortization of
the convertible senior notes due 2015 debt discount and debt issuance costs is based on an effective interest rate
of 8.37%. For the years ended December 28, 2015, December 29, 2014 and December 30, 2013, the amortization
of the convertible senior notes due 2020 debt discount and debt issuance costs is based on an effective interest
rate of 6.48%.
Loss on Extinguishment of Debt
The Company became a party to its current Term Loan and ABL Revolving Loans during the year ended
2015 in order to refinance and pay in full the remaining outstanding amount of $225,700 under an existing 2012
credit agreement, as well as to finance the acquisition of Viasystems and refinance Viasystems’ outstanding debt.
As a result, the Company recognized losses of approximately $802 during the year ended December 28, 2015
resulting from the write off of the remaining unamortized debt issuance costs associated with the terminated 2012
credit agreement.
Additionally, in January 2014 and in December 2013, the Company repurchased $6,541 and $136,091,
respectively, of its convertible senior notes due 2015 both at approximately 103.4% of their principal amounts.
The repurchases were accounted for as extinguishments of debt and, accordingly, the Company recognized losses
of approximately $506 for the year ended December 29, 2014 and $10,743 for the year ended December 30,
2013, primarily associated with the premium paid to repurchase the convertible senior notes and the recognition
of related unamortized debt discount and issuance costs.
94
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Letters of Credit
The Company has up to $75,000 and $100,000 Letters of Credit Facilities under the U.S. ABL and the Asia
ABL, respectively, as mentioned above. As of December 28, 2015, letters of credit in the amount of $4,556 were
outstanding under the U.S. ABL and $7,982 were outstanding under the Asia ABL. The Company has other
standby letters of credit outstanding in the amount of $2,894 which expire by April 2016. These other standby
letters of credit are securitized by cash collateral. As such, the Company has recorded such cash as restricted on
the consolidated balance sheet as of December 28, 2015. There were no such arrangements at December 29,
2014.
Other Credit Facility
Additionally, the Company is party to a revolving loan credit facility (Chinese Revolver) with a lender in
China. Under this arrangement, the lender has made available to the Company approximately $35,500 in
unsecured borrowing with all terms of the borrowing to be negotiated at the time the Chinese Revolver is drawn
upon. There are no commitment fees on the unused portion of the Chinese Revolver, and this arrangement
expires in December 2016. As of December 28, 2015, the Chinese Revolver had not been drawn upon.
(9)
Income Taxes
The components of
income (loss) before income taxes
for
the years ended December 28,
2015, December 29, 2014 and December 30, 2013 are:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(104,068)
113,044
(In thousands)
$ (3,201)
25,492
$ (2,247)
42,019
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . .
$
8,976
$22,291
$39,772
The Company expects its foreign earnings attributable to all foreign subsidiaries will be indefinitely
reinvested in such foreign jurisdictions and, therefore, no deferred tax liabilities for U.S. income taxes on
undistributed earnings are recorded. The undistributed earnings of the foreign subsidiaries amounted to
approximately $620,339 as of December 28, 2015. The determination of unrecognized deferred tax liability
related to these undistributed earnings is not practicable. Foreign earnings attributable to certain manufacturing
subsidiaries within China may be repatriated to the parent holding company located in Hong Kong, and therefore,
a deferred tax liability of approximately $4,740 for the foreign tax impacts has been recorded on the
undistributed earnings of these subsidiaries.
After the acquisition of Viasystems, the Company determined it will indefinitely reinvest the undistributed
earnings from the backplane assembly facility in Shanghai, China. As such, the previously recognized deferred
tax liability of $8,281 for U.S. income taxes on these undistributed earnings was reversed as income tax benefit
in 2015.
95
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The components of income tax provision for the years ended December 28, 2015, December 29, 2014 and
December 30, 2013 are:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
Current (provision) benefit:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
477
(345)
(19,379)
$ 1,717
(216)
(5,385)
$ 6,684
643
(14,466)
Total current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,247)
(3,884)
(7,139)
Deferred (provision) benefit:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,084)
(2,184)
(3,079)
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,347)
(829)
133
(3,018)
(3,714)
(5,038)
(5,337)
1,635
(8,740)
Total provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(34,594)
$(7,598)
$(15,879)
The following is a reconciliation of the (provision) benefit for income taxes at the statutory federal income
the years ended December 28,
income taxes for
tax rate compared to the Company’s provision for
2015, December 29, 2014 and December 30, 2013:
Statutory federal income tax . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal benefit and state tax
credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign deemed dividends . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related expenses . . . . . . . . . . . . . . . . . . . . . . .
Intercompany profit in inventory elimination . . . . . . . . . .
Permanently reinvested earnings assertion . . . . . . . . . . . .
Foreign tax differential on foreign earnings . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal research and development credits . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
$ (3,052)
$(7,579)
$(13,523)
(345)
(5,691)
(7,692)
596
8,281
15,543
(39,148)
(3,911)
1,270
—
(445)
(84)
—
—
—
—
(6,243)
5,321
—
1,020
—
(33)
890
—
—
—
—
(3,759)
(2,370)
—
1,044
2,393
(554)
Total provision for income taxes . . . . . . . . . . . . . . . . . . . .
$(34,594)
$(7,598)
$(15,879)
96
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The
significant components of the net deferred income tax assets as of December 28, 2015 and December 29, 2014
are as follows:
As of
December 28,
2015
December 29,
2014
(In thousands)
Deferred income tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and intangible amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Original issue discount on convertible senior notes . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 223,456
—
36,137
19,719
4,609
18,876
12,945
3,172
$ 26,644
11,071
11,415
6,101
3,624
22,029
16,375
3,804
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities:
Discount on convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on currency translation . . . . . . . . . . . . . . . . . . . . . . . .
Repatriation of foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment basis differences . . . . . . . . . . . . . . . . . .
Goodwill and intangible amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Other deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
318,914
(234,192)
101,063
(38,839)
84,722
62,224
(16,495)
—
(4,776)
(34,716)
(41,790)
(93)
(19,315)
(2,979)
(8,823)
(28,194)
—
—
Net deferred income tax (liabilities) assets . . . . . . . . . . . . . . . . . . . . . . . .
$ (13,148)
$
2,913
Deferred income tax assets (liabilities), net:
Current deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
(13,148)
$ 10,147
(7,234)
As of December 28, 2015, the Company had the following net operating loss (“NOL”) carryforwards:
$478,916 in the U.S. for federal, $589,468 in various U.S. states, $50,492 in China, $36,606 in Hong Kong and
$345 in the Netherlands. The U.S. federal NOLs expire in 2021 through 2035, the various U.S. states NOLs
expire in 2016 through 2035, the China NOLs expire in 2016 through 2020 and the Netherlands NOLs expire in
2017. Further, the Company’s tax credits were approximately $22,696 of which $9,210 carryforward indefinitely.
In connection with the Company’s acquisition of Viasystems, there was more than a 50% change in
ownership under Section 382 of the Internal Revenue Code of 1986, as amended, and regulations issued there
under. As a consequence, the utilization of the acquired Viasystems U.S. NOLs is limited to approximately
$9,400 per year. In addition, the Company recognizes certain gains built in at the time of the ownership change,
which increase the limitation by approximately $48,500 for each of the first 5 years after the acquisition. Any
unused limitation in a year can be carried over to succeeding years.
97
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
A valuation allowance is provided when it is more likely than not that all or some portion of the deferred
income tax assets will not be realized. Before the acquisition of Viasystems, the Company had net U.S. deferred
tax assets. Upon acquisition, the Company now has recorded an income tax expense of $19,593 to establish a full
valuation allowance on all of its deferred tax assets such as its NOL and tax credits in the United States. Certain
subsidiaries within China continue to have net operating loss carryforwards in various tax jurisdictions that the
Company has determined are not more likely than not to be utilized. Based on historical performance and future
expectations of these subsidiaries, the Company does not anticipate sufficient taxable income to utilize these net
operating loss carryforwards. As a result, a full valuation allowance has been recorded for these subsidiaries at
December 28, 2015. For the remaining net deferred income tax asset, management has determined that it is more
likely than not that the results of future operations will generate sufficient taxable income to realize the net
deferred tax asset.
The following summarizes the activity in the Company’s valuation allowance for the years ended
December 28, 2015, December 29, 2014 and December 30, 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Additions related to acquisition . . . . . . . . . . . . . . . . . . . .
Additions charged to expense . . . . . . . . . . . . . . . . . . . . . .
Reduction related to sale of foreign subsidiary . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 38,839
177,699
39,149
(21,495)
—
(In thousands)
$ 44,160
—
6,458
—
(11,779)
$41,790
—
6,763
—
(4,393)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$234,192
$ 38,839
$44,160
Certain entities within China operated under the high technology enterprise (HNTE) status and tax holidays,
which were effective for the years ended December 28, 2015, December 29, 2014 and December 30, 2013. The
HNTE and tax holidays decreased Chinese taxes by $7,600, $1,877 and $3,187, which (decreased) increased both
basic and dilutive (loss) earnings per share by $(0.08), $0.02 and $0.04, for the years ended December 28,
2015, December 29, 2014 and December 30, 2013, respectively. HTNE status and tax holidays expire at various
dates through 2017 and the Company expects to continue to file for renewal of such HNTE status and tax
holidays for the foreseeable future.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of accrued
interest and penalties, is as follows:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions related to acquisition . . . . . . . . . . . . . . . . . .
Additions based on tax positions related to the current
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions for tax positions of prior years . . . . . . . . . . .
Reductions for tax positions of prior years . . . . . . . . . .
Lapse of statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2,441
11,293
3,349
14
(1,371)
(322)
(In thousands)
$2,298
—
220
286
—
(363)
$2,424
—
322
—
(448)
—
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15,404
$2,441
$2,298
98
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
As of December 28, 2015 and December 29, 2014, the Company recorded unrecognized tax benefits of
$10,649 and $31, respectively, as well as interest and penalties of $12,202 and $22, respectively, to other long-
term liabilities. The Company has also recorded unrecognized tax benefits of $4,755 and $1,385 against certain
deferred tax assets as of December 28, 2015 and December 29 2014, respectively. The amount of unrecognized
tax benefits that would, if recognized, reduce the Company’s effective income tax rate in any future periods is
$22,851 including interest and penalties. The Company expects its unrecognized tax benefits to decrease by
$2,595 along with related interest of $4,017 over the next 12 months due to expiring statutes.
As of December 28, 2015, the Company is subject to (i) U.S. federal income tax examination for tax years
from 1998 to 2015, (ii) state and local income tax examination for tax years 2002 to 2015, and (iii) foreign
income tax examinations generally for tax years from 2005 to 2015.
(10) Financial Instruments
Derivatives
The Company enters into foreign currency forward contracts to mitigate the impact of changes in foreign
currency exchange rates and to reduce the volatility of purchases of equipment generated in currencies other than
the functional currencies. The Company’s foreign subsidiaries may at times purchase forward exchange contracts
to manage its foreign currency risks in relation to certain purchases of machinery denominated in foreign
currencies other than the Company’s foreign functional currency. The notional amount of the foreign exchange
contracts as of December 28, 2015 and December 29, 2014 was approximately $1,614 and $29,142, respectively.
The Company has designated certain of these foreign exchange contracts as cash flow hedges.
The fair values of derivative instruments in the consolidated balance sheets are as follows:
Balance Sheet Location
Asset / (Liability) Fair Value
as of
December 28,
2015
December 29,
2014
(In thousands)
Cash flow derivative instruments
designated as hedges:
Foreign exchange contracts . . . . . . . . . . . Other accrued expenses
Foreign exchange contracts . . . . . . . . . . . Deposits and other non-current assets
$ —
—
$
(12)
—
Cash flow derivative instruments not
designated as hedges:
Foreign exchange contracts . . . . . . . . . . . Prepaid expenses and other current assets
Foreign exchange contracts . . . . . . . . . . . Other accrued expenses
16
(51)
(35)
—
(5,050)
$(5,062)
$
99
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table provides information about the amounts recorded in accumulated other comprehensive
income related to derivatives designated as cash flow hedges, as well as the amounts recorded in each caption in the
consolidated statements of operations when derivative amounts are reclassified out of accumulated other
comprehensive income for the years ended December 28, 2015, December 29, 2014 and December 30, 2013:
December 28, 2015
Effective
Portion
Gain/(Loss)
Recognized
in
Other
Comprehensive
Income
Gain/(Loss)
Reclassified
into
Income
Financial
Statement
Caption
Ineffective
Portion
Gain/
(Loss)
Recognized
into
Income
For the Year Ended
December 29, 2014
December 30, 2013
Effective
Portion
Ineffective
Portion
Effective
Portion
Gain/(Loss)
Recognized
in
Other
Comprehensive
Income
Gain/(Loss)
Reclassified
into
Income
(In thousands)
Gain/
(Loss)
Recognized
into
Income
Gain/(Loss)
Recognized in
Other
Comprehensive
Income
Gain/(Loss)
Reclassified
into
Income
Ineffective
Portion
Gain/
(Loss)
Recognized
into
Income
Cash flow hedge:
Foreign currency
forward . . . . . .
Depreciation
expense
$(20)
$(20)
$(172)
$(172)
—
—
$43
$43
$(146)
$(146)
—
—
$(1,726)
$(1,726)
$(128)
$(128)
—
—
The following provides a summary of the activity associated with the designated cash flow hedges reflected in
accumulated other comprehensive income for the years ended December 28, 2015, December 29, 2014 and
December 30, 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Beginning balance, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value gain (loss), net of tax . . . . . . . . . . . . . . . .
Reclassification to earnings, net of tax . . . . . . . . . . . . . . . . . . . .
$(1,424)
(20)
172
(In thousands)
$(1,613)
43
146
Ending balance, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,272)
$(1,424)
$
(15)
(1,726)
128
$(1,613)
The Company expects that approximately $172 of the accumulated other comprehensive income will be
reclassified into the statement of operations, net of tax, in the next 12 months.
The net gain (loss) recognized in other, net in the consolidated statements of operations on derivative instruments
not designated as hedges is as follows for the years December 28, 2015, December 29, 2014 and December 30, 2013:
Derivative instruments not designated as hedges:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
$(374)
—
$(374)
$(3,579)
—
$(3,579)
$(2,381)
620
$(1,761)
The Company had entered into a two-year pay-fixed, receive floating (1-month LIBOR), amortizing interest rate
swap arrangement with an initial notional amount of $146,500, which expired during the year ended December 30,
2013. For the year ended 2013, the Company did not designate this interest rate swap as a cash flow hedge as the
borrowings attributable to this interest rate swap were paid in full. The change in the fair value of this interest rate swap
during the year ended December 30, 2013 was recorded as other, net in the consolidated statement of operations.
100
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(11) Accumulated Other Comprehensive Income
The following provides a summary of the components of accumulated other comprehensive income, net of
tax as of December 28, 2015, December 29, 2014 and December 30, 2013:
Foreign
Currency
Translation
Gains (Losses)
on Cash
Flow
Hedges
Unrealized
Gains (Losses)
on
Available
for Sale
Securities
Total
(In thousands)
Ending balance at December 30, 2013 . . . . . . . . . . . . . . . . . . .
$ 47,280
$(1,613)
$
(63)
$ 45,604
Other comprehensive income (loss) before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,841)
Amounts reclassified from accumulated other
comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Net year to date period other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,841)
43
146
189
Ending balance at December 29, 2014 . . . . . . . . . . . . . . . . . . .
Other comprehensive loss before reclassifications . . . . . . .
Amounts reclassified from accumulated other
32,439
(27,758)
(1,424)
(20)
comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,786)
Net year to date period other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(29,544)
172
152
(20)
(14,818)
83
63
—
—
—
—
229
(14,589)
31,015
(27,778)
(1,614)
(29,392)
Ending balance at December 28, 2015 . . . . . . . . . . . . . . . . . . .
$ 2,895
$(1,272)
$
— $ 1,623
The following provides a summary of reclassifications out of accumulated other comprehensive income, net
of tax for the years ended December 28, 2015, December 29, 2014 and December 30, 2013:
Amount Reclassified from
Accumulated Other Comprehensive
Income
For the Year Ended
Details about Accumulated Other
Comprehensive Income
Components
Statement of Operations Location
December 28,
2015
December 29,
2014
December 30,
2013
Loss on cash flow hedges . . . . Depreciation expense, net of tax
$
172
$
146
Loss on available for sale
securities . . . . . . . . . . . . . . . Other, net, net of tax
$ — $
83
$
$
128
53
Gain on foreign currency
translation . . . . . . . . . . . . . . Gain on sale of assets, net of tax
$(1,786)
$
— $(14,266)
(12) Significant Customers and Concentration of Credit Risk
In the normal course of business, the Company extends credit to its customers, which are in diverse end
markets. Many customers to which the Company extends credit are located outside the United States. 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.
101
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The Company’s customers include both OEMs and EMS companies. The Company’s OEM customers often
direct a significant portion of their purchases through EMS companies. 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 years ended December 28, 2015, December 29, 2014 and December 30, 2013, one customer
accounted for approximately 20%, 21% and 20%, respectively, of the Company’s net sales. There were no other
customers that accounted for 10% or more of net sales for the years ended December 28, 2015, December 29,
2014 and December 30, 2013.
(13) Fair Value Measures
The Company measures at fair value its financial and non-financial assets by using a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value. 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 December 28,
2015 and December 29, 2014 were as follows:
As of
December 28, 2015
December 29, 2014
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
(In thousands)
Derivative assets, current
. . . . . . . . . . . . . . . . . . . .
Derivative liabilities, current . . . . . . . . . . . . . . . . . .
Term and Revolving Loans . . . . . . . . . . . . . . . . . . .
Convertible Senior Notes due 2020 . . . . . . . . . . . .
Convertible Senior Notes due 2015 . . . . . . . . . . . .
$
16
51
997,383
204,574
—
$
16
51
935,000
230,950
—
$
—
5,062
273,804
197,042
31,841
$
—
5,062
273,820
241,875
32,631
The fair value of the derivative instruments was determined using pricing models developed based on the
including quoted market prices, as
foreign currency exchange rates and other observable market data,
appropriate.
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 December 28, 2015 and December 29, 2014, which
are considered Level 1 and 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 1 and Level 2 inputs.
As of December 28, 2015 and December 29, 2014, the Company’s other financial instruments also included
cash and cash equivalents, accounts receivable, accounts payable and equipment payables. Due to short-term
maturities, the carrying amount of these instruments approximates fair value. Our cash and cash equivalents at
December 28, 2015 consisted of $82,545 held in the U.S., with the remaining $176,555 held by foreign
subsidiaries.
102
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
As of December 28, 2015 and December 29, 2014, the following financial assets and liabilities were
measured at fair value on a recurring basis using the type of inputs shown:
Fair Value Measurements Using:
As of
December 28,
2015
Level 1 Inputs
Level 2 Inputs Level 3 Inputs
(In thousands)
Foreign exchange derivative
liabilities . . . . . . . . . . . . . . . . . . . . .
Foreign exchange derivative assets . . .
$
51
16
—
—
$
51
16
—
—
Fair Value Measurements Using:
As of
December 29,
2014
Level 1 Inputs
Level 2 Inputs Level 3 Inputs
Money market funds . . . . . . . . . . . . . .
Foreign exchange derivative
$129,012
$129,012
—
(In thousands)
liabilities . . . . . . . . . . . . . . . . . . . . .
5,062
—
$5,062
—
—
There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the years
ended December 28, 2015 and December 29, 2014.
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 for 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.
For the years ended December 29, 2014 and December 30, 2013, the following assets were measured at fair
value on a nonrecurring basis using the type of inputs shown:
Fair Value Measurements Using:
December 29,
2014
Level 1
Inputs
Level 2
Inputs
Level 3
Inputs
(In thousands)
Total Losses for
the Year Ended
December 29,
2014
Assets held for sale . . . . . . . . . . . .
$21,031
— $21,031
—
$ 1,845
Fair Value Measurements Using:
December 30,
2013
Level 1
Inputs
Level 2
Inputs
Level 3
Inputs
(In thousands)
Total Losses for
the Year Ended
December 30,
2013
Assets held for sale . . . . . . . . . . . .
$ 2,519
— $ 2,519
—
$10,782
There was no impairment of long-lived assets recognized in the year ended December 28, 2015.
The fair values of assets held for sale were primarily determined using appraisals and comparable prices of
similar assets, which are considered to be Level 2 inputs.
103
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(14) Commitments and Contingencies
Operating Leases
The Company leases some of its manufacturing and assembly plants, a sales office and equipment under
noncancellable operating leases that expire at various dates through 2024. Certain real property leases contain
renewal provisions at the Company’s option. Most of the leases require the Company to pay for certain other
costs such as property taxes and maintenance. Certain leases also contain rent escalation clauses (step rents) that
require additional rental amounts in the later years of the term. Rent expense for leases with step rents is
recognized on a straight-line basis over the minimum lease term.
The following is a schedule of future minimum lease payments as of December 28, 2015:
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
Operating Leases
(In thousands)
$ 8,332
6,057
2,762
2,419
1,630
6,403
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$27,603
Total rent expense for the years ended December 28, 2015, December 29, 2014, and December 30, 2013,
was approximately $7,362, $3,731 and $3,364, respectively.
Legal Matters
The Company is subject to various legal matters, which it considers normal for its business activities. While
the Company currently believes that the amount of any reasonably possible loss for known matters would not be
material to the Company’s financial condition, the outcome of these actions is inherently difficult to predict. 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 December 28, 2015 and December 29, 2014.
However, these amounts are not material to the consolidated financial statements of the Company.
Environmental Matters
The process to manufacture PCBs requires adherence to city, county, state,
federal, and foreign
environmental regulations regarding the storage, use, handling and disposal of chemicals, solid wastes and other
hazardous materials, as well as compliance with air quality standards and chemical use reporting. The Company
believes that its facilities in the United States, Canada and Mexico comply in all material respects with applicable
environmental laws and regulations. In China, governmental authorities have adopted new rules and regulations
governing environmental issues. An update to the Chinese environmental waste water law was issued in late
2012, allowing for an interim period in which plants subject to such law may install equipment that meets the
new regulatory regime. Some of the Company’s plants in China are not yet in full compliance with the updated
environmental regulations. The Company believes it has developed plans acceptable to the Chinese government
and is in the process of implementing these plans. The Company does not anticipate any immediate risk of
government fines or temporary closure of its Chinese plants. The Company has established and enacted an
investment plan related to the efforts to come into full compliance with the new regulations. The 2016 capital
expenditure costs expected for these plans are included in the Company’s capital expenditure projections.
104
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(15) Stock-Based Compensation
Incentive Compensation Plan
The Company maintains the 2014 Incentive Compensation Plan (the Plan), which allows for the issuance of
up to 5,288 shares through its expiration date of February 2024.
The Plan provides for the grant of incentive stock options and nonqualified stock options to the Company’s
key employees, non-employee directors and consultants. Other types of awards such as performance-based
restricted stock units (PRUs), restricted stock units (RSUs), and stock appreciation rights are also permitted. The
exercise price for options and awards is determined by the compensation committee of the board of directors and,
for options intended to qualify as incentive stock options, may not be less than the fair market value as
determined by the closing stock price at the date of the grant. Each option and award shall vest and expire as
determined by the compensation committee of the board of directors, with options, PRUs and RSUs generally
vesting over three years for employees and one year for non-employee directors. Options, PRUs and RSUs do not
have voting rights. Options expire no later than ten years from the grant date. All grants provide for accelerated
vesting if there is a change in control, as defined in the Plan. Upon the exercise of outstanding stock options or
vesting of RSUs and PRUs, the Company’s practice is to issue new registered shares that are reserved for
issuance under the Plan.
As of December 28, 2015, 572 PRUs, 2,294 RSUs and 420 stock options were outstanding under the Plan.
Included in the 572 PRUs outstanding as of December 28, 2015 are 271 vested but not yet released. Included in
the 2,294 RSUs outstanding as of December 28, 2015 are 319 vested but not yet released RSUs associated with
non-employee directors. These RSUs vest over one year with release of the underlying shares of common stock
deferred until retirement from the board of directors, (or until one year after retirement in the case of certain prior
grants).
Performance-based Restricted Stock Units
The Company maintains a long-term incentive program for executives that provides for the issuance of
PRUs, representing hypothetical shares of the Company’s common stock that may be issued. Under the PRU
program, a target number of PRUs is awarded at the beginning of each three-year performance period. The
number of shares of common stock released at the end of the performance period may range from zero to 2.4
times the target number depending on performance during the period. The performance metrics of the PRU
program are based on (a) annual financial targets, which are based on revenue and EBITDA (earnings before
interest, tax, depreciation, and amortization expense), each equally weighted, and (b) an overall modifier based
on the Company’s total stockholder return (TSR) relative to a group of peer companies selected by the
Company’s compensation committee, over the three-year performance period.
Under the PRU program, financial goals are set at the beginning of each fiscal year and performance is
reviewed at the end of that year. The percentage to be applied to each participant’s target award ranges from zero
to 160% based upon the extent to which the annual financial performance goals are achieved. If specific
performance threshold levels for the annual financial goals are met, the amount earned for that element will be
applied to one-third of the participants’ PRU award to determine the number of units earned.
At the end of the three-year performance period, the total units earned, if any, are adjusted by applying a
modifier, ranging from zero to 150% based on the Company’s TSR based on stock price changes relative to a
group of peer companies selected by the Company’s compensation committee for the same three-year period.
The TSR modifier is intended to ensure that there are limited or no payouts under the PRU program if the
Company’s stock performance is significantly below the median TSR of a group of peer companies selected by
the Company’s compensation committee over the three-year performance period. Where the annual financial
goals have been met and where there has been strong relative TSR performance over the three-year performance
period, the PRU program may provide substantial rewards to participants with a maximum payout of 2.4 times
the initial PRU award. However, even if all of the annual financial metric goals are achieved in each of the three
105
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
years, there will be no payouts if the Company’s stock performance is below that of the 20th percentile of the
group of peer companies selected by the Company’s compensation committee, as appropriate.
Recipients of PRU awards generally must remain employed by the Company on a continuous basis through
the end of the three-year performance period in order to receive any amount of the PRUs covered by that award.
In events such as death, disability or retirement, the recipient may be entitled to pro-rata amounts of PRUs as
defined in the Plan. Target shares subject to PRU awards do not have voting rights of common stock until earned
and issued following the end of the three-year performance period.
The Company records stock-based compensation expense for PRU awards granted based on management’s
periodic assessment of the probability of the PRU awards vesting. As of December 28, 2015, management
determined that vesting of the PRU awards was probable. PRU activity for the year ended December 28, 2015
was as follows:
Outstanding target shares at December 29, 2014 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in units due to annual performance achievement . . . . . . . . . . . . . .
Forfeited / cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(In thousands)
275
295
(271)
72
(70)
Outstanding target shares at December 28, 2015 . . . . . . . . . . . . . . . . . . . . .
301
Weighted
Average
Fair Value
$8.03
7.22
6.67
7.22
6.67
$8.58
The fair value of PRUs granted is calculated using a Monte Carlo simulation model, as the TSR modifier
contains a market condition. For the years ended December 28, 2015, December 29, 2014 and December 30,
2013, the following assumptions were used in determining the fair value:
Weighted-average fair value . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term in months . . . . . . . . . . . . . . . . . . . . . . . . . .
For the Year Ended
December 28,
2015(1)
December 29,
2014(2)
December 30,
2013(3)
$7.22
$5.80
$6.79
0.5%
—
37%
22
0.4%
—
41%
23
0.3%
—
49%
25
(1) Reflects the weighted-averages for the third year of the three-year performance period applicable to PRUs
granted in 2013, the second year of the three-year performance period applicable to PRUs granted in 2014
and the first year of the three-year performance period applicable to PRUs granted in 2015.
(2) Reflects the weighted-averages for the third year of the three-year performance period applicable to PRUs
granted in 2012, second year of the three-year performance period applicable to PRUs granted in 2013 and
for the first year of the three-year performance period applicable to PRUs granted in 2014.
(3) Reflects the weighted-averages for the third year of the three-year performance period applicable to PRUs
granted in 2011, second year of the three-year performance period applicable to PRUs granted in 2012 and
for the first year of the three-year performance period applicable to PRUs granted in 2013.
The expected term of the PRUs reflects the performance period for the PRUs granted. Expected volatility is
calculated using the Company’s historical stock price. The risk-free interest rate for the expected term of PRUs is
based on the U.S Treasury yield curve in effect at the time of grant.
106
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Restricted Stock Units
RSU activity for the year ended December 28, 2015 was as follows:
Non-vested RSUs outstanding at December 29, 2014 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested RSUs outstanding at December 28, 2015 . . . . . . . . . . . . . . . .
Vested and expected to vest at December 28, 2015 . . . . . . . . . . . . . . . . . .
Weighted
Average
Grant-Date
Fair Value
$8.54
9.15
9.00
8.65
$8.77
$8.92
Shares
(In thousands)
1,436
1,301
(711)
(51)
1,975
2,204
The fair value of the Company’s RSUs is determined based upon the closing common stock price on the
grant date. The fair value per unit of RSUs granted was $9.15, $7.98 and $8.17 for the years ended December 28,
2015, December 29, 2014 and December 30, 2013, respectively. The total fair value of RSUs vested for the years
ended December 28, 2015, December 29, 2014 and December 30, 2013 was $6,396, $7,195 and $7,878,
respectively.
Stock Options
The Company did not grant any stock option awards during the years ended December 28,
2015, December 29, 2014 and December 30, 2013. Option activity under the Plan for the year ended
December 28, 2015 was as follows:
Outstanding at December 29, 2014 . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/expired . . . . . . . . . . . . . . . . .
Options
(In thousands)
511
—
(68)
(23)
Outstanding at December 28, 2015 . . .
420
Vested and expected to vest at
December 28, 2015 . . . . . . . . . . . . .
Exercisable at December 28, 2015 . . . .
420
420
Weighted-
Average
Exercise Price
$11.54
—
7.32
8.89
$12.37
$12.37
$12.37
Weighted-
Average
Remaining
Contractual
Term
(In years)
2.3
Aggregate
Intrinsic
Value
(In thousands)
1.7
1.7
1.7
$4
$4
$4
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference
between Company’s closing stock price on the last trading day of the 2015 fiscal year and the exercise price,
multiplied by the number of in-the-money options) that would have been received by the option holders had all
option holders exercised their options on December 28, 2015. This amount changes based on the fair market
value of the Company’s stock. The total intrinsic value of options exercised for the years ended December 28,
2015 and December 30, 2013 was $131 and $117, respectively. There were no options exercised in December 29,
2014. The total fair value of the options vested for the years ended December 29, 2014 and December 30, 2013
was $110 and $143, respectively. There were no options vested in December 28, 2015.
107
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Stock-based Compensation Expense and Unrecognized Compensation Costs
For the years ended December 28, 2015, December 29, 2014 and December 30, 2013, the amounts
recognized in the consolidated financial statements with respect to the stock-based compensation plan are as
follows:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense recognized . . . . . . . .
Income tax benefit recognized . . . . . . . . . . . . . . . . . . . . .
$1,117
1,135
7,409
9,661
—
(In thousands)
$
866
1,109
5,825
7,800
(2,018)
$ 1,059
1,308
6,618
8,985
(2,274)
Total stock-based compensation expense after income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,661
$ 5,782
$ 6,711
The Company may become entitled to a deduction in its tax returns upon the future exercise of incentive
stock options under certain circumstances; however, the value of this deduction will be recorded as an increase to
additional paid-in capital and not as an income tax benefit. For
the years ended December 28,
2015, December 29, 2014 and December 30, 2013, a net tax shortfall of $247, $1,015 and $744, respectively,
related to fully vested stock option awards exercised and vested RSUs was recorded as a decrease to additional
paid-in capital. Additionally, for the year ended December 28, 2015, the Company did not record an income tax
benefit as a result of a full valuation allowance on its deferred tax assets.
The following is a summary of total unrecognized compensation costs as of December 28, 2015:
PRU awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RSU awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized
Stock-Based
Compensation Cost
Remaining Weighted
Average Recognition
Period
(In thousands)
$ 1,403
10,159
$11,562
(In years)
1.65
1.40
(16) Employee Benefit and Deferred Compensation Plans
The Company has four separate retirement benefit plans: two in North America (one of which was acquired
from Viasystems during 2015), and two in Asia Pacific. In North America, the Company has two 401(k) savings
plans (the Savings Plans) in which eligible full-time domestic employees can participate and contribute a
percentage of compensation subject to the maximum allowed by the Internal Revenue Service. The Savings Plans
provides for a partial match by the employer of the first 5% of employee contributions (100% of the first 3% and
50% of the following 2% of employee contributions for one plan and 50% of the first 6% of employee
contributions for plan acquired from Viasystems). In Asia Pacific, the Company contributes to either separate
trust-administered funds or various government-sponsored pension plans on a mandatory basis. For all retirement
plans, the Company has no further payment obligation once the required contributions have been made. The
Company recorded contributions to retirement benefit plans of $35,427, $18,953 and $14,987 during the years
ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively.
The Company also maintains a deferred compensation plan (the Compensation Plan). The Compensation
Plan is an unfunded, nonqualified deferred compensation plan and is limited to selected employees, including our
108
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
named executive officers and our directors. The Compensation Plan allows participants to defer up to 100% of
their annual bonus and between 5% and 100% of their annual director fees. Amounts deferred under the
Compensation Plan will be credited to accounts maintained by the Company for each participant and will be
credited or debited with the participant’s proportionate share of any gains or losses attributable to the
performance of investment options selected by the participant.
(17) Preferred Stock
The board of directors has the authority, without action by stockholders, to designate and issue preferred
stock in one or more series. The board of directors may also designate the rights, preferences and privileges of
each series of preferred stock, any or all of which may be superior to the rights of the common stock. As of
December 28, 2015, no shares of preferred stock were outstanding.
(18) Distribution of profits
As stipulated by the relevant laws and regulations of China applicable to the Company’s subsidiaries in
China, each of such subsidiaries is required to make appropriations from its net income as determined in
accordance with accounting principles and the relevant financial regulations of China (PRC GAAP) to a non-
distributable reserve, also referred to as statutory surplus reserve. The appropriations to the statutory surplus
reserve are required to be made at not less than 10% of the profit after tax as determined under PRC GAAP and
are required until the balance reaches 50% of its registered capital. The statutory surplus reserve is used to offset
future or past losses. These Chinese subsidiaries may, upon a resolution passed by their respective shareholders,
convert the statutory surplus reserve into capital.
There were appropriations of approximately $4,576, $2,544 and $3,526 to the statutory surplus reserve of
the Company’s Chinese subsidiaries for the years ended December 28, 2015, December 29, 2014 and
December 30, 2013, respectively.
(19) Segment Information
The operating segments reported 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. As a result of the May 31, 2015 acquisition of Viasystems and the
ongoing integration activities, the Company has reassessed its reportable operating segments and determined that
it has two reportable operating segments: PCB and E-M Solutions. This determination was made based on the
criteria of earning revenues and incurring expenses, the Company’s organizational structure which has segment
information, and the
to the chief operating decision maker and discrete financial
managers who report
aggregation of similar operating segments into reportable 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. All prior-period amounts have been adjusted retrospectively to reflect our reportable segment
changes.
The Company evaluates segment performance based on operating segment income, which is operating
income before amortization of intangibles. Interest expense and interest income are not presented by segment
since they are not included in the measure of segment profitability reviewed by the chief operating decision
maker. All inter-segment transactions have been eliminated.
109
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The Company accounts for inter-segment sales and transfers consistent with the Company’s revenue
recognition policy. The inter-segment sales for the year ended December 28, 2015 are sales primarily from the
PCB to the E-M Solutions operating segment.
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
Net Sales:
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,944,041
158,655
$1,251,665
76,545
$1,305,862
65,202
Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,102,696
(7,208)
1,328,210
(2,493)
1,371,064
(2,849)
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,095,488
$1,325,717
$1,368,215
Operating Segment Income (Loss):
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating segment income . . . . . . . . . . . . . . . .
Amortization of definite-lived intangibles . . . . . . . . . .
Total operating income . . . . . . . . . . . . . . . . . . . . . . .
Total other expense . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$ 172,227
1,424
(93,421)
80,230
(18,888)
61,342
(52,366)
77,092
3,855
(26,021)
54,926
(8,387)
46,539
(24,248)
$ 101,048
1,917
(24,505)
78,460
(9,332)
69,128
(29,356)
Income before income taxes . . . . . . . . . . . . . . . . . . . . .
$
8,976
$
22,291
$
39,772
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands)
Depreciation Expense:
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$130,339
2,079
1,090
Total depreciation expense . . . . . . . . . . . . . . . . . . . .
$133,508
Capital Expenditures:
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 72,036
4,006
1,523
Total capital expenditures . . . . . . . . . . . . . . . . . . . . .
$ 77,565
$95,027
183
139
$95,349
$73,779
400
2,603
$76,782
$ 91,759
248
113
$ 92,120
$127,623
176
472
$128,271
110
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
As of
December 28,
2015
December 29
2014
December 30,
2013
(In thousands)
Segment Assets:
PCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-M Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,943,577
143,779
583,948
$1,334,648
43,255
223,386
$1,371,093
43,990
258,492
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,671,304
$1,601,289
$1,673,575
The Corporate category 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 and acquisition and integration costs associated with the acquisition of Viasystems. Bank
fees and legal, accounting, and other professional service costs associated with the acquisition of Viasystems of
$34,448 and $5,981 for the years ended December 28, 2015 and December 29, 2014, respectively, are included in
Corporate. There were no bank fees and legal, accounting, and other professional service costs associated with
the acquisition of Viasystems for the year ended December 30, 2013.
During the years ended December 29, 2014 and December 30, 2013, the Company recorded impairment
charges of $1,845 and $10,782, respectively, for the impairment of long-lived assets related to its PCB operating
segment.
The Company markets and sells its products in approximately 41 countries. Other than in the United States
and China, the Company does not conduct business in any country in which its net sales in that country exceed
10% of the Company’s total net sales. Net sales and long-lived assets are as follows:
2015
2014
2013
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
(In thousands)
United States . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
$ 960,146
547,999
587,343
$ 654,579
923,219
23,133
$ 568,796
352,385
404,536
$103,340
682,739
—
$ 571,046
391,905
405,264
$ 95,672
754,781
—
Total
. . . . . . . . . . . . . . . . . . . . . .
$2,095,488
$1,600,931
$1,325,717
$786,079
$1,368,215
$850,453
Net sales are attributed to countries by country invoiced.
111
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
(20) Earnings 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 years ended December 28, 2015, December 29, 2014 and
December 30, 2013:
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(In thousands, except per share
amounts)
Net (loss) earnings attributable to TTM Technologies, Inc.
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(25,882)
$14,693
$21,877
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of performance-based stock units, restricted stock units
and stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,675
83,238
82,506
—
703
626
Diluted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,675
83,941
83,132
(Loss) earnings per share attributable to TTM Technologies, Inc.
stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(0.28)
(0.28)
$
$
0.18
0.18
$
$
0.27
0.26
For the year ended December 28, 2015, potential shares of common stock, consisting of stock options to
purchase approximately 420 shares of common stock at exercise prices ranging from $5.78 to $16.82 per share,
2,294 RSUs, and 572 PRUs were not included in the computation of diluted earnings per share because the
Company incurred a net loss from operations and, as a result, the impact would be anti-dilutive.
For the years ended December 29, 2014 and December 30, 2013, PRUs, RSUs and stock options to purchase
1,233 and 1,751 shares of common stock, respectively, were not considered in calculating diluted earnings per
share because the options’ exercise prices or the total assumed proceeds under the treasury stock method for
PRUs, RSUs or stock options was greater than the average market price of common shares during the applicable
year and, therefore, the effect would be anti-dilutive.
Additionally, for the year ended December 28, 2015, 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 because the Company incurred a net loss from operations and, as a result, the impact
would be anti-dilutive.
For the years ended December 29, 2014 and December 30, 2013, 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 because the conversion price of the convertible senior notes were
greater than the average market price of common shares during the applicable year, and therefore, the effect
would be anti-dilutive.
Outstanding warrants for the years ended December 28, 2015, December 29, 2014 and December 30, 2013,
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 year, and therefore, the effect would be anti-dilutive.
112
TTM TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The below is a summary of amounts convertible to common stock related to convertible senior notes and
related warrants:
Common stock related to convertible senior notes . . . . . .
25,940
(In thousands)
27,970
Warrants to purchase common stock . . . . . . . . . . . . . . . .
26,408
28,020
25,265
23,654
For the Year Ended
December 28,
2015
December 29,
2014
December 30,
2013
(21) 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
purchased laminate and prepreg from these related parties in the amount of $63,605, $47,446 and $62,648 for the
years ended December 28, 2015, December 29, 2014 and December 30, 2013, respectively.
Dongguan Shengyi Electronics Ltd. (SYE) is also a related party as it is a wholly owned subsidiary of an
entity in which a significant shareholder of the Company holds an equity interest. The Company sells PCBs to
SYE and purchases PCBs including various services relating to PCB manufacturing from SYE. Sales to SYE for
the years ended December 28, 2015, December 29, 2014 and December 30, 2013 were $4,709, $24,120 and
$29,616, respectively. Purchases of PCBs including various services relating to PCB manufacturing for the years
ended December 28, 2015 and December 29, 2014 were $1,948 and $1,671, respectively. There were no
purchases from SYE for the year ended December 30, 2013.
As of December 28, 2015 and December 29, 2014, the Company’s consolidated balance sheets included
$29,306 and $17,950, respectively, in accounts payable due to related parties for purchases of laminate and
prepreg and various PCB manufacturing services and such balances are included as a component of accounts
payable on the consolidated balance sheets. Additionally, the Company’s consolidated balance sheets included
$1,999 and $4,934, respectively, in accounts receivable due from a related party for sales of PCBs to SYE, as
mentioned above, and such balances are included as a component of accounts receivable, net on the consolidated
balance sheets.
(22) Non-controlling Interest Holdings
As of December 28, 2015, noncontrolling interest consists of a 5% equity interest in a manufacturing facility
in Huiyang, China which was acquired with along with other assets and liabilities of Viasystems.
During the year ended December 30, 2013, the Company completed the sale of its 70.2% controlling equity
interest in Dongguan Shengyi Electronics Ltd. (SYE) to its noncontrolling partner, Shengyi Technology Co. Ltd.
(Sytech), for 702,000,000 Chinese RMB or $114,495. The Company recognized a gain on the sale of SYE of
$17,917 in 2013. Consideration net of cash sold was $67,147.
Additionally, the Company acquired Sytech’s 20.0% noncontrolling equity interest in Dongguan Meadville
Circuits Ltd. (DMC) for 180,000,000 Chinese RMB or $29,358 in 2013. The Company recorded a decrease to
additional paid-in capital for the difference between the purchase price and the carrying value of the
noncontrolling interest of $71.
113
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BOARD MEMBERS
STOCKHOLDER INFORMATION
CHAIRMAN
Robert E. Klatell 2,3,4
Retired
Kenton K. Alder 4
Retired
James K. Bass 2,4
Retired
Thomas T. Edman 4
President and Chief Executive Officer, TTM Technologies, Inc.
Philip G. Franklin 1,4 Retired
Lt. General Ronald W. Iverson 2,4
Retired
John G. Mayer 1,3,4
Retired
Tang Chung Yen, Tom
Chairman, Hong Kong Exporter’s Association
Dr. Dov S. Zakheim 1,3,4
Senior Advisor, Center for Strategic and International Studies
1
Audit Committee member
2
Compensation Committee member
3
Nominating and Corporate Governance Committee member
4
Government Security Committee member
EXECUTIVE OFFICERS
Thomas T. Edman
President and Chief Executive Officer
Chung Tai Keung, Canice
Executive Vice President, Asia Pacific Business Development
Todd B. Schull
Executive Vice President, Chief Financial Officer, and Treasurer
Douglas L. Soder
Executive Vice President and President, Communications
and Computing Business Unit
Brian W. Barber
Executive Vice President and Chief Operating Officer
Stockholder Meeting
The annual meeting of stockholders will be held at the Corporate
Office located at 1665 Scenic Ave. Suite 250, Costa Mesa, CA at
8:00 a.m. Pacific Time on Thursday, May 12, 2016.
Investor Relations Contact
Sameer Desai
Senior Director, Corporate Development and Investor Relations
Tel: +1-714-327-3000
Stock Listing
TTM’s common stock is traded on the NASDAQ Global Select
Market under the symbol “TTMI”.
Stock Transfer Agent
AMERICAN STOCK TRANSFER AND TRUST COMPANY
6201 15th Avenue
Brooklyn, NY 11219
Tel: 800-937-5449
U.S. and Canada Shareholders
Tel: +1-718-921-8124
International Shareholders
Email: info@amstock.com
www.amstock.com
SAFE HARBOR STATEMENT
This annual report contains forward-looking statements subject
to known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements. Such risks and uncertainties include, but are
not limited to, fluctuations in quarterly and annual operating
results, the volatility and cyclicality of various industries that the
company serves and other risks described in TTM’s most recent
SEC filings.
HEADQUARTERS
1665 Scenic Avenue
Suite 250
Costa Mesa, CA 92626
Tel: +1-714-327-3000
WEBSITE
www.ttm.com
1665 Scenic Avenue, Suite 250
Costa Mesa, CA 92626
+1-714-327-3000
www.ttm.com