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TTM Technologies, Inc. Reports Second Quarter 2002 Results; Announces Production Realignment and Cost-Saving Restructuring

REDMOND, Wash., Aug 1, 2002 /PRNewswire-FirstCall via COMTEX/ -- TTM Technologies, Inc. (Nasdaq: TTMI), a leading manufacturer of time- critical, technologically advanced printed circuit boards, today reported results for the second quarter ended July 1, 2002. The company also announced the realignment of production among its three facilities, an action expected to yield significant cost savings.

Second-Quarter Results

In the second quarter, revenue and profitability declined, year-over-year, due to continued weakness in the electronics industry. Net sales declined 24 percent to $23.3 million, compared to $30.7 million for the second quarter of 2001. For the second quarter of 2002, quick-turn business remained essentially flat at 44 percent of total revenues, compared to 45 percent for the second quarter of 2001.

Gross profit declined 75 percent to $2.0 million, as gross margins declined to 8.4 percent in the second quarter of 2002, compared to 25.3 percent for the same period in 2001. As a result of lower volume and pricing, reduced absorption of fixed manufacturing overhead, and a $907,000 restructuring charge, the company reported an operating loss of $1.9 million in the second quarter of 2002, compared to operating income of $3.8 million for the second quarter of 2001. Prior-period results included a quarterly goodwill amortization charge of $900,000, which was eliminated with the adoption of Statement of Financial Accounting Standards No. 142 in the first quarter of 2002.

For the second quarter of 2002, the net loss was $1.3 million, or $0.03 per diluted share, compared to net income of $2.2 million, or $0.06 per diluted share, for the same period in 2001. The net cash loss was $1.0 million, or $0.02 on a per share basis, compared to $3.4 million, or $0.09 per diluted share, for the same period in 2001. Adjusted for the restructuring charge, the net cash loss per share for the second quarter of 2002 was $0.01.

Earnings before interest, taxes, depreciation and amortization (EBITDA) declined 86 percent to $1.0 million for the second quarter of 2002, compared to $7.4 million for the same period in 2001.

"We continue to manage the business to meet market conditions," said Kent Alder, President and CEO of TTM Technologies. "With our production realignment and associated workforce reduction, we further lowered our cost structure."

Production Realignment and Cost Savings

The latest cost-cutting steps include the realignment of production among TTM's three facilities, located in Burlington and Redmond, Washington, and Santa Ana, California. As a result of the realignment, the Burlington facility will specialize in inner layer production. Outer layers, previously produced in Burlington, will be shifted to Redmond and Santa Ana. With the reduction of 130 employees, plus associated overhead and management support at the Burlington facility, TTM expects to generate quarterly cost savings in excess of $1.0 million. The company booked a pretax charge of $907,000, associated with the production realignment and headcount reduction.

"While this realignment will provide additional operating and cost advantages, it will not reduce our long-term capacity or hurt our ability to respond to an industry upturn," said Alder. "If a substantial upsurge in demand necessitates an increase in outer layer capacity, we retain the option of reestablishing outer layer production at Burlington."

Return on Invested Capital

TTM's return on invested capital (ROIC), based on tax-affected EBITA, was 1.2 percent in the second quarter of 2002, excluding the restructuring charge, compared with 10.5 percent in the year-ago period. On a trailing 12-month basis, TTM generated an ROIC of 4.4 percent.

At the quarter's end, TTM had net cash of $10.7 million, compared with net debt of $8.1 million at year-end 2001.

Outlook

For the third quarter of 2002, TTM anticipates revenues ranging from $20 to $23 million and cash earnings per share between a profit of $0.01 and a loss of $0.01.

"Our increasingly efficient production capabilities, combined with our strong balance sheet, provide the strength we need to withstand the protracted downturn in the electronics industry," concluded Alder. "We have continued to invest in our time and technology strategy and remain well positioned to capture market share when the industry recovers."

TTM Technologies, Inc. is a leading supplier of time-critical, technologically advanced printed circuit boards to original equipment manufacturers and electronic manufacturing services companies. TTM stands for time-to-market, representing how the company's time-critical, one-stop manufacturing services enable customers to shorten the time required to develop new products and bring them to market.

Conference Call/Webcast

The company will conduct a conference call to discuss its second quarter performance and outlook today at 4:30 p.m. Eastern/1:30 p.m. Pacific time. The call will be simulcast, and available for replay until August 8, 2002, on the company's Web site at www.ttmtech.com .

This release contains forward-looking statements that relate to future events or performance. These statements reflect the company's current expectations, and the company does not undertake to update or revise these forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied in this or other company statements will not be realized. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, the company's dependence upon the electronics industry, the company's dependence upon a small number of customers, general economic conditions and specific conditions in the markets TTM addresses, including the recent significant slowdown in the technology sector and related excess capacity, the unpredictability of future revenues and expenses, potential fluctuations in revenues and operating results, and other "Risk Factors" set forth in the company's Form 10-K for 2001.

                            TTM TECHNOLOGIES, INC.

                   Selected Unaudited Financial Information

                    (In thousands, except per share data)

                           Second Quarter         First Two Fiscal Quarters
                       2002       2001   2001     2002      2001       2001
                                       Adjusted*                    Adjusted*
    CONSOLIDATED
     STATEMENTS
     OF OPERATIONS

    Net sales        $23,287   $30,666  $30,666  $47,021   $76,668  $76,668
    Cost of goods
     sold             21,327     22,905  22,905   42,714    50,610   50,610

    Gross profit       1,960      7,761   7,761    4,307    26,058   26,058

    Operating expenses:
      Sales and
       marketing       1,591      1,907   1,907    3,246     4,371    4,371
      General and
       administrative  1,040        844     844    1,617     2,921    2,921
      Amortization of
       intangibles       301      1,202     301      601     2,404      601
      Restructuring
       charges           907                         907         -        -
        Total operating
         expenses      3,839      3,953   3,052    6,371     9,696    7,893

    Operating income
     (loss)           (1,879)     3,808   4,709   (2,064)   16,362   18,165

    Interest expense    (275)      (668)   (668)    (542)   (1,532)  (1,532)
    Amortization of
     debt issuance
     costs               (11)       (10)    (10)     (21)      (21)     (21)
    Interest income
     and other, net      255        275     275      308       434      434

    Income before
     income taxes     (1,910)     3,405   4,306   (2,319)   15,243   17,046
    Income tax
     benefit
     (provision)         626     (1,227) (1,552)     757    (5,503)  (6,152)

    Net income
     (loss)          $(1,284)    $2,178 $ 2,754  $(1,562)   $9,740  $10,894

    Earnings per
     common share
     (EPS):
      Basic           $(0.03)     $0.06   $0.07   $(0.04)    $0.26    $0.29
      Diluted          (0.03)      0.06    0.07    (0.04)     0.25     0.28
      Cash
       (diluted)**     (0.02)      0.09    0.08    (0.02)     0.31     0.30

    Weighted average
     common shares:
      Basic           39,831     37,441  37,441   39,217    37,397   37,397
      Diluted         39,831     38,894  38,894   39,217    38,908   38,908

    *  Adjusted to show the pro-forma impact of eliminating goodwill
       amortization and the related income tax effect during the first two
       quarters of 2001

    ** Fully diluted EPS plus amortization of intangibles


    SELECTED BALANCE SHEET DATA   07/01/02       12/31/01

    Cash                           $39,419        $24,490
    Accounts receivable, net        10,198         11,208
    Inventories                      3,256          3,126
    Total current assets            57,390         43,971
    Net PP&E                        49,078         50,906
    Other assets                    95,390         98,199
    Total assets                   201,858        193,076

    Current maturities of
     long-term debt                 $5,062         $4,500
    Other current liabilities        8,714         10,372
    Long-term liabilities           23,625         28,125
    Shareholders' equity           164,457        150,079
    Total liabilities and
     shareholders' equity          201,858        193,076


    SUPPLEMENTAL DATA
                             Second Quarter      First Two Fiscal Quarters
                       2002       2001    2001     2002      2001      2001
                                        Adjusted*                    Adjusted*

    EBITDA***         $1,031     $7,377  $7,377   $3,475   $23,248   $23,248

    EBITA****        $(1,323)    $5,285  $5,285  $(1,155)  $19,200   $19,200


    Gross margin         8.4%      25.3%   25.3%     9.2%     34.0%     34.0%
    EBITDA margin        4.4       24.1    24.1      7.4      30.3      30.3

    Operating margin    (8.1)      12.4    15.4     (4.4)     21.3      23.7


    Return on Invested
     Capital
     (after tax)        -0.3%      10.5%   10.5%


    End Market Breakdown:

                                     Second Quarter
                                  2002           2001

    Networking/
     communications               31.0%           35.9%
    High-end computing            12.5            14.3
    Industrial/Medical            28.4            27.3
    Computer peripherals          20.0            11.8
    Handheld                       2.8             7.0
    Other                          5.3             3.7

    ***  EBITDA (earnings before interest, taxes, depreciation and
         amortization) means earnings before interest expense
         (including amortization of debt issuance costs), income taxes,
         depreciation and amortization.

    **** EBITA (earnings before interest, taxes and amortization) means
         earnings before interest expense (including
         amortization of debt issuance costs), income taxes and amortization.
SOURCE TTM Technologies, Inc.

CONTACT: Stacey Peterson, Chief Financial Officer of TTM Technologies, Inc., +1-714-241-0303

URL: http://www.ttmtech.com

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