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

TTM TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		91-1033443
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2630 South Harbor Boulevard, Santa Ana, California 92704
(Address of Principal Executive Offices) (Zip Code)

(714) 327-3000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.001 par value		Nasdaq National Market

     Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ

     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 to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer þ      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of Common Stock held by nonaffiliates of the registrant (41,658,229) based on the closing price of the registrant’s Common Stock as reported on the Nasdaq National Market on June 30, 2006, was $602,794,574. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. 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 March 12, 2007, there were outstanding 42,177,893 shares of the registrant’s Common Stock, $0.001 par value.

Documents Incorporated by Reference

     Portions of the registrant’s definitive Proxy Statement for the 2007 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

 

 

TTM TECHNOLOGIES, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I

ITEM 1.		BUSINESS			1
ITEM 1A.		RISK FACTORS			10
ITEM 1B.		UNRESOLVED STAFF COMMENTS			19
ITEM 2.		PROPERTIES			19
ITEM 3.		LEGAL PROCEEDINGS			20
ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			20
		PART II
ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			20
ITEM 6.		SELECTED FINANCIAL DATA			22
ITEM 7.		MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			35
ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			35
ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			36
ITEM 9A.		CONTROLS AND PROCEDURES			36
ITEM 9B.		OTHER INFORMATION			36
		PART III
ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERANCE			37
ITEM 11.		EXECTIVE COMPENSATION			37
ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			37
ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPEDENCE			37
ITEM 14.		PRINCIPAL ACCOUNTING FEES AND SERVICES			37
		PART IV
ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES			37
		SIGNATURES			39
		INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
Exhibit 10.4
EX-10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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 report, annual or 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.”

ITEM 1. BUSINESS

Overview

     We are a one-stop provider of time-critical and technologically complex printed circuit boards (“PCBs”) and backplane assemblies. PCBs serve as the foundation of sophisticated electronic products. We serve high-end commercial markets and aerospace and defense markets, providing PCBs and backplane assemblies for applications including networking/communications infrastructure; high-end computing; commercial and military flight management systems; naval and aerospace radar systems; weapons guidance systems; military communication devices; satellites; industrial controls; and medical testing equipment. Our products are characterized by high levels of complexity and moderate production volumes. Our customers include both original equipment manufacturers, or OEMs, and electronic manufacturing services, or EMS, providers. On October 27, 2006, we completed the acquisition of the Tyco Printed Circuit Group business (“PCG”) from Tyco International Ltd. for a total purchase price of $226.8 million, excluding acquisition costs. We acquired six PCB fabrication facilities and three backplane assembly facilities. One facility is located in Shanghai, China, and the rest are located in the United States. We are in the process of closing the Dallas, Oregon, facility, (one of the acquired facilities,) and transferring the PCB production to our other facilities.

Industry Background

     Printed circuit boards are manufactured from sheets of laminated material, or panels. Each panel is typically subdivided into multiple printed circuit boards, each consisting of a pattern of electrical circuitry etched from copper to provide an electrical connection between the components mounted to it.

     Printed circuit boards serve as the foundation for virtually all electronic products, ranging from consumer products (such as cellular telephones and personal computers) to high-end commercial electronic equipment (such as medical equipment, data communications routers, switches and servers), and aerospace and defense electronic systems. Generally, consumer electronics products utilize commodity-type printed circuit boards with lower layer counts, less complexity and larger production runs. High-end commercial equipment and aerospace and defense products require more customized, multilayer printed circuit boards using advanced technologies. In addition, most high-end commercial and aerospace and defense end markets have low volume requirements that demand a highly flexible manufacturing environment. As production of sophisticated circuit boards becomes more complex, high-end manufacturers must continually invest in advanced production equipment, engineering and process technology, and a skilled workforce. Backplane assemblies also exhibit these characteristics.

     According to Prismark Partners LLC, the worldwide market for printed circuit boards was approximately $45 billion in 2006 with North America producing 11%, or approximately $5 billion. As a result of consolidation and the slowdown in the electronics industry in 2001 and 2002, many manufacturing facilities were closed, reducing North American printed circuit board manufacturing capacity by as much as 40%. This capacity reduction combined with improved market demand led to higher capacity utilization across the industry in 2003 and continuing through 2006. Management believes this situation provides significant opportunities for well-capitalized manufacturers that have advanced technological capabilities.

     Several trends are impacting the printed circuit board manufacturing and backplane assembly industries. These trends include:

     Short electronic product life cycles. Continual 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 printed circuit board manufacturers that can offer engineering support in the prototype stage and manufacturing scalability throughout the production life cycle.

     Increasing complexity of electronic products. OEMs are continually designing higher performance electronic products, which require technologically complex printed circuit boards that can accommodate higher speeds and component densities. These complex printed circuit boards often require very high layer counts, advanced manufacturing processes and materials, and high-mix production capabilities, which involve processing small lots in a flexible manufacturing environment. OEMs increasingly rely upon larger printed circuit board manufacturers, which possess the financial resources necessary to invest in advanced manufacturing process technologies and sophisticated engineering staff, often to the exclusion of smaller printed circuit board manufacturers that do not possess such technologies or resources.

     Increasing competition from Asian manufacturers. In recent years, many electronics manufacturers have moved their commercial production to Asia to take advantage of its exceptionally large, low-cost labor pool. This is particularly true for consumer electronics producers that utilize commodity-type printed circuit boards with low layer counts and complexity. These less sophisticated printed circuit boards are generally mass produced and have experienced significant pricing pressures from Asian manufacturers. Printed circuit boards requiring complex technologies, advanced manufacturing processes and materials, quick turnaround times or high-mix production are subject to less competition from low cost regions. In addition, many of the unique challenges involved in successfully designing and manufacturing highly complex printed circuit boards—and the ongoing capital investment required to maintain state-of-the-art capabilities—have effectively served as barriers to entry in these high-mix and high-complexity segments of the domestic printed circuit board industry. Export controls also represent a barrier to entry for international competition as they restrict the overseas export of defense-related materials, services and sensitive technologies that are associated with government programs.

     Decreased reliance on multiple printed circuit board manufacturers by OEMs. OEMs traditionally have relied on multiple printed circuit board manufacturers to provide different services as an electronic product moves through its life cycle. The transfer of a product among different printed circuit board manufacturers often results in increased costs and inefficiencies due to incompatible technologies and manufacturing processes and production delays. In addition, OEMs find it easier to manage fewer printed circuit board manufacturers. As a result, OEMs are reducing the number of printed circuit board manufacturers and backplane assembly services providers on which they rely, presenting an opportunity for those that can offer one-stop manufacturing capabilities—from prototype to volume production.

     Increasing demand for aerospace and defense products. The aerospace and defense market is characterized by time-consuming and complex certification processes, long product life cycles and a unique combination of demand for leading-edge technology with extremely high reliability and durability. Increasing focus on incorporating leading-edge technology in products for reconnaissance and intelligence combined with continued spending on military communications, aerospace and weapons systems applications are anticipated to drive steady end market growth. Success in the defense and aerospace market is achieved only after manufacturers demonstrate the long-term ability to pass extensive OEM and government certification processes; numerous product inspections; audits for quality and performance; and extensive administrative requirements associated with participation in government programs. Export controls represent a barrier to entry for international competition as they restrict the overseas export of defense-related materials, services and sensitive technologies that are associated with government programs. In addition, the complexity of the end products serves as a barrier to entry to potential new suppliers.

     Customers increasingly rely on manufacturing partners for backplane assembly and sub-system assembly services. OEM customers are increasingly relying on either EMS companies or PCB manufacturers for backplane assembly and sub-system assembly services as they focus on streamlining their own supply chains. As a result, OEMs increasingly prefer close proximity to their assembly partners as quick-turn and prototyping processes are more efficient with readily accessible engineering teams and shorter shipping times. Although some North American backplane assembly has migrated to Asia in recent years, complex custom backplanes and sub-systems have typically remained in North America. The large physical size and complexity of many of these assemblies make them cost prohibitive to ship from Asia to North America. Furthermore, North American facilities are better able to service the small lot and quick turn-around requirements of many North American customers. Cost savings from migrating backplane assembly to Asia are limited, particularly for more complex and technically sophisticated large products.

The TTM Solution

     We manufacture printed circuit boards and backplane assemblies that satisfy all stages of an electronic product’s life cycle—from prototype to volume production. Key aspects of our solution include:

	•		One-stop manufacturing solution. We offer a one-stop manufacturing solution to our customers through our specialized and integrated facilities, some of which focus on different stages of an electronic product’s life cycle. This one-stop solution allows us to provide a broad array of services and technologies to meet the rapidly evolving needs of our customer base.
	•		Quick-turn services. We deliver highly complex printed circuit boards to customers in significantly compressed lead times. This rapid delivery service enables OEMs to develop sophisticated electronic products quickly and reduce their time to market.

			In addition, our quick-turn services provide us with an opportunity to cross-sell our other services, including high-mix and volume production in our targeted end markets.
	•		Strong process and technology expertise. We deliver time-critical and highly complex manufacturing services through our advanced manufacturing processes and material and technology expertise. We regularly manufacture printed circuit boards with layer counts in excess of 30 layers.
	•		Aerospace and defense capabilities. We provide a comprehensive product offering in the defense and aerospace market and provide customers with comprehensive PCB fabrication capabilities, exotic material expertise and technological experience.
	•		Complementary backplane assembly. We provide backplane and sub-system assembly products as a natural extension of our commercial and defense PCB offerings. This segment is a full service provider of complex backplane assembly, sub-system assembly, electro-mechanical integration and design services.

Our Manufacturing Services

Quick-turn

     We refer to our rapid turnaround services as “quick-turn” because we provide custom-fabricated printed circuit boards to our customers within as little as 24 hours to 10 days. As a result of our ability to rapidly and reliably respond to the critical time requirements of our customers, we generally receive a premium for our quick-turn 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 printed circuit boards in a very short period of time. We satisfy this need by manufacturing prototype printed circuit boards in small quantities of up to 50 boards per order, with delivery times ranging from as little as 24 hours to 10 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 printed circuit boards 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 printed circuit boards per order with delivery times ranging from 5 to 15 days.

     For the years ended December 31, 2005 and 2006, orders with delivery requirements of 10 days or less represented approximately 22% and 17% of our gross PCB sales, respectively. Quick-turn orders decreased as a percentage of our gross PCB sales in 2006 due to both higher demand for our standard lead-time, high technology production services as well as the inclusion of the PCG facilities, which focus primarily on standard lead-time services.

Standard delivery

     Our standard delivery time services focus on the high-mix and complex technology requirements of our customers, with delivery times typically ranging from four to six weeks. Our high technology expertise is evidenced by our ability to regularly produce complex printed circuit boards with more than 30 layers in commercial volumes. In 2006, the average layer count of our PCBs decreased to 15.5 from 15.8 in 2005 due to the inclusion of the PCG facilities, which generally manufacture PCBs with lower layer counts. In addition, many of our lower layer-count PCBs are complex as a result of the incorporation of other technologically advanced features, including high performance materials, blind and buried vias, sequential lamination and extremely fine geometries and tolerances. Although we provide standard delivery time services to all customers, including large OEMs, we do not target our standard delivery time services to high-volume, consumer electronics applications such as cellular telephones, personal computers, hand-held devices and automotive products.

Strategy

     Our goal is to be the leading provider of time-critical, one-stop manufacturing services for highly complex printed circuit boards and backplane assemblies. Key aspects of our strategy include:

     Leveraging our one-stop manufacturing solution. Our quick-turn capabilities allow us to establish relationships with customers early in a product’s life cycle, giving us an advantage in securing preferred vendor status for subsequent ramp-to-volume and volume production opportunities. We also seek to gain quick-turn business from our existing ramp-to-volume and volume customers.

     Using our quick-turn capabilities to attract new customers with high-growth potential. Our time-to-market strategy focuses on the rapid introduction and short product life cycle of advanced electronic products. We continue to attract emerging companies to our quick-turn facilities and believe that our ability to rapidly and reliably respond to the critical time requirements of our customers provides us with a significant competitive advantage.

     Continuing to improve our technological capabilities and manufacturing processes. We are consistently among the first to adopt new developments in printed circuit board manufacturing processes and technology. We continuously evaluate new manufacturing processes, materials, and technology to increase our capabilities and further reduce our delivery times, improve quality, increase yields and decrease costs. We continue to invest in technologies that are required by the leading OEMs in the electronics industry.

     Capitalizing on facility specialization to enhance operating efficiency. We utilize a facility specialization strategy in which each commercial order is directed to the facility best suited to the customer’s particular delivery time, product complexity and volume needs. Our plants use compatible technologies and manufacturing processes, allowing us generally to move orders easily between plants to optimize operating efficiency. This strategy provides customers with faster delivery times and enhanced product quality and consistency.

     Expanding our presence in targeted markets through internal initiatives and selective acquisitions. We actively target technologies and business opportunities that enhance our competitive position in selected markets. Our 2006 acquisition of PCG exemplifies our ability to successfully expand our business into markets, such as the desirable aerospace and defense market. We intend to pursue high-end commercial and defense customers that demand flexible and advanced manufacturing processes, expertise with high-performance specialty materials, and other high-mix and complex technologies. In addition, we regularly evaluate and pursue internal initiatives aimed at adding new customers and better serving existing customers within our markets.

Manufacturing Technology

     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 who must bring complicated electronic products to market faster.

     To manufacture printed circuit boards, 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 circuits, called traces, which are separated by insulating material. A finished multilayer circuit board laminates together a number of layers of circuitry, using intense heat and pressure under vacuum. Vertical connections between layers are achieved by 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 printed circuit boards 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 to ensure consistent quality.

     We believe that our highly specialized equipment and advanced manufacturing processes enable us to reliably produce printed circuit boards with the following characteristics:

	•		High layer count. Manufacturing printed circuit boards with a large number of layers is difficult to accomplish due to the accumulation of manufacturing tolerances and registration systems required. We regularly manufacture printed circuit boards with more than 30 layers on a quick-turn and volume basis. For 2006, approximately 65% of our gross PCB sales involved the manufacture of printed circuit boards with at least 12 layers, compared with 68% in 2005. Printed circuit boards with at least 20 layers represented 37% of gross PCB sales in 2006, down slightly from 38% in 2005.
	•		Blind and buried vias. Vias are drilled holes that provide electrical connectivity between layers of circuitry in a printed circuit board. Blind vias connect the surface layer of the printed circuit board to an internal layer and terminate at the internal layer. Buried vias are holes that do not reach either surface of the printed circuit board 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.

	•		Embedded passives. Embedded passive technology involves embedding either the capacitive or resistive elements inside the printed circuit board, which allows for removal of passive components from the surface of the printed circuit board and thereby leaves more surface area for active components. Use of this technology results in greater design flexibility and products with higher component density and increased functionality.
	•		Fine line traces and spaces. Traces are the connecting copper lines between the different components of the printed circuit board and spaces are the distances between traces. The smaller the traces and tighter the spaces, the higher the density on the printed circuit board and the greater the expertise required to achieve a desired final yield on an order. We are able to provide 0.003 inch traces and spaces.
	•		High aspect ratios. The aspect ratio is the ratio between the thickness of the printed circuit board and the diameter of a drilled hole. The higher the ratio, the greater the difficulty to reliably form, electroplate and finish all the holes on a printed circuit board. We are able to provide aspect ratios of up to 15:1.
	•		Thin core processing. A core is the basic inner-layer building block material from which printed circuit boards are constructed. A core consists of a flat sheet of material comprised of glass-reinforced resin with copper foil on either side. The thickness of inner-layer cores is determined by the overall thickness of the printed circuit board and the number of layers required. The demand for thinner cores derives from requirements of thinner printed circuit boards, higher layer counts and various electrical parameters. Core thickness in our printed circuit boards ranges from as little as 0.002 inches up to 0.062 inches.
	•		Microvias. Microvias are small vias with diameters generally between 0.001 inches and 0.005 inches after plating. These very small vias consume much less space on the layers they interconnect, thereby providing for greater wiring densities and closer spacing of components and their attachment pads. The fabrication of printed circuit boards 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.
	•		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 insulating 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 printed circuit boards 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.
	•		Advanced backplane assembly and system integration. We provide specialized assembly services for highly complex and large form-factor backplanes. These services provide additional value for many of the high technology backplane circuit boards produced in our printed circuit board manufacturing facilities. The manufacture of backplane assemblies involves mounting various electronic components to large PCBs. Components include, but are not limited to, connectors, capacitors, resistors, diodes, integrated circuits, hardware and a variety of other parts. TTM also assembles backplanes, sub-systems and provides full systems integration of backplane assemblies, cabling, power, thermal and other complex electromechanical parts into chassis and other enclosures. In addition to assembling, TTM provides a full range of inspection and testing services such as Automated Optical Inspection (“AOI”) and X-ray inspection to ensure that all components have been properly placed and electrical circuits are complete.
	•		Flexible circuits. We manufacture circuits on flexible substrates that can be installed in three-dimensional applications for electronic packaging systems. Use of flexible circuitry enables improved reliability, improved electrical performance, reduced weight and reduced assembly costs when compared with traditional wire harness or ribbon cable packaging. We can combine these flexible substrates with rigid laminates to create high reliability, high layer count rigid-flex products.
	•		High frequency circuits. We have the ability to produce and test specialized circuits used in radio-frequency (“RF”) or microwave emission and collection applications. These products are typically used for radar, transmit/receive antennas and similar wireless applications. Markets include defense, avionics, satellite, and commercial. 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 RF assembly and test services.

	•		Thermal management. Increased component density on circuit boards often requires improved thermal dissipation to reduce operating temperatures. We have the ability to produce printed circuits with electrically passive heatsinks laminated externally on a circuit board or between two circuit boards and/or electrically active thermal cores.
	•		Design Engineering Services. We have the ability to offer both mechanical and electrical computer aided design (“CAD”) services, which allows us to offer our customers complete manufacturing opportunities for PCB, assembly and system level products. We provide design services for both defense and commercial applications. We also offer signal integrity, thermal, and structural analysis services.

Customers and Markets

     Our customers include both OEMs and EMS companies that primarily serve the networking/communications, high-end computing, industrial/medical and aerospace/defense end markets of the electronics industry. Because of the significant increase in aerospace/defense business due to the recent acquisition of PCG, we have modified our end market classifications to more accurately portray our resulting customer base. We measure customers as those companies that have placed at least two orders in the preceding 12-month period. As of December 31, 2005, we had approximately 580 customers and approximately 740 customers as of December 31, 2006. This significant increase is primarily due to the acquisition of PCG.

     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)		2004				2005				2006
Networking/Communications			42	%			46	%			43	%
Computing/Storage/Peripherals			37				34				29
Medical/Industrial/Instrumentation/Other			14				12				12
Aerospace/Defense			7				8				16
Total			100	%			100	%			100	%

     Sales attributable to our five largest OEM customers, which can vary from year to year, accounted for 54% of our net sales in 2005 and 39% of our net sales in 2006. This dilution in our customer concentration reflects our acquisition of PCG, which allowed us to diversify our customer base. Our five largest OEM customers in 2006 were, in alphabetical order, Cisco Systems, Hewlett-Packard, IBM, Juniper Networks and Motorola. Sales attributed to OEMs include sales made through EMS providers. Sales to EMS providers comprised approximately 69% and 65% of our sales in 2005 and 2006, respectively. Although our contractual relationship is with the EMS company, we typically negotiate price and volume requirements directly with the OEMs. In addition, we are on the approved vendor lists of several of our EMS providers, which allow us to be awarded additional discretionary orders. Our five largest EMS customers in 2006 were, in alphabetical order, Celestica, Flextronics, Jabil Circuit, Plexus and Solectron. Sales to our two largest EMS customers, Solectron and Celestica, accounted for 20% and 10%, respectively, of our net sales in 2006.

     During 2006, approximately 68% of our net sales were to customers in the United States, 12% in Malaysia, 5% in Canada, 4% in China, 2% in Taiwan, 2% in Singapore and the remainder was primarily to other European and Asian countries. In 2005, approximately 62% of our net sales were to customers in the United States, 17% in Malaysia, 6% in Italy, 5% in Canada, and the remainder primarily was to other European and Asian countries.

     Our marketing strategy focuses on building long-term relationships with our customers’ engineering and new product introduction personnel early in the product development phase. 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 assist 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 its facilities. Additionally, the largest and most strategic customers are also supported by selected program management and engineering resources. Our sales force is comprised of direct salespeople, complemented by a large force of commission-based, independent representatives.

     Our international footprint includes a backplane assembly operation in Shanghai, China, and inventory hubs in Belgium, Canada, Czech Republic, Malaysia, Mexico, and Thailand. Our international sales force services customers in Canada, China, England, Ireland, Israel, Mexico, Singapore, Spain, Sweden and countries in Eastern Europe. We believe our international reach enables us to access new customers and allows us to better serve existing customers.

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. The primary raw materials we use in backplane assembly include PCBs, connectors, capacitors, resistors, diodes and integrated circuits.

     We 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. Although we have preferred suppliers for some raw materials, most of our raw materials are generally readily available in the open market from numerous other potential suppliers. 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 printed circuit board industry is fragmented and characterized by intense competition. Our principal North American PCB competitors include DDi, Endicott Interconnect Technologies, Merix, Sanmina-SCI, Coretec, Pioneer Circuits and Unicircuit. Our principal international PCB competitors include Elec & Eltek, Hitachi, Ibiden, and Multek. Our principal assembly competitors include Amphenol, Sanmina-SCI, Simclair, TT Electronics, and Via Systems.

     We believe we compete favorably based on the following competitive factors:

	•		status as largest North American PCB fabricator;
	•		ability to offer the most comprehensive PCB product offering;
	•		ability to offer one-stop manufacturing capabilities;
	•		specialized and integrated manufacturing facilities;
	•		ability to offer time-to-market capabilities;
	•		capability and flexibility to produce technologically complex products;
	•		leading edge aerospace and defense capabilities;
	•		flexibility to manufacture 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, such as blind and buried vias, larger panel size, sequential lamination, exotic materials, and smaller traces and spaces provides us with a competitive advantage over manufacturers that do not possess these advanced technological capabilities. Our future success will depend in large part on our ability to maintain and enhance our manufacturing capabilities and production technologies.

Backlog

     Backlog consists of purchase orders received, including, in some instances, forecast requirements released for production under customer contracts. Cancellation and rescheduling charges will vary depending upon the time of cancellation or rescheduling. We obtain firm purchase orders from our customers for all products. However, for many of these purchase orders, customers do not make firm orders for delivery of products more than 30 to 60 days in advance. Some of the markets which we serve are characterized by

increasingly short product life cycles. For other markets, longer product life cycles are more common as are orders for deliveries greater than 60 days in advance.

Intellectual Property

     We have limited patent or trade secret protection for our manufacturing processes. We believe our business depends on the effectiveness of our fabrication techniques and our ability to continue to improve our manufacturing processes. We rely on the collective experience of our employees in the manufacturing process to ensure we continuously evaluate and adopt new technologies 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.

Governmental Regulation

     Our operations are subject to federal, state, and local regulatory requirements relating to environmental compliance, waste management, and health and safety matters. In particular, we are subject to regulations promulgated by:

	•		the U.S. Occupational Safety and Health Administration (OSHA), and state OSHA and Department of Labor laws pertaining to health and safety in the workplace;
	•		the Environmental Protection Agency, pertaining to air emissions, wastewater discharges, the use, storage, discharge, and disposal of hazardous chemicals used in the manufacturing processes;
	•		corresponding state laws and regulations, including site investigation and remediation;
	•		corresponding U.S. county and city agencies; and
	•		corresponding agencies in China for the Shanghai facility.

     To date, the costs of compliance and environmental remediation have not been material to us. These costs include investigation and remediation of our three Connecticut sites as required by the Connecticut Land Transfer Act. Nevertheless, additional or modified requirements may be imposed in the future. If such additional or modified requirements are imposed on us, or if conditions requiring remediation at other sites are found to exist, we may be required to incur substantial additional expenditures.

     PCG made legal commitments to the U.S. Environmental Protection Agency and to the State of Connecticut regarding settlement of enforcement actions against the PCG facilities in Connecticut. The obligations include fulfillment of a Compliance Management Plan until at least July 2009, completion of a wastewater audit, and installation of rinse water recycling systems at the Stafford, Connecticut facility.

Employees

     As of December 31, 2006, we had 4,009 employees. None of our U.S. employees are represented by unions and in China, our employees are represented by a labor union on a national level. Of these employees, 3,717 were involved in manufacturing and engineering, 153 worked in sales and marketing, and 139 worked in accounting, systems and other support capacities. We have not experienced any labor problems resulting in a work stoppage and believe that we have good relations with our employees. On December 7, 2006, we announced plans to close the Dallas, Oregon, facility, affecting approximately 300 employees.

Management

     The following table, together with the accompanying text, presents certain information as of February 28, 2007, with respect to each of our executive officers.

Name		Age				Position(s) Held With the Company
Kenton K. Alder			57			Chief Executive Officer, President and Director
Steven W. Richards			42			Executive Vice President, Chief Financial Officer and Secretary
Douglas L. Soder			46			Executive Vice President
Shane S. Whiteside			41			Executive Vice President and Chief Operating Officer
Daniel L. Felsenthal			50			Vice President and Corporate Controller

     Kenton K. Alder has served as our Chief Executive Officer, President and Director since March 1999. From January 1997 to July 1998, Mr. Alder served as Vice President of Tyco Printed Circuit Group Inc., a printed circuit board manufacturer. Prior to that time, Mr. Alder served as President and Chief Executive Officer of ElectroStar, Inc., previously a publicly held printed circuit board manufacturing company, from December 1994 to December 1996. From January 1987 to November 1994, Mr. Alder served as President of Lundahl Astro Circuits Inc., a predecessor company to ElectroStar. Mr. Alder holds a Bachelor of Science degree in Finance and a Bachelor of Science degree in Accounting from Utah State University.

     Steven W. Richards has served as our Chief Financial Officer since December 2005 and Executive Vice President since November 2006. Mr. Richards has served as our Secretary since September 2005, a Vice President since October 2003 and our Treasurer from May 2000 to December 2005. From June 1996 to April 2000, Mr. Richards worked in a variety of financial planning and analysis roles at Atlantic Richfield Corporation, a multinational oil and gas company. Mr. Richards holds a Bachelor of Journalism degree from the University of Missouri, Columbia and a Master of Business Administration degree from the University of Southern California. Mr. Richards is a Chartered Financial Analyst charterholder.

     Douglas L. Soder has served as our Executive Vice President since November 2006. Prior to joining TTM Technologies, Mr. Soder held the position of Executive Vice President for Tyco Electronics – Printed Circuit Group from January 2001 to November 2006 at which time the company was acquired by TTM Technologies. During an almost 24-year career at Tyco Electronics, Mr. Soder served in a variety of sales and sales management positions at AMP Incorporated and PCG. From November 1996 to January 2001, Mr. Soder was Vice President of Sales and Marketing for PCG. Mr. Soder holds a Bachelor of Arts degree in Political Science from Dickinson College.

     Shane S. Whiteside has served as an Executive Vice President since November 2006 and Senior Vice President since October 2003 and our Vice President and Chief Operating Officer since December 2002. From January 2001 to November 2002, Mr. Whiteside was the Vice President of Operations—Santa Ana Division and our Director of Operations—Santa Ana Division from July 1999 to December 2000. From March 1998 to June 1999, Mr. Whiteside was the Director of Operations of Power Circuits. Mr. Whiteside holds a Bachelor of Arts degree in Economics from the University of California at Irvine.

     Daniel L. Felsenthal has served as our Vice President and Corporate Controller since February 2003. From May 2002 through November 2002, Mr. Felsenthal was a financial consultant. From November 2001 through May 2002, Mr. Felsenthal served as the Chief Financial Officer for Castro–Krause’s Industries, Inc. From February 1999 through October 2001, Mr. Felsenthal served as the Vice President, Corporate Controller for Krause’s Furniture, Inc. Mr. Felsenthal holds a Bachelor of Arts degree in Economics from the University of California at Los Angeles and a Master of Business Administration degree from the University of Pennsylvania, the Wharton School.

Availability of Reports Filed with the Securities and Exchange Commission

     Our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, registration statements, and amendments to those reports are available without charge on our website, http://www.ttmtech.com/ir/sec filings, as soon as reasonably practicable after they are filed electronically with the SEC. Copies are also available without charge by (i) telephonic request by calling our Investor Relations Department at (714) 241-0303, (ii) e-mail request to investor@ttmtech.com, or (iii) a written request to TTM Technologies, Inc., Attention: Investor Relations, 2630 South Harbor Blvd., Santa Ana, CA 92704.

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.

     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 Form 10-K or the other documents we file with the SEC, or our annual or quarterly reports to stockholders, future press releases, or orally, whether in presentations, responses to questions, or otherwise.

Risks Related to Our Company

We are heavily dependent upon the worldwide electronics industry, which is characterized by significant economic cycles and fluctuations in product demand. A significant downturn in the electronics industry could result in decreased demand for our manufacturing services and could lower our sales and gross margins.

     A majority of our revenues are generated from the electronics industry, which is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand. Furthermore, the industry is subject to economic cycles and recessionary periods and would be negatively affected by a contraction in the U.S. economy and worldwide electronics market. Moreover, 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. A lasting economic recession, excess manufacturing capacity, or a decline in the electronics industry could negatively affect our business, results of operations, and financial condition. For example, our net sales declined from $129.0 million in 2001 to $89.0 million in 2002 due to a significant downturn in demand in the electronics industry during 2001 and 2002. A decline in our net sales could harm our profitability and results of operations and could require us to record an additional valuation allowance against our deferred tax assets or recognize an impairment of our long-lived assets, including goodwill and other intangible assets.

We recently completed a major acquisition and expect to continue to pursue acquisitions to expand our operations. We may have trouble integrating acquisitions. Acquisitions 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 existing business. On October 27, 2006, we acquired the Printed Circuit Group business unit from Tyco International Ltd. The acquired PCG business generally consists of nine printed circuit board or backplane and subassembly plants, including one in China and the total purchase price was $226.8 million, excluding acquisition costs.

     We paid for the transaction from our available cash and cash equivalents and from a new senior credit financing. We obtained a new senior secured term loan of $200 million with a six-year maturity and a senior secured revolving credit facility of $40 million with a five-year maturity from a syndicate of financial institutions. The term loan and revolving facility are secured by substantially all of our domestic assets and 65% of our foreign assets.

     Our acquisition of businesses and expansion of operations involve risks, including the following:

	•		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;
	•		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.

     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 non-amortizable intangible assets that will be subject to impairment testing and potential periodic impairment charges;
	•		become subject to litigation and environmental issues;
	•		incur unanticipated costs;
	•		incur large and immediate write-offs;
	•		issue common stock that would dilute our current stockholders’ percentage ownership; 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 and will not harm our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions we make could harm our business and operating results in a material way. 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 the acquisition.

During periods of excess global printed circuit board manufacturing capacity, our gross margins may fall and/or we may have to incur restructuring charges if we choose to reduce the capacity of or close any of our facilities.

     When we experience excess capacity, our sales revenues may not fully cover our fixed overhead expenses, and our gross margins will fall. In addition, we generally schedule our quick-turn 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.

We face a risk that capital needed for our business and to repay our debt obligations will not be available when we need it. Additionally, our leverage and our debt service obligations may adversely affect our cash flow.

     On December 31, 2006, we had total indebtedness of approximately $200.7 million, which represented approximately 41% of our total capitalization.

     Our discretionary use of cash or cash flow is constrained by certain leverage and interest coverage ratio tests required to be met under the terms of our credit agreement. These ratios become more restrictive over each of the next successive quarters. As a result, if the financial performance of our business falls short of expectations, then we might be required to repay additional debt beyond current planned repayments. We also are required to apply any excess cash flow, as defined by the credit agreement, to pay down our debt.

     Our indebtedness could have significant negative consequences, including:

•

increasing our vulnerability to general adverse economic and industry conditions,

	•		limiting our ability to obtain additional financing,
	•		requiring the dedication of a substantial portion of any cash flow from operations to service our indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures,
	•		limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete, and
	•		placing us at a possible competitive disadvantage to less leveraged competitors and competitors that have better access to capital resources.

We are dependent upon a relatively small number of OEM customers for a large portion of our net sales, and a decline in sales to major customers could harm our results of operations.

     A small number of customers are responsible for a significant portion of our net sales. Our five largest OEM customers accounted for approximately 54% of our net sales in 2005 and approximately 39% of our net sales in 2006. Sales attributed to OEMs include both direct sales as well as sales that the OEMs place through EMS providers. As result of the acquisition of PCG, 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 could harm our business, results of operations, and financial condition and lead to declines in the trading price of our common stock. 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 results of operations would be harmed.

We compete against manufacturers in Asia, where production costs are lower. These competitors may gain market share in our key market segments, which may have an adverse effect on the pricing of our products.

     We may be at a competitive disadvantage with respect to price when compared to manufacturers with lower-cost facilities in Asia and other locations. We believe price competition from printed circuit board manufacturers in Asia and other locations with lower production costs may play an increasing role in the market. Although we do have a backplane assembly facility in China, we do not have offshore facilities for PCB fabrication in lower-cost locations such as Asia. While historically our competitors in these locations have produced less technologically advanced printed circuit boards, they continue to expand their capacity and capabilities with advanced equipment to produce higher technology printed circuit boards. In addition, fluctuations in foreign currency exchange rates may benefit these offshore competitors. As a result, these competitors may gain market share, which may force us to lower our prices, reducing our gross margins.

A trend toward consolidation among OEMs could adversely affect our business.

     Recently, some of our large customers, including Siemens and Nokia, have consolidated. 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 at the OEM could result in the termination of a product line that we currently support. While there is potential for increasing our position with the combined Company, 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 OEM because of its increased market share.

Our failure to comply with the requirements of environmental laws could result in fines and revocation of permits necessary to our manufacturing processes. Failure to operate in conformance with environmental laws could lead to debarment from our participation in federal government contracts.

     Our operations are regulated under a number of federal, state, 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, and the Federal Motor Carrier Safety Act as well as analogous state 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, such as ammoniacal and cupric etching solutions, copper, nickel and other plating baths, etc. 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, and 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. We believe that our operations substantially comply with all applicable environmental laws. However, any material violations of environmental laws by us could subject us to revocation of our effluent discharge permits. Any such revocations could require us to cease or limit production at one or more of our facilities, and harm our business, results of operations, and financial condition. Even if we ultimately prevail, environmental lawsuits against us would be time consuming and costly to defend.

     Prior to our acquisition of the PCG business, PCG made legal commitments to the U.S. Environmental Protection Agency and to the State of Connecticut regarding settlement of enforcement actions related to the PCG facilities in Connecticut. The obligations include fulfillment of a Compliance Management Plan through at least July 2009 and completion of a wastewater audit and installation of rinse water recycling systems at the Stafford, Connecticut facility. Failure to meet either commitment could result in further costly enforcement actions, including exclusion from participation in defense and other federal contracts, which would materially harm our business, results of operations, and financial condition.

     Environmental laws also could become more stringent 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 global relocation. It is possible that environmental compliance costs and penalties from new or existing regulations may harm our business, results of operations, and financial condition.

     In addition, we are increasingly required to certify compliance to the European Union Restriction of Hazardous Substances (“RoHS”) directive and non-applicability to the Waste Electrical and Electronic Equipment directive for some of the products that we manufacture. 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 certification.

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 10 largest customers accounted for approximately 66% of our net sales in 2005 and approximately 53% of our net sales in 2006. Our OEM customers often direct a significant portion of their purchases through a relatively limited number of EMS companies. Our contractual relationship is often with the EMS companies, who are obligated to pay us for our products. Because we expect our OEM customers to continue to direct our sales to EMS companies, we expect to continue to be subject to the 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 results of operations would be harmed.

     Some of our customers are EMS companies located abroad. Our exposure has increased as these foreign customers continue to expand. With the primary exception of sales from our facility in China and a portion of sales from our Ireland sales office, our foreign sales are denominated in U.S. dollars and are typically on the same “open credit” basis and terms described above. Our foreign receivables were approximately 11% of our net account receivable as of December 31, 2006 and are expected to continue to grow as a percentage of our total receivables. We do not utilize credit insurance as a risk management tool.

We rely on suppliers for the timely delivery of raw materials and components used in manufacturing our printed circuit boards and backplane assemblies, and an increase in industry demand or the presence of a shortage for these raw materials or components may increase the price of these raw materials and reduce our gross margins. If a raw material supplier fails to satisfy our product quality standards, it could harm our customer relationships.

     To manufacture printed circuit boards, 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. Although we have preferred suppliers for most of these raw materials, the materials we use are generally readily available in the open market, and numerous other potential suppliers exist. 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. These components for backplane assemblies in some cases have limited or sole sources of supply. From time to time, we may experience increases in raw material prices, based on demand trends, which can negatively affect our gross margins. In addition, 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 supplier fails to satisfy our product quality standards, 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.

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. We may not be able to raise additional funds in order to respond to technological changes as quickly as our competitors.

     In addition, the printed circuit board 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 may require us to make significant capital investments.

Competition in the printed circuit board 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 printed circuit board 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 North American PCB competitors include DDi, Endicott Interconnect Technologies, Merix, Sanmina-SCI, Coretec, Pioneer Circuits and Unicircuit. Our principal international PCB competitors include Elec & Eltek, Hitachi, Ibiden, and Multek. Our principal assembly competitors include Amphenol, Sanmina-SCI, Simclair, TT Electronics, and Via Systems. 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;
	•		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, and devote greater resources to the development, promotion, and sale of their products 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 could cause our gross margins to decline. Periodically, printed circuit board manufacturers and backplane assembly providers experience overcapacity. Overcapacity, combined with weakness in demand for electronic products, results in increased competition and price erosion for our products.

Our quarterly 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 and potentially cause the trading price of our common stock to decline.

     Our quarterly 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 computer industry and quick-turn ordering patterns affects the overall printed circuit board industry. These seasonal trends have caused fluctuations in our quarterly operating results in the past and may continue to do so in the future. Results of operations in any quarterly period should not be considered indicative of the results to 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. If this occurs, the trading price of our common stock would likely decline.

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.

     We generally sell to customers on a purchase order basis rather than pursuant to long-term contracts. Our quick-turn orders are subject to particularly short lead times. Consequently, our net 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. 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 printed circuit board 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 harm our business, results of operations, and financial condition.

The increasing prominence of EMS providers in the printed circuit board industry could reduce our gross margins, potential sales, and customers.

     Sales to EMS providers represented approximately 65% of our net sales in 2006. 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 could 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 printed circuit boards 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 printed circuit boards and creation of backplane assemblies to these EMS providers, our business, results of operations, and financial condition may be harmed.

If events or circumstances occur in our business that indicate that our goodwill and intangibles may not be recoverable, we could have impairment charges that would negatively affect our earnings.

     As of December 31, 2006, our consolidated balance sheet reflected $141.9 million of goodwill and intangible assets. We evaluate whether events and circumstances have occurred that indicate the remaining balance of goodwill and 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 intangible assets, which could harm our results during the periods in which such a reduction is recognized. Our goodwill and

intangible assets may increase in future periods if we consummate other acquisitions. Amortization or impairment of these additional intangibles would, in turn, harm our earnings.

Damage to our manufacturing facilities due to fire, natural disaster or other event could harm our financial results.

     We have U.S. manufacturing facilities in California, Connecticut, Oregon, Utah, Washington, and Wisconsin. We also have a manufacturing facility in China. The destruction or closure of any of our manufacturing facilities for a significant period of time as a result of fire; explosion; blizzard; act of war or terrorism; or flood, tornado, earthquake, lightning, or other natural disaster could harm us financially, increasing our costs of doing business and limiting our ability to deliver our manufacturing services on a timely basis.

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 harm our financial results.

     We have limited patent or trade secret protection for our manufacturing processes. We rely on the collective experience of our employees in the manufacturing processes to ensure 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.

Our profitability is impacted by the global interest rate environment.

     We are exposed to interest rate risk relating to our senior secured term loan and revolving credit facility, which bears interest at either the Alternate Base Rate, as defined in our credit agreement, plus an applicable margin or LIBOR plus an additional margin. The interest rate on our term loan is linked to LIBOR and re-prices at intervals of 30, 60, 90, or 180 days as selected by the Company. A 1.0% increase in the interest rate would result in an increase of approximately $2.0 million in interest expense per year

     Our revolving credit facility bears interest at floating rates. The revolving credit facility bears interest at rates ranging from 1.75% to 2.25% per year plus the applicable LIBOR or from 0.75% to 1.25% per year plus the Alternate Base Rate. As of December 31, 2006, we have no outstanding revolving loans.

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 could be subject to legal proceedings and claims for alleged infringement by us of third-party proprietary rights, such as patents, from time to time in the ordinary course of business. It is possible that the circuit board designs and other specifications supplied to us by our customers might infringe on the patents or other intellectual property rights of third parties, in which case our manufacture of printed circuit boards according to such designs and specifications could expose us to legal proceedings for allegedly aiding and abetting the violation, as well as to potential liability for the infringement. If we do not prevail in any litigation as a result of any such allegations, our business could be harmed.

We depend heavily on a single end customer, the U.S. government, for a substantial portion of our business, including programs subject to security classification restrictions on information. Changes affecting the government’s capacity to do business with us or our direct customers or the effects of competition in the defense industry could have a material adverse effect on our business.

     A significant portion of our revenues are derived from products and services ultimately sold to the U.S. government and are 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. These contracts are subject to the respective customers’ political and budgetary constraints and processes, changes in customers’ short-range and long-range strategic plans, the timing of contract awards, and in the case of contracts with the U.S. government, 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. 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, results of operations or prospects.

Our business may suffer if any of our key senior executives discontinues employment with us or if we are unable to recruit and retain highly skilled engineering and sales staff.

     Our future success depends to a large extent on the services of our key managerial employees. We may not be able to retain our executive officers and key personnel or attract additional qualified management in the future. 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.

Increasingly, our larger customers are requesting that we enter into supply agreements with them that have increasingly restrictive terms and conditions. These agreements typically include provisions that increase our financial exposure, which could result in significant costs to us.

     Increasingly, our larger customers are requesting that we enter into supply agreements with them. These agreements typically include provisions that generally serve to increase our exposure for product liability and warranty claims – as compared to our standard terms and conditions – 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 can adversely impact our cash flow and results of operations.

Our commercial assembly operation serves customers and has a manufacturing facility outside the United States and is subject to the risks characteristic of international operations. These risks include significant potential financial damage and potential loss of the business and its assets.

     Because we have manufacturing operations and sales offices located in Asia and Europe, we are subject to the risks of changes in economic and political conditions in those countries, including but not limited to:

	•		managing international operations;
	•		export license requirements;
	•		fluctuations in the value of local currencies;
	•		labor unrest and difficulties in staffing;
	•		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;
	•		imposition of restrictions on currency conversion or the transfer of funds;
	•		limitations on imports or exports of our product offering;
	•		travel restrictions;
	•		expropriation of private enterprises; and
	•		the potential reversal of current favorable policies encouraging foreign investment and trade.

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. Our sales mix has shifted towards standard delivery time products, which have larger production runs, thereby increasing our exposure to these types of defects. 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 printed circuit board, 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. Product liability litigation against us, even if it were unsuccessful, would be time consuming and costly to defend. Although we maintain technology errors and omissions insurance, we cannot assure you that we will continue to be able to purchase such insurance coverage in the future on terms that are satisfactory to us, if at all.

We are subject to risks of currency fluctuations.

     A portion of our cash and other current assets are held in currencies other than the U.S. dollar. As of December 31, 2006, we had approximately $19 million of current assets denominated in Chinese RMB. 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 in 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.

We export defense and commercial products from the United States to other countries. If we fail to comply with export laws, we could be subject to fines and other punitive actions.

     Exports from the United States are regulated by the U.S. Department of State and U.S. Department of Commerce. Failure to comply with these regulations can result in significant fines and penalties. Additionally, violations of these laws can result in punitive penalties, which would restrict or prohibit us from exporting certain products, resulting in significant harm to our business.

     The PCG facilities we acquired from Tyco International Ltd. generated $72.9 million of our 2006 revenue. Over time, the PCG locations developed business relationships with other Tyco entities. These relationships involved the purchase of raw materials from other Tyco entities and sale of products to other Tyco entities. Sales to other Tyco entities accounted for approximately $1.5 million of our consolidated 2006 net sales. If we are unable to maintain these relationships or if the pricing with the Tyco entities changes as a result of the acquisition of PCG, we could face higher raw material costs or lower revenues if the Tyco entities elect to purchase product from other suppliers.

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 future growth could be adversely affected.

We may not be able to fully recover our costs for providing design services to our customers, which could harm our financial results.

     Although we enter into design service activities with purchase order commitments, the cost of labor and equipment to provide these services may in fact exceed what we are able to fully recover through purchase order coverage. We also may be subject to agreements with customers in which the cost of these services is recovered over a period of time or through a certain number of units shipped as part of the ongoing product price. While we may make contractual provisions to recover these costs in the event that the product does not go into production, the actual recovery can be difficult and may not happen in full. In other instances, the business relationship may involve investing in these services for a customer as an ongoing service not directly recoverable through purchase orders. In any of these cases, the possibility exists that some or all of these activities are considered costs of doing business, are not directly recoverable, and may adversely impact our operating results.

Unanticipated changes in our tax rates or in our assessment of the realizability of our deferred tax assets or exposure to additional income tax liabilities could affect our operating results and financial condition.

We are subject to income taxes in both 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 adversely affected by changes in the mix of earnings in countries and states with differing statutory tax rates, changes in the valuation of deferred 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 affect our operating results.

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 an additional valuation allowance against our net deferred tax assets.

     As of December 31, 2006, we had deferred tax assets of approximately $6.7 million, which is net of a valuation allowance of $2.4 million. If we should determine that it is more likely than not that we will not generate taxable income in sufficient amounts to be able to use our net deferred tax assets, we would be required to increase our current valuation allowance against these deferred tax assets. This would result in an additional income tax provision and a deterioration of our results of operations. Based on our forecast for future earnings, we believe we will utilize the deferred tax asset in future periods. However, if our estimates of future earnings are lower than expected, we may record a higher income tax provision due to a write down of our net deferred tax assets, which would reduce our earnings per share.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

     The following table describes our principal manufacturing facilities and administrative offices.

		Leased				Owned				Total
Location		Square Feet				Square Feet				Square Feet
Chippewa Falls, WI			—				280,400				280,400
Dallas, OR (1)			14,000				118,272				132,272
Enfield, CT (office) (2)			11,563				—				11,563
Hopkins, MN (office)			8,700				—				8,700
Inglewood, CA			65,137				—				65,137
Logan, UT			—				124,104				124,104
Redmond, WA			—				102,200				102,200
San Diego, CA			37,500				—				37,500
Santa Ana, CA			—				98,000				98,000
Santa Clara, CA			36,448				36,245				72,693
Shanghai, China			63,098				—				63,098
Stafford, CT			—				89,696				89,696
Stafford Springs, CT			10,000				53,000				63,000
Staffordville, CT			—				43,056				43,056
Union City, CA			116,993				—				116,993
Total			363,439				944,973				1,308,412
Logan, UT (vacant land)						2.5 acres
Stafford, CT (vacant land)						2.5 acres

     Our owned facilities are subject to mortgages under our senior credit 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 were added as a defendant in a patent infringement lawsuit filed in 2001 in the U.S. District Court for the District of Arizona by Lemelson Medical, Education and Research Foundation, Limited Partnership. The suit alleges that we have infringed certain “bar code,” “machine vision” and other patents owned by the plaintiff and seeks injunctive relief, damages for the alleged infringements and payment of the plaintiff’s attorneys’ fees. In March 2002, the lawsuit was stayed pending the outcome of Symbol Technologies, et al. v. Lemelson in the U.S. District Court for the District Court of Nevada, in which a declaratory relief suit filed by certain manufacturers challenged the validity, enforceability and infringement of Lemelson’s “bar code” and “machine vision” patents. As a result of the stay, we have not filed an answer to the complaint nor has any discovery been conducted. In January 2004, the Nevada court found the Lemelson patents, including those patents asserted by the Lemelson Foundation against us in the Arizona case, to be invalid, not infringed and unenforceable. The Lemelson Foundation has the right to appeal the Nevada court’s judgment. Although the ultimate outcome of this matter is not currently determinable, we believe we have meritorious defenses to these allegations and do not expect this litigation to materially impact our business, results of operations or financial condition. However, there can be no assurance that the ultimate resolution of this matter will not have a material adverse effect on our results of operations for any quarter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     Our common stock has been listed on the Nasdaq National Market under the symbol “TTMI” since September 21, 2000. The following table sets forth the quarterly high and low closing prices of our common stock as reported on the Nasdaq National Market for the periods indicated.

		High				Low
2006:
First Quarter		$	15.29			$	9.68
Second Quarter		$	17.46			$	12.56
Third Quarter		$	14.24			$	10.00
Fourth Quarter		$	13.27			$	11.33
2005:
First Quarter		$	11.33			$	8.82
Second Quarter		$	10.55			$	7.28
Third Quarter		$	8.38			$	6.25
Fourth Quarter		$	9.83			$	6.81

     As of March 12, 2007, there were approximately 327 holders of record of our common stock. The closing sale price of our common stock on the Nasdaq National Market on March 12, 2007 was $10.01 per share.

     We have not declared or paid any dividends since 2000, and we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our senior credit facility prohibits the payment of dividends. We presently intend to retain any future earnings to finance future operations and the expansion of our business.

PERFORMANCE GRAPH

     The following graph compares, for the period from December 31, 2001 to December 31, 2006, the cumulative total stockholder return on our common stock against the cumulative total return of:

	•		the Nasdaq Composite Index; and
	•		a peer group consisting of us and two other publicly traded printed circuit board companies that we have selected.

     The graph assumes $100 was invested in our common stock on September 21, 2000, the date on which our common stock became registered under Section 12 of the Securities Exchange Act of 1934 as a result of our initial public offering, and an investment in each of the peer group and the Nasdaq Composite Index, and the reinvestment of all dividends. The companies included in the peer group are Sanmina Corporation (Nasdaq NM: SANM) and Merix Corporation (Nasdaq NM: MERX).

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among TTM Technologies, Inc., The NASDAQ Composite Index
And A Peer Group

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 31,
		2002(1)				2003(1)				2004				2005				2006(3)(4)
		(In thousands, except per share data)
Consolidated Statement of Operations Data:
Net sales		$	88,989			$	180,317			$	240,650			$	240,209			$	369,316
Cost of goods sold			78,456				145,694				172,103				186,453				276,168
Gross profit			10,533				34,623				68,547				53,756				93,148
Operating expenses:
Selling and marketing			6,447				10,858				12,032				11,977				16,473
General and administrative			5,519				11,696				13,223				14,135				19,656
Amortization of definite-lived intangibles			1,202				1,202				1,202				1,202				1,786
Restructuring charges(2)			3,859				649				855				—				199
Total operating expenses			17,027				24,405				27,312				27,314				38,114
Operating income (loss)			(6,494	)			10,218				41,235				26,442				55,034
Other income (expense):
Interest expense			(1,084	)			(583	)			(367	)			(179	)			(3,020	)
Amortization of debt issuance costs			(105	)			(97	)			(148	)			(72	)			(374	)
Interest income and other, net			694				352				793				2,126				4,462
Income (loss) before income taxes and extraordinary item			(6.989	)			9,890				41,513				28,317				56,102
Income tax (provision) benefit			2,278				(3,901	)			(13,183	)			2,524				(21,063	)
Income (loss) before extraordinary item			(4,711	)			5,989				28,330				30,841				35,039
Extraordinary gain			6,296				1,453				—				—				—
Net income		$	1,585			$	7,442			$	28,330			$	30,841			$	35,039
Income (loss) per common share, before extraordinary item:
Basic		$	(0.12	)		$	0.15			$	0.69			$	0.75			$	0.84
Diluted		$	(0.12	)		$	0.15			$	0.68			$	0.74			$	0.83
Net income per common share:
Basic		$	0.04			$	0.19			$	0.69			$	0.75			$	0.84
Diluted		$	0.04			$	0.18			$	0.68			$	0.74			$	0.83
Weighted average common shares:
Basic			39,511				39,993				40,780				41,232				41,740
Diluted			39,511				41,123				41,868				41,770				42,295
Other Financial Data:
Depreciation of property, plant and equipment		$	8,761			$	7,774			$	8,213			$	9,290			$	12,178
Non-cash restructuring charges for impairment of building and equipment			1,838				446				855				—				—

		As of December 31,
		2002				2003				2004				2005				2006
		(In thousands)
Consolidated Balance Sheet Data:
Working capital		$	40,405			$	52,352			$	82,645			$	111,224			$	127,405
Total assets			197,506				205,857				235,770				273,143				573,698
Long-term debt, including current maturities			10,000				7,777				—				—				200,705
Stockholders’ equity			167,426				178,327				211,626				243,952				287,315

		Year Ended December 31,
		2002				2003				2004				2005				2006
		(In thousands)
Supplemental Data:
EBITDA(1)		$	10,459			$	21,057			$	51,560			$	39,176			$	73,577
Cash flows from operating activities			10,011				18,582				48,810				31,027				32,784
Cash flows from investing activities			(7,017	)			(13,181	)			(9,276	)			(13,583	)			(234,579	)
Cash flows from financing activities			(7,105	)			863				(5,989	)			626				200,027

		Year Ended December 31,
		2002				2003				2004				2005				2006
		(In thousands)
Net income		$	1,585			$	7,442			$	28,330			$	30,841			$	35,039
Add back items:
Income taxes			(2,278	)			3,901				13,183				(2,524	)			21,063
Interest expense			1,084				583				367				179				3,020
Amortization of debt issuance costs			105				97				148				72				374
Depreciation of property, plant and equipment			8,761				7,774				8,213				9,290				12,178
Amortization of intangibles			1,202				1,260				1,319				1,318				1,903
Total			8,874				13,615				23,230				8,335				38,538
EBITDA		$	10,459			$	21,057			$	51,560			$	39,176			$	73,577

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

     We are a one-stop provider of time-critical and technologically complex printed circuit boards (“PCBs”) and backplane assemblies, which serve as the foundation of sophisticated electronic products. We serve high-end commercial and aerospace / defense markets—including the networking/communications infrastructure, high-end computing, defense, aerospace and industrial/medical markets—which are characterized by high levels of complexity and moderate production volumes. Our customers include original equipment manufacturers, or OEMs, electronic manufacturing services, or EMS, providers and defense and aerospace companies. Our time-to-market and high technology focused manufacturing services enable our customers to reduce the time required to develop new products and bring them to market.

     The market for our products experienced a sustained downturn during 2001 and 2002, due to the economic slowdown in the electronics industry. During this period, we reduced our work force and focused on cost reduction by improving the efficiency of our operations and negotiating lower prices on key supplies from our vendors. Throughout this period, we generated positive cash flow from operations, added new customers, and continued to invest in our future growth, adding capital equipment and acquiring Advanced Circuits in December 2002. During 2003, we generated increased sales due to the inclusion of Advanced Circuits, market share gains, and the improving economic conditions in the electronics industry and our customers’ end markets. Our gross profit margin also increased from 2002 to 2003, due to our improved operating leverage as costs that are largely fixed in nature, such as labor, were absorbed over greater production volume. Market conditions continued to improve in 2004, resulting in further revenue growth and expanded gross margins. During the first half of 2005, prices for our printed circuit boards declined leading to lower revenue and gross margins. However, prices as well as production volume increased during the second half of 2005 and in 2006, leading to increased revenue and expanded gross margins.

     On October 27, 2006, we completed the acquisition of PCG from Tyco International Ltd. The total purchase price of this acquisition was $226.8 million, excluding acquisition costs. This acquisition enhanced our business in the following ways:

	•		positioned us as the largest PCB fabricator in North America as well as the largest PCB fabricator in the defense and aerospace end market;
	•		added complementary commercial PCB fabrication facilities to our original three commercial PCB manufacturing sites;
	•		added global backplane and sub-system assembly capability;
	•		entered the backplane assembly market in China with a facility in Shanghai;
	•		expanded engineering and materials expertise;
	•		expanded and diversified our customer base.

     We measure customers as those companies that have placed at least two orders in the preceding 12-month period. As of December 31, 2006, we had approximately 740 customers and approximately 580 as of December 31, 2005. Sales to our 10 largest customers accounted for 53% of our net sales in 2006 and 66% of our net sales in 2005. We sell to OEMs both directly and indirectly through EMS companies. Sales attributable to our five largest OEM customers accounted for approximately 39% of our net sales in 2006, 54% of our net sales in 2005 and 54% of our net sales in 2004.

     The following table shows the percentage of our net sales attributable to each of the principal end markets we served for the periods indicated. Because of the significant increase in aerospace/defense business due to the recent acquisition of PCG, we have modified our end market classifications to more accurately portray our resulting customer base.

		Year Ended December 31,
End Markets (1)		2004				2005				2006
Networking/Communications			42	%			46	%			43	%
Computing/Storage/Peripherals			37				34				29
Medical/Industrial/Instrumentation/Other			14				12				12
Aerospace/Defense			7				8				16
Total			100	%			100	%			100	%

     For PCBs we measure the time sensitivity of our products by tracking the quick-turn percentage of our work. We define quick-turn orders as those with delivery times of 10 days or less, which typically captures research and development, prototype, and new product introduction work, in addition to unexpected short-term demand among our customers. Generally, we quote prices after we receive the design specifications and the time and volume requirements from our customers. Our quick-turn services command a premium price as compared to standard lead time products. Quick-turn orders decreased from approximately 22% of net PCB sales in 2005 to 17% of net PCB sales in 2006, due to both higher demand for our standard lead-time, high technology production services as well as the inclusion of the PCG facilities, which focus primarily on standard lead-time services. We also deliver a large percentage of compressed lead-time work with lead times of 11 to 20 days. We receive a premium price for this work as well. Purchase orders may be cancelled prior to shipment. We charge customers a fee, based on percentage completed, if an order is cancelled once it has entered production.

     We recognize revenues when persuasive evidence of a sales arrangement exists, the sales terms are fixed and determinable, title and risk of loss has transferred, and collectibility is reasonably assured—generally when products are shipped to the customer. Net sales consist of gross sales less an allowance for returns, which typically has been less than 2% of gross sales. We provide our customers a limited right of return for defective printed circuit boards. We record an amount for estimated sales returns and allowances at the time of sale based on our historical results. To the extent actual returns vary from our historical experience, revisions to these allowances may be required.

     Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the manufacture and testing of our products as well as stock-based compensation expense. Many factors affect our gross margin, including capacity utilization, product mix, production volume, and yield. We 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. We believe that our cost of goods sold will continue to fluctuate as a percentage of net sales.

     Selling and marketing expenses consist primarily of salaries and commissions paid to our internal sales force and commissions paid to independent sales representatives, salaries paid to our sales support staff, stock-based compensation expense as well as costs associated with marketing materials and trade shows. We generally pay higher commissions to our independent sales representatives for quick-turn work, which generally has a higher gross profit component than standard lead-time work. We expect our selling and marketing expenses to continue to fluctuate as a percentage of net sales.

     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, stock-based compensation expense, and bad debt expense. We expect these expenses to continue to fluctuate as a percentage of net sales as we add personnel and incur additional costs related to the growth of our business and the requirements of operating as a public company.

     Amortization of intangibles consists of intangible assets, which we recorded as a result of the Power Circuits acquisition in July 1999 as well as the PCG acquisition in October 2006.

     Restructuring charges in 2004 relate to the final write down of assets held for sale associated with the sale of the Burlington, Washington, facility. Restructuring charges in 2006 relate to severance costs to terminate certain sales and administrative employees of the acquiring entity following the PCG acquisition.

     Our interest expense relates to our senior secured credit facility and our other long-term obligations. Amortization of debt issuance costs consists of the amortization of loan origination fees and related legal and administrative expenses. Interest and other income consist primarily of interest received on our cash and short-term investment balances.

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 management 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. Management bases its estimates on historical experience, the use of independent valuation firms and licensed environmental professionals, 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. Senior 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.

     Accounting policies for which significant judgments and estimates are made include asset valuation related to bad debts and inventory obsolescence; sales returns and allowances; impairment of long-lived assets, including goodwill and intangible assets; realizability of deferred tax assets; establishing the fair value of individual assets acquired and individual liabilities assumed when we acquire other businesses; determining stock-based compensation expense, self-insured medical reserves, asset retirement obligations and environmental liabilities. A detailed description of these estimates and our policies to account for them is included in the notes to our consolidated financial statements in this report.

     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 expected collectibility of accounts. Our actual bad debts may differ from our estimates.

     In assessing the realization of inventories, we are required to make judgments as to future demand requirements and compare these with current and committed inventory levels. Provision is made to reduce excess and obsolete inventories to their estimated net realizable value. Our inventory requirements may change based on our projected customer demand, changes due to 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. 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.

     We derive revenues primarily from the sale of printed circuit boards and backplane assemblies using customer-supplied engineering and design plans and recognize revenues when persuasive evidence of a sales arrangement exists, the sales terms are fixed and determinable, title and risk of loss have transferred, and collectibility is reasonably assured—generally when products are shipped to the customer. We provide our customers a limited right of return for defective printed circuit boards and backplane assemblies. We accrue an estimated amount for sales returns and allowances at the time of sale based on historical information. To the extent actual experience varies from our historical experience, revisions to these allowances may be required.

     We have significant long-lived tangible and intangible assets consisting of property, plant and equipment; goodwill; and definite-lived intangibles. 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. Our goodwill and intangibles are largely attributable to our acquisitions of other businesses. During the fourth fiscal quarter 2006, we performed an impairment assessment of our goodwill, which requires the use of a fair-value based analysis and determined that no impairment existed. At December 31, 2006, we determined that there were no events or changes in circumstances that indicated that the carrying amount of long-lived tangible assets and definite-lived intangible assets may not be recoverable. We use an estimate of the future undiscounted net cash flows in measuring whether our long-lived tangible assets and definite-lived intangible assets are recoverable. 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 adversely affect our results of operations and financial condition.

     Deferred income tax assets are reviewed for recoverability and valuation allowances are provided, when necessary, to reduce deferred tax assets to the amounts expected to be realized. At December 31, 2006, we have net deferred income tax assets of $6.7 million, which is net of a valuation allowance of approximately $2.4 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. In addition, we record income tax provision or benefit during interim periods at a rate that is based on expected results for the full year. If we determine in the future that it is more likely than not that some or all of our deferred income tax assets would be realizable in an amount greater than what already is recorded, we would reverse all or a portion of valuation allowance in the period the determination is made. 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.

     We apply the provisions of purchase accounting when recording our acquisitions. Application of purchase accounting requires that we estimate the fair value of the individual assets acquired and liabilities assumed of a business. Determination of the fair value of the assets involves a number of judgments and estimates. In our acquisitions to date, we have engaged an outside valuation firm to provide us with an appraisal report, which we utilized in determining the purchase price allocation. The allocation of the purchase price to different asset classes impacts the depreciation and amortization expense we subsequently record. The principal assets we have acquired to date are receivables, inventory, real estate, property and equipment, as well as intangible assets such as customer relationships. The principal liabilities we have assumed to date are payables, asset retirement obligations and future environmental remediation obligations. The fair values assigned to the assets acquired and liabilities assumed in our 2006 acquisition of Tyco Printed Circuit Group has not been finalized and is subject to change pending the receipt of additional information necessary to finalize the fair values of: accounts receivables; sales returns and allowances; property, plant and equipment; asset retirement obligations; environmental reserves; and certain contingent liabilities. The additional information includes among other items, adequate support for certain credits in the accounts receivable, completion of a final compilation of property and equipment due to the incompleteness of the records acquired, completion of the appraisals being obtained on certain property and equipment, and information being obtained to finalize the values of asset retirement obligations, environmental reserves and certain contingent liabilities. The Company will continue to obtain the necessary information to finalize the fair values of these items during 2007 and may make further purchase accounting adjustments if appropriate which would primarily affect the amount of goodwill that we recorded.

     We establish liabilities for the costs of asset retirement obligations when a legal or contractual obligation exists to dispose of or restore an asset upon its retirement and the timing and cost of such work is reasonably estimable. We record such liabilities only when such timing and costs are reasonably determinable. In addition, we accrue an estimate of the undiscounted costs of environmental remediation for work at identified sites where an assessment has indicated it is probable that cleanup costs are or will be required and may be reasonably estimated. In making these estimates, we consider information that is currently available, existing technology, enacted laws and regulations, and our estimates of the timing of the required remedial actions, and we discount these estimates at 8%. We may use outside environmental consultants to assist us in making these estimates. We also are required to estimate the amount of any probable recoveries, including insurance recoveries.

     Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123R “Share-Based Payments” (“SFAS 123R”) using the modified prospective transition method, and therefore have not restated prior periods’ results. Under this method we recognize compensation expense for all share-based payments granted on and after January 1, 2006, and prior but not yet vested as of January 1, 2006, in accordance with SFAS No. 123R. Under the fair value recognition provisions of SFAS No. 123R, we recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest over the requisite service period of the award using a straight-line method. Prior to SFAS No. 123R adoption, we accounted for share-based payments under APB No. 25 “Accounting for Stock Issued to Employees”, and therefore we generally recognized compensation expense only when we granted options with an exercise price below the market price on the date of grant.

     We estimate the value of share-based awards on the date of grant using the Black-Scholes option pricing model. Calculating the fair value of share-based payment awards requires the input of highly subjective assumptions, including the expected term of the share-based payment awards and expected stock price volatility. The expected term represents the average time that options that vest are expected to be outstanding. The expected volatility rates are estimated based on a weighted average of the historical volatilities of our common stock. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We have currently estimated our forfeiture rate to be 7 percent. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. For the year ended December 31, 2006, share-based compensation expense was $1.6 million. At December 31, 2006, total unrecognized estimated compensation expense related to non-vested stock options was $5.9 million, which is expected to be recognized over a weighted-average period of 1.6 years.

     We are self-insured for group health insurance benefits provided to our employees, and we purchase insurance to protect against claims at the individual and aggregate level. The insurance carrier adjudicates and processes employee claims and is paid a fee for these services. We reimburse our insurance carrier for paid claims subject to variable monthly limitations. We estimate our exposure for claims incurred but not paid at the end of each reporting period and use historical information supplied by our insurance carrier and broker to estimate our liability for these claims. This liability is subject to an aggregate stop-loss that varies based on employee enrollment and factors that are established at each annual contract renewal. Our actual claims experience may differ from our estimates.

RESULTS OF OPERATIONS

     The following table sets forth statement of operations data expressed as a percentage of net sales for the periods indicated:

		Year Ended December 31,
		2004				2005				2006
Net sales			100.0	%			100.0	%			100.0	%
Cost of goods sold			71.5				77.6				74.8
Gross profit			28.5				22.4				25.2
Operating expenses:
Selling and marketing			5.0				5.0				4.5
General and administrative			5.5				5.9				5.3
Amortization of definite-lived intangibles			0.5				0.5				0.5
Restructuring charges			0.4				—				—
Total operating expenses			11.4				11.4				10.3
Operating income			17.1				11.0				14.9
Other income (expense):
Interest expense			(0.1	)			(0.1	)			(0.8	)
Amortization of debt issuance costs			(0.0	)			(0.0	)			(0.1	)
Interest income and other, net			0.3				0.9				1.2
Total other income (expense), net			0.2				0.8				0.3
Income before income taxes			17.3				11.8				15.2
Income tax benefit (provision) benefit			(5.5	)			1.0				(5.7	)
Net income			11.8	%			12.8	%			9.5	%

Business Segments

     The Company has two reportable segments: PCB Manufacturing and Commercial Assembly. Prior to our acquisition of PCG we had one reportable segment. These reportable segments are managed separately because they distribute and manufacture distinct products with different production processes. PCB Manufacturing fabricates printed circuit boards. Commercial Assembly is a contract manufacturing business that specializes in assembling backplanes into subassemblies and other complete electronic devices. PCB Manufacturing customers are either EMS companies or OEM companies, while Commercial Assembly customers are usually OEMs. Our Commercial Assembly segment includes our Hayward, California and Shanghai, China plants and our Ireland sales and distribution infrastructure. Our PCB manufacturing segment is composed of nine domestic PCB fabrication plants and an assembly operation that is closely affiliated with one of the PCB manufacturing plants.

     We evaluate each segment on the basis of segment profits, which excludes profit on inter-segment sales, certain interest income and expense, and income tax expense. Corporate expenses and certain centrally-managed expenses are allocated to each segment. The following table presents sales and operating income for our reportable segments. For further information regarding our reportable segments, refer to Note 13 to our consolidated financial statements.

		Year Ended December 31,
		2004				2005				2006
		(in thousands)
Net sales:
PCB Manufacturing		$	240,650			$	240,209			$	353,734
Commercial Assembly			—				—				22,357
Total Sales			240,650				240,209				376,091
Inter-segment sales			—				—				(6,775	)
Total Net Sales		$	240,650			$	240,209			$	369,316
Operating income:
PCB Manufacturing		$	42,554			$	27,760			$	55,561
Commercial Assembly			—				—				1,376
Total operating segment income			42,554				27,760				56,937
Amortization of intangibles			(1,319	)			(1,318	)			(1,903	)
Total operating income			41,235				26,442				55,034
Total other income			278				1,875				1,068
Income before income taxes		$	41,513			$	28,317			$	56,102

Year Ended December 31, 2006, Compared to Year Ended December 31, 2005

The full year 2006 includes 65 days of the results of operations from our PCG acquisition, which occurred on October 27, 2006. The acquisition has had and will continue to have a significant affect on our operations as discussed in the various comparisons noted below.

Net Sales

     Net sales increased $129.1 million, or 53.7%, from $240.2 million in 2005 to $369.3 million in 2006 due to several factors, including the addition of the PCG facilities, and both increased prices and production volume at the three original TTM Technologies plants. Of the $129.1 million increase in sales, $72.9 million resulted from our PCG acquisition, including $22.4 million from the commercial assembly segment. Volume increased approximately 26% primarily due to higher demand from our customers for our products. Prices rose approximately 12% due to increased demand for PCBs as well as a shift in production mix toward more high technology production. Our quick-turn production, which generally is characterized by higher prices, decreased from 22% of PCB revenue in 2005 to 17% of PCB revenue in 2006 due to both higher demand for our standard lead-time, high technology production services as well as the inclusion of the PCG facilities, which focus primarily on standard lead-time services.

Gross Profit

     Cost of goods sold increased $89.7 million, or 48.1%, from $186.5 million for 2005 to $276.2 million for 2006. Cost of goods sold rose due to several factors, including the addition of the PCG facilities, and both increased material prices and production volume at the three original TTM Technologies plants. Adding to this increase was higher repair and maintenance costs, higher utilities costs and higher depreciation expense. The increase in cost of goods sold included approximately $4.0 million for the value of the manufacturing profit added to the PCG inventories at the acquisition date. In addition, higher wage rates, greater headcount, increased incentive compensation and the inclusion of stock option expense led to increased labor costs. As a percentage of net sales, cost of goods sold decreased from 77.6% for 2005 to 74.8% for 2006 primarily due to increased pricing and greater absorption of fixed costs due to increased production.

     As a result of the foregoing, gross profit increased $39.3 million, or 73.0%, from $53.8 million for 2005 to $93.1 million for 2006. Our gross margin increased from 22.4% in 2005 to 25.2% in 2006.

     The increase in our gross margin was due to higher sale prices for our products as well as lower cost of goods sold as a percent of sales, which increased due to the factors discussed above, partially offset by assembly sales, which have inherently lower gross margins. This increase in gross margin was fueled by increased absorption of fixed costs due to increased production. Printed circuit board manufacturing is a multi-step process that requires a certain level of equipment and staffing for even minimal production volumes. As production increases, our employees are able to work more efficiently and produce more printed circuit boards without incurring significant cost increases. However, at higher capacity utilization rates, additional employees and capital may be required.

Operating Expenses

     Selling and marketing expenses increased $4.5 million, or 37.5%, from $12.0 million for 2005 to $16.5 million for 2006, primarily due to the inclusion of the PCG facilities in our results for 2006 as well as higher commission expense due to higher revenue. As a percentage of net sales, selling and marketing expenses decreased from 5.0% in 2005 to 4.5% in 2006 due to greater absorption of fixed costs. The mix of selling and marketing expenses did not change significantly from 2005 to 2006.

     General and administrative expenses increased $5.6 million from $14.1 million, or 5.9% of net sales, for 2005 to $19.7 million, or 5.3% of net sales, for 2006. The increase in expenses resulted primarily from the inclusion of the PCG facilities in our results for 2006. Other factors that increased general and administrative expense were higher incentive compensation and stock-based compensation expense as well as increased accounting, legal fees and consulting expenses related to completion and integration of the acquisition. General and administrative expenses decreased as a percentage of net sales, primarily due to greater absorption of these costs over a larger revenue base.

     In the fourth fiscal quarter 2006, we recorded a restructuring charge of $0.2 million related to realigning certain sales and administrative functions.

Other Income (Expense)

     Other income (expense) declined $0.8 million from income of $1.9 million in 2005 to income of $1.1 million in 2006. This net decrease resulted from an increase of $3.1 million in interest expense and amortization of debt issuance costs related to our new $200 million senior secured term loan used to fund the acquisition of PCG, net of an increase of $2.3 million from interest earned on higher balances in cash and cash equivalents and short-term investments for most of 2006.

Income Taxes

     The provision for income taxes increased from a $2.5 million benefit for 2005 to a $21.1 million provision for 2006. The change from an income tax benefit in 2005 to an income tax provision in 2006 resulted from a favorable valuation allowance adjustment in 2005, higher pretax income in 2006, and a higher effective tax rate for 2006. Our effective tax benefit rate was 8.9% in 2005, and our effective tax provision rate was 37.5% in 2006. Our effective tax rate is primarily impacted by the federal income tax rate; apportioned state income tax rates; utilization of other credits and deductions available to us; and certain non-deductible items. During 2005, we decreased our valuation allowance against our deferred income tax assets and benefited our 2005 income tax provision by $12.7 million for the portion of the deferred income tax assets that we determined that is more likely than not to be realized. Our expectations of future earnings were sufficient for us to conclude that it was more likely than not that most of our deferred income tax assets will be realized. Excluding the favorable impacts to our tax provision resulting from the decreases in our valuation allowance in 2005, our effective tax rate in 2005 was 35.8%. The increase from this rate to the 2006 effective tax rate of 37.5% is due primarily to the acquisition of the PCG facilities, which are generally in states with higher tax rates, most notably California. Our federal tax rate also increased from 34.0% in 2005 to 35.0% in 2006. As of December 31, 2006, our valuation allowance against deferred income tax assets was approximately $2.4 million.

Year Ended December 31, 2005, Compared to Year Ended December 31, 2004

Net Sales

     Net sales decreased $0.4 million, or 0.2%, from $240.6 million in 2004 to $240.2 million in 2005 due to declining prices, partially offset by an increase in production volume. Volume increased approximately 5% primarily due to higher demand from our customers for our products. Prices fell approximately 5% primarily due to increased competition and excess capacity in the North American printed circuit board industry, partially offset by a shift in product mix toward more high technology production. Our quick-turn production, which generally is characterized by higher prices, increased from 20% of revenue in 2004 to 22% of revenue in 2005.

Gross Profit

     Cost of goods sold increased $14.4 million, or 8.3%, from $172.1 million for 2004 to $186.5 million for 2005. Cost of goods sold rose due to an increase in the number of printed circuit boards sold as well as price increases in raw materials, higher repair and maintenance costs, higher utilities costs, primarily natural gas, and higher depreciation expense. In addition, higher wage rates and greater headcount led to increased labor costs, but these increases were partially offset by a reduced incentive compensation accrual. As a percentage of net sales, cost of goods sold increased from 71.5% for 2004 to 77.6% for 2005 primarily due to declining prices and higher absolute costs, partially offset by increased absorption of fixed costs.

     As a result of the foregoing, gross profit decreased $14.7 million, or 21.6%, from $68.5 million for 2004 to $53.8 million for 2005. Our gross margin decreased from 28.5% in 2004 to 22.4% in 2005.

     The decline in our gross margin was due to lower prices for our products as well as higher cost of goods sold, which increased due to the factors discussed above. This decline in gross margin was somewhat mitigated by increased absorption of fixed costs due to increased production. Printed circuit board manufacturing is a multi-step process that requires a certain level of equipment and staffing for even minimal production volumes. As production increases, our employees are able to work more efficiently and produce more printed circuit boards without incurring significant cost increases. However, at higher capacity utilization rates, additional employees and capital may be required. Our average layer count increased from 15.6 in 2004 to 15.8 in 2005.

Operating Expenses

     Selling and marketing expenses remained essentially flat at $12.0 million for 2004 and 2005. As a percentage of net sales, selling and marketing expenses remained unchanged at 5.0% during the same periods of time. The mix of selling and marketing expenses did not change significantly from 2004 to 2005.

     General and administrative expenses increased $0.9 million from $13.2 million, or 5.5% of net sales, for 2004 to $14.1 million, or 5.9% of net sales, for 2005. The increase in expenses resulted primarily from a net $2.2 million loss contingency accrual related to reaching a definitive agreement with a customer to resolve a dispute concerning certain goods shipped in 2002 and 2003; higher accounting fees for the audit of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act; and higher labor expense due to higher wage rates, partially offset by lower incentive compensation expense and costs related to a proposed public stock offering in the second fiscal quarter 2004. General and administrative expenses increased as a percentage of net sales, primarily due to the net increase in expenses described in this paragraph.

     In the second fiscal quarter 2004, we recorded a restructuring charge of $0.9 million to write down the value of our Burlington, Washington building prior to selling it. We subsequently sold it in the fourth fiscal quarter 2004.

Other Income (Expense)

     Other income (expense) improved $1.6 million from income of $0.3 million in 2004 to income of $1.9 million in 2005. This increase resulted from higher interest income due to higher cash and short term investment balances and higher interest rates in 2005 as compared to 2004 as well as lower interest expense in 2005 due to the repayment of our term loan in 2004.

Income Taxes

     The provision for income taxes decreased from a $13.2 million provision for 2004 to a $2.5 million benefit for 2005. The change from an income tax provision in 2004 to an income tax benefit in 2005 resulted from lower pretax income in 2005 combined with a lower effective tax rate for 2005. Our effective tax provision rate was 31.8% in 2004 and our effective tax benefit rate was 8.9% in 2005. Our effective tax rate is primarily impacted by the federal income tax rate; apportioned state income tax rates; utilization of other credits and deductions available to us; and certain non-deductible items. In addition, during 2004 and 2005, we decreased our valuation allowance against our deferred income tax assets and benefited our 2004 and 2005 income tax provision by $2.1 million and $12.7 million, respectively, for the portion that we determined that is more likely than not to be realized. The reduction in valuation allowance in 2005 occurred during the fourth quarter given the additional positive evidence from continued historical earnings and expectations of future earnings which was sufficient for us to conclude that it was more likely than not that most of our deferred income tax assets will be realized. Excluding the favorable impacts to our tax provision resulting from the decreases in our valuation allowance in 2004 and 2005, our effective tax rate in 2004 was 36.8% and 35.8% in 2005. As of December 31, 2005, our valuation allowance against deferred income tax assets was approximately $2.5 million.

Liquidity and Capital Resources

     Our principal sources of liquidity have been cash provided by operations, borrowings under our senior secured credit facility, and proceeds from employee exercises of stock options. Our principal uses of cash have been to finance acquisitions, meet debt service requirements, finance capital expenditures and fund working capital requirements. We anticipate that servicing debt, funding working capital requirements and financing capital expenditures will continue to be the principal demands on our cash in the future. On October 27, 2006, we completed the PCG acquisition for $226.8 million, excluding acquisition costs. This purchase price was paid using some of our available cash and cash equivalents as well as proceeds from a new $200 million senior secured term loan. We cancelled our existing $25 million revolving credit facility and replaced it with a new $40 million senior secured revolving credit facility.

     As of December 31, 2006, we had net working capital of approximately $127.4 million, compared to $111.2 million as of December 31, 2005. The increase in working capital is primarily attributable to increases in accounts receivable and inventories largely due to consolidation of the acquired entity’s balance sheet and partially offset by the classification of a significant portion of

our long-term debt as a current liability in 2006. On October 27, 2006, we used $34.1 million of our cash and cash equivalents to fund a portion of the price paid for PCG plus direct acquisition and debt issuance costs.

     Our 2007 capital expenditure plan is expected to total approximately $16 million and will fund capital equipment purchases to increase capacity and expand our technological capabilities throughout our facilities.

     The following table provides information on contractual obligations as of December 31, 2006 (in thousands):

Contractual Obligations		Total				Less than 1 year				1 – 3 years				4 – 5 years				After 5 years
Operating leases		$	8,705			$	2,401			$	3,992			$	924			$	1,388
Purchase obligations			30				30				—				—				—
Capital lease obligations			744				744				—				—				—
Debt obligations			200,000				60,000				1,781				2,850				135,369
Interest on debt obligations (1)			62,341				12,058				21,101				20,710				8,472
Total contractual obligations		$	271,820			$	75,233			$	26,874			$	24,484			$	145,229

     In connection with the PCG acquisition, the Company is involved in various stages of investigation and cleanup related to environmental remediation at two Connecticut sites and is obligated to investigate a third Connecticut site. The Company currently estimates that it will incur remediation costs of $1.0 million to $1.2 million over the next 12 to 60 months related to these matters. In addition, the Company has obligations to the Connecticut Department of Environmental Protection to complete a compliance management plan through July 2009 under which the Company will make certain environmental asset improvements to its waste water systems, which are estimated to cost $1.0 million.

     Based on our current level of operations, we believe that cash generated from operations, available cash and amounts available under a new five-year senior secured $40 million revolving credit facility will be adequate to meet our currently anticipated debt service, capital expenditure, and working capital needs for the next 12 months and beyond. Our principal liquidity needs for periods beyond the next 12 months are to meet debt service requirements as well as for other contractual obligations as indicated in our contractual obligations table above and for capital purchases under our annual capital expenditure plan.

     Net cash provided by operating activities was $32.8 million in 2006, compared to $31.0 million in 2005. Our 2006 operating cash flow of $32.8 million primarily reflects net income of $35.0 million, $14.1 million of depreciation and amortization, a decrease in deferred income tax assets of $5.0 million and $0.6 million from a variety of other factors, partially offset by a net increase in working capital of $21.9 million, excluding cash and short-term investments.

     Net cash used in investing activities was $234.6 million in 2006, compared to $13.6 million in 2005. In 2006, we acquired the PCG business and used cash of $230.9 million, which is net of the cash acquired and includes the direct acquisition costs. Additionally, we made net purchases of approximately $14.1 million of property, plant, and equipment, offset by a reduction of $10.4 million in our net short-term investments.

     Net cash provided by financing activities was $200.0 million in 2006, compared to $0.6 million in 2005. Our 2006 financing net cash flow reflects proceeds of $200.0 million from issuance of debt, approximately $5.0 million from employee stock option exercises and $0.9 million from a variety of other factors, partially offset by payment of $5.9 million of debt issuance costs for our new senior term loan and revolving credit facility. As of December 31, 2006, we had $200 million of long-term debt obligations outstanding under our senior secured term loan facility and no borrowing outstanding under our senior secured revolving credit facility. Beginning with our adoption of SFAS 123R on January 1, 2006, the excess of tax benefits upon exercise of common stock options is reported as a cash flow from financing activities.

     In accordance with EITF No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, the Company recorded a liability in purchase accounting, the costs of involuntary employee severance and other exit activity costs of $3.2 million associated with its plan to close the PCG Dallas, Oregon, facility, and the termination of certain sales employees of the acquired business. The closure of the Dallas facility is expected to be completed during the second quarter of 2007 after which the Company will commence the process of selling the building and certain assets. We anticipate that we will also incur additional costs of approximately $0.4 million related to transferring certain equipment and closing the facility which will be expensed as incurred. The table below shows amounts (in thousands) which resulted from these restructuring actions during the year ended December 31, 2006. As of December 31, 2006, we had paid $0.2 of the amounts accrued and had a remaining liability of $3.2 million.

		2006 Restructuring Summary
						Corporate Sales,
		Dallas, Oregon				Administrative
		Facility Closure				Realignment				Total
PCB Manufacturing		$	2,680			$	545			$	3,225
Corporate (1)			—				199				199
Total Restructuring Costs (1)		$	2,680			$	744			$	3,424

     On October 27, 2006, we entered into a credit agreement (the “Credit Agreement”) with certain lenders lead by UBS Securities LLC. The Credit Agreement provides for a $200 million term loan that matures in October 2012, and a $40 million revolving loan facility, that matures in October 2011. Borrowings under the Credit Agreement will bear interest at a floating rate of either a base rate (the “Alternate Base Rate”) plus an applicable interest margin or LIBOR plus an applicable interest margin. The Alternate Base Rate is equal to the greater of (i) the federal funds rate plus 0.50% or (ii) the prime rate. Under terms of the Credit Agreement, borrowings under the term loan and the revolving loan facility will, at the Borrower’s option, initially bear interest at a rate based on either (a) LIBOR plus 2.25% or (b) the Alternate Base rate plus 1.25%. The applicable interest margins on both Alternate Base Rate loans and LIBOR loans under the revolving loan facility may decrease under the terms of the Credit Agreement by up to 0.5% as our leverage ratio decreases. There is no provision in the credit agreement, other than in the event of default, for these interest margins to increase. Each calendar year we are required to repay 1% of the outstanding term loan balance, subject to adjustment for prior period repayments, and excess cash flow as defined in the credit agreement. Discretionary use of cash or cash flow by the Company is constrained by certain leverage and interest coverage ratio tests required to be met under the terms of our Credit Agreement. These ratios become more restrictive over each of the next successive quarters. Currently, we expect to repay $60 million of our outstanding debt in 2007 in order to meet certain financial covenants of our Credit Agreement. As of March 15, 2007, we have repaid $25 million on our outstanding debt. If the financial performance of our business falls short of expectations then we might be required to repay additional debt beyond current planned repayments.

     The Credit Agreement contains customary limitations, including limitations on indebtedness; limitations on liens; limitations on investments and acquisitions; limitations on dividends, stock repurchases, stock redemptions and the redemption or prepayment of other debt; limitations on mergers, consolidations or sales of assets; limitations on capital expenditures; and limitations on transactions with affiliates. We are also subject to financial covenants, including a maximum total leverage ratio and minimum interest coverage ratio and limitations on capital expenditures. The leverage ratio is the ratio of total indebtedness to consolidated EBITDA and the interest coverage ratio is the ratio of consolidated EBITDA to consolidated interest expense. EBITDA used for our debt covenants is adjusted for certain costs related to our PCG transactions (not to exceed $9 million) and other non-cash charges as defined in the credit agreement. Our maximum leverage ratio covenant ranges from 1.85:1 to 1:00:1 during the term of the agreement. Our minimum interest coverage ratio ranges from 5.75:1 to 10.50:1 during the term. The term loan and revolving loan facility are secured by substantially all of our domestic assets and 65% of our foreign assets.

     At December 31, 2006, none of our debt was covered by any hedging arrangements. On January 25, 2007, we entered into an interest rate swap, to comply with the terms of our credit agreement, to hedge 40% or $70.0 million of our outstanding debt. This amount reflects a repayment of $25.0 million of the debt which occurred on January 2, 2007. The interest rate swap has been designated as a cash flow hedge and will be accounted for in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities.”

Impact of Inflation

     We believe that our results of operations are not dependent upon moderate changes in the inflation rate as we expect that we generally will be able to pass along component price increases to our customers.

Seasonality

     We have historically experienced some seasonality in our second and third fiscal quarters in our computing/storage/peripherals end market.

Recently Issued Accounting Standards

     In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” which defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. A tax position that meets the “more-likely-than-not” criterion shall be measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement. Interpretation No. 48 applies to all tax positions accounted for under SFAS No. 109, “Accounting for Income Taxes.” Interpretation No. 48 is effective for fiscal years beginning after December 15, 2006. Upon adoption, we will adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any adjustment will be recorded directly to our beginning retained earnings balance in the period of adoption and reported as a change in accounting principle. We are currently analyzing the effects of adopting Interpretation No. 48 on our financial statements.

     In June 2006, the EITF reached a consensus on EITF Issue No. 06-03, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)”. EITF 06-03 provides that the presentation of taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer on either a gross basis (included in revenues and costs) or on a net basis (excluded from revenues) is an accounting policy decision that should be disclosed. The provisions of EITF 06-03 become effective as of January 1, 2007. The adoption of EITF 06-03 is not expected to have any effect on our financial statements.

     In September 2006, the Securities and Exchange Commission issued SAB 108 to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that we quantify misstatements based on their impact on each of our financial statements and related disclosures. SAB 108 is effective as of the end of our 2006 year, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB 108. We do not expect the impact of SAB 108 to have an impact on our financial statements.

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective beginning January 1, 2008. We are currently evaluating the impact this standard will have on our financial position and results of operations.

     In September 2006, the FASB issued FASB Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities,” which prohibits companies from recognizing planned major maintenance costs by accruing a liability over several reporting periods before the maintenance is performed – the accrue-in-advance method. This pronouncement will be effective for us beginning January 1, 2007. Our policy is to expense maintenance costs as the direct expenses are incurred and therefore, the adoption of this pronouncement will not impact our consolidated financial statements.

     In February 2007, FASB Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” was released. SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 will be effective for us beginning January 1, 2008. We are currently assessing the potential effect of SFAS 159 on our financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest Rate Risk. We are exposed to interest rate risk relating to our senior secured term loan, which bears interest at (a) either an alternate base rate plus an applicable margin or (b) LIBOR plus an additional margin. A 1.0% fluctuation in the interest rate would result in a $2.0 million increase in interest expense per annum.

     Our revolving credit facility bears interest at floating rates. The revolving credit facility bears interest ranging from 1.75% to 2.25% per year plus the applicable LIBOR or from 0.75 to 1.25% per year plus the Alternate Base Rate, as defined in our credit agreement. As of December 31, 2006, we have no outstanding revolving loans. However, $0.3 million of the available capacity for letters of credit is utilized in support of a real estate lease.

     At December 31, 2006, none of our debt was covered by any hedging arrangements. On January 25, 2007, we entered into an interest rate swap, to comply with the terms of our credit agreement, to hedge 40%, or $70.0 million, of our outstanding debt, to effectively fix the interest rate for such portion of our outstanding debt at 7.46%. This amount reflects a repayment of $25.0 million of the debt on January 2, 2007. The interest rate swap has been designated as a cash flow hedge and amortizes to a zero notional value on January 25, 2010. Accounting for this swap agreement is covered by SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”.

     Foreign Currency Exchange Risk. We are subject to risks associated with transactions that are denominated in currencies other than the US dollar, as well as the effects of translating amounts denominated in a foreign currency to the US dollar as a normal part of the reporting process. Our recently acquired Chinese operations utilize the Chinese Yuan or RMB as the functional currency which results in the Company recording a translation adjustment which is included as component of accumulated other comprehensive income within stockholders’ equity. Net foreign currency transaction losses on transactions denominated in currencies other than the US dollar were $0.1 million during the fiscal year ended December 31, 2006. There were no foreign currency transaction gains or losses for the fiscal years ended December 31, 2005 and 2004. We currently do not utilize any derivative instruments to hedge foreign currency risks.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reference is made to the financial statements, the report thereon, the notes thereto, and the supplementary data commencing at page F-1 of this report, which financial statements, report, notes, and data are included herein.

     The following unaudited selected quarterly results of operations data for the years ended December 31, 2005 and 2006 have been derived from the Company’s unaudited consolidated financial statements, which in the opinion of management have been prepared on the same basis as the audited consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the information for the quarters presented. This information should be read in conjunction with the consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included as part of this Form 10-K. The operating results for the quarters presented are not necessarily indicative of the operating results of any future period. The Company uses a 13-week fiscal quarter accounting period with the first quarter ending on the Monday closest to April 1 and the fourth quarter always ending on December 31. The first and fourth quarters of 2005 and 2006 contained 95 and 90 days, and 94 and 91 days, respectively.

		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
Year Ended December 31, 2005:
Net sales		$	58,883			$	57,216			$	60,979			$	63,131
Gross profit			13,538				11,037				14,152				15,029
Net income			4,460				3,272				4,061				19,048
Earnings per share:
Basic		$	0.11			$	0.08			$	0.10			$	0.46
Diluted		$	0.11			$	0.08			$	0.10			$	0.46
Year Ended December 31, 2006:
Net sales		$	72,688			$	76,683			$	75,765			$	144,180
Gross profit			20,203				22,969				22,477				27,499
Net income			8,811				10,556				10,523				5,149
Earnings per share:
Basic		$	0.21			$	0.25			$	0.25			$	0.12
Diluted		$	0.21			$	0.25			$	0.25			$	0.12

     Our quarterly results of operations reflect some seasonal trends in the second and third quarters that are primarily due to seasonality experienced by the customers in computing, storage and peripherals end markets.

     During the fourth quarter of fiscal 2005, we reversed valuation allowances on certain deferred income tax assets which had a $12.7 million favorable impact on our net income for that period.

     During the fourth quarter of fiscal 2006, we acquired the operations of PCG which significantly affected our net sales, gross profit and net income for that period. We also incurred significant operating costs related to integrating the PCG acquisition that impacted net income for that period. Gross profit was negatively impacted by approximately $4.0 million for the value of the manufacturing profit added to the PCG inventories at the acquisition date. These inventories were substantially sold during the fourth quarter. Gross margins also were affected by the inclusion of PCG’s backplane assembly operations, which inherently carry a lower gross margin than printed circuit board manufacturing.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

     An evaluation was performed under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2006. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported as specified in the SEC’s rules and forms. There has been no change in our internal control over financial reporting during the three months ended December 31, 2006, that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting is effective as of December 31, 2006.

     The Company acquired PCG (the “acquired entity”) during October 2006. Management excluded from its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006, the acquired entity’s internal control over financial reporting associated with total assets of $296 million and total revenues of $73 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2006.

     Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006 has been audited by KPMG, LLP, an independent registered public accounting firm, as stated in their report, which is included on page F-2 of this report.

Inherent Limitations on Effectiveness of Controls

     Our management, including our principal executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. 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 limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-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. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

ITEM 9B. OTHER INFORMATION

Not Applicable

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item relating to our directors is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2007 Annual Meeting of Stockholders. The information required by this Item relating to our executive officers is included in Item 1, “Business – Management” of this report.

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 2007 Annual Meeting of Stockholders.

     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 2007 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     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 2007 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 2007 Annual Meeting of Stockholders.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedule

          (1) Financial Statements are listed in the Index to Financial Statements on page F-1 of this Report.

          (2) Financial Statement Schedule:

     Schedule II Valuation and Qualifying Accounts are set forth on page S-2 of this Report.

     Other schedules are omitted because they are not applicable, not required, or because required information is included in the consolidated financial statements or notes thereto.

          (3) Exhibits

(b) Exhibits

Exhibit
Number						Exhibits
	2.1					Form of Plan of Reorganization (1).
	2.2					Stock and Asset Purchase Agreement by and among Tyco Printed Circuit Group LP, Tyco Electronics Corporation, Raychem International, Tyco Kappa Limited, Tyco Electronics Logistics AG, and TTM (Ozarks) Acquisition, Inc. dated as of August 2, 2006 (2)
	3.1					Registrant’s Certificate of Incorporation.(3)
	3.2					Registrant’s Bylaws.(3)
	4.1					Form of Registrant’s common stock certificate.(3)
	10.1					UBS Credit Agreement see ex. 10.1 to November 2, 2006 8-K (4)
	10.2					Employment Agreement dated as of December 31, 2005 between the Registrant and Kenton K. Alder. (5)
	10.3					Form of Executive Change in Control Severance Agreement and schedule of agreements entered into on December 1, 2005. (5)
	10.4					Employment Agreement dated as of October 23, 2006 between the Registrant and Douglas L. Soder.(6)
	10.5					Form of Severance Agreement and schedule of agreements entered into on December 1, 2006.(6)
	10.6					2006 Incentive Compensation Plan.(6)
	10.7					Form of Stock Option Agreement. (6)
	10.8					Form of Restricted Stock Unit Award Agreement. (6)
	10.9					Form of Indemnification Agreement with directors. (1)
	10.10					Statutory Warranty Deeds for Redmond Facility.(1)
	21.1					Subsidiaries of the Registrant (6)
	23.1					Consent of KPMG LLP, independent registered public accounting firm (6)
	31.1					Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. (6)
	31.2					Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. (6)
	32.1					Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (6)
	32.2					Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (6)

SIGNATURES

     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.

		TTM TECHNOLOGIES, INC.
Date: March 15, 2007		By:		/s/ KENTON K. ALDER
				Kenton K. Alder
				President and Chief Executive Officer

     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/ KENTON K. ALDER   Kenton K. Alder		President, Chief Executive Officer (Principal Executive Officer), and Director		March 15, 2007
/s/ STEVEN W. RICHARDS   Steven W. Richards		Executive Vice President, Chief Financial Officer and Secretary (Principal Financial Officer)		March 15, 2007
/s/ DANIEL L. FELSENTHAL   Daniel L. Felsenthal		Vice President and Controller (Principal Accounting Officer)		March 15, 2007
/s/ ROBERT E. KLATELL   Robert E. Klatell		Chairman of the Board		March 15, 2007
/s/ THOMAS T. EDMAN   Thomas T. Edman		Director		March 15, 2007
/s/ JAMES K. BASS   James K. Bass		Director		March 15, 2007
/s/ RICHARD P. BECK   Richard P. Beck		Director		March 15, 2007
/s/ JOHN G. MAYER   John G. Mayer		Director		March 15, 2007

TTM TECHNOLOGIES, INC.

Report of Independent Registered Public Accounting Firm on Management’s Assessment of the Effectiveness on Internal Control Over Financial Reporting and on the Effectiveness of Internal Control Over Financial Reporting			F-2
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements			F-3
Consolidated Balance Sheets as of December 31, 2005 and 2006			F-4
Consolidated Statements of Operations for the Years Ended December 31, 2004, 2005 and 2006			F-5
Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the Years Ended December 31, 2004, 2005 and 2006			F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2005 and 2006			F-7
Notes to Consolidated Financial Statements			F-8
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statement Schedule			S-1
Schedule II—Valuation and Qualifying Accounts			S-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
TTM Technologies, Inc:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that TTM Technologies, Inc. maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework 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. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’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, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and 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, management’s assessment that TTM Technologies, Inc. maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, TTM Technologies, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

The Company acquired Tyco Printed Circuit Group LP (the “acquired entity”) during 2006, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006, the acquired entity’s internal control over financial reporting associated with total assets of $296 million and total revenues of $73 million included in the consolidated financial statements of the Company and subsidiaries as of and for the year ended December 31, 2006. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the acquired entity.

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 31, 2005 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006, and our report dated March 15, 2007 expressed an unqualified opinion on those consolidated financial statements.

/s/KPMG LLP

Salt Lake City, Utah
March 15, 2007

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 31, 2005 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006. 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 31, 2005 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2006 the Company changed its method of accounting for stock-based compensation upon adoption of Statement of Financial Accounting Standards No. 123R, “Share Based Payment.”

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of TTM Technologies, Inc.’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2007, expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

/s/KPMG LLP

Salt Lake City, Utah
March 15, 2007

TTM TECHNOLOGIES, INC.

		2005				2006
Assets
Current assets:
Cash and cash equivalents		$	61,258			$	59,660
Short-term investments			21,100				10,996
Accounts receivable, net of allowances of $4,094 and $7,201, respectively			38,631				125,435
Inventories, net			12,564				67,020
Prepaid expenses and other			2,261				3,924
Income taxes receivable			—				717
Deferred income taxes			4,601				3,996
Total current assets			140,415				271,748
Property, plant and equipment, at cost:
Land			4,932				11,761
Machinery and equipment			68,624				137,111
Buildings and improvements			22,523				46,403
Furniture and fixtures			424				576
Automobiles			80				96
Construction-in-process			1,436				10,739
			98,019				206,686
Less accumulated depreciation			(46,221	)			(55,849	)
Property, plant and equipment, net			51,798				150,837
Other assets:
Debt issuance costs, net of accumulated amortization of $33 and $175, respectively			199				5,711
Deferred income taxes			6,834				2,685
Goodwill			63,153				115,627
Definite-lived intangibles, net of accumulated amortization of $8,061 and $9,614, respectively			10,318				26,235
Deposits and other			426				855
Total other assets			80,930				151,113
		$	273,143			$	573,698
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion long-term debt		$	—			$	60,705
Accounts payable			11,310				49,276
Accrued salaries, wages and benefits			9,921				24,189
Accrued contingencies			3,150				—
Other accrued expenses			1,642				10,173
Income taxes payable			2,116				—
Current portion other long-term liabilities			1,052				—
Total current liabilities			29,191				144,343
Long-term debt, less current portion			—				140,000
Other long-term liabilities, less current portion			—				2,040
Total long-term liabilities			—				142,040
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized, 41,311 and 42,093 shares issued and outstanding, respectively			41				42
Additional paid-in capital			159,634				167,850
Retained earnings			84,277				119,316
Accumulated other comprehensive income			—				107
Total stockholders’ equity			243,952				287,315
		$	273,143			$	573,698

See accompanying notes to consolidated financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Statements of Operations

		2004				2005				2006
Net sales		$	240,650			$	240,209			$	369,316
Cost of goods sold			172,103				186,453				276,168
Gross profit			68,547				53,756				93,148
Operating expenses:
Selling and marketing			12,032				11,977				16,473
General and administrative			13,223				14,135				19,656
Amortization of definite-lived intangibles			1,202				1,202				1,786
Restructuring charges			855				—				199
Total operating expenses			27,312				27,314				38,114
Operating income			41,235				26,442				55,034
Other income (expense):
Interest expense			(367	)			(179	)			(3,020	)
Amortization of debt issuance costs			(148	)			(72	)			(374	)
Interest income and other, net			793				2,126				4,462
Total other income, net			278				1,875				1,068
Income before income taxes			41,513				28,317				56,102
Income tax benefit (provision)			(13,183	)			2,524				(21,063	)
Net income		$	28,330			$	30,841			$	35,039
Basic earnings per share		$	0.69			$	0.75			$	0.84
Diluted earnings per share		$	0.68			$	0.74			$	0.83