10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on May 5, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form
For the quarterly period ended
Or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of shares of common stock, $0.001 par value, of registrant outstanding at May 3, 2021:
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
TTM TECHNOLOGIES, INC.
Consolidated Condensed Balance Sheets
As of March 29, 2021 and December 28, 2020
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As of |
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March 29, |
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December 28, |
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2021 |
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2020 |
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(Unaudited) |
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(In thousands, except par value) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Contract assets |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Definite-lived intangibles, net |
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Deposits and other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Contract liabilities |
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Accrued salaries, wages and benefits |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net of discount and issuance costs |
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Operating lease liabilities |
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Other long-term liabilities |
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Total long-term liabilities |
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Commitments and contingencies (Note 14) |
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Equity: |
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Common stock, $ shares issued and outstanding as of March 29, 2021 and December 28, 2020, respectively |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders’ equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to consolidated condensed financial statements.
3
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Operations
For the Quarters Ended March 29, 2021 and March 30, 2020
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Quarter Ended |
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March 29, |
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March 30, |
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2021 |
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2020 |
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(Unaudited) |
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(In thousands, except per share data) |
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Net sales |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Selling and marketing |
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General and administrative |
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Research and development |
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Amortization of definite-lived intangibles |
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Total operating expenses |
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Operating income |
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Other (expense) income: |
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Interest expense |
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Loss on extinguishment of debt |
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— |
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Other, net |
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Total other expense, net |
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Loss from continuing operations before income taxes |
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Income tax benefit (provision) |
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( |
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Net loss from continuing operations |
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Income from discontinued operations, net of income taxes |
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— |
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Net loss |
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$ |
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$ |
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(Loss) earnings per share: |
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Basic loss per share from continuing operations |
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$ |
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$ |
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Basic earnings per share from discontinued operations |
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— |
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Basic loss per share |
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$ |
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$ |
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Diluted loss per share from continuing operations |
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$ |
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$ |
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Diluted earnings per share from discontinued operations |
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— |
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Diluted loss per share |
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$ |
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$ |
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See accompanying notes to consolidated condensed financial statements.
4
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Comprehensive Loss
For the Quarters Ended March 29, 2021 and March 30, 2020
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Quarter Ended |
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March 29, |
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March 30, |
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2021 |
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2020 |
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(Unaudited) |
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(In thousands) |
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Net loss |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Pension obligation adjustments, net |
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— |
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Foreign currency translation adjustments, net |
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Net unrealized losses on cash flow hedges: |
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Unrealized loss on effective cash flow hedges during the period, net |
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Loss realized in the statement of operations, net |
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Net |
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Other comprehensive income (loss), net of tax |
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( |
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Comprehensive loss, net of tax |
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$ |
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$ |
( |
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See accompanying notes to consolidated condensed financial statements.
5
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Stockholders’ Equity
For the Quarters Ended March 29, 2021 and March 30, 2020
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Common Stock |
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Additional Paid-In |
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Retained |
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Accumulated Other Comprehensive |
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Total Stockholders' |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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(Unaudited) |
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(In thousands) |
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Balance, December 28, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Issuance of common stock for performance-based restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock for restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Fair value of warrants reclassified to warrant liabilities |
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— |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock from warrant exercises |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance, March 29, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Common Stock |
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Additional Paid-In |
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Retained |
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Accumulated Other Comprehensive |
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Total Stockholders' |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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(Unaudited) |
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(In thousands) |
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Balance, December 30, 2019 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Issuance of common stock for performance-based restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock for restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance, March 30, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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See accompanying notes to consolidated condensed financial statements.
6
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Cash Flows
For the Quarters Ended March 29, 2021 and March 30, 2020
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Quarter Ended |
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March 29, 2021 |
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March 30, 2020 |
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(Unaudited) |
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(In thousands) |
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Cash flows from operating activities: |
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Net loss |
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$ |
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$ |
( |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation of property, plant and equipment |
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Amortization of definite-lived intangible assets |
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Amortization of debt discount and issuance costs |
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Loss on extinguishment of debt |
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— |
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Deferred income taxes |
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( |
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Stock-based compensation |
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Other |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Contract assets |
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Inventories |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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( |
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Contract liabilities |
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( |
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( |
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Accrued salaries, wages and benefits |
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( |
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( |
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Other current liabilities |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Refundable deposit related to sale of the Mobility business unit |
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— |
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Purchase of property, plant and equipment and other assets |
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( |
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( |
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Proceeds from sale of property, plant and equipment and other assets |
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— |
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Net cash (used in) provided by investing activities |
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( |
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Cash flows from financing activities: |
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Proceeds from long-term debt borrowing |
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— |
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Repayment of long-term debt borrowings |
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( |
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— |
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Payment of debt issuance costs |
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( |
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— |
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Other |
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( |
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— |
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Net cash provided by financing activities |
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— |
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Effect of foreign currency exchange rates on cash and cash equivalents |
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( |
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( |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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Cash and cash equivalents in assets held for sale |
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— |
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( |
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Cash and cash equivalents as presented on the consolidated condensed balance sheet |
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$ |
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$ |
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Supplemental cash flow information: |
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Cash paid, net for interest |
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$ |
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$ |
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Cash paid, net for income taxes |
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Net cash provided by operating activities from discontinued operations |
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— |
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Net cash provided by investing activities from discontinued operations |
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— |
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Net cash used in financing activities from discontinued operations |
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— |
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— |
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Supplemental disclosure of noncash investing and financing activities: |
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Property, plant and equipment recorded in accounts payable |
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$ |
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$ |
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Issuance of common stock for warrant settlement |
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— |
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Supplemental disclosure of noncash investing activities from discontinued operations: |
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Property, plant and equipment recorded in accounts payable |
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$ |
— |
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$ |
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See accompanying notes to consolidated condensed financial statements.
7
TTM TECHNOLOGIES, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(Dollars and shares in thousands, except per share data)
(1) Nature of Operations and Basis of Presentation
TTM Technologies, Inc. (the Company or TTM) is a leading global printed circuit board (PCB) manufacturer, focusing on quick-turn and volume production of technologically advanced PCBs and backplane assemblies as well as a global designer and manufacturer of high-frequency radio frequency (RF) and microwave components and assemblies. The Company provides time-to-market and volume production of advanced technology products and offers a one-stop design, engineering and manufacturing solution to customers. This one-stop design, engineering and manufacturing solution allows the Company to align technology developments with the diverse needs of the Company’s customers and to enable them to reduce the time required to develop new products and bring them to market.
The Company serves a diversified customer base in various markets throughout the world, including aerospace and defense, data center computing, automotive components, medical, industrial and instrumentation related products, as well as networking/communications infrastructure products. The Company’s customers include both original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) providers.
The accompanying consolidated condensed financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated condensed financial statements and accompanying notes. Due to the coronavirus (COVID-19) global pandemic, the global economy and financial markets have been disrupted and there is a significant amount of uncertainty about the length and severity of the consequences caused by the pandemic. The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. Actual results could differ materially from those estimates. The Company uses a 13-week fiscal quarter accounting period with the fourth quarter ending on the Monday nearest December 31.
On January 19, 2020, the Company entered into a definitive equity interests purchase agreement with AKMMeadville Electronics (Xiamen) Co., Ltd (the Purchaser) for the sale of the Company’s following subsidiaries, which was completed on April 17, 2020: Shanghai Kaiser Electronics Co., Ltd. (SKE), Shanghai Meadville Electronics Co., Ltd. (SME), Shanghai Meadville Science & Technology Co., Ltd. (SP) and Guangzhou Meadville Electronics Co., Ltd. (GME) (collectively, the Mobility business unit). For all periods presented in the consolidated condensed statements of operations, all sales, costs, expenses, income taxes and gain on sale attributable to the Mobility business unit have been aggregated under the caption “Income (loss) from discontinued operations, net of income taxes”. Refer to Note 2, Discontinued Operations, for additional information.
Unless otherwise noted, amounts and disclosures throughout these notes to consolidated condensed financial statements relate to continuing operations. These consolidated condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
Reclassifications
The Company currently has
Recently Adopted and Issued Accounting Standards
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes.
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TTM TECHNOLOGIES, INC.
Notes to Consolidated Condensed Financial Statements—(Continued)
ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this ASU as of
(2) Discontinued Operations
On January 19, 2020, the Company entered into a definitive equity interests purchase agreement for the sale of the Company’s Mobility business unit. The sale was completed on April 17, 2020 for a base purchase price of $
On April 18, 2020, the Company entered into a Transition Services Agreement (TSA) with the Purchaser pursuant to which the Purchaser is receiving certain services (the Services) to enable it to operate the Mobility business unit after the closing of the sale of the Mobility business unit. The Services include finance and accounting, human resources, legal and compliance, sales, information technology, and other corporate support services. Under the TSA, the Services are being provided at cost for a period of up to
Further, on June 29, 2020, the Company entered into a Sales Force Agreement with the Purchaser pursuant to which the Company’s sales representatives assist the Purchaser in selling PCBs manufactured by the Purchaser to certain customers for a commission for a period up to April 17, 2021. There was no material impact on the Company’s consolidated condensed financial statements.
As the sale of the Company’s Mobility business unit represents a strategic shift that will have a major effect on the Company’s operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Mobility business unit results are classified as discontinued operations in the consolidated condensed statements of operations for all periods presented.
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TTM TECHNOLOGIES, INC.
Notes to Consolidated Condensed Financial Statements—(Continued)
The following table summarizes the results of Mobility operations for the quarter ended March 30, 2020 prior to sale:
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Quarter Ended |
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March 30, |
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2020 |
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(In thousands) |
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Net sales |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Selling and marketing |
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General and administrative |
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Research and development |
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Amortization of definite-lived intangibles |
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Total operating expenses |
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Operating income |
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Other (expense) income: |
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Interest expense |
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Other, net |
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Total other income, net |
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Income from discontinued operations before income taxes |
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Income tax provision |
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Income from discontinued operations, net of income taxes |
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$ |
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Earnings per share from discontinued operations: |
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Basic earnings per share |
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$ |
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Diluted earnings per share |
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$ |
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Depreciation expense related to the discontinued operations for the quarter ended March 30,