UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-23818
MERIX CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-1135197
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1521 Poplar Lane, Forest Grove, Oregon 97116
(Address of principal executive offices) (Zip Code)
(503) 359-9300
(Registrant's telephone number)
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 the filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's Common Stock outstanding as of March
31, 1997 was 6,166,281 shares.
<PAGE>
MERIX CORPORATION
FORM 10-Q
TABLE OF CONTENTS
Part I Financial Information Page
Item 1. Financial Statements:
Condensed Balance Sheets as of March 1, 1997 and
May 25, 1996............................................ 3
Condensed Statements of Income for the three and
nine months ended March 1, 1997 and
February 24, 1996....................................... 4
Condensed Statements of Cash Flows for the
nine months ended March 1, 1997 and
February 24, 1996....................................... 5
Notes to Condensed Financial Statements....................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K................................14
Signature.......................................................15
2
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
MERIX CORPORATION
CONDENSED BALANCE SHEETS
(unaudited, in thousands)
March 1, May 25,
1997 1996
---------------- ---------------
<S> <C> <C>
Assets
Cash and short-term investments $ 29,685 $ 19,358
Accounts receivable, net 22,932 24,539
Inventories (Note 2) 7,442 6,435
Other current assets 2,572 589
---------------- ---------------
Total current assets 62,631 50,921
Property, plant and equipment, net (Note 3) 63,660 55,576
Deferred income taxes 1,615 2,283
Other assets 2,639 2,390
================ ===============
Total assets $ 130,545 $ 111,170
================ ===============
Liabilities and Shareholders' Equity
Accounts payable $ 7,511 $ 7,456
Accrued compensation 3,839 4,502
Current portion of long-term debt (Note 4) 2,110 1,931
Other accrued liabilities 4,211 2,985
---------------- ---------------
Total current liabilities 17,671 16,874
Other liabilities 1,273 1,273
Long-term debt (Note 4) 44,561 26,670
---------------- ---------------
Total liabilities 63,505 44,817
Shareholders' equity
Preferred stock, no par value; authorized
10,000 shares, none issued - -
Common stock, no par value; authorized
50,000 shares; issued and outstanding
1997: 6,171 shares, 1996: 6,133 shares 44,398 43,733
Unearned compensation (742) (737)
Retained earnings 23,384 23,357
---------------- ---------------
Total shareholders' equity 67,040 66,353
---------------- ---------------
Total liabilities and shareholders' equity $ 130,545 $ 111,170
================ ===============
The accompanying notes are an integral part of the condensed financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
MERIX CORPORATION
CONDENSED STATEMENTS OF INCOME
(unaudited, in thousands, except earnings per share data)
Three Months Ended Nine Months Ended
----------------------------------- ----------------------------------
March 1, Feb. 24, March 1, Feb. 24,
1997 1996 1997 1996
------------------ ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 35,942 $ 46,896 $ 112,899 $ 108,173
Cost of sales 32,252 36,086 96,771 81,694
------------------ ---------------- ---------------- -----------------
Gross profit 3,690 10,810 16,128 26,479
------------------ ---------------- ---------------- -----------------
Engineering 1,414 1,434 4,608 3,569
Selling, general and administrative 3,487 3,520 10,238 8,136
------------------ ---------------- ---------------- -----------------
Total operating expense 4,901 4,954 14,846 11,705
------------------ ---------------- ---------------- -----------------
Operating income (loss) (1,211) 5,856 1,282 14,774
Interest and other income (expense), net (540) (480) (1,241) (336)
------------------ ---------------- ---------------- -----------------
Income (loss) before taxes (1,751) 5,376 41 14,438
Income taxes (665) 1,858 14 5,300
================== ================ ================ =================
Net income (loss) $ (1,086) $ 3,518 $ 27 $ 9,138
================== ================ ================ =================
Earnings (loss) per common and common
equivalent shares outstanding: $ (0.18) $ 0.55 $ 0.00 $ 1.41
Weighted average number of common and
common equivalent shares outstanding: 6,147 6,361 6,255 6,466
The accompanying notes are an integral part of the condensed financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MERIX CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
----------------------------------
March 1, Feb. 24,
1997 1996
--------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 27 $ 9,138
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................... 6,413 3,736
Deferred income taxes....................................... 668 811
Amortization of unearned compensation......................... 359 261
Loss on asset disposal........................................ 69 -
Changes in assets and liabilities:
Accounts receivable......................................... 1,607 (12,876)
Inventories................................................. (1,007) (586)
Other current assets........................................ (1,983) 65
Accounts payable............................................ 55 4,085
Accrued compensation........................................ (663) 593
Other accrued liabilities................................... 1,443 2,121
--------------- --------------
Net cash provided by operating activities....................... 6,988 7,348
--------------- --------------
Cash flows from investing activities:
Acquisitions.................................................. - (28,472)
Capital expenditures.......................................... (14,609) (10,836)
Short-term investments:
Purchases................................................... (15,110) (11,000)
Maturities.................................................. 9,429 16,445
Other long-term assets........................................ (375) -
Proceeds from sale of assets.................................. 169 -
--------------- --------------
Net cash used in investing activities........................... (20,496) (33,863)
--------------- --------------
Cash flows from financing activities:
Long-term debt:
Proceeds.................................................... 40,000 20,212
Principal payments.......................................... (21,930) (83)
Exercise of stock options..................................... 84 310
--------------- --------------
Net cash provided by financing activities....................... 18,154 20,439
--------------- --------------
Increase (decrease) in cash and cash equivalents................ 4,646 (6,076)
Cash and cash equivalents at beginning of period................ 12,191 14,307
--------------- --------------
Cash and cash equivalents at end of period...................... 16,837 8,231
Short-term investments.......................................... 12,848 7,139
--------------- --------------
Cash and short-term investments at end of period................ $ 29,685 $ 15,370
=============== ==============
Supplemental disclosures:
Tax benefit related to stock-based compensation.............. $ 268 $ 204
Assets acquired by recognition of lease renovation liability $ - $ 1,296
Income taxes paid............................................ $ - $ 3,575
The accompanying notes are an integral part of the condensed financial statements
</TABLE>
5
<PAGE>
MERIX CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Thousands)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared pursuant to Securities and Exchange Commission rules and regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's annual report on Form
10-K for the fiscal year ended May 25, 1996.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for interim
periods. The results of operations for the nine months ended March 1, 1997 are
not necessarily indicative of the results to be expected for the full year.
Reclassifications from prior periods have been made to conform with the
current method of presentation.
Note 2. INVENTORIES
<TABLE>
<CAPTION>
March 1, May 25,
1997 1996
--------------- -------------
<S> <C> <C>
Raw materials.................................................... $ 2,143 $ 2,254
Work in process.................................................. 2,818 3,104
Finished goods................................................... 2,481 1,077
--------------- -------------
Total........................................................ $ 7,442 $ 6,435
=============== =============
</TABLE>
Note 3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
March 1, May 25,
1997 1996
--------------- -------------
<S> <C> <C>
Land............................................................. $ 2,190 $ 2,190
Buildings and grounds............................................ 23,631 16,345
Machinery and equipment.......................................... 88,648 77,196
Construction in progress......................................... - 6,000
--------------- -------------
Total............................................................ 114,469 101,731
Less accumulated depreciation.................................... (50,809) (46,155)
--------------- -------------
Property, plant and equipment, net............................... $ 63,660 $ 55,576
=============== =============
</TABLE>
6
<PAGE>
Note 4. LONG-TERM DEBT
<TABLE>
<CAPTION>
March 1, May 25,
1997 1996
---------------- ---------------
<S> <C> <C>
Senior unsecured notes, principal payable in five equal annual
installments commencing on September 15, 1999, with interest
at 7.92% payable on a semi-annual basis........................... $ 40,000 $ -
Note payable to Tektronix, payable in five annual installments
including interest at 7.5%, secured by a Trust Deed............... 6,427 8,267
Bank line of credit................................................. - 20,000
Other............................................................... 244 334
---------------- ---------------
Total............................................................... 46,671 28,601
Less current portion................................................ (2,110) (1,931)
---------------- ---------------
Long-term debt...................................................... $ 44,561 $ 26,670
================ ===============
</TABLE>
On September 10, 1996, the Company completed a $40 million private
placement of senior unsecured notes with two insurance companies. Proceeds from
the notes were used in part to retire $20 million outstanding under the
Company's unsecured bank line of credit. On October 31, 1996, the Company
entered into a syndicated $30 million unsecured bank line of credit, which
expires on September 30, 1998. Borrowings under the line of credit will accrue
interest at the agent's prime rate (8.25% on March 1, 1997) or other rate
options available at the time of borrowing. The senior unsecured notes and the
bank line of credit agreements contain various financial covenants such as
minimum net worth, debt ratio, quick ratio and interest coverage requirements.
As of March 1, 1997, the Company was in compliance with all covenants.
Future principal payments by fiscal year for long-term debt are as follows:
1997, $2,110; 1998, $2,263; 1999, $2,298; 2000, $8,000; 2001, $8,000; and
thereafter $24,000.
Note 5. NEW ACCOUNTING PRONOUNCEMENTS
Accounting for Stock Based Compensation
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS 123 requires expanded
disclosures of stock-based compensation arrangements with employees and
encourages (but does not require) compensation cost to be measured based on the
fair value of the equity instrument awarded. SFAS 123 permits companies to
continue to apply Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees," which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue to
apply APB Opinion No. 25 to its stock-based compensation awards to employees and
will disclose the required pro forma effect on net income and earnings per share
of the compensation cost related to stock-based awards as measured by the fair
value method in its 1997 annual report.
7
<PAGE>
Earnings per Share
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." SFAS 128 changes the standards for computing and
presenting earnings per share (EPS) and supersedes APB Opinion No. 15, "Earnings
per Share." SFAS 128 simplifies the standards for computing earnings per share
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods; earlier application is not permitted. This Statement
requires restatement of all prior-period EPS data presented. Following is the
pro forma effect of adoption on the Company's earnings per share for the three
months and nine months ended March 1, 1997 and February 24, 1996:
<TABLE>
<CAPTION>
Pro Forma
---------------------------------------------------------------
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
March 1, Feb. 24, March 1, Feb. 24,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings per common share $ (0.18) $ 0.58 $ 0.00 $ 1.50
============ ============ ============ ============
Earnings per common share -
diluted by stock options $ (0.18) $ 0.55 $ 0.00 $ 1.41
============ ============ ============ ============
</TABLE>
Note 6. SHAREHOLDER RIGHTS PLAN
On March 25, 1997, the Board of Directors adopted a Shareholder Rights Plan
(the Plan) designed to preserve and enhance shareholder value and the Company's
ability to carry out its long-term business strategy. In connection with the
adoption of the Plan, the Board of Directors declared a dividend distribution of
one Right per share of common stock, payable to the shareholders of record on
April 25, 1997. A Right enables the holder, under certain circumstances, to
purchase either Series A Preferred or common stock of Merix. The Company may
redeem the Rights for $0.001 per Right under certain circumstances. The Rights
will expire in 2007. On March 25, 1997, the Board also reserved 500,000 shares
of Series A Preferred Stock for purposes of the Plan. The Company has filed a
Form 8-K with the Securities and Exchange Commission, which contains a summary
of the terms of the Plan.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Dollars in Thousands)
This discussion and analysis is designed to be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations set forth in the Company's Form 10-K for the fiscal year ended May
25, 1996.
Results of Operations
Net Sales. Net sales for the third quarter of fiscal 1997 were $35,942, a
decrease of 23.4% from net sales of $46,896 in the third quarter of fiscal 1996.
Net sales for the nine months ended March 1, 1997 were $112,899, an increase of
4.4% from net sales of $108,173 during the same period in the prior year. The
decrease in sales for the three month period in fiscal 1997 was due principally
to a decrease in sales to some of the Company's significant customers (see table
on the next page). Sales to Motorola decreased because it has been transitioning
to a new generation of its cellular base station products. Motorola is consuming
its existing inventory of cellular base station parts, which have been a
significant part of the Company's sales to Motorola. The Company expects to
begin production for this next generation of Motorola's products during calendar
1997, but believes that these future sales may have lower margins. Sales to
Hewlett-Packard decreased principally due to a change in sales mix to a higher
proportion of lower priced, lower margin products. Sales to Teradyne decreased
for the three and nine month period in fiscal 1997 due to a decline in
Teradyne's sales to its customers as a result of an earlier softening in the
semiconductor industry.
In addition, the Company experienced overall changes in product mix, which
caused average customer selling prices to decline from the prior year. Sales
during the first nine months of fiscal 1996 were lower than in fiscal 1997
because Loveland and Soladyne operations were not added until the middle of
fiscal 1996. While the Company expects net sales in the fourth quarter of fiscal
1997 to be higher than in the third quarter, there can be no assurance that
downward pressure on selling prices and margins will not continue.
The Company's five largest customers comprised 73% and 77% of net sales for
the three month periods ended March 1, 1997 and February 24, 1996, respectively,
and 74% and 77% of net sales for the nine month periods ended March 1, 1997 and
February 24, 1996, respectively. The Company has stated that its principal
short-term objective is to diversify its customer base in order to grow sales
and reduce the risks associated with a concentration of sales to a relatively
small number of customers. The Company is taking actions to increase sales by
broadening its customer base, and expects that a small number of customers will
continue to account for a substantial majority of its sales until efforts to
broaden its customer base are successful. There can be no assurance that the
Company's principal customers will continue to purchase products and services
from the Company at current levels, that the mix or volume of products purchased
will be in the same ratio or that actions to broaden its customer base and
increase sales to new and existing customers will be successful. The loss of one
or more principal customers or a change in the mix of product sales could have a
material adverse effect on the Company's business, financial condition and
results of operations.
9
<PAGE>
Sales by product lines, market segments and major customers as a percent of
net sales were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- -----------------------------------
March 1, 1997 Feb. 24, 1996 March 1, 1997 Feb. 24, 1996
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product Lines
Rigid 78% $ 27,933 73% $ 34,410 75% $ 84,967 73% $ 78,824
High Performance 20% 7,362 24% 11,265 23% 25,987 24% 26,329
Flexible 2% 647 3% 1,221 2% 1,945 3% 3,020
Total 100% 35,942 100% 46,896 100% 112,899 100% 108,173
Market Segments
Computers 30% 10,675 24% 11,349 29% 32,382 19% 20,620
Communications 21% 7,449 27% 12,636 22% 24,475 29% 31,800
Test and Instruments 34% 12,150 34% 15,978 33% 37,791 37% 39,969
Contract Mfg. 14% 5,009 13% 6,201 14% 15,991 13% 14,282
Other 1% 659 2% 732 2% 2,260 2% 1,502
Total 100% 35,942 100% 46,896 100% 112,899 100% 108,173
Largest Customers
Hewlett-Packard 26% 9,522 28% 13,348 27% 30,084 16% 17,306
Tektronix 19% 6,611 17% 7,874 19% 21,814 22% 23,779
Motorola 9% 3,200 19% 9,063 13% 15,030 21% 22,166
Teradyne 10% 3,452 9% 4,115 7% 7,902 12% 12,811
Storage Technology 9% 3,386 4% 2,058 8% 8,846 6% 5,911
Other 27% 9,771 23% 10,438 26% 29,223 23% 26,200
Total 100% 35,942 100% 46,896 100% 112,899 100% 108,173
</TABLE>
The Company's 90 day backlog was approximately $16.9 million at March 1,
1997, compared to $19.9 million at May 25, 1996. Changes in backlog reflect
variations in customer ordering patterns, the decrease in customer lead times,
and the lower demand from some of the Company's largest customers. A substantial
portion of the Company's backlog is typically scheduled for delivery within 60
days and not generally subject to significant penalties for cancellation or
postponement. The Company's backlog is not necessarily indicative of future
sales or earnings.
On December 9, 1996, the Company entered into a long-term supply agreement
with Amkor Electronics, Inc. (Amkor) to manufacture laminate-based chip carrier
packages. In connection with this agreement, the Company purchased certain
assets, including manufacturing equipment, and licensed process know-how from
Amkor. The purchased assets are located at the Company's Forest Grove
manufacturing site. Volume shipments under the supply agreement are scheduled to
commence in fiscal 1998. The purchase price was not material to the financial
position of the Company.
Gross Margins. Gross margin for the third quarter of fiscal 1997 was 10.3%,
compared to 23.1% in the third quarter of fiscal 1996. Gross margin for the nine
months ended March 1, 1997 was 14.3%, compared to 24.5% in the same period in
the prior year. Gross margin in fiscal 1997 declined principally due to lower
sales in relation to the level of fixed costs. A significant portion of the
Company's manufacturing costs are relatively fixed from quarter to quarter. As
sales decrease, these costs become more significant in relation to sales. Fixed
costs year to date were higher in fiscal 1997 as a result of the acquisitions of
the Loveland and Soladyne sites in fiscal 1996. Additionally, the product mix in
fiscal 1997 included a greater proportion of lower priced, lower margin products
than in fiscal 1996. Accordingly, the level and mix of sales were the major
factors in determining the Company's gross margin. The Company is working to
increase the level of sales and improve product mix by lowering the proportion
of low margin products sold. However, there can be no assurance that these
efforts will be successful or result in an increase in gross margin.
10
<PAGE>
Engineering. Engineering expenses were $1,414 and $1,434, and 3.9% and 3.1%
of sales, in the quarters ended March 1, 1997 and February 24, 1996,
respectively. Engineering expenses were $4,608 and $3,569, and 4.1% and 3.3% of
sales, for the nine month periods ended March 1, 1997 and February 24, 1996,
respectively. Engineering expenses were lower in the prior year because the
Loveland and Soladyne operations were not acquired until the middle of fiscal
1996. The Company believes it is necessary to continue to invest in engineering
efforts to remain competitive, but there can be no assurance that such
investments will result in increased sales or profits.
Selling, General and Administrative. Selling, general and administrative
expenses were $3,487 and $3,520, and 9.7% and 7.5% of sales, in the quarters
ended March 1, 1997 and February 24, 1996, respectively. Selling, general and
administrative expenses were $10,238 and $8,136, and 9.1% and 7.5% of sales, in
the nine month periods ended March 1, 1997 and February 24, 1996, respectively.
This increase over the prior year was due principally to costs associated with
increased selling efforts. The Company is continuing to invest in expanded
selling activity, including a restructuring and relocation of the sales force.
However, there can be no assurance these efforts will result in increased sales
or profits.
Interest and Other Income (Expense), net. Interest and other income
(expense), net was $(540) and $(480) for the three months ended March 1, 1997
and February 24, 1996, respectively, and $(1,241) and $(336) for the nine month
periods ended March 1, 1997 and February 24, 1996, respectively. The change in
interest and other income (expense) in the third quarter and for the nine months
ended March 1, 1997 in relation to the same periods in the prior year was due
principally to additional interest expense from a $40 million private placement
of debt.
Income Taxes. The Company estimates that its effective income tax rate for
the year ended May 31, 1997 will be approximately 34 percent. Accordingly, it
has applied this rate to determine the tax provision for the nine months ended
March 1, 1997.
Liquidity and Capital Resources
Cash and short-term investments at March 1, 1997 were $29,685 compared with
$19,358 at May 25, 1996. Working capital was $44,960 at March 1, 1997 and
$34,047 at May 25, 1996. The Company generated cash from operations of $6,988 in
the nine months ended March 1, 1997 and used $20,496 in investing activities.
The Company purchased $15,110 in short-term investments, and redeemed $9,429 of
matured short-term investments. The Company's policy is to hold short-term
investments to maturity.
During the first nine months of fiscal year 1997, the Company had $14,609
of capital expenditures, consisting of $13,117 for manufacturing equipment and
$1,492 for facilities. The capital expenditures for facilities related largely
to the new administration and training building, which was completed and
occupied in September 1996.
On September 10, 1996, the Company completed a $40 million private
placement of senior unsecured notes with two insurance companies. The notes bear
interest at 7.92%, payable on a semi-annual basis, with payment of principal in
five equal annual installments commencing on September 15, 1999. Proceeds from
the notes were used to pay off $20 million outstanding under the Company's bank
line of credit and will be used to fund capital equipment purchases, capacity
expansion and possible acquisitions. These notes contain various financial
covenants such as minimum net worth, debt ratio and interest coverage
requirements. Noncompliance with these covenants could result in a penalty,
increased interest rate or acceleration of principal payments. As of March 1,
1997, the Company was in compliance with all covenants.
11
<PAGE>
On October 31, 1996, the Company entered into a syndicated $30 million
unsecured bank line of credit which expires on September 30, 1998. Borrowings
under the line of credit will accrue interest at the agent's prime rate (8.25%
on March 1, 1997) or other rate options available at the time of borrowing. As
of March 1, 1997, there were no borrowings outstanding under the line of credit.
The bank line of credit agreement contains various financial covenants such as
minimum net worth, debt ratio and quick ratio requirements.
The Company's future needs for financial resources include amounts to
support investments in additional facilities and equipment. The Company had
capital commitments of approximately $5 million at March 1, 1997. The Company
believes that its existing capital resources, including the proceeds from the
$40 million private placement of debt and bank line of credit, and cash
generated from operations will be sufficient to meet its working capital and
capital expenditure requirements through calendar 1997.
12
<PAGE>
Forward-looking Statements
Information set forth in this Quarterly Report on Form 10-Q relating to the
remainder of calendar year 1997, including: anticipated customer demand, sales
and sales mix; customer diversification; anticipated production; and the
estimated effective tax rate for fiscal 1997 constitute forward-looking
statements. Information contained in forward looking statements is based on
current expectations, is subject to change and may differ materially from actual
results. From time to time, information provided by the Company or statements
made by its employees may contain other forward-looking information that
involves a number of risks and uncertainties. Factors that could cause actual
results to differ materially from the forward-looking information include, but
are not limited to, the matters discussed in this Form 10-Q as well as the
following: anticipated customer demand, sales and net income; ability to attract
new customers; business conditions and growth in the general economy and the
interconnect industry; production delays; product mix; the highly competitive
interconnect environment; cancellation or reduction of orders; effective
utilization of existing and new manufacturing resources; customer acceptance of
new technologies; environmental issues; pricing pressures by key customers;
costs and yield issues associated with production; availability of parts and
supplies from third parties on a timely basis and at reasonable prices; ability
to execute financing strategies; and other risks listed from time to time in the
Company's Securities and Exchange Commission reports or otherwise disclosed by
the Company. Any forward-looking statements should be considered in light of
these factors.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27: Financial Data Schedule
14
<PAGE>
SIGNATURE
Pursuant to the requirements 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 this fourteenth day of April, 1997.
MERIX CORPORATION
By: /s/ JOSEPH HOWELL
------------------------------------
Joseph Howell
Senior Vice President and Chief Financial
Officer
(On behalf of the registrant as Principal
Financial Officer)
15
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page No.
- --------------------------------------------------------------------------------
27: Financial Data Schedule
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> MAR-01-1997
<CASH> 16,837
<SECURITIES> 12,848
<RECEIVABLES> 23,504
<ALLOWANCES> 572
<INVENTORY> 7,442
<CURRENT-ASSETS> 62,631
<PP&E> 114,469
<DEPRECIATION> 50,809
<TOTAL-ASSETS> 130,545
<CURRENT-LIABILITIES> 17,671
<BONDS> 0
0
0
<COMMON> 44,398
<OTHER-SE> 23,384
<TOTAL-LIABILITY-AND-EQUITY> 130,545
<SALES> 112,899
<TOTAL-REVENUES> 112,899
<CGS> 96,771
<TOTAL-COSTS> 96,771
<OTHER-EXPENSES> 4,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,310
<INCOME-PRETAX> 41
<INCOME-TAX> 14
<INCOME-CONTINUING> 27
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
