Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-164012

 

PROXY STATEMENT/PROSPECTUS

 

To the Stockholders of TTM Technologies, Inc. and the Shareholders of Meadville Holdings Limited:

 

On behalf of the board of directors of TTM Technologies, Inc., we are pleased to deliver to you this proxy statement/prospectus relating to the proposed issuance and sale by us of 36,334,000 shares of our common stock in connection with the acquisition transaction described below.

 

On November 16, 2009, we and certain of our subsidiaries entered into a stock purchase agreement with Meadville Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands and listed on the Stock Exchange of Hong Kong, and one of Meadville’s subsidiaries, pursuant to which we have agreed to acquire the entire outstanding capital stock of all of Meadville’s indirect wholly owned subsidiaries that comprise and operate Meadville’s printed circuit board, or PCB, business. The aggregate purchase price consideration will consist of $114,034,328 in cash and the issuance of 36,334,000 shares of our common stock to Meadville, plus our assumption of indebtedness of those subsidiaries. In this proxy statement/prospectus we refer to the transactions contemplated by the stock purchase agreement as the “PCB Combination” and to the subsidiaries we have agreed to acquire from Meadville as the “PCB Subsidiaries.”

 

The proposed PCB Combination is being effected through the purchase by TTM Hong Kong Limited, one of our indirect wholly owned subsidiaries, of all of the capital stock of the PCB Subsidiaries owned by MTG Investment (BVI) Limited, or MTG, a wholly owned subsidiary of Meadville. Completion of the PCB Combination requires the approval by our stockholders of the issuance of 36,334,000 shares of our common stock. Our board of directors has scheduled a special meeting of our stockholders to obtain this approval on March 12, 2010. We currently estimate that approximately 46% of the shares of our common stock outstanding after completion of the PCB Combination will be held by Meadville and, following the effectiveness of Meadville’s special dividend of our shares to its shareholders or their transferees as described in this proxy statement/prospectus, ultimately by Meadville’s shareholders or their transferees.

 

Consummation of the PCB Combination is subject to a number of conditions described in this proxy statement/prospectus, including the approval by our stockholders of the issuance and sale to Meadville of 36,334,000 shares of our common stock. For a description of these conditions, see the section entitled “The PCB Combination — Conditions to Completion of the PCB Combination” in this proxy statement/prospectus.

 

Except for the approval by our stockholders of the issuance and sale by us of 36,334,000 shares of our common stock, our stockholders are not being requested, and are not entitled, to vote to approve the PCB Combination itself or any of the other transactions contemplated by the stock purchase agreement.

 

Approval of the proposed issuance of shares of our common stock in the PCB Combination requires the affirmative vote of the holders of our shares representing not less than a majority (greater than 50%) of the votes present in person or represented by proxy at the special meeting and entitled to vote thereon, provided that a quorum consisting of the holders of not less than a majority (greater than 50%) of the votes entitled to be cast by our stockholders is present at the special meeting in person or by proxy.

 

We believe that the PCB Combination will:

 

 

 

This proxy statement/prospectus also provides information about us, Meadville, the PCB Subsidiaries, and our proposed acquisition of the PCB Subsidiaries that our stockholders should know when they vote. In particular, the section entitled “Risk Factors” beginning on page 19 contains a description of risks that you should consider in evaluating the proposed PCB Combination. We urge you to read this entire proxy statement/prospectus carefully.

 

Our board of directors previously approved our execution of the stock purchase agreement, which we executed on November 16, 2009 and pursuant to which we agreed to acquire the PCB Subsidiaries, and the issuance of shares of our common stock pursuant to the stock purchase agreement. Accordingly, our board of directors unanimously recommends that our stockholders vote “for” approval of the proposed issuance of 36,334,000 shares of our common stock in connection with the PCB Combination.

 

If you are a holder of our shares of common stock, whether or not you plan to attend the special meeting, your vote is very important. Please sign and submit your proxy as soon as possible so that your shares can be voted at the special meeting in accordance with your instructions. Record holders of our common stock can vote via the Internet, by telephone, or by mailing the enclosed proxy card (beneficial owners may vote via the Internet, by telephone, or by mailing the enclosed voting instructions). Instructions for using these convenient services appear on the instructions on the enclosed proxy card or voting instructions.

 

On behalf of our company, we look forward to seeing our stockholders at the special meeting and we thank you for your support.

 

Sincerely,

 

 

Kenton K. Alder

Chief Executive Officer and President

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

Proxy statement/prospectus dated February 10, 2010 and first mailed to
our stockholders and Meadville shareholders on or about February 11, 2010.

 

In addition to this proxy statement/prospectus, we, certain of our subsidiaries, and Meadville will prepare a joint Circular to be issued to Meadville’s shareholders in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong and the Hong Kong Code on Takeovers and Mergers. The Circular is subject to the approval of the Stock Exchange of Hong Kong and the Corporate Finance Division of the Securities Futures Commission of Hong Kong.

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 12, 2010

 

To the Stockholders of TTM Technologies, Inc.:

 

We will hold a special meeting of stockholders at our corporate offices located at 2630 South Harbor Boulevard, Santa Ana, California 92704, on March 12, 2010 at 10:00 a.m., Pacific time, for the following purposes:

 

1. To consider and vote upon a proposal to approve the issuance of 36,334,000 shares of our common stock in connection with the proposed acquisition of certain companies engaged in the printed circuit board business pursuant to the terms of a Stock Purchase Agreement, dated as of November 16, 2009, among our company, Meadville Holdings Limited, MTG Investment (BVI) Limited, TTM Technologies International, Inc., and TTM Hong Kong Limited; and

 

2. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

 

Our board of directors has unanimously approved the PCB Combination and the issuance of our shares of common stock in the PCB Combination pursuant to the stock purchase agreement, and recommends that you vote “for” the proposal to approve the issuance of 36,334,000 shares of our common stock in connection with the proposed PCB Combination. A copy of the stock purchase agreement is attached as Annex A to the accompanying proxy statement/prospectus. The proposal is described in more detail in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting.

 

Only our stockholders of record at the close of business on February 1, 2010, which we refer to as the Record Date, are entitled to notice of the special meeting and to vote at the special meeting and at any adjournments or postponements thereof. A list of such holders as of the Record Date will be available during normal business hours for examination by any such holder for a period of ten days prior to the date of the special meeting, at our principal executive offices located at 2630 South Harbor Boulevard, Santa Ana, California 92704.

 

All of our stockholders are urged to attend the meeting in person or by proxy. Your vote is important. Whether or not you expect to attend the meeting in person, please sign and submit your proxy as soon as possible so that your shares can be voted at the special meeting in accordance with the instructions on the enclosed proxy card. The proxy is revocable and will not affect your right to vote in person in the event you attend the special meeting. You may revoke your proxy at any time before it is voted. If you receive more than one proxy card because your shares are registered in different names or at different addresses, please sign and return each proxy card so that all of your shares will be represented at the special meeting.

 

By Order of the Board of Directors,

 

 

Steven W. Richards

Secretary

 

Santa Ana, California

February 10, 2010

IMPORTANT

 

We file annual, quarterly, and special reports, proxy statements, and other information with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. You may read and copy these reports and other information filed by us at the Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC through the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The address of this site is www.sec.gov.

 

This proxy statement/prospectus incorporates by reference important business and financial information about us that is not included in or delivered with this proxy statement/prospectus. You may request this information, which includes copies of our annual, quarterly, and special reports, proxy statements, and other information, from us, without charge, excluding all exhibits, unless we have specifically incorporated by reference an exhibit in this proxy statement/prospectus. Our stockholders and Meadville shareholders may obtain documents incorporated by reference in this proxy statement/prospectus by requesting them from us in writing or by telephone at the following address or telephone number:

 

TTM Technologies, Inc.

2630 South Harbor Boulevard

Santa Ana, California 92704

(714) 327-3000

 

To obtain timely delivery, holders of our common stock must request any information no later than March 4, 2010.

 

In addition, we provide copies of our Forms 8-K, 10-K, 10-Q, Proxy Statement, and Annual Report at no charge to investors upon request and we make electronic copies of our most recently filed reports available through our website at www.ttmtech.com/investors/investors.jsp as soon as reasonably practicable after filing such material with the SEC.

 

For a more detailed description of the information incorporated by reference into this proxy statement/prospectus and how you may obtain it, see the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.”

 

Holders of our common stock who have questions about the special meeting or how to vote or revote their proxy should contact The Altman Group by telephone at (866) 521-4428 (toll-free) or via email at www.ttmiproxyinfo@altmangroup.com.

 

TABLE OF CONTENTS

 

 

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

 

SUMMARY

 

TTM Technologies, Inc.

 

Recent Events Relating to TTM Technologies, Inc.

 

Information Regarding Meadville and the PCB Subsidiaries (Page 113)

 

The PCB Combination (Page 54)

 

Why You Are Receiving this Proxy Statement/Prospectus (Page 51)

 

Recommendation of TTM’s Board of Directors (Page 64)

 

What Meadville Shareholders will Receive in the PCB Combination (Page 66)

 

Principal Agreements (Page 73)

Approval by Holders of TTM Common Stock (Page 51)

 

Opinion of TTM’s Financial Advisor (Page 58)

 

Risk Factors (Page 19)

Conditions to the PCB Combination (Page 65)

	•	antitrust and other regulatory approvals;
	•	completion of a review or investigation by the Committee on Foreign Investment in the United States, or CFIUS (which occurred on February 2, 2010);
	•	effectiveness of our registration statement relating to the shares of our common stock issuable in the PCB Combination;
	•	receipt of requisite approvals by our stockholders and Meadville’s shareholders;
	•	the absence of any suit, action, or proceeding by any government entity seeking to restrain or prohibit the consummation of the PCB Combination, and the absence of laws enjoining certain aspects of the PCB Combination;
	•	Meadville’s separate sale of its laminate business;
	•	execution and effectiveness of the credit agreement for the PCB Subsidiaries;
	•	execution of two separate registration rights agreements;
	•	the absence of certain change of control arrangements relating to Meadville, MTG, or us;
	•	the accuracy of representations and warranties made by the parties in the stock purchase agreement;
	•	compliance with various obligations under the stock purchase agreement;
	•	the absence of certain material adverse events affecting the parties to the stock purchase agreement;
	•	the execution and effectiveness of all agreements ancillary to the stock purchase agreement; and
	•	the receipt by us and Meadville from each other of certificates representing that certain conditions to the PCB Combination have been satisfied or waived.

Termination of the Stock Purchase Agreement (Page 83)

	•	if the conditions to the transaction have not been satisfied or waived on or before May 31, 2010 and the party requesting the termination has not willfully breached a covenant in the stock purchase agreement, provided that either party may extend the termination date to June 30, 2010 if certain of the conditions have not been satisfied or waived before May 31, 2010;
	•	if any law has been enacted or enforced in a manner to prohibit the completion of the transaction, provided that such party has used its reasonable efforts to remove or have vacated such law;

	•	with respect to each party, if the other party shall have failed to comply with any obligation or covenant in the stock purchase agreement or breached any representation or warranty, such breach or failure prevents completion of the transaction, and such breach or failure to comply is not capable of being remedied or, if capable of being remedied, is not remedied by the earlier of the date which is 30 days following the date of delivery of a written notice of such breach to the other party or the date of termination of the stock purchase agreement;
	•	if an event having a material adverse effect as to a party has occurred and is not capable of being remedied or, if capable of being remedied, is not remedied by the earlier of the date which is 30 days following the date of delivery of a written notice of such breach to the other party or the date of termination of the stock purchase agreement; and
	•	if the requisite approvals from the stockholders of our company and the shareholders of Meadville in respect of the PCB Combination have not been obtained.

Termination Fees and Expenses (Page 83)

Interests of Certain Persons in the PCB Combination (Page 70)

Dealing Facility for Meadville Shareholders (Page 71)

Material U.S. Federal Income Tax Consequences to TTM Stockholders (Page 67)

Anticipated Accounting Treatment of the PCB Combination (Page 69)

Regulatory Matters (Page 67)

Directors and Management of TTM and the PCB Subsidiaries Following Completion of the PCB Combination (Page 71)

Appraisal Rights (Page 70)

Comparison of Stockholder Rights (Page 92)

 

SUMMARY SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

Summary Selected Consolidated Financial Data of TTM

																						Nine Months Ended
		Years Ended December 31,																				Sept. 28,				Sept. 29,
		2008(1)				2007				2006(2)				2005				2004				2009(3)				2008
																						(Unaudited)
		(In millions, except per share data)
Consolidated Statement of Operations Data:
Net sales		$	681.0			$	669.5			$	369.3			$	240.2			$	240.7			$	432.5			$	516.1
Operating (loss) income			(49.9	)			63.6				55.0				26.4				41.2				11.8				59.0
Net (loss) income			(36.9	)			34.7				35.0				30.8				28.3				2.5				32.3
Earnings (loss) per common share:
Basic			(0.86	)			0.82				0.84				0.75				0.69				0.06				0.76
Diluted			(0.86	)			0.81				0.83				0.74				0.68				0.06				0.75
Weighted average common shares:
Basic			42.7				42.2				41.7				41.2				40.8				43.0				42.6
Diluted			42.7				42.6				42.3				41.8				41.9				43.5				43.0

		As of December 31,																				As of Sept. 28,
		2008				2007				2006				2005				2004				2009
																						(Unaudited)
		(In millions)
Consolidated Balance Sheet Data:
Working capital		$	280.4			$	98.8			$	127.4			$	111.2			$	82.6			$	319.1
Total assets			540.2				498.8				537.7				273.1				235.8				542.9
Convertible senior notes, net			134.9				—				—				—				—				138.6
Long-term debt, including current maturities			—				85.0				200.7				—				—				—
Stockholders’ equity			330.0				328.6				287.3				244.0				211.6				336.8

(1)		We recorded an impairment of goodwill and long-lived assets in 2008 as a result of our annual goodwill impairment test and the write-down of certain long-lived assets associated with specific plant facilities and assets held for sale.
(2)		Our results for the year ended December 31, 2006 include 65 days of activity of PCG, which we acquired on October 27, 2006.
(3)		We recorded impairment of long-lived assets and restructuring charges related to the closure of our Redmond, Washington, and Los Angeles and Hayward, California facilities.

Summary Selected Combined Financial Data of the PCB Business of Meadville

														Nine Months Ended
		Years Ended December 31,												September 30,
		2008				2007				2006				2009				2008
																		(Unaudited)
		(In millions of HK$)
(HKFRS)
Combined Statement of Operations Data:
Revenue		$	5,212.4			$	4,108.6			$	2,838.8			$	3,505.4			$	3,930.2
Operating profit			668.5				492.9				416.2				302.2				570.8
Profits for the year/period			483.7				352.9				302.6				198.7				412.4
of which, attributable to shareholders in Meadville			376.1				246.1				239.8				127.3				336.3
of which, attributable to minority interests			107.6				106.8				62.8				71.4				76.1

														As of
		As of December 31,												September 30,
		2008				2007				2006				2009
		(In millions of HK$)
(HKFRS)
Combined Balance Sheet Data:
Current assets		$	2,798.1			$	2,609.1			$	1,547.6			$	2,428.4
Total assets			8,003.5				6,757.7				3,547.0				7,527.5
Current liabilities, excluding current portion of borrowings			2,318.0				1,865.0				1,343.1				1,373.7
Borrowings, including current portion			3,586.2				2,587.4				1,572.8				3,564.5
Equity attributable to shareholders			1,371.2				1,524.3				433.6				1,779.3
Total shareholders’ equity			1,776.6				1,860.1				631.1				2,313.9

		Years Ended								Nine Months Ended
		December 31,								September 30,
		2008				2007				2009				2008
														(Unaudited)
		(In millions of HK$)
(U.S. GAAP)(1)
Combined Statement of Operations Data:
Revenue		$	5,212.4			$	4,108.6			$	3,505.4			$	3,930.2
Operating profit			662.4				493.3				314.7				573.9
Profits for the year/period			491.5				353.2				217.0				428.9

		As of								As of
		December 31,								September 30,
		2008				2007				2009
		(In millions of HK$)
(U.S. GAAP)(1)
Combined Balance Sheet Data:
Current assets		$	2,798.1			$	2,609.1			$	2,428.4
Total assets			7,964.5				6,606.3				7,494.9
Current liabilities, excluding current portion of borrowings			2,318.0				1,865.0				1,373.7
Borrowings, including current portion			3,586.2				2,587,4				3,564.5
Equity attributable to shareholders			1,352.1				1,519.4				1,768.5
Total shareholders’ equity			1,903.6				1,988.8				2,457.0

(1)		For further details, see Note 35 in the audited combined financial statements of the PCB Business.

 

Summary Selected Unaudited Pro Forma Condensed Combined Financial Data

		Nine Months
		Ended				Year Ended
		September 28,				December 31,
		2009				2008
		(In millions, except per share data)
Statements of Operations Data:
Net sales		$	884.7			$	1,350.4
Operating income			64.1				27.4
Net income			36.7				34.6
Net income attributable to noncontrolling interests			7.6				12.8
Net income attributable to stockholders			29.1				21.8
Net income per common share attributable to stockholders:
Basic		$	0.37			$	0.28
Diluted		$	0.36			$	0.28

		September 28,
		2009
		(In millions)
Balance Sheet Data:
Current assets		$	566.5
Total assets			1,644.8
Current liabilities			309.1
Long-term liabilities			555.2
Stockholders’ equity			780.5

 

Exchange Rate Information

		Period-End				Average
		Rate(1)				Rate(2)				High				Low
Recent Monthly Data
January 2010			7.7645				7.7624				7.7766				7.7543
December 2009			7.7543				7.7530				7.7580				7.7501
November 2009			7.7501				7.7501				7.7503				7.7500
October 2009			7.7502				7.7501				7.7503				7.7500
September 2009			7.7500				7.7504				7.7512				7.7500
August 2009			7.7507				7.7507				7.7517				7.7500
July 2009			7.7500				7.7501				7.7506				7.7500
June 2009			7.7501				7.7507				7.7522				7.7500
May 2009			7.7522				7.7513				7.7535				7.7500
April 2009			7.7501				7.7501				7.7504				7.7500
March 2009			7.7503				7.7531				7.7592				7.7500
February 2009			7.7552				7.7536				7.7557				7.7518
January 2009			7.7545				7.7562				7.7600				7.7502
Interim Period Data
Three months ended September 28, 2009			7.7502				7.7504				7.7517				7.7500
Three months ended September 29, 2008			7.7629				7.7982				7.8142				7.7582
Six months ended September 28, 2009			7.7502				7.7506				7.7535				7.7500
Six months ended September 29, 2008			7.7629				7.7986				7.8159				7.7582
Nine months ended September 28, 2009			7.7502				7.7518				7.7600				7.7500
Nine months ended September 29, 2008			7.7629				7.7971				7.8159				7.7582
Annual Data (Year ended December 31,)
2009			7.7543				7.7516				7.7600				7.7500
2008			7.7499				7.7862				7.8159				7.7497
2007			7.7984				7.8019				7.8289				7.7497
2006			7.7771				7.7681				7.7928				7.7506
2005			7.7533				7.7775				7.7999				7.7514
2004			7.7723				7.7891				7.8010				7.7632

(1)		The period-end rate was the exchange rate on the last business day of the applicable period.
(2)		The average rates for the monthly, interim, and annual periods were calculated by taking the simple average of daily rates in the period.

 

Comparative Historical and Pro Forma Per Share Data

	•	our audited basic and diluted earnings per share and unaudited cash dividends per share for the year ended December 31, 2008, unaudited basic and diluted earnings and cash dividends per share for the nine months ended September 28, 2009, and unaudited net book value per share as of December 31, 2008 and September 28, 2009 on a historical basis; and
	•	unaudited basic and diluted earnings per share data for the year ended December 31, 2008, unaudited basic and diluted earnings per share and cash dividends for the nine months ended September 28, 2009, and unaudited net book value per share as of September 28, 2009 of the combined company on a pro forma basis.

		As of and for the
		Year Ended				Nine Months Ended
		December 31, 2008				September 28, 2009
(U.S. GAAP)
Basic earnings (loss) per share		$	(0.86	)		$	0.06
Diluted earnings (loss) per share		$	(0.86	)		$	0.06
Cash dividends per share			—				—
Net book value per share		$	7.71			$	7.80

		As of and for the
		Year Ended				Nine Months Ended
		December 31, 2008				September 28, 2009
(U.S. GAAP)
Basic earnings per share		$	0.28			$	0.37
Diluted earnings per share		$	0.28			$	0.36
Cash dividends per share			—				—
Net book value per share						$	9.82

 

Stock Price Information

		TTM Common Stock				Meadville Shares
		(US$)				(US$)
October 29, 2009		$	10.79			$	0.36
November 13, 2009		$	11.21				No trading
February 5, 2010		$	8.95			$	0.40

 

Our stockholders should carefully consider the following factors in evaluating whether to approve the issuance of our common stock in connection with the PCB Combination, and Meadville’s shareholders should consider the following factors in connection with their potential receipt of shares of our common stock in the PCB Combination from the special dividend by Meadville. These factors should be considered in conjunction with the other information included or incorporated by reference in this proxy statement/prospectus. Additional risks and uncertainties not presently known to us, or that are not currently believed to be important to you, also may adversely affect the PCB Combination and us following the PCB Combination.

 

Failure to complete the proposed PCB Combination could adversely affect our and Meadville’s future business and operations.

 

The proposed PCB Combination is subject to the satisfaction of various closing conditions, including the approval by both our and Meadville’s shareholders and other conditions described in the stock purchase agreement that are outside the control of us and Meadville. Our and Meadville’s respective obligations to complete the PCB Combination are also subject to the other conditions listed under “The PCB Combination — Conditions to Completion of the PCB Combination.” We cannot assure you that these conditions will be satisfied or that the PCB Combination will be successfully completed. In the event that the PCB Combination is not completed:

 

 

Any such events could adversely affect our and Meadville’s business and operating results.

 

Our and Meadville’s business could suffer due to the announcement, pendency, and consummation of the proposed PCB Combination.

 

The announcement, pendency, and consummation of the PCB Combination may have a negative impact on our, Meadville’s, and the combined company’s ability to sell their respective products and services, attract and retain key management, technical, sales, or other personnel, maintain and attract new customers, and maintain strategic relationships with third parties. For example, we and Meadville, and following consummation of the PCB Combination the combined company, may experience the deferral, cancellation, or a decline in the size or rate of orders for products or services or a deterioration in customer relationships. Any such events could harm our and Meadville’s, and following the PCB Combination the combined company’s, operating results and financial condition.

 

The price of our common stock may fluctuate, and the purchase price payable in the PCB Combination will not be adjusted for any changes in the price of our common stock or Meadville’s shares.

 

A portion of the consideration payable in connection with the PCB Combination would be paid through the issuance to Meadville, as MTG’s designee, of 36,334,000 shares of our common stock, and we will deliver to Meadville cash in the amount of $114,034,328. Under the stock purchase agreement, other than as a result of reclassifications, stock splits, stock dividends, and similar changes effected by us, neither the number of shares of our common stock to be issued nor the amount of cash to be delivered will be adjusted even if the market price of our common stock or Meadville’s shares fluctuates between the date of the stock purchase agreement and the closing date of the PCB Combination. The market price of our common stock and Meadville’s shares at the closing of the

PCB Combination will likely vary from the market price at the date of this proxy statement/prospectus and at the date of our stockholders’ meeting and the Meadville shareholders’ meeting. The stock purchase and special dividend of our common stock and cash to Meadville’s shareholders may not be completed until a significant period of time has passed after the special meetings. Stock price changes may result from a variety of factors that are beyond the control of us or Meadville, including:

 

 

Neither party is permitted to “walk away” from the PCB Combination or re-solicit the vote of its shareholders solely because of changes in the market price, and therefore value, of our common stock or Meadville’s shares through the closing date of the PCB Combination. Any reduction in our stock price would result in Meadville shareholders receiving less value in the PCB Combination. Conversely, any increase in our stock price would potentially result in Meadville, and ultimately Meadville shareholders, receiving greater value in the PCB Combination. The specific dollar value per share of our common stock that Meadville, and ultimately Meadville shareholders, would receive upon completion of the PCB Combination will depend on, among other things, the market value of our common stock at that time and at the time of Meadville’s special dividend of our shares to Meadville’s shareholders, and other factors discussed in this proxy statement/prospectus. Our and Meadville’s shareholders will not know the exact value of our common stock to be issued in the PCB Combination at the time of the special meetings of their respective shareholders.

 

The PCB Combination could be a taxable transaction for Meadville shareholders.

 

Meadville shareholders who are subject to U.S. or foreign income taxes are urged to consult their own tax advisors concerning the consequences of the PCB Combination.

 

We may not realize the operating and financial benefits we expect from the PCB Combination.

 

The post-acquisition integration of our company and the PCB Subsidiaries would be complex, time-consuming, and expensive, and may disrupt the day-to-day management and operation of our respective businesses. After the PCB Combination, the combined company would need to overcome significant challenges in order to realize any benefits or synergies from the PCB Combination. These challenges include the timely, efficient, and successful completion of a number of post-acquisition events, including the following:

 

 

 

The execution of these post-acquisition integration events would involve considerable risks and may not be successfully implemented, or if implemented, on a timely basis. These risks include the following:

 

 

The combined company may not succeed in mitigating these risks or any other problems encountered in connection with the PCB Combination. The inability to successfully integrate the operations, technology, and personnel of our company and the PCB Subsidiaries, or any significant delay in achieving integration of the companies, could have a material adverse effect on the combined company after the PCB Combination and, as a result, on the market price of our common stock following the PCB Combination.

 

As a result of the PCB Combination, we and the PCB Subsidiaries as a combined company would be a substantially larger and broader organization, with a greater geographic diversity relative to our and Meadville’s current operations, and if management is unable to sufficiently manage the combined company, operating and financial results would suffer.

 

As a result of the PCB Combination, the combined company would have significantly more employees, greater geographic diversity, and customers in multiple distribution channels. The combined company would face challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate policies, benefits, reporting, management, and compliance programs and systems. The inability to manage successfully the substantially larger and internationally diverse organization, or any significant delay in achieving successful management of the organization, could have a material adverse effect on the combined company and, as a result, on the market price of our common stock.

 

The combined company would need to invest in its operations to integrate us and the PCB Subsidiaries and to maintain and grow the combined business, and may need additional funds to do so.

 

The combined company would depend on the availability of adequate capital to maintain and develop its business. We believe that the combined company can meet its capital requirements from internally generated funds, cash in hand, and available borrowings. If the combined company is unable to fund its capital requirements as currently planned, however, it would have a material adverse effect on the combined company’s business, financial condition, and operating results. If the combined company does not achieve our expected operating results, the combined company would need to reallocate its sources and uses of operating cash flows. This may include borrowing additional funds to service debt payments, which may impair the ability of the combined company to make investments in the business or to integrate us and the PCB Subsidiaries. There is no assurance that the combined company would be able to borrow any such additional funds when needed on commercially acceptable terms or at all.

Should the combined company need to raise funds through incurring additional debt, the combined company may become subject to covenants even more restrictive than those contained in our or the PCB Subsidiaries’ current debt instruments. Furthermore, if we issue additional equity, our equity holders would suffer dilution. There can be no assurance that additional capital would be available on a timely basis, on favorable terms, or at all.

 

The PCB Combination could cause us or the PCB Subsidiaries to lose key personnel, which could materially affect the combined company’s business and require the combined company to incur substantial costs to recruit replacements for lost personnel.

 

As a result of the PCB Combination, our current and prospective employees and the PCB Subsidiaries’ employees could experience uncertainty about their future roles within the combined company. This uncertainty may adversely affect their ability or willingness to continue with the combined company, and the ability of the combined company to attract and retain key management, sales, marketing, and technical personnel. Any failure to retain and attract key personnel could have a material adverse effect on our and the PCB Subsidiaries’ current business and the business of the combined company after the completion of the PCB Combination.

 

General uncertainty related to the PCB Combination could harm us and Meadville.

 

In response to the announcement and pendency of the proposed PCB Combination, customers may delay or defer purchasing decisions. If this were to occur, our and Meadville’s cash flows and revenue, respectively, and the revenues of the combined company, could decline materially or any anticipated increases in revenue could be lower than expected. Also, speculation regarding the likelihood of the closing of the PCB Combination could increase the volatility of our and Meadville’s share price.

 

Some of our and Meadville’s and the PCB Subsidiaries’ officers and directors have conflicts of interest that may influence them to support or approve the issuance of shares in connection with the PCB Combination.

 

Certain officers and directors of us, Meadville, and the PCB Subsidiaries participate in arrangements that provide them with material interests in the PCB Combination that are different from and in addition to those of our stockholders and Meadville’s shareholders, including, among others, employment agreements and compensation arrangements for key officers, indemnification arrangements, and, with respect to the Principal Shareholders and Tang Siblings, the ability to nominate a member of our board of directors. These interests, among others, may influence our directors and officers and the directors and officers of Meadville and the PCB Subsidiaries to support or approve the PCB Combination. For a more detailed discussion, see the section entitled “The PCB Combination — Interests of Certain Meadville Directors, Officers, and Affiliates in the PCB Combination” in this proxy statement/prospectus.

 

Regulatory authorities may delay or impose conditions on approval of the PCB Combination, which may diminish the anticipated benefits of the PCB Combination.

 

The completion of the PCB Combination requires the receipt of various approvals from governmental authorities, both in the U.S. and in the PRC. These regulatory approvals may take substantial time, and there can be no assurance that such approvals can be obtained. Failure to obtain these approvals in a timely manner may delay the completion of the PCB Combination, possibly for a significant period of time, or prevent the completion of the PCB Combination altogether. In addition, regulatory authorities may attempt to condition their approval of the PCB Combination on the imposition of conditions that could restrict the day-to-day operations of the combined company, including requiring the discontinuance of certain lines of business, that may have a material adverse effect on the combined company’s operating results or the value of our common stock after the PCB Combination is completed. Any delay in the completion of the PCB Combination or conditions on effecting the PCB Combination may diminish anticipated benefits or may result in additional transaction costs, loss of revenue, or other effects associated with uncertainty about the completion or terms of the PCB Combination.

Both we and the PCB Subsidiaries, and ultimately the PCB Combination, may be subject to adverse regulatory requirements and conditions.

 

A condition to completing the PCB Combination is the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the Hart-Scott-Rodino Act. We and Meadville made the required filings with the U.S. Department of Justice and the U.S. Federal Trade Commission and received notice from the Federal Trade Commission in January 2010 that our request for early termination of the review period had been granted. However, even after the termination of the waiting period of the Hart-Scott-Rodino Act, the Department of Justice or the Federal Trade Commission, as well as a foreign regulatory agency or government, state, or private persons, may challenge the PCB Combination at any time before or after its completion. We and Meadville cannot assure you that the Department of Justice or Federal Trade Commission or third parties would not try to prevent the PCB Combination or seek to impose restrictions or conditions on us or the PCB Subsidiaries. The PCB Combination is also subject to approval by CFIUS, which we obtained on February 2, 2010, and is conditioned upon the receipt of antitrust approvals from the applicable governmental authorities of the PRC. Such approvals may take a substantial amount of time to obtain and there can be no assurance that such approvals can be obtained in a timely manner or at all. Depending on the nature of any restrictions or conditions, these restrictions or conditions may jeopardize or delay completion of the PCB Combination or lessen the anticipated benefits of the PCB Combination.

 

The U.S. Department of Justice, the SEC, and other governmental authorities have a broad range of civil and criminal sanction authority available to them under the U.S. Foreign Corrupt Practices Act, referred to as the FCPA, and other laws, which they may seek to impose in appropriate circumstances. Recent civil and criminal settlements with a number of public corporations and individuals have included multi-million dollar fines, disgorgement, injunctive relief, guilty pleas, deferred prosecution agreements, and other sanctions, including requirements that corporations retain a monitor to oversee compliance with the FCPA. The combined company may incur significant expenses in instituting controls related to compliance with the FCPA.

 

We are subject to the requirements of the National Industrial Security Program Operating Manual for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S. government.

 

A facility security clearance is required in order to be awarded and perform on classified contracts for the U.S. Department of Defense and certain other agencies of the U.S. government. We currently perform on several classified contracts. As a cleared entity, we must comply with the requirements of the National Industrial Security Program Operating Manual, or NISPOM, and any other applicable U.S. government industrial security regulations. Further, due to the fact that immediately following the PCB Combination a significant portion of our voting equity will be owned by a non-U.S. entity, we expect that following the closing of the PCB Combination the combined company will be required to be governed by and operate in accordance with the terms and requirements of a Special Security Agreement, or SSA, with the U.S. Department of Defense.

 

If we were to violate the terms and requirements of the SSA, the NISPOM, or any other applicable U.S. government industrial security regulations (which may apply to us under the terms of our classified contracts), we could lose our security clearance. We cannot assure you that we will be able to maintain our security clearance. If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform present classified contracts and would not be able to enter into new classified contracts, which could adversely affect the combined company’s revenues.

 

Charges to earnings resulting from the application of the purchase method of accounting may adversely affect the market value of our common stock following the PCB Combination.

 

If the anticipated benefits of the PCB Combination are not achieved, our financial results, including our earnings, could be adversely affected. In accordance with U.S. GAAP, we would account for the PCB Combination using the purchase method of accounting. For accounting purposes, we would be considered the acquiring company. As a result, we would allocate the total purchase price to the PCB Subsidiaries’ net tangible assets, identifiable intangible assets, liabilities assumed, and noncontrolling interests based on their fair values as of the date of completion of the PCB Combination, and record the excess of the purchase price over those fair values as goodwill.

The combined company would incur additional amortization expense over the estimated useful lives of certain of the intangible assets acquired in connection with the PCB Combination. In addition, to the extent the value of goodwill or intangible assets with indefinite lives becomes impaired, we may be required to incur material charges relating to the impairment of those assets.

 

In addition, from the date of the completion of the PCB Combination, our results of operations would include the operating results of the PCB Subsidiaries, presented in accordance with U.S. GAAP. Certain of the PCB Business’ historical combined financial statements included in this proxy statement/prospectus have been prepared in accordance with HKFRS and reconciled to U.S. GAAP, which differ in certain material respects from U.S. GAAP. Accordingly, the U.S. GAAP presentation of the PCB Business’ results of operations may not be comparable to its historical financial statements.

 

Changes to current accounting principles could have a significant effect on the combined company’s reported financial results or the way in which it conducts its business.

 

We prepare our financial statements in conformity with U.S. GAAP, which are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC, and various other authorities formed to interpret, recommend, and announce appropriate accounting principles, policies, and practices. A change in these principles could have a significant effect on our reported financial results and may even retroactively affect the accounting for previously reported transactions. Our accounting policies that recently have been or may in the future be affected by changes in the accounting principles are as follows:

 

 

Changes in these or other rules may have a significant adverse effect on our reported financial results or in the way in which we conduct our business. See the discussion in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2009, which we have incorporated by reference into this proxy statement/prospectus, under “Critical Accounting Policies and Estimates” and the Notes to Condensed Consolidated Financial Statements included therein, for additional information about our critical accounting policies and estimates and associated risks.

 

We and the PCB Subsidiaries have limited protection of our respective proprietary rights, and we may be involved in disputes relating to intellectual property.

 

We and the PCB Subsidiaries rely on a combination of copyright, patent, trademark and trade secret laws, confidentiality procedures, contractual provisions, and other measures to protect our respective proprietary information. All of these measures afford only limited protection. These measures may be invalidated, circumvented, or challenged, and others may develop technologies or processes that are similar or superior to our or the PCB Subsidiaries’ technology. We and the PCB Subsidiaries, and ultimately the combined company, may not have the controls and procedures in place that are needed to adequately protect proprietary information. Despite our and the PCB Subsidiaries’ efforts to protect our respective proprietary rights, unauthorized parties may attempt to copy our or the combined company’s products or obtain or use information that we regard as proprietary, which could adversely impact revenues and the financial condition of the combined company.

 

Furthermore, there is a risk that we or the PCB Subsidiaries may infringe on the intellectual property rights of others. As in the case with many other companies in the PCB industry, we and the PCB Subsidiaries from time to time receive communications from third parties asserting patent rights to our respective products and enter into discussions with such third parties. Irrespective of the validity or the successful assertion of such claims, we and the PCB Subsidiaries could incur costs in either defending or settling any intellectual property disputes alleging infringement. In addition, our customers and the customers of the PCB Subsidiaries typically require us and the

PCB Subsidiaries, respectively, to indemnify them against claims of intellectual property infringement. If any claims are brought against the customers for such infringement, whether or not these have merit, we and the PCB Subsidiaries could be required to expend significant resources in defending such claims. In the event we or the PCB Subsidiaries are subject to any infringement claims, we or the PCB Subsidiaries may be required to spend a significant amount of money to develop non-infringing alternatives or obtain licenses. We and the PCB Subsidiaries, and ultimately the combined company, may not be successful in developing such alternatives or in obtaining such licenses on reasonable terms or at all, which could disrupt the production processes, damage the reputation, and affect the revenues and financial condition of the combined company.

 

We and Meadville will not have recourse for breaches of representations and warranties by the other.

 

The stock purchase agreement under which the PCB Combination would be effected provides that the representations and warranties made by us and our affiliates, Meadville, and MTG will not survive the effectiveness of the PCB Combination. Accordingly, the stock purchase agreement does not contain provisions for indemnification by any party for the breach or inaccuracy of any representation or warranty set forth in the stock purchase agreement. As a result, if the PCB Combination is effected, we and our affiliates on the one hand, and Meadville and MTG, on the other hand, would thereafter not have remedies under the stock purchase agreement for the breach of any representation or warranty made by the other.

 

We incur a variety of costs as a result of being a public company, and those costs may increase as a result of the PCB Combination.

 

As a U.S. public company registered with the SEC under the Exchange Act, we incur significant legal, accounting, and other expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Stock Market, frequently require changes in corporate governance policies and practices of companies registered with the SEC under the Exchange Act. These rules and regulations increase legal and financial compliance costs and make some activities more time-consuming and costly. In addition, we incur additional costs associated with our Exchange Act public company reporting requirements. These rules and regulations also may make it more difficult and more expensive for us to obtain and pay for, at commercially reasonable rates, director and officer liability insurance, and the combined company may be required to accept reduced policy limits and reduced scope of coverage or incur substantially higher costs to obtain the same or similar levels of coverage. As a result, it may be more difficult for the combined company to attract and retain qualified persons to serve on its board of directors or as executive officers. As a result, implementation of disclosure controls, internal controls, and financial reporting systems complying with the requirements of U.S. GAAP and U.S. securities laws and regulations required as a result of our continued status as a reporting company under the Exchange Act following effectiveness of the PCB Combination may be more difficult and costly than anticipated.

 

We expect to incur significant costs as a result of the integration of our operations with the PCB Subsidiaries.

 

There are inconsistencies in standards, controls, procedures and policies, business cultures, and compensation structures between us and the PCB Subsidiaries. The integration of our operations and the operations of the PCB subsidiaries and reconciling the inconsistencies in the standards, controls, procedures and policies, business cultures, and compensation structures between us and the PCB Subsidiaries may result in additional costs for the combined company. There are no assurances that such inconsistencies can be reconciled seamlessly or at all. The failure to reconcile such inconsistencies may lessen the anticipated benefits of the PCB Combination.

 

Meadville shareholders receiving our common stock in the PCB Combination would become stockholders in a Delaware corporation, which would change the rights and privileges of such shareholders in comparison to the rights and privileges of a shareholder in a Cayman Islands company.

 

We are governed by the laws of the United States and the corporate and other laws of the state of Delaware and by our Certificate of Incorporation and Bylaws. The Delaware General Corporation Law extends to stockholders certain rights and privileges that may not exist at all or that may be materially different under Cayman Islands law and, conversely, does not extend certain rights and privileges that a Meadville shareholder may have as a

shareholder of a company governed by Cayman Islands law. See the section entitled “Comparison of Meadville Shareholder and TTM Stockholder Rights” in this proxy statement/prospectus. We have adopted certain provisions that have the effect of discouraging a third party from acquiring control of our company. These provisions may also have the effect of discouraging or preventing certain types of transactions involving an actual or a threatened change in control of our company, including unsolicited takeover attempts, even though such a transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price.

 

Following the effectiveness of the PCB Combination, the current principal owners of Meadville are expected to own a substantial percentage of our common stock.

 

Following the effectiveness of the PCB Combination, approximately 46% of our common stock outstanding after giving effect to the PCB Combination (based on the number of shares of our common stock outstanding on November 16, 2009, the date we executed and announced the stock purchase agreement) would be owned by Meadville and, following the special dividend of our common stock by Meadville to its shareholders (or sale thereof on behalf of such shareholders electing to sell such TTM shares to which they would otherwise have been entitled), by Meadville’s shareholders or their transferees, and an estimated 33% to 39% of our common stock would be owned by the Principal Shareholders. The Principal Shareholders and the Tang Siblings will be entitled to jointly nominate one individual to our board of directors and a majority of the members of the board of directors of the PCB Subsidiaries. The Principal Shareholders, subject to the restrictions set forth in the shareholders agreement and any mitigation agreement(s) that we may be required to enter into with agencies of the U.S. government, will have influence over our management, operations, and potential significant corporate actions. The interests of the Principal Shareholders could conflict with the interests of our other stockholders and there can be no assurance that the Principal Shareholders would not take actions that favor their interests and not the interests of our other stockholders. See the sections entitled “The Stock Purchase Agreement and Related Arrangements — The Shareholders Agreement” and “The PCB Combination — Regulatory Approvals Required for the PCB Combination.”

 

Current holders of our common stock would suffer substantial dilution if the PCB Combination is effected.

 

The PCB Combination would dilute the ownership position of our current stockholders. If the PCB Combination is effected, we would issue 36,334,000 shares of our common stock in connection with the PCB Combination, representing approximately 46% of our outstanding common stock after giving effect to the PCB Combination (based on the number of shares of our common stock outstanding on November 16, 2009, the date we executed and announced the stock purchase agreement). Consequently, following the PCB Combination our current stockholders, as a general matter, would have less influence over the management and policies of our company than they currently exercise over the management and policies of our company.

 

The date that Meadville shareholders would receive the special dividend of our common stock from Meadville is uncertain.

 

The completion of the PCB Combination is subject to the shareholder and governmental approvals described in this proxy statement/prospectus and the satisfaction or waiver of certain other conditions. While we currently expect to complete the PCB Combination during the first quarter of 2010, such date could be later than expected due to delays in receiving such approvals or satisfying other closing conditions. After the closing of the PCB Combination, the special dividend of the TTM shares, together with certain cash, by Meadville to the Meadville shareholders is subject to Meadville withdrawing the listing of its shares on the Stock Exchange of Hong Kong, the deregistration of Meadville from the Cayman Islands and continuation of Meadville in the British Virgin Islands as a British Virgin Islands business company, and the approval of the Meadville shareholders in respect of the special dividend. While we currently expect the special dividend of our shares, together with certain cash, by Meadville to take place within thirty days following the closing date of the PCB Combination, such date could be later due to unexpected delays in the deregistration and continuation process. Accordingly, we cannot provide our stockholders with a definitive date on which we would issue the shares of our common stock to Meadville, and we cannot provide Meadville shareholders with a definitive date on which Meadville shareholders would receive from Meadville the

special dividend of shares of our common stock or cash in lieu of shares of our common stock (as to Meadville shareholders that elect to participate in the dealing facility and receive the net cash proceeds from the sale of the shares of our common stock by Meadville) in connection with the PCB Combination.

 

The combined company would be 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 the combined company’s manufacturing services and could lower its sales revenues and gross margins.

 

A majority of our and the PCB Subsidiaries’ sales revenues are generated from the electronics industry, which is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand. The industry is subject to economic cycles and recessionary periods and has been negatively affected by the current contraction in the U.S. and global economy and in the worldwide electronics market. Moreover, due to the uncertainty in the end markets served by most of our and the PCB Subsidiaries’ customers, the combined company would have a low level of visibility with respect to future financial results. The current credit crisis and related turmoil in the financial system has negatively impacted the global economy and could result in a significant downturn in the electronics industry. A lasting economic recession, excess manufacturing capacity, or a decline in the electronics industry could negatively affect the combined company’s business, results of operations, and financial condition. A decline in sales could harm the combined company’s profitability and results of operations and could require the combined company to recognize an impairment of its long-lived assets, including goodwill and other intangible assets.

 

The global financial crisis may impact the combined company’s business and financial condition in ways that we and Meadville currently cannot predict.

 

The continued credit crisis and related turmoil in the global financial system has had and may continue to have an impact on our, Meadville’s, and the PCB Subsidiaries’, and ultimately the combined company’s, business and financial condition. In addition to the impact that the global financial crisis has already had on us and Meadville, the combined company could face significant challenges if conditions in the financial markets do not improve or worsen. For example, continuation of the credit crisis could adversely impact overall demand in the electronics industry, which could have a negative effect on the combined company’s revenues and profitability. In addition, the combined company’s ability to access the capital markets may be severely restricted at a time when the combined company would like, or need, to do so, which could have an impact on flexibility to react to changing economic and business conditions.

 

During periods of excess global printed circuit board manufacturing capacity, the combined company’s gross margins may fall and/or the combined company may have to incur restructuring charges if it chooses to reduce the capacity of or close any of its facilities.

 

When we experience excess capacity, our sales revenues may not fully cover our fixed overhead expenses, and our gross margins may decline. 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. We expect that the combined company would continue to be subject to this risk of excess capacity. If the combined company determines that it has significant, long-term excess capacity, it may decide to permanently close one or more of its facilities and lay off some of its employees. Closures or lay-offs could result in the combined company recording restructuring charges such as severance, other exit costs, and asset impairments.

The combined company will have significant indebtedness, which could limit the financial flexibility of the combined company.

 

Our total liabilities as of September 28, 2009 were approximately $206 million. After giving effect to the PCB Combination, the combined company’s pro forma total liabilities as of September 28, 2009 would have been approximately $864.3 million. The combined company’s significant indebtedness could have significant negative consequences, including:

 

 

Our acquisition strategy involves numerous risks.

 

As part of our business strategy, including following the PCB Combination, we expect that we would continue to grow by pursuing opportunistic and strategic acquisitions of businesses, technologies, assets, or product lines that complement or expand our business. Risks related to an acquisition (including the acquisition of the PCB Subsidiaries in the PCB Combination) may include:

 

 

Acquisitions may cause us to:

 

 

 

Acquisitions of high technology companies are inherently risky, and no assurance can be given that our past or future acquisitions, including the PCB Combination, 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.

 

If the combined company is unable to manage its growth effectively, the business could be negatively affected.

 

We have experienced, and expect to continue to experience, growth in the scope and complexity of our operations. This growth may strain our and the PCB Subsidiaries’ managerial, financial, manufacturing, and other resources. In order to manage the combined company’s growth following the PCB Combination, the combined company would be required to continue to implement additional operating and financial controls and hire and train additional personnel. There can be no assurance that the combined company would be able to do so in the future, and failure to do so could jeopardize expansion plans and seriously harm the combined company’s operations. In addition, growth in the combined company’s capacity could result in reduced capacity utilization and a corresponding decrease in gross margins.

 

The development plans of the combined company involve significant capital expenditures and financing requirements, which are subject to a number of risks and uncertainties.

 

We expect the business of the combined company will be capital intensive. The ability of the combined company to increase revenue, profit, and cash flow depends upon continued capital spending. There can be no assurance as to whether, or at what cost, the anticipated capital projects of the combined company will be completed, if they will be completed on schedule, or as to the success of these projects if completed. In addition, we may be unable to generate sufficient cash flows from operations or obtain necessary external financing to finance our capital expenditures and investments. Further, the ability of the combined company to obtain external financing in the future is subject to a variety of uncertainties, including the following:

 

 

If adequate funds are not available on satisfactory terms, we may be forced to curtail the expansion plans of the combined company, which could result in a loss of customers, the inability to successfully implement our business strategy, and plan limitations on the growth of the business of the combined company.

We and the PCB Subsidiaries depend upon a relatively small number of original equipment manufacturer, or OEM, customers for a large portion of our and their respective sales, and a decline in sales to major customers could harm the results of operations of the combined company.

 

A small number of customers are responsible for a significant portion of our sales. Our five largest OEM customers accounted for approximately 29% and 24% of our net sales for the years ended December 31, 2008 and 2007, respectively. Our sales attributed to OEMs include both direct sales as well as sales that the OEMs place through EMS providers. The PCB Subsidiaries also depend on a small number of key direct and indirect OEM customers for a significant portion of their net sales. Sales to the PCB Subsidiaries’ five largest OEM customers accounted for approximately 38.6% and 36.1% of net sales for the years ended December 31, 2008 and 2007, respectively. The combined company’s customer concentration could fluctuate, depending on future customer requirements, which would depend in large part on market conditions in the electronics industry segments in which its customers participate. The loss of one or more significant customers or a decline in sales to significant customers could harm the combined company’s business, results of operations, and financial condition and lead to declines in the trading price of our common stock. In addition, the combined company could generate significant accounts receivable in connection with providing manufacturing services to its customers. If one or more significant customers were to become insolvent or were otherwise unable or unwilling to pay for the manufacturing services provided by the combined company, the combined company’s results of operations would be harmed.

 

In addition, during the combined company’s industry downturns, customers may request that the combined company reduce prices to limit the level of order losses, and the combined company may be unable to collect payments from its customers. There can be no assurance that key customers would not cancel orders, that they would continue to place orders with the combined company in the future at the same levels as experienced by us and the PCB Subsidiaries in prior periods, that they would be able to meet their payment obligations, or that the end-products which use the combined company’s products would be successful. This concentration of customer base may materially and adversely affect the combined company’s operating results due to the loss or cancellation of business from any of these key customers, significant changes in scheduled deliveries to any of these customers, or decreases in the prices of the products sold to any of these customers.

 

The PCB Subsidiaries have historically operated in Asia, where production costs are lower. We have historically operated primarily in North America. Following the PCB Combination, the average production costs of the combined company may be higher than the historic average production costs of the PCB Subsidiaries due to the integration of the production costs of the PCB Subsidiaries with our production costs, which has historically operated in North America. Competitors with lower production costs may gain market share in the combined company’s key market segments, which may have an adverse effect on the pricing of the products of the combined company.

 

Although the PCB Subsidiaries have historically operated in Asia, the PCB Combination and the integration of the PCB Subsidiaries with our company, which has historically operated in North America, may result in the combined company being at a competitive disadvantage with respect to price when compared to manufacturers with other lower-cost facilities in Asia and other locations. We believe price competition from PCB manufacturers in Asia and other locations with lower production costs may play an increasing role in the market. While historically our and the PCB Subsidiaries’ competitors in these locations have produced less technologically advanced PCBs, they continue to expand their capacity and capabilities with advanced equipment to produce higher technology PCBs. 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 the combined company to lower its prices, which would reduce the combined company’s gross margins.

 

The PCB Subsidiaries’ manufacturing facilities are located in Hong Kong and the PRC. To the extent that other cost-competitive regions begin to enter into PCB production and start to draw foreign investment into their domestic PCB industries or establish domestic markets for such products, the combined company may face greater competition for its products. Correspondingly, if conditions in the PCB products markets in the PRC and Hong Kong deteriorate, particularly for reasons such as increases in labor or other costs, migration of the supply chain outside of the PRC and Hong Kong, or decreases in demand for PCBs in the PRC, then production and consumption

of PCBs may shift to these other regions. The inability of the combined company to shift its production and sales to these regions could have a material adverse effect on its results of operations and financial condition.

 

A trend toward consolidation among customers could adversely affect the combined company’s business.

 

Recently, some of our large customers have consolidated and further consolidation of customers may occur. Depending on which organization becomes the controller of the supply chain function following the consolidation, the combined company may not be retained as a preferred or approved supplier. In addition, product duplication could result in the termination of a product line that we currently support and that the combined company would support. While there is potential for increasing the combined company’s position with the combined customers, there does exist the potential for decreased revenue if the combined company is not retained as a continuing supplier. The combined company would also face the risk of increased pricing pressure from the combined customers because of its increased market share.

 

The combined company’s failure to comply with the requirements of environmental laws could result in litigation, fines, and revocation of permits necessary to its manufacturing processes. Failure to operate in conformance with environmental laws could lead to debarment from participation in federal government contracts.

 

Our and the PCB Subsidiaries’ operations are, and the combined company’s operations would be, regulated under a number of federal, state, local, and foreign environmental and safety laws and regulations that govern, among other things, the discharge of hazardous materials into the air and water, as well as the handling, storage, and disposal of such materials. In the U.S., 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 Improvement Act. There are also analogous state, local, and foreign laws that would apply to the combined company, including stringent environmental regulations in the PRC. Compliance with these environmental laws is a major consideration for the combined company because the combined company’s manufacturing processes would use and generate materials classified as hazardous. Because we and the PCB Subsidiaries use hazardous materials and generate hazardous wastes in our manufacturing processes, we and the combined company may be subject to potential financial liability for costs associated with the investigation and remediation of our sites, or sites at which we have arranged for the disposal of hazardous wastes, if such sites become contaminated. Even if we, the PCB Subsidiaries, and the combined company fully comply with applicable environmental laws and are not directly at fault for the contamination, we may still be liable. The wastes the combined company would likely generate include spent ammoniacal and cupric etching solutions, metal stripping solutions, waste acid solutions, waste alkaline cleaners, waste oil, and waste waters that contain heavy metals such as copper, tin, lead, nickel, gold, silver, cyanide, and fluoride; and both filter cake and spent ion exchange resins from equipment used for on-site waste treatment.

 

Any material violations of environmental laws or failure to maintain required environmental permits could subject the combined company to fines, penalties, and other sanctions, including the revocation of effluent discharge permits, which could require the combined company to cease or limit production at one or more of its facilities, and harm its business, results of operations, and financial condition. Even if the combined company were to ultimately prevail, environmental lawsuits against it would be time consuming and costly to defend.

 

Prior to our acquisition of our 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 operations in Connecticut. The obligations include fulfillment of a Compliance Management Plan and installation of two rinse water recycling systems at the Stafford, Connecticut facilities. 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 violations. We and the PCB Subsidiaries operate, and the combined company would 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 the combined company’s business, results of operations, and financial condition.

 

We have been increasingly required to certify compliance to various material content restrictions in our products based on laws of various jurisdictions or territories such as the Restriction of Hazardous Substances, or RoHS, and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH, directives in the European Union and China’s RoHS legislation. New York City has adopted identical restrictions and many U.S. states are considering similar rules and legislation. In addition, we must also certify as to the non-applicability to the European Union’s Waste Electrical and Electronic Equipment directive for certain products that it manufactures. As with other types of product certifications that we routinely provide, we may incur liability and pay damages if our products do not conform to our certifications. The combined company would remain subject to these certification requirements and the liability that results from those requirements.

 

Like us, Meadville and the PCB Subsidiaries are subject to a variety of environmental laws and regulations in Hong Kong and the PRC which impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage, and disposal of solid and hazardous wastes. The manufacturing of their products generates gaseous chemical wastes, liquid wastes, waste water, and other industrial wastes in various stages of the manufacturing process. Production sites in Hong Kong and in the PRC are subject to regulation and periodic monitoring by the relevant environmental protection authorities. Environmental claims or the failure to comply with current or future regulations could result in the assessment of damages or imposition of fines against the combined company, suspension of production, or cessation of operations. New regulations could require the combined company to acquire costly equipment or to incur other significant expenses. Any failure by the combined company to control the use of, or adequately restrict the discharge of, hazardous substances could subject it to substantial future liabilities.

 

The combined company would be exposed to the credit risk of some of its customers and to credit exposures in weakened markets.

 

Most of the combined company’s sales would be on an “open credit” basis, with standard industry payment terms. The combined company would monitor individual customer payment capability in granting such open credit arrangements, seek to limit such open credit to amounts it believes the customers can pay, and maintain reserves the combined company believes are adequate to cover exposure for doubtful accounts. During periods of economic downturn in the electronics industry and the global economy, the combined company’s exposure to credit risks from its customers increases. Although we and the PCB Subsidiaries have, and the combined company would have, programs in place to monitor and mitigate the associated risks, such programs may not be effective in reducing the combined company’s credit risks.

 

Our ten largest customers accounted for approximately 50% and 44% of our net sales for the years ended December 31, 2008 and 2007, respectively. The ten largest customers of the PCB Subsidiaries accounted for approximately 51.1% and 50.3% of their combined net sales for the years ended December 31, 2008 and 2007, respectively. Additionally, the OEM customers often direct a significant portion of their purchases through a relatively limited number of EMS companies. Our and the PCB Subsidiaries’ contractual relationships are often with the EMS companies, who are obligated to pay us or the PCB Subsidiaries for their products. Because we expect the combined company’s OEM customers to continue to direct sales to EMS companies, we expect that the combined company would continue to be subject to this credit risk with a limited number of EMS customers. If one or more significant customers were to become insolvent or were otherwise unable to pay amounts owing to the combined company, the combined company’s results of operations would be harmed.

 

Many of the combined company’s customers would be EMS companies located outside of the U.S. The combined company’s exposure is likely to increase as these foreign customers continue to expand. With the primary exception of sales from the combined company’s facilities in China and a portion of sales from our current Ireland sales office, the combined company’s foreign sales would be denominated in U.S. Dollars and would not typically be on the same “open credit” basis and terms described above.

The combined company would rely on suppliers for the timely delivery of raw materials and components used in manufacturing its PCB 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 or components and decrease anticipated gross margins. If a raw material supplier fails to satisfy the combined company’s product quality standards, it could harm customer relationships.

 

To manufacture PCBs, the combined company would use raw materials such as laminated layers of fiberglass, copper foil, chemical solutions, gold, and other commodity products, which it would order from its suppliers. Although we and the PCB Subsidiaries have historically had preferred suppliers for most of these raw materials, the materials we and the PCB Subsidiaries use, and the combined company would 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 would be controlled by the combined company’s customers’ approved vendors. These components for backplane assemblies in some cases have limited or sole sources of supply. From time to time, the combined company would likely experience increases in raw material or component prices, based on demand trends, which can negatively affect gross margins. In addition, consolidations and restructuring in the combined company’s supplier base may result in adverse materials pricing due to reduction in competition among suppliers. Furthermore, if a raw material or component supplier fails to satisfy the combined company’s product quality standards, it could harm 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 the combined company’s ability to deliver products on a timely basis.

 

We and the PCB Subsidiaries have recently experienced an increase in the price we pay for gold. In general, we and the PCB Subsidiaries have been able to pass this price increase on to our customers, but there can be no assurance that we and the PCB Subsidiaries, or the combined company, would continue to be able to do so in the future.

 

If the combined company is unable to respond to rapid technological change and process development, it may not be able to compete effectively.

 

The market for our and the PCB Subsidiaries’ manufacturing services is characterized by rapidly changing technology and continual implementation of new production processes. The future success of the combined company’s business would depend in large part upon its ability to maintain and enhance its 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 the combined company’s technological position would increase as customers make demands for products and services requiring more advanced technology on a quicker turnaround basis. The combined company may not be able to respond to technological changes as quickly as its competitors.

 

In addition, the PCB industry could encounter competition from new or revised manufacturing and production technologies that render existing manufacturing and production technology less competitive or obsolete. The combined company may not respond effectively to the technological requirements of the changing market. If the combined company needs new technologies and equipment to remain competitive, the development, acquisition, and implementation of those technologies and equipment may require it to make significant capital investments. There is no assurance it would be able to acquire such technology or equipment on reasonable terms or at all, or if acquired, implement it on a timely and profitable basis.

 

If the combined company is unable to provide its customers with high-end technology, high quality products, and responsive service, or if it is unable to deliver its products to its customers in a timely manner, the combined company’s results of operations and financial condition may suffer.

 

In order to maintain our and the PCB Subsidiaries’ existing PCB customer base and obtain business from new customers, the combined company must demonstrate its ability to produce its products at the level of technology, quality, responsiveness of service, timeliness of delivery, and at costs that our customers require. If the combined company’s products are of substandard quality, if they are not delivered on time, if the combined company is not responsive to its customers’ demands, or if it cannot meet its customers’ technological requirements, the combined

company’s reputation as a reliable supplier of PCB products would likely be damaged. If the combined company is unable to meet these product and service standards it may be unable to obtain new contracts or keep our and the PCB Subsidiaries’ existing customers, and this could have a material adverse effect on its results of operations and financial condition.

 

If the combined company is unable to maintain satisfactory capacity utilization rates, its results of operations and financial condition would be adversely affected.

 

Given the high fixed costs of our and the PCB Subsidiaries’ operations, decreases in capacity utilization rates can have a significant effect on our businesses. Accordingly, the combined company’s ability to maintain or enhance gross margins would continue to depend, in part, on maintaining satisfactory capacity utilization rates. In turn, its ability to maintain satisfactory capacity utilization would depend on the demand for its products, the volume of orders it receives, and its ability to offer products that meet its customers’ requirements at competitive prices. If current or future production capacity fails to match current or future customer demands, the combined company’s facilities would be underutilized and would be less likely to achieve expected gross margins.

 

Competition in the PCB market is intense, and the combined company could lose market share if it is unable to maintain its current competitive position in end markets using quick-turn, high technology, and high-mix manufacturing services.

 

The PCB industry is intensely competitive, highly fragmented, and rapidly changing. We expect competition to continue, which could result in price reductions, reduced gross margins, and loss of market share. Our principal North American PCB competitors include Coretec, DDi, Endicott Interconnect Technologies, Firan Technology Group, ISU/Petasys, Merix, Pioneer Circuits, and Sanmina-SCI. Our principal international PCB competitors include Elec & Eltek, Hitachi, Ibiden, ISU/Petasys, Meadville, and Multek. Our principal assembly competitors in Asia include Amphenol, Sanmina-SCI, Simclar, TT Electronics, and Viasystems. The PCB Subsidiaries’ principal competitors include China Circuit, Compeq. Elec & Eltek, Founder Holdings, Gold Circuit, Nan Ya, Shenzhen Shennan Circuit, Tripod Technology, Unimicron, Unitech, and WUS. The PCB subsidiaries’ principal international competitors include AT&S, Merix, Multex, and Viasystems. The combined company is expected to compete on an international basis, and new and emerging technologies may result in new competitors entering the combined company’s market.

 

Some of the combined company’s competitors and potential competitors would have advantages over the combined company, including:

 

 

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 would the combined company. The combined company would be required to continually develop improved manufacturing processes to meet its customers’ needs for complex products. Our and the PCB Subsidiaries’ manufacturing process technology is generally not subject to significant proprietary protection.

During recessionary periods in the electronics industry, our historic strategy of providing quick-turn services, an integrated manufacturing solution, and responsive customer service may take on reduced importance to the combined company’s customers. As a result, the combined company may need to compete more on the basis of price, which could cause its gross margins to decline. Periodically, PCB manufacturers and backplane assembly providers experience overcapacity. Overcapacity, combined with weakness in demand for electronic products, would result in increased competition and price erosion for the combined company’s products.

 

Our and the PCB Subsidiaries’ 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 the combined company’s gross margins and potentially cause the trading price of our common stock to decline.

 

Our and the PCB Subsidiaries’ results of operations fluctuate for a variety of reasons, including:

 

 

A significant portion of our operating expenses are relatively fixed in nature, and planned expenditures are based in part on anticipated orders. We expect that the combined company would operate on a similar basis. Accordingly, unexpected revenue shortfalls may decrease the combined company’s 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 its customers and the end markets it serves. In particular, the seasonality of the computer industry and quick-turn ordering patterns affects the overall PCB industry. These seasonal trends have caused fluctuations in our operating results in the past and may continue to do so in the future, including for the combined company. Results of operations in any period should not be considered indicative of the results to be expected for any future period. In addition, our consolidated 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 likely would be adversely affected.

 

Because the combined company intends to sell primarily on a purchase order basis, it would be subject to uncertainties and variability in demand by its customers that could decrease revenues and harm its operating results.

 

We generally sell, and the combined company is expected to sell, to customers on a purchase order basis rather than pursuant to long-term contracts. Quick-turn orders are subject to particularly short lead times. Consequently, sales are subject to short-term variability in demand by 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 the combined company’s customers may vary due to:

 

 

We and the PCB Subsidiaries have periodically experienced terminations, reductions, and delays in our respective customers’ orders. Further terminations, reductions, or delays in customers’ orders could harm the

combined company’s business, results of operations, and financial condition. In addition, significant cancellations or deferrals could cause the combined company to hold excess inventory of certain raw materials supplied for the cancelled product for which it has taken delivery and which could reduce its profit margins and restrict its ability to fund its operations.

 

The increasing prominence of EMS providers in the PCB industry could adversely impact the combined company’s anticipated gross margins, potential sales, and customers.

 

Sales to EMS providers represented approximately 52% and 53% of our net sales for the years ended December 31, 2008 and 2007, respectively. Sales to EMS providers include sales directed by OEMs as well as orders placed with us at the EMS providers’ discretion. EMS providers source on a global basis to a greater extent than OEMs. The growth of EMS providers increases the purchasing power of such providers and could result in increased price competition or the loss of existing OEM customers. In addition, some EMS providers, including some of our and the PCB Subsidiaries’ customers, have the ability to directly manufacture PCBs and create backplane assemblies. If a significant number of other EMS customers were to acquire these abilities, the combined company’s customer base might shrink, and its expected and actual sales might decrease substantially. Moreover, if any of the combined company’s OEM customers outsource the production of PCBs and creation of backplane assemblies to these EMS providers, the combined company’s business, results of operations, and financial condition may be harmed.

 

If events or circumstances occur in the combined company’s business that indicate that its goodwill and definite-lived intangibles may not be recoverable, it could have impairment charges that would negatively affect its earnings.

 

As of September 28, 2009, our consolidated balance sheet reflected approximately $30.1 million of goodwill and definite-lived intangible assets. We evaluate whether events and circumstances have occurred, such as the potential for reduced expectations for future cash flows coupled with further decline in the market price of our stock and market capitalization that may indicate that the remaining balance of goodwill and definite-lived intangible assets may not be recoverable. If factors indicate that assets are impaired, the combined company would be required to reduce the carrying value of its goodwill and definite-lived intangible assets, which could harm the combined company’s results during the periods in which such a reduction is recognized. The combined company’s goodwill and definite-lived intangible assets may increase in future periods if it consummates other acquisitions. Amortization or impairment of these additional intangibles would, in turn, harm the combined company’s earnings.

 

Damage to the combined company’s manufacturing facilities due to fire, natural disaster, or other events could harm its financial results.

 

We have U.S. manufacturing and assembly facilities in California, Connecticut, Utah, and Wisconsin, and also have an assembly facility in the PRC. The PCB Subsidiaries have various PCB facilities in the PRC in Dongguan, Guangzhou, Shanghai, and Suzhou and in Hong Kong. The destruction or closure of any of the combined company’s facilities for a significant period of time as a result of fire, explosion, blizzard, act of war or terrorism, flood, tornado, earthquake, lightning, or other natural disaster could harm the combined company financially, increasing its costs of doing business and limiting its ability to deliver its manufacturing services and products on a timely basis.

 

The combined company’s manufacturing processes would depend on the collective industry experience of its employees. If a significant number of these employees were to leave the employ of the combined company, it could limit its ability to compete effectively and could harm the combined company’s financial results.

 

The combined company would have limited patent or trade secret protection for its manufacturing processes. We and the PCB Subsidiaries rely on the collective experience of our employees involved in their manufacturing processes to ensure that we continuously evaluate and adopt new technologies in our industry. Pursuant to relevant agreements, the PCB Subsidiaries have been granted the right to use certain of their customers’ intellectual property and strategic partners’ proprietary technology for the production of certain products. Although the combined

company would not be dependent on any one employee or a small number of employees, if a significant number of the combined company’s employees involved in its manufacturing processes were to leave its employment, and the combined company is not able to replace these people with new employees with comparable experience, the combined company’s manufacturing processes might suffer as the combined company might be unable to keep up with innovations in the industry. Further, employees who leave the combined company may take their experience to one of the combined company’s competitors, and those competitors could develop an advantage over the combined company in the sophistication of their manufacturing techniques. As a result, the combined company may lose its ability to continue to compete effectively.

 

The combined company’s business may suffer if any of its key senior executives discontinue employment with the combined company or if the combined company is unable to recruit and retain highly skilled engineering and sales staff.

 

The combined company’s future success would depend to a large extent on the services of its key managerial employees. In particular, Meadville and the PCB Subsidiaries have depended on the continued service of its executive officers, including its executive directors Mr. Tang, Mr. Tang Chung Yen, Tom (who we refer to as Tom Tang), Mr. Chung Tai Keung, Canice (who we refer to as Canice Chung), and Ms. Tang Ying Ming, Mai (who we refer to as Mai Tang). The combined company may not be able to retain its executive officers and key personnel or attract additional qualified management in the future. Its business also would depend on its continuing ability to recruit, train, and retain highly qualified employees, particularly engineering, sales, and marketing personnel. The competition for these employees is intense, including in the PRC, and the loss of these employees could harm the combined company’s business. Further, the combined company’s ability to successfully integrate the acquired companies depends in part on its ability to retain key management and existing employees at the time of the acquisition. The combined company may need to increase employee compensation levels in order to attract and retain existing executive officers and certain other employees as well as hire new employees.

 

The combined company 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.

 

The combined company could be subject to legal proceedings and claims for alleged infringement by it 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 the combined company by its customers might infringe on the patents or other intellectual property rights of third parties, in which case the combined company’s manufacture of PCBs according to such designs and specifications could expose it to legal proceedings for allegedly aiding and abetting the violation, as well as to potential liability for the infringement. If the combined company did not prevail in any litigation resulting from any such allegations, its business could be harmed. Any such claim, regardless of its merits, could result in substantial costs and diversion of resources that could materially and adversely affect the combined company’s business and operating results.

 

The combined company would be subject to extensive governmental regulations, policies, and controls in the U.S., the PRC, and elsewhere.

 

The combined company’s failure to comply with any of such present or future regulatory requirements or contractual obligations could result in suspension of production, prohibitions on sales or product recalls, or in its being directly or indirectly liable for costs, civil or criminal fines or penalties, and third-party claims. In addition, such regulations could jeopardize the combined company’s ability to conduct business in the jurisdictions implementing them or require it to incur significant expenses associated with compliance. Changes in current laws or regulations or the imposition of new laws and regulations in the U.S., the PRC, or elsewhere could also materially and adversely affect the combined company’s business. Additionally, foreign governments may impose tariffs, duties, and other import restrictions on raw materials that the combined company would obtain from non-domestic suppliers and may impose export restrictions on products that it would sell internationally. The imposition of regulations, tariffs, duties, or restrictions could materially and adversely affect the combined company’s business, results of operations, and financial condition.

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 the combined company’s business.

 

A significant portion of our revenues have historically been derived from products and services ultimately sold to the U.S. government and is therefore affected by, among other things, the federal budget process. We are a supplier, primarily as a subcontractor, to the U.S. government and its agencies as well as foreign governments and agencies. 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, or the U.S. government’s determination not to use the combined company as a supplier, could have a material adverse effect on the combined company’s business, results of operations, or prospects. The substantial foreign ownership of our shares following the PCB Combination may limit the combined company’s ability to work on certain projects for the U.S. government, especially projects with security requirements.

 

The U.S. Defense Security Service and CFIUS may take measures to protect classified projects and national security.

 

Due to the substantial foreign ownership of our shares following the PCB Combination, the U.S. Defense Security Service and CFIUS may take measures to protect classified projects and national security. Certain measures and conditions may be imposed on the combined company, which may materially and adversely affect the combined company’s operating results, due to increasing the costs of the combined company for directors and other security measures and limiting the combined company’s control over certain U.S. facilities, contracts, personnel, and operations.

 

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 the combined company.

 

Our supply agreements with our customers 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 the combined company 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 the combined company’s cash flow and results of operations.

 

Products that the combined company manufactures may contain design or manufacturing defects, which could result in reduced demand for the combined company’s services and liability claims against the combined company.

 

A significant component of the combined company’s business would involve manufacturing products to its customers’ specifications, which are highly complex and may contain design or manufacturing errors or failures, despite quality control and quality assurance efforts. Defects in the products the combined company manufactures, 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 the combined company. If these defects occur either in large quantities or too frequently, the combined company’s 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 the combined company’s products would be used in products that are integral to its customers’ businesses, errors, defects, or other performance problems could result in financial or other damages to its customers beyond the cost of the PCB, for which the combined company may be liable. Although the combined company’s invoices and sales arrangements would generally contain provisions

designed to limit its 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 the combined company, even if it were unsuccessful, would be time consuming and costly to defend and could impair the combined company’s reputation and relationships with customers. Although we maintain, and we expect that the combined company would seek to maintain, technology errors and omissions insurance, we cannot assure you that the combined company would be able to purchase such insurance coverage in the future on terms that are satisfactory to the combined company, if at all.

 

We are subject to risks of currency fluctuations and currency exchange risks, and the combined company would continue to be subject to such risks.

 

A portion of the combined company’s cash and other current assets would be held in currencies other than the U.S. Dollar. Changes in exchange rates among other currencies and the U.S. Dollar would affect the value of these assets as translated to U.S. Dollars in the combined company’s balance sheet. To the extent that we ultimately decide to repatriate some portion of these funds to the U.S., 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. Significant inflation or disproportionate changes in foreign exchange rates could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy, or changes in local interest rates.

 

As a result of this, and due to the fact that a substantial portion of the combined company’s operating costs are expected to be denominated in Renminbi, or RMB, a portion of the combined company’s results of operations will be exposed to fluctuations between the U.S. Dollar and the RMB. The impact of future exchange rate fluctuations between the U.S. Dollar and the RMB cannot be predicted. To the extent that the PCB Subsidiaries have, or the combined company will have, outstanding indebtedness denominated in the RMB, the appreciation of the RMB against the U.S. Dollar will have an adverse impact on the financial condition and results of operations (including the cost of servicing, and the value in our balance sheet of, the RMB-denominated indebtedness) of the combined company.

 

The PRC government imposes control over the convertibility of RMB into foreign currencies. Pursuant to certain PRC regulations, conversion of RMB into foreign exchange from foreign exchange accounts in the PRC is based on, among other things, a board resolution declaring the distribution of a dividend and payment of profits. Remittance of such amounts to foreign investors from the foreign exchange accounts of the foreign invested enterprises in the PRC or conversion of the RMB into foreign currencies at designated foreign exchange banks for the remittance of dividends and profits do not require permission from the State Administration of Foreign Exchange, or SAFE, and other applicable governmental authorities of the PRC do not impose restrictions on the category of recurring international payments and transfers. However, conversion of RMB into foreign currencies for capital account items, including direct investment, loans, and security investment, must be approved by SAFE and the relevant branch. These regulations and procedures would subject the combined company to further currency exchange risks.

 

We export defense and commercial products from the United States to other countries, and Meadville exports various products from the PRC. If the combined company were to fail to comply with export laws, it 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, and exports from the PRC are regulated by certain PRC authorities. Other foreign countries also regulate exports of products that may be manufactured by the combined company. 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 the combined company from exporting certain products, resulting in significant harm to the combined company’s business.

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, the business of the combined company could suffer.

 

The combined company’s future revenue growth partially depends on new outsourcing opportunities from OEMs. Our and the PCB Subsidiaries’ current and prospective customers continuously evaluate our and the PCB Subsidiaries’ 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, the combined company’s financial results and future growth could be adversely affected.

 

The combined company may not be able to fully recover its costs for providing design services to its customers, which could harm its financial results.

 

Although we and the PCB Subsidiaries have historically entered into design service activities with purchase order commitments, the cost of labor and equipment to provide these services may in fact exceed what the combined company would be able to fully recover through purchase order coverage. The combined company may also 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 the combined company would generally seek to make contractual provisions to recover these costs in the event that the product does not go into production, the actual recovery can be difficult to obtain and may not happen in full or at all. 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 the combined company’s operating results.

 

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

 

We are, and the combined company will be, subject to income taxes in the United States and various foreign jurisdictions. Significant judgment will be required in determining the combined company’s 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. The combined company’s 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. These tax determinations are regularly subject to audit by tax authorities, and developments in those audits could adversely affect the combined company’s income tax provision. Although we believe that our own 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 and the operating results of the combined company.

 

If our net earnings do not remain at or above recent levels, or if we are not able to predict with a reasonable degree of probability that they will continue, we may have to record a valuation allowance against our net deferred tax assets.

 

As of September 28, 2009, we had net deferred income tax assets of approximately $40.9 million. Based on our forecast for future taxable earnings, we believe we will utilize the deferred tax asset in future periods. However, if the 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.

 

The combined company’s results of operations may differ significantly from the unaudited pro forma condensed combined financial data included in this proxy statement/prospectus.

 

This proxy statement/prospectus includes unaudited pro forma condensed combined financial statements to illustrate the effects of the PCB Combination on our historical financial position and operating results. The

unaudited pro forma condensed combined statements of operations combine the historical consolidated statements of operations of us and the PCB Business of Meadville, giving effect to the PCB Combination as if it had been completed on January 1, 2008. The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheets of us and the PCB Business of Meadville, giving effect to the PCB Combination as if it occurred on September 28, 2009. This unaudited pro forma financial data is presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the PCB Combination been completed as of the dates or at the beginning of the periods presented, as applicable, nor is it indicative of the results of operations in future periods or the future financial position of the combined company.

 

Our existing backplane 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 currently have manufacturing operations and sales offices located in Asia and Europe, and the PCB Subsidiaries have facilities in the PRC, we and the combined company are subject to the risks of changes in economic and political conditions in those geographic areas, including but not limited to:

 

 

Our and the PCB Subsidiaries’ current operations in the PRC, and ultimately the combined company’s operations in the PRC, subject us to risks and uncertainties relating to the laws and regulations of the PRC.

 

Consummation of the PCB Combination would result in us having a substantially greater presence in and exposure to the PRC. Under its current leadership, the government of the PRC has been pursuing economic reform policies, including the encouragement of foreign trade and investment and greater economic decentralization. No assurance can be given, however, that the government of the PRC will continue to pursue such policies, that such policies will be successful if pursued, or that such policies will not be significantly altered from time to time. Despite progress in developing its legal system, the PRC does not have a comprehensive and highly developed system of laws, particularly with respect to foreign investment activities and foreign trade. Enforcement of existing and future laws and contracts is uncertain, and implementation and interpretation thereof may be inconsistent. As

the Chinese legal system develops, the promulgation of new laws, changes to existing laws, and the preemption of local regulations by national laws may adversely affect foreign investors. Further, any litigation in the PRC may be protracted and result in substantial costs and diversion of resources and management attention. In addition, some government policies and rules are not timely published or broadly communicated, if they are published at all. As a result, the combined company may operate its business in violation of new rules and policies without having any knowledge of their existence. These uncertainties could limit the legal protections available to the combined company.

 

The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of capital reinvestment, growth rate, control of foreign exchange, allocation of resources, and balance of payments position. While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has implemented measures since the late 1970s emphasizing the use of market forces for economic reform, including the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, the government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. Since late 2003, the PRC government has implemented a number of measures designed to prevent the economy from overheating. These actions, as well as future actions and policies of the PRC government, could cause a decrease in the overall level of economic activity, and consequently have an adverse impact on the combined company’s business, results of operations, and financial condition.

 

Moreover, there can be no assurance that economic reform measures adopted by the PRC government, or other policies adopted in the future, will be effective or consistently applied. Furthermore, some of these measures and policies may benefit the overall economy of the PRC, but may also have a negative impact on the combined company’s business. For example, the combined company’s results of operations and financial condition may be adversely affected by government control over capital investments or changes in tax regulations applicable to the combined company.

 

The combined company’s operations would be subject to the uncertainties of the PRC legal system.

 

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little value as precedent. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, and forms of foreign investment (including wholly foreign-owned enterprises and joint ventures) in particular. These laws, regulations, and legal requirements are relatively new and are often changing and their interpretation and enforcement involve uncertainties. These uncertainties would limit the reliability of legal protections available to the combined company. We cannot predict the effect of future developments in the PRC legal system. The combined company may be required in the future to procure additional permits, authorizations, and approvals for our and the PCB Subsidiaries’ existing and the combined company’s future operations, which may not be obtainable in a timely fashion or at all. An inability to obtain such permits or authorizations may have a material adverse effect on the combined company’s business and results of operations.

 

Due to the lack of back up facilities in the PRC, the combined company’s operations could be adversely affected by a shortage of utilities or a discontinuation of priority supply status offered for such utilities.

 

The manufacturing of PCBs requires significant quantities of electricity and water. Meadville and the PCB Subsidiaries have historically purchased substantially all of the electrical power for their manufacturing plants in the PRC from local power plants. Because the PRC’s economy has recently been in a state of growth, the strain on the nation’s power plants is increasing, which has led to continuing power outages in various parts of the country. There may be times when the combined company’s operations in the PRC may be unable to obtain adequate sources of electricity to meet production requirements. Additionally, the combined company would not likely maintain any

back-up power generation facilities for its operations, so if it were to lose power at any of its facilities it would be required to cease operations until power was restored. Any stoppage of power could adversely affect the combined company’s ability to meet its customers’ orders in a timely manner, thus potentially resulting in a loss of business and increased costs of manufacturing. In addition, the sudden cessation of power supply could damage the combined company’s equipment, resulting in the need for costly repairs or maintenance as well as damage to products in production, resulting in an increase in scrapped products. Similarly, the sudden cessation of the water supply to the PRC facilities could adversely affect the combined company’s ability to fulfill orders in a timely manner, potentially resulting in a loss of business and under-utilization of capacity. Various regions in the PRC have in the past experienced shortages of both electricity and water and unexpected interruptions of power supply. There can be no assurance that the combined company’s required utilities would not in the future experience material interruptions, which could have a material adverse effect on its results of operations and financial condition.

 

The national and regional economies in the PRC may be adversely affected by a recurrence of severe acute respiratory syndrome, or an outbreak of other epidemics such as H1N1 or avian flu, thereby affecting the combined company’s prospects.

 

In June 2009, the World Health Organization, or WHO, declared the outbreak of H1N1 influenza to be a pandemic. The PRC has had reported cases of H1N1 influenza. The governments of many regions, including the government of the PRC, undertook quarantine measures. During 2004, large parts of Asia, including the Guangdong province, where the PCB Subsidiaries have operations, experienced outbreaks of avian flu which, according to a report of the WHO in 2004, placed the world at risk of an influenza pandemic with high mortality and social and economic disruption. Further, in the first half of 2003 certain countries in Asia experienced an outbreak of SARS, a highly contagious form of atypical pneumonia, which seriously interrupted economic activities and caused the demand for goods and services to decrease in the affected regions.

 

Past occurrences of epidemics or pandemics, depending on their scale of occurrence, have caused different degrees of damage to the national and local economies in the PRC. A recurrence of SARS or an outbreak of any other epidemics or pandemics in the PRC, such as the H1N1 influenza or avian flu, especially in the areas where we or the PCB Subsidiaries have operations, or where the combined company will have operations, may result in quarantines, temporary closures of offices and manufacturing facilities, travel restrictions, or the temporary or permanent loss of key personnel. The perception that an outbreak of contagious disease may occur again may also have an adverse effect on the economic conditions of countries in Asia. Any of the above may cause material disruptions to our operations, which in turn may adversely affect our financial condition and results of operations.

 

The PCB Subsidiaries do not currently have a certificate of state-owned land use or certificates of real estate ownership for certain of their properties in the PRC and the properties associated with certain facilities are subject to a general city re-zoning plan which, if implemented in the future, may require the combined company to relocate these facilities.

 

The PCB Subsidiaries do not currently have certificates of real estate ownership for certain buildings used as dormitories and a sewage treatment center for staff dormitories in the PRC. The PCB Subsidiaries also have not obtained the relevant certificate of state-owned land use and certificates of real estate ownership for certain facilities in the PRC. Further, there is a legal defect in the leasing of a parcel of land currently used as dormitories and two buildings used as staff quarters in the PRC. We can provide no assurance that the PCB Subsidiaries will be able to obtain relevant land use certificates in a timely manner or at all, or that the combined company’s results of operations or financial condition would not be adversely affected due to the lack of such certificates. Any requirement to cease using the relevant property and premises could also have a material adverse effect on the combined company’s business.

 

In addition, we understand that all of the properties where certain of the PCB Subsidiaries’ facilities are located are now subject to a general city rezoning plan which has been prepared by the Dongguan municipal government. According to the relevant PRC regulations, the general rezoning plan is made for twenty years. Under the rezoning plan, it is intended that the properties where certain of the PCB Subsidiaries’ facilities are located will be re-designated from industrial to commercial use. If and when implemented in respect of those properties, the rezoning plan may require the combined company to vacate these properties and relocate the facilities.

In the event the combined company is required to vacate the above properties, the combined company would implement certain strategies to minimize any loss of production capacity during relocation. There can be no assurance that the combined company’s strategies to deal with the relocation of the facilities can be implemented, or that such strategies can be implemented before the combined company is required to vacate the above properties due to the proposed general city rezoning plan. If the combined company is required to relocate the facilities, the combined company’s results of operation and financial condition may be materially and adversely affected.

 

The market price for our common stock may be volatile before and following the PCB Combination, and many factors could cause the market price of our common stock to fall.

 

Many factors could cause the market price of our common stock to rise and fall before and following the PCB Combination, including the following:

 

 

In addition, stocks of technology companies have experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to their operating performance. Public announcements by technology companies concerning, among other things, their performance, accounting practices, or legal problems could cause the market price of our common stock to decline regardless of the actual operating performance of us or the combined company.

 

Holders of Meadville’s capital stock who receive shares of our common stock in the PCB Combination may face difficulty and risks in selling the shares of our common stock they receive.

 

In connection with the PCB Combination transaction, Meadville’s shareholders would be given an option to either receive our common stock

 

 

Meadville will prepare and deliver to Meadville’s shareholders an election form with the Circular provided by Meadville to allow such holders to make the election.

If a Meadville shareholder elects to utilize the dealing facility, the sale price for our shares would not be subject to any minimum or maximum price but would depend on the market price over the applicable sales period and, therefore, our shares may be sold at prices that are substantially lower than the current trading price of our shares or the trading price of our shares on the date of the sale by the placing agent or agents. No assurance can be given as to the sale price that Meadville shareholders would receive for their TTM shares through the dealing facility. The cash proceeds from the sale, net of certain transaction expenses (including any underwriting commission or placing fees and transfer taxes (if any)), will be remitted to the Meadville shareholders who have elected or who are deemed to have elected to participate in the dealing facility. There can be no assurance that the transaction expenses incurred by Meadville, and ultimately borne by the Meadville shareholders electing to use the dealing facility, will be less than the expenses a Meadville shareholder would incur if it were to sell the TTM shares on its own.

 

The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.

 

Sales of a substantial number of shares of our common stock in the public markets following the PCB Combination, or the perception that these sales might occur, and the issuance of a substantial number of shares of our common stock in connection with the PCB Combination (and the special dividend of such shares to Meadville shareholders, or the sale thereof, at the election of Meadville shareholders, to the public through the dealing facility), could cause the market price of our common stock to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.

 

We may not pay dividends on our common stock in the immediate future.

 

We have not declared or paid cash dividends since 2000. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends on our common stock. Payments of any cash dividends on our common stock in the future will depend on our financial condition, results of operations, and capital requirements as well as other factors deemed relevant by our board of directors. Further, we may enter into credit arrangements and other lending arrangements that prohibit us from paying dividends on our common stock without the consent of our lenders.

 

Provisions of our Certificate of Incorporation, Bylaws, and Delaware law could delay or prevent a change in control of us and entrench current management.

 

Our Certificate of Incorporation, our Bylaws, and the Delaware General Corporation Law contain certain provisions that could delay or make more difficult an acquisition of control of our company not approved by our board of directors, whether by means of a tender offer, open market purchases, a proxy context, or otherwise. These provisions have been implemented to enable us to develop our business in a manner that will foster our long-term growth without disruption caused by the threat of a takeover not deemed by our board of directors to be in the best interests of our company and our stockholders. These provisions could have the effect of discouraging third parties from making proposals involving an acquisition or change of control of our company even if such a proposal, if made, might be considered desirable by a majority of our stockholders. These provisions may also have the effect of making it more difficult for third parties to cause the replacement of our current management without the concurrence of our board of directors.

 

Our Certificate of Incorporation and Bylaws provide that our board of directors will be divided into three classes, as nearly equal in number as possible, serving staggered terms. Approximately one-third of our board of directors will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of our outstanding common stock from obtaining control of our board of directors until our second annual stockholder meeting following the date the acquirer obtains the controlling share interest. The classified board of directors provision could have the effect of discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us and could increase the likelihood that incumbent directors will retain their positions.

In addition, our Certificate of Incorporation and Bylaws:

 

 

Section 203 of the Delaware General Corporation Law applies to our company. Section 203 provides that, subject to certain exceptions, a corporation shall not engage in any “business combination” with any “interested shareholder” for a three-year period following the time that such shareholder becomes an interested shareholder unless the following conditions have been satisfied:

 

 

Section 203 generally defines an “interested shareholder” to include, subject to various exceptions, the following:

 

 

Section 203 generally defines a “business combination” to include the following:

 

 

 

Under certain circumstances, Section 203 makes it more difficult for a person that would be an “interested shareholder” to effect various business combinations with a corporation for a three-year period, although a company’s certificate of incorporation or shareholder-adopted bylaws may exempt a corporation from the restrictions imposed by Section 203. Neither our Certificate of Incorporation nor our Bylaws exempt our company from the restrictions imposed by Section 203. We anticipate that the provisions of Section 203 may encourage companies interested in acquiring our company to negotiate in advance with our board of directors since the stockholder approval requirement would be avoided if the board of directors approves, prior to the time the acquirer becomes an interested shareholder, either the business combination or the transaction that results in the acquirer becoming an interested shareholder.

 

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. These forward-looking statements include all matters that are not historical facts. This proxy statement/prospectus and documents incorporated by reference contain these types of statements. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “may,” “will,” or “should” and words or terms of similar substance used in connection with any discussion of future operating results or financial performance identify forward-looking statements. Also, as examples, forward-looking statements may include statements relating to the benefits of the PCB Combination, including anticipated synergies and cost savings estimated to result from the PCB Combination, and statements relating to future business prospects, revenue, income, and financial condition.

 

These forward-looking statements involve certain known and unknown risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, the following factors:

 

 

See also the section entitled “Risk Factors” in this proxy statement/prospectus and the risk factors disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 28, 2009. These risks and uncertainties are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely impact the combined company’s business and financial performance. Moreover, the combined company will operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact that these factors will have on the combined company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

 

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and any risk resulting from such uncertainty in connection with any forward-looking statement that may be made herein. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus in the case of forward-looking statements contained in this proxy statement/prospectus, or the dates of the documents incorporated by reference into this proxy statement/prospectus in the case of forward-looking statements made in those incorporated documents. You should carefully review this proxy statement/prospectus in its entirety, including, but not limited to, our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the accompanying notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and in our Current Report on Form 8-K filed with the SEC on December 15, 2009, and incorporated by reference herein, and the risks described in the section entitled “Risk Factors” in this proxy statement/prospectus. You should also review the description of Meadville’s PCB business in the sections entitled “Information Regarding Meadville’s PCB Operations and the PCB Subsidiaries” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the PCB Business of Meadville,” and the financial statements and the accompanying notes thereto in this proxy statement/prospectus. Except for our ongoing obligation to disclose material information under U.S. federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events, or to report the occurrence of unanticipated events.

 

We expressly qualify in their entirety all forward-looking statements attributable to us, Meadville, the PCB Subsidiaries, or the combined company, or any person acting on their behalf, by the cautionary statements contained or referred to in this section.

 

Our common stock is listed on the NASDAQ Global Select Market under the symbol “TTMI.” Meadville’s shares are listed on the Stock Exchange of Hong Kong, or HKSE, under the symbol “3313.” As of February 1, 2010, there were 303 holders of record of shares of our common stock and 2,836 holders of record of Meadville shares. The table below sets forth the high and low sales prices per share of TTM common stock and Meadville shares, as reported on the NASDAQ Global Select Market and the HKSE, respectively. Our quarters are based on a 13 week quarter, and Meadville’s quarters are based on a calendar quarter.

 

 

 

 

The following table shows, as of (a) October 29, 2009, the last full trading day of Meadville’s shares before suspension of trading in Meadville’s shares prior to announcement of the PCB Combination; (b) November 13, 2009, the last full trading day of our shares of common stock before announcement of the PCB Combination; and (c) February 5, 2010, the last practicable day before the date of this proxy statement/prospectus, the closing price per share of our common stock on the NASDAQ Global Select Market and the closing price per Meadville share on

the Stock Exchange of Hong Kong. The table assumes an exchange rate of HK$7.7503 to US$1.00 on October 29, 2009 and HK$7.7706 to US$1.00 on February 5, 2010.

 

 

The market price of our common stock or Meadville’s shares could change significantly. Because the equity component of the consideration to be paid in the PCB Combination will not be adjusted for changes in the market price of our common stock or Meadville’s shares through the closing date of the PCB Combination, the consideration that holders of Meadville shares may receive in the PCB Combination and subsequent special dividend of our shares by Meadville (or the net cash proceeds payable to each Meadville shareholder who elects to have Meadville sell the shares of our common stock that such electing Meadville shareholder would otherwise be entitled to receive in the special dividend on their behalf through the dealing facility) may vary significantly from the market value of our common stock that holders of Meadville shares would have received if the PCB Combination was completed on November 13, 2009, the last full trading day before the announcement of the PCB Combination, or on the date of this proxy statement/prospectus.

 

We have not declared or paid cash dividends on our common stock since 2000. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends on our common stock. Payments of any cash dividends on our common stock in the future will depend on our financial condition, results of operations, and capital requirements as well as other factors deemed relevant by our board of directors. Further, we may enter into credit agreements and other lending arrangements prohibiting us from paying dividends on our common stock without the consent of our lenders.

 

Since January 1, 2007, Meadville paid cash dividends as follows:

 

 

Payments of dividends on Meadville shares in the future will depend on the financial condition, results of operations, capital requirements, contractual restrictions, and other factors deemed relevant by Meadville’s board of directors.

 

Following completion of the PCB Combination, the holders of our common stock will be entitled to receive any dividends as may be declared by our board of directors from funds legally available therefor. The dividend policy of the combined company will be determined by our board of directors.

 

We are furnishing this proxy statement/prospectus to holders of our common stock in connection with the solicitation of proxies by our board of directors for use at the special meeting of stockholders to be held on March 12, 2010 and at any adjournment, postponement, or continuation thereof. This proxy statement/prospectus is first being furnished to our stockholders on or about February 11, 2010. In addition, this proxy statement/prospectus is being furnished to the Meadville shareholders as a prospectus of TTM in connection with the issuance by us of shares of our common stock to Meadville in connection with the PCB Combination described in this proxy statement/prospectus, and Meadville’s subsequent special dividend of such shares of our common stock to its shareholders or, to the extent a Meadville shareholder so elects, in lieu of the shares of our common stock that such Meadville shareholder would otherwise have been entitled to receive, the net cash proceeds from the sale of such TTM shares sold through the dealing facility established by Meadville.

 

The special meeting of our stockholders will be held on March 12, 2010 at 10:00 a.m., Pacific time, at our corporate offices located at 2630 South Harbor Boulevard, Santa Ana, California 92704.

 

At the special meeting of our stockholders, and at any adjournment, postponement, or continuation thereof, our stockholders will be asked to consider and vote upon the proposal to approve the issuance of 36,334,000 shares of our common stock in the PCB Combination pursuant to the terms of the stock purchase agreement, and to transact any other business that may be properly brought before the special meeting or any adjournment or postponement thereof.

 

Our board of directors has unanimously approved and we have executed the stock purchase agreement, and our board of directors has unanimously approved the issuance of shares of our common stock in the PCB Combination, and recommends that our stockholders vote “for” approval of the issuance of shares of our common stock in the PCB Combination pursuant to the stock purchase agreement.

 

We have fixed the close of business on February 1, 2010 as the Record Date for determination of our stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on February 1, 2010, there were 43,186,855 shares of our common stock outstanding and entitled to vote.

 

Approval of the issuance of shares of our common stock in connection with the PCB Combination requires the affirmative vote of holders of shares representing not less than a majority (greater than 50%) of the votes present in person or represented by proxy at the special meeting and entitled to vote thereon, provided that a quorum consisting of the holders of not less than a majority (greater than 50%) of the votes entitled to be cast by our stockholders is present at the special meeting in person or by proxy.

 

At the close of business on the Record Date, directors and executive officers of our company beneficially owned and were entitled to vote approximately 3.1% of the 43,186,855 shares of our common stock outstanding on that date. Directors and executive officers of Meadville and their affiliates did not beneficially own any of our shares of common stock outstanding on that date.

 

Holders of our common stock are entitled to one vote for each share of our common stock held at the close of business on the Record Date. Votes will be counted by the inspector of election appointed for the meeting, who will separately count “for” and “against” votes, abstentions, and broker non-votes.

 

The approval of the issuance of our common stock in the PCB Combination pursuant to the stock purchase agreement requires the affirmative vote of holders of shares representing a majority (more than 50%) of the shares of our common stock represented in person or by proxy and entitled to vote at the special meeting, assuming the presence of a quorum.

 

The failure of a TTM stockholder to return a proxy or to vote in person will not have the effect of a vote “for” or “against” the PCB Combination, assuming the presence of a quorum.

 

A quorum of stockholders is necessary to hold a valid special meeting. A quorum will be present at our special meeting if holders of our shares representing a majority (more than 50%) of the votes entitled to be cast are represented in person or by proxy. If a quorum is not present at the special meeting, we expect that the meeting will be adjourned or postponed to solicit additional proxies. Your shares will be counted towards the quorum only if you submit a valid proxy or vote at the special meeting.

 

Shares abstaining from the vote on the PCB Combination will have the effect of a vote “against” the proposal. Broker non-votes will not be counted for any purpose in determining whether a proposal has been approved. Abstentions and broker non-votes will be counted towards the quorum requirement. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner (despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions).

 

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank, or other nominee, and you wish to vote at the special meeting, you must bring to the special meeting a proxy from the record holder of the shares authorizing you to vote at the special meeting.

 

We request that our stockholders complete, date, and sign the accompanying proxy and promptly return it in the accompanying envelope or otherwise mail it to us. All properly executed proxies that we receive prior to the vote at the special meeting (that have not been revoked) will be voted in accordance with the instructions indicated on the proxies. All properly executed proxies that we receive prior to the vote at the special meeting that do not provide any direction as to how to vote will be voted in accordance with the recommendations of our board of directors.

 

If your shares are held in street name, you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. Brokers that hold shares of our common stock in street name for a beneficial owner of those shares typically have the authority to vote on “discretionary” matters when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of “non-discretionary” matters without specific instructions from the beneficial owner. If your broker holds your TTM common stock in street name, your broker will vote your shares on the PCB Combination only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with the proxy statement/prospectus. On non-discretionary matters for which you do not give your broker instructions, the shares will be treated as broker non-votes. Accordingly, our stockholders are encouraged to return the enclosed proxy card marked to indicate their vote as described in the instructions on the proxy card.

 

Stockholders may revoke their proxies at any time prior to use by delivering to our Secretary at our principal executive offices, 2630 South Harbor Boulevard, Santa Ana, California 92704, a signed notice of revocation or a later-dated signed proxy, or by attending the special meeting and voting in person. Attendance at the special meeting does not in itself constitute the revocation of a proxy. Stockholders who have instructed their broker to vote their shares must follow their broker’s directions in order to change those instructions. You may also attend the special meeting in person instead of submitting a proxy.

 

We will bear the entire cost of solicitation of proxies from our stockholders, including preparation, assembly, printing, and mailing of this proxy statement/prospectus and the proxy card. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries, and custodians holding in their names shares of our common stock beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of our common stock for their costs of forwarding solicitation materials to such beneficial owners. In addition to solicitation by use of the mails, proxies may be solicited by directors, officers, employees, or agents of our company in person or by telephone or other means of communication. No additional compensation will be paid to directors, officers, or other regular employees of ours for such services.

 

We have retained The Altman Group to aid in the solicitation of proxies from banks, brokers, nominees, and intermediaries. We will pay The Altman Group a fee of $6,500 for its services, plus we will reimburse The Altman Group for various out-of-pocket and other expenses.

 

We do not expect that any matter other than the proposal presented in this proxy statement/prospectus will be brought before our special meeting. However, if other matters incident to the conduct of the special meeting are properly presented at the special meeting or any adjournment, postponement, or continuation of the special meeting, the persons named as proxies will vote in accordance with their best judgment with respect to those matters.

 

Adjournments may be made for the purpose of, among other things, soliciting additional proxies.

 

The special meeting of our stockholders will be held on March 12, 2010, at 10:00 a.m., Pacific time, to consider the following item of business:

 

Approval of the Issuance of 36,334,000 Shares of TTM Common Stock

 

Proposal

 

We are seeking the approval of our stockholders, as required by Nasdaq Marketplace Rule 5635(a)(1), for the issuance of 36,334,000 shares of our common stock in the PCB Combination as described in this proxy statement/prospectus. Approval of our stockholders of the issuance of those shares is a condition to the obligations of our company and Meadville to effecting the PCB Combination. If the proposal to issue 36,334,000 shares of our common stock is not approved, we cannot effect the PCB Combination under the terms set forth in the stock purchase agreement.

Nasdaq Requirements

 

Our common stock is listed for trading on the NASDAQ Global Select Market. The Marketplace Rules of the Nasdaq Stock Market require that we obtain the approval of holders of our common stock prior to the issuance of additional shares of our common stock in any transaction if:

 

1. the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock; or

 

2. the number of shares of common stock to be issued is, or will be, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or securities.

 

As of the Record Date, there were 43,186,855 shares of our common stock outstanding. In connection with the PCB Combination, we will issue 36,334,000 shares of our common stock, representing an increase of approximately 84% over the number of outstanding shares of our common stock as of November 16, 2009, the date of execution of the stock purchase agreement, and an increase of approximately 84% over the number of outstanding shares of our common stock as of the Record Date.

 

Impact of Issuance on Existing Stockholders

 

Existing holders of our common stock will have rights that are equal to those of the holders of the shares of our common stock that would be issued in the PCB Combination, as the shares to be issued in the PCB Combination are the same class of common stock as the class of our common stock currently outstanding. In determining whether to vote for this proposal, stockholders should consider that they are subject to the risk of substantial dilution of their interests that will result from the issuance of shares of our common stock, and that as a result of the issuance of such shares of our common stock, the current stockholders will own a smaller percentage of our outstanding shares of common stock. Meadville or its stockholders would hold approximately 46% of our common stock outstanding after giving effect to the PCB Combination, based on the number of shares of our common stock outstanding on November 16, 2009.

 

TTM Stockholder Vote Requirement

 

Approval of the issuance of TTM common stock in connection with the PCB Combination requires the affirmative vote of not less than a majority of the votes present in person or represented by proxy at the special meeting and entitled to vote thereon, provided that a quorum is present at the special meeting.

 

Recommendation of TTM’s Board of Directors

 

We cannot complete the PCB Combination under the terms set forth in the stock purchase agreement unless the issuance of our common stock described above is approved by the required vote. The board of directors believes that the PCB Combination is in the best interests of our company and our stockholders, and therefore recommends a vote “for” the proposal described above.

 

The proposed transaction involves the acquisition by TTM Hong Kong, a wholly owned subsidiary of TTM International, of 100% of the equity interests of the PCB Subsidiaries owned by MTG. MTG is the owner of all of the outstanding capital stock of each of MTG Management (BVI) Limited, MTG PCB (BVI) Limited, MTG PCB No. 2 (BVI) Limited, and MTG Flex (BVI) Limited, and each of those entities is the owner of all or a substantial part of the equity interests of numerous subsidiaries engaged in PCB operations. The PCB Subsidiaries engage in the business of manufacturing and distributing PCBs, including circuit design, quick-turn-around services, and drilling and routing services. TTM Hong Kong is an investment holding company incorporated in Hong Kong and was formed by TTM International solely for the purpose of acquiring the PCB Subsidiaries. TTM Hong Kong has

conducted no operations to date. In connection with the proposed PCB Combination, on November 16, 2009 we, TTM International, and TTM Hong Kong entered into a stock purchase agreement with Meadville and MTG that provides for the payment by us at the closing of the PCB Combination of cash consideration of $114,034,328 and the issuance to Meadville, as MTG’s designee, of 36,334,000 shares of our common stock. The cash purchase price and the number of shares of our common stock issuable as consideration for the acquisition of the PCB Subsidiaries will not be adjusted (other than as a result of reclassifications, stock splits, stock dividends, and similar changes effected by us) in the event of fluctuations in the trading price of our common stock or Meadville’s shares through the closing date of the PCB Combination. We would also assume the indebtedness of the PCB Subsidiaries in connection with the PCB Combination.

 

Concurrent with our purchase of the PCB Subsidiaries, MTG will separately sell its laminate operations to an affiliate of the Principal Shareholders. We will not be a party to Meadville’s sale of its laminate business. Following the closing of the purchase of the PCB Subsidiaries and Meadville’s sale of its laminate operations, Meadville will, subject to certain conditions, distribute to its shareholders by way of special dividend the sale proceeds from the PCB Combination and sale of its laminate operations, including the shares of our common stock issued in connection with the PCB Combination, after which Meadville will be wound up.

 

As of November 16, 2009, the date of execution of the stock purchase agreement, there were 43,170,990 shares of our common stock outstanding. As of that date, the shares of our common stock to be issued in the PCB Combination represented approximately 84% of our outstanding capital stock, and based on that number of our shares outstanding, would represent approximately 46% of our outstanding capital stock following completion of the PCB Combination.

 

The shares of our common stock to be issued in the PCB Combination will be issued from our authorized but unissued shares of common stock. The cash consideration to be paid to Meadville in connection with the transaction will be paid from our cash on-hand, which we have previously deposited in an escrow account pending the closing of the PCB Combination.

 

Our board of directors continually reviews our results of operations and competitive position in the industry in which we operate, as well as our strategic alternatives. In connection with these reviews, we have from time to time evaluated potential transactions that would further our strategic objectives. In addition, we have regularly contacted other PCB companies to discuss areas of possible collaboration, including strategic transactions. In connection with these reviews and discussions, we have from time to time engaged UBS to act as our financial advisor.

 

The stock purchase agreement and proposed PCB Combination is the culmination of a process that started in early 2007. In March 2007, members of our management team and members of Meadville’s management team met and had initial discussions regarding a potential combination of us and Meadville. However, several months passed following the initial discussions before we took any additional material actions in connection with the potential combination.

 

During November and December 2007, representatives of UBS discussed acquisition alternatives with us, including presentations to our board of directors with regards to a potential acquisition transaction with Meadville using various financing alternatives and exploration of other Asian-based acquisition targets.

 

On January 7, 2008, by execution of an engagement letter, we formally engaged UBS as our exclusive financial advisor in connection with a potential acquisition transaction with Meadville.

 

During January, February, and March of 2008, members of our management team and representatives of Meadville, as well as representatives of UBS, had ongoing discussions regarding a potential combination of our company and Meadville.

 

On March 28, 2008, our representatives and representatives of Meadville met in Hong Kong. During that meeting our representatives provided Meadville with a preliminary combination proposal.

During April 2008 through September 2008, representatives of our company, Meadville, UBS, and Merrill Lynch (Asia Pacific) Limited, or Merrill Lynch (which had been engaged by Meadville as its financial advisor), had ongoing discussions regarding the terms and conditions of our combination proposal.

 

On October 14, 2008, we executed a non-disclosure agreement with Meadville. Shortly thereafter, Meadville provided us with access to various diligence-related documents requested by us and our advisors.

 

During October, November, and December of 2008, we and Meadville engaged in due diligence activities, including review of materials provided by us and Meadville to the other, in-person management meetings, and manufacturing facility visits.

 

On January 9, 2009, Kent Alder, our Chief Executive Officer and President, and Canice Chung, Meadville’s Executive Director and Chief Executive Officer, agreed to put the combination discussions on hold due to market conditions.

 

During March 2009, representatives of UBS and Merrill Lynch held calls to discuss the potential combination, and on April 8, 2009, Mr. Alder and Mr. Chung met in Los Angeles, California to recommence discussions relating to the potential combination. Based on those discussions, Mr. Alder agreed to provide Meadville a revised combination proposal, which we subsequently provided to Meadville.

 

In April, May, and June of 2009, representatives of our company and Meadville, as well as representatives of UBS and Merrill Lynch, had ongoing discussions regarding the terms included in the revised combination proposal.

 

On June 12, 2009, we and Meadville came to an understanding on the basis on which to proceed with the proposed PCB Combination and agreed to move forward with due diligence, financing, regulatory, and transaction structuring discussions. We, Meadville, and our respective legal and financial advisors agreed to hold a weekly update call to coordinate the various workstreams.

 

In July 2009, we and Meadville exchanged financial projections.

 

On July 24, 2009, in contemplation of the proposed PCB Combination, we and Meadville delivered a presentation to potential lenders to the PCB Subsidiaries to secure financing for the PCB Subsidiaries.

 

During July 2009 through October 2009, we, Meadville, and our respective advisors continued to conduct due diligence relating to the PCB Combination. We, Meadville, and our respective advisors continued to discuss the transaction structure, the regulatory process and issues, and financing term requirements. We and Meadville also continued discussions with potential lenders.

 

During the months of September and October 2009, we and Meadville began preparing drafts of and negotiating the terms of the definitive agreements to be executed in the PCB Combination.

 

On October 2, 2009, Meadville provided us with updated financial projections. The following day UBS representatives, members of our management, and Robert Klatell, our Chairman, discussed the updated financial projections provided by Meadville.

 

During October 2009, we, Meadville, and our respective advisors began to negotiate the terms of the stock purchase agreement, shareholders agreement, registration rights agreement, and sell-down registration rights agreement, and discussed the various disclosure and filing obligations under applicable U.S. and foreign securities laws, antitrust filings, CFIUS requirements, and other regulatory aspects of the proposed PCB Combination.

 

On October 23, 2009, our board of directors met to discuss the potential PCB Combination and discuss with members of our management team and advisors the status of the various documents to be prepared in connection with the PCB Combination, due diligence activities and status, and regulatory issues.

 

On October 29 and 30, 2009, Mr. Alder and Mr. Klatell, together with certain of our advisors, met with Meadville representatives and their advisors in Hong Kong to negotiate in person the terms of the stock purchase agreement and shareholders agreement.

 

At 3:19 p.m. Hong Kong time on October 30, 2009, trading of Meadville’s shares was suspended on the HKSE and an announcement to that effect was released by Meadville in Hong Kong shortly thereafter.

As negotiations between us and Meadville continued, on November 5, 2009, our board of directors met to discuss the PCB Combination with our management team and advisors. Our board of directors was presented with an update on the discussions with Meadville relating to the PCB Combination. Tom Tang, Mai Tang, and Mr. Chung from Meadville also met with our board of directors during a portion of the board meeting.

 

From November 5, 2009 through November 15, 2009, we, Meadville, and our respective advisors continued to negotiate the terms of the stock purchase agreement, shareholders agreement, registration rights agreement, and sell-down registration rights agreement, and continued work relating to the credit facility to be provided to the PCB Subsidiaries.

 

On November 15, 2009, our board of directors met. At that meeting, members of our management team reviewed with our board of directors the terms of the transaction, the draft transaction documents that had been previously provided to the board of directors, and related matters, and representatives of UBS reviewed with our board of directors its financial analysis of the PCB Combination. UBS also delivered its oral opinion, subsequently confirmed in writing, that, as of November 15, 2009, and based upon and subject to the factors and assumptions stated in its opinion, the consideration to be paid by us in the PCB Combination was fair, from a financial point of view, to us. At that meeting, our board of directors unanimously approved our execution of the stock purchase agreement.

 

On November 16, 2009, we, TTM International, TTM Hong Kong, Meadville, and MTG executed the stock purchase agreement. Shortly thereafter, we issued a press release announcing the transaction and filed a current report on Form 8-K relating to the execution of the stock purchase agreement, among other matters.

 

Between the date of announcement of the execution of the stock purchase agreement and the date of this proxy statement/prospectus, the parties have engaged in various activities intended to satisfy the conditions to closing set forth in the stock purchase agreement. Further to that purpose, on December 23, 2009, we, Meadville, and MTG executed the sell-down registration rights agreement.

 

We believe that our acquisition of the PCB Subsidiaries will allow us to achieve certain economies of scale necessary for sustainable and profitable growth. The PCB Combination is expected to broaden our product line offering, capture incremental high-volume business from existing and new customers, and expand and diversify our customer base and end markets. We expect that the PCB Combination will enable us to create a one stop global business solution for the combined company’s customers. While the PCB Combination is not motivated by the creation of cost synergies or cost reductions, we expect that the combined PCB business will stand to realize potential synergies, improve utilization of its capital resources, and enhance capital expenditure management. The PCB Subsidiaries have expanded their capacity in recent years to support a growing market demand, and we expect to capitalize on Meadville’s prior investments in the PCB Subsidiaries. We expect that the manufacturing platform of the combined company will enable us to execute our global facility specialization strategy.

 

Upon completion of the PCB Combination, by combining the leading North American PCB manufacturer with a leading Asian PCB manufacturer, we expect that we will become a leading global PCB manufacturer with high-technology, strong production, and strong research and development capabilities. While the PCB Combination is expected to create a global presence, we expect to retain deep local knowledge in the respective North American and Asian PCB markets. We expect the PCB Combination to strengthen our competitive position by expanding our platform into the critical low-cost Asian regions that complement our existing U.S. footprint. Additionally, we expect that the combined position will allow us to serve the growing Asian market demand, broaden our product line offering, and, due to minimal customer overlap, expand our customer base and end markets. We believe that the long-term potential of the PCB business remains significant and the PCB Combination will allow us to capitalize on what we believe to be a long-term growth opportunity. We also expect to be able to leverage the PCB Subsidiaries’ presence in Asia, marketing capabilities, and distribution networks.

 

We believe that the combination of our company and the PCB Subsidiaries:

 

 

 

On November 15, 2009, at a meeting of our board of directors held to evaluate the proposed PCB Combination, UBS delivered to our board of directors an oral opinion, which opinion was confirmed by delivery of a written opinion dated November 15, 2009, to the effect that, as of that date and based on and subject to various assumptions, matters considered, and limitations described in its opinion, the approximately 36.3 million shares of our common stock to be issued, together with the approximately $114 million in cash to be paid by us in the PCB Combination, referred to in this section collectively as the “Consideration,” was fair, from a financial point of view, to us.

 

The full text of UBS’ opinion describes the assumptions made, procedures followed, matters considered, and limitations on the review undertaken by UBS. This opinion is attached as Annex C and is incorporated into this proxy statement/prospectus by reference.

 

Holders of our common stock are encouraged to read UBS’ opinion carefully in its entirety. UBS’ opinion was provided for the benefit of our board of directors in connection with, and for the purpose of, its evaluation of the Consideration from a financial point of view and does not address any other aspect of the PCB Combination. The opinion does not address the relative merits of the PCB Combination or any related transaction as compared to other business strategies or transactions that might be available to the Company or the Company’s underlying business decision to effect the PCB Combination or any related transaction. The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to the PCB Combination or any related transaction.

 

The following summary of UBS’ opinion is qualified in its entirety by reference to the full text of UBS’ opinion.

 

In arriving at its opinion, UBS, among other things:

 

 

 

In connection with its review, with the consent of our board of directors, UBS assumed and relied upon, without independent verification, the accuracy and completeness in all material respects of the information provided to or reviewed by UBS for the purpose of its opinion. In addition, with the consent of our board of directors, UBS did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of our company or the PCB Subsidiaries, and was not furnished with any such evaluation or appraisal. With respect to the financial forecasts, estimates, and pro forma effects referred to above, UBS assumed, at the direction of our board of directors, that such forecasts, estimates, and pro forma effects had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of our management as to the future financial performance of our company, the PCB Subsidiaries and such pro forma effects. In addition, UBS assumed, with the approval of our board of directors, that such financial forecasts and estimates would be achieved at the times and in the amounts projected. UBS’ opinion was necessarily based on economic, monetary, market, and other conditions as in effect on, and the information available to UBS as of, the date of its opinion.

 

At the direction of our board of directors, UBS was not asked to, and it did not, offer any opinion as to the terms, other than the Consideration to the extent expressly specified in UBS’ opinion, of the stock purchase agreement or any related documents or the form of the PCB Combination or any related transaction. In addition, UBS expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors, or employees of any parties to the PCB Combination, or any class of such persons, relative to the Consideration. UBS expressed no opinion as to what the value of our common stock would be when issued pursuant to the PCB Combination or the price at which shares of our common stock would trade at any time. In rendering its opinion, UBS assumed, with the consent of our board of directors, that (i) the final executed form of the stock purchase agreement would not differ in any material respect from the draft that UBS reviewed, (ii) the parties to the stock purchase agreement would comply with all material terms of the stock purchase agreement, and (iii) the PCB Combination would be consummated in accordance with the terms of the stock purchase agreement without any adverse waiver or amendment of any material term or condition of the stock purchase agreement. UBS also assumed that all governmental, regulatory, or other consents and approvals necessary for the consummation of the PCB Combination would be obtained without any material adverse effect on our company, the PCB Subsidiaries, or the transaction. Except as described above, we imposed no other instructions or limitations on UBS with respect to the investigations made or the procedures followed by UBS in rendering its opinion. The issuance of UBS’ opinion was approved by an authorized committee of UBS.

 

In connection with rendering its opinion to our board of directors, UBS performed a variety of financial and comparative analyses which are summarized below. The following summary is not a complete description of all analyses performed and factors considered by UBS in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the selected companies and the selected transactions analysis summarized below, no company or transaction used as a comparison was identical to our company, the PCB Subsidiaries, or the PCB Combination. These analyses necessarily involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading or acquisition values of the companies concerned.

UBS believes that its analyses and the summary below must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying UBS’ analyses and opinion. UBS did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.

 

The estimates of the future performance of our company and the PCB Subsidiaries provided by us in or underlying UBS’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, UBS considered industry performance, general business and economic conditions, and other matters, many of which were beyond our or Meadville’s control. Estimates of the financial value of companies do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold or acquired.

 

The Consideration was determined through negotiation between us and Meadville and the decision by us to enter into the PCB Combination was solely that of our board of directors. UBS’ opinion and financial analyses were only one of many factors considered by our board of directors in its evaluation of the PCB Combination and should not be viewed as determinative of the views of our board of directors or management with respect to the PCB Combination or the Consideration.

 

The following is a brief summary of the material financial analyses performed by UBS and reviewed with our board of directors on November 15, 2009 in connection with its opinion relating to the proposed PCB Combination. The financial analyses summarized below include information presented in tabular format. In order for UBS’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of UBS’ financial analyses. For purposes of the “PCB Subsidiaries Financial Analyses” described below, the term “implied value of the Consideration” refers to the $521.3 million implied value of the Consideration to be paid to purchase the equity of the PCB Subsidiaries based on the cash portion of the Consideration of $114 million and the implied value, utilizing the closing price of TTM common stock on November 13, 2009, of the stock portion of the Consideration of 36.3 million shares of TTM common stock. Implied present values of TTM common stock per share set forth below assume outstanding shares based on the treasury stock method, including potential stock issuances and purchases relating to the conversion of our 3.25% convertible senior notes due May 15, 2015 and the related option and warrant transactions, as more fully described in our Form 10-K for the year ended December 31, 2008 and in our current report on Form 8-K filed with the SEC on December 15, 2009. Unless otherwise stated, the minority interests in the PCB Subsidiaries included in the analyses set forth below were valued at the equity-value-to-net-income multiple resulting from the implied value of the Consideration.

 

PCB Subsidiaries Financial Analyses

 

Selected Companies Analysis

 

UBS compared selected financial data based on the implied value of the Consideration to be paid for the PCB Subsidiaries with corresponding data of the following nine publicly traded PCB companies, including Meadville and our company:

 

 

 

UBS reviewed, among other things, the enterprise values of the selected companies, calculated as equity market value based on closing stock prices on November 13, 2009, plus non-convertible debt at book value, convertible debt at face amount, and minority interests at book value, less cash and cash equivalents and certain minority investments at market value, as multiples of, to the extent publicly available, estimated revenue and estimated earnings before interest, taxes, depreciation, and amortization, referred to as “EBITDA,” for the calendar years 2009 and 2010. UBS also reviewed closing stock prices of the selected companies on November 13, 2009 as a multiple of calendar years 2009 and 2010 estimated earnings per share, referred to as “EPS.” UBS then compared these multiples derived for the selected companies with corresponding multiples implied for the PCB Subsidiaries based on the implied value of the Consideration. Additionally, UBS compared these multiples derived for the selected companies with corresponding multiples implied for our company, using two sets of financial forecasts and estimates for the Company prepared by our management that our management characterized respectively as “GAAP” and “Non-GAAP.” Financial data for the selected companies, including the financial data for Meadville and our company included in the “Selected Companies” data, were based on publicly available research analysts consensus estimates, public filings, and other publicly available information, as of the most recent dates available. Multiples greater than 75.0x or less than zero were regarded as not meaningful and excluded from the analysis. Estimated financial data for the PCB Subsidiaries were based on financial forecasts and estimates prepared by our management. “GAAP” estimates for our company were characterized by our management as having been prepared on a basis consistent with GAAP, and “Non-GAAP” estimates for our company reflect adjustments by our management to EPS to exclude amortization of intangibles, stock-based compensation expense, restructuring expense, non-cash interest expense on convertible debt, amortization of debt issuance costs, and other non-recurring items. This analysis indicated the following implied high, median, mean, and low multiples for the selected companies, as compared to corresponding multiples implied for our company and the PCB Subsidiaries: