UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2004

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                  to                 

 

Commission File Number: 000-30241

 

DDi CORP.

(Exact name of registrant as specified in its charter)

 

 

1220 Simon Circle

Anaheim, California  92806

(Address of principal executive offices)  (Zip code)

 

(714) 688-7200

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:        ý  Yes    o  No

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). o  Yes    ý  No

 

Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.      ý  Yes    o  No

 

As of May 5, 2004, DDi Corp. had 26,080,227 shares of common stock, par value $0.001 per share, outstanding.

 

 

DDi CORP.

FORM 10-Q

 

TABLE OF CONTENTS

 

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2004 (Reorganized DDi Corp.) and December 31, 2003 (Reorganized DDi Corp.)
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.)
	Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.)
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.)
	Notes to Condensed Consolidated Financial Statements
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3	Quantitative and Qualitative Disclosures about Market Risk
Item 4.	Controls and Procedures
PART II	OTHER INFORMATION
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Item 6.	Exhibits and Reports on Form 8-K
Signature

 

2

 

FORWARD-LOOKING STATEMENTS

 

On one or more occasions, we may make statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q relating to expectation of future financial performance, continued growth, changes in economic conditions or capital markets and changes in customer usage patterns and preferences, are forward-looking statements.

 

Words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue,” “may,” “could” or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and we believe such statements are based on reasonable assumptions, including without limitation, management’s examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that our expectations will be realized.

 

In addition to the factors and other matters discussed under the caption “Factors That May Affect Future Results” in Part 1 — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-Q, some important factors that could cause actual results or outcomes for DDi Corp. or our subsidiaries to differ materially from those discussed in forward-looking statements include:

 

•      changes in general economic conditions in the markets in which we may compete and fluctuations in demand in the electronics industry;

 

•      our ability to sustain historical margins as the industry develops;

 

•      increased competition;

 

•      increased costs;

 

•      our ability to retain key members of management;

 

•      adverse state, federal or foreign legislation or regulation or adverse determinations by regulators; and

 

•      other factors identified from time to time in our filings with the Securities and Exchange Commission.

 

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.

 

3

 

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

DDi CORP.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

		Reorganized DDi Corp.
		March 31, 2004			December 31, 2003
Assets
Current assets:
Cash and cash equivalents		$	21,199		$	11,202
Cash, cash equivalents and marketable securities - restricted		—			7,500
Accounts receivable, net		48,210			39,140
Inventories		27,428			26,292
Prepaid expenses and other		3,717			2,707
Total current assets		100,554			86,841
Property, plant and equipment, net		70,763			74,918
Debt issuance costs, net		2,150			—
Goodwill		107,200			105,452
Other intangibles, net		21,457			23,376
Other		905			816
Total assets		$	303,029		$	291,403
Liabilities, Mandatorily Redeemable Preferred Stock and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt and capital lease obligations		$	1,558		$	1,439
Revolving credit facilities		26,846			11,809
Accounts payable		32,474			28,687
Accrued expenses and other liabilities		22,501			26,338
Income taxes payable		903			998
Note payable		—			500
Total current liabilities		84,282			69,771
Long-term debt and capital lease obligations		45,209			114,799
Deferred income tax liability		221			533
Notes payable and other		16,125			12,798
Series A mandatorily redeemable preferred stock		2,279			2,066
Total liabilities		148,116			199,967
Series B mandatorily redeemable preferred stock		57,670			—
Stockholders’ equity:
Common stock		26			24
Additional paid-in-capital		151,222			138,661
Deferred compensation		(22,158		)	(32,454		)
Accumulated other comprehensive income (loss)		228			(152		)
Stockholder receivables		(639		)	(635		)
Accumulated deficit		(31,436		)	(14,008		)
Total stockholders’ equity		97,243			91,436
Total liabilities, mandatorily redeemable preferred stock and stockholders’ equity		$	303,029		$	291,403

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

DDi CORP.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

		Reorganized DDi Corp.			Predecessor DDi Corp.
		Three months ended March 31, 2004			Three months ended March 31, 2003
Net sales		$	72,350		$	61,661
Cost of goods sold:
Cost of goods sold		58,738			57,198
Non-cash compensation and amortization of intangibles		6,453			—
Restructuring-related inventory impairment		499			—
Total cost of goods sold		65,690			57,198
Gross profit		6,660			4,463
Operating expenses:
Sales and marketing:
Sales and marketing expenses		4,518			4,555
Non-cash compensation		1,432			—
Total sales and marketing		5,950			4,555