Filed By
Merix Corporation
Pursuant
to Rule 425 Under the Securities Act of 1933
And
Deemed Filed Pursuant to Rule 14a-6
Under the
Securities Exchange Act of 1934
Registration
Statement No. 333-163040
Subject
Company: Merix Corporation
Commission
File No. 001-33752
JANUARY
4, 2010 PRESS RELEASE
Merix
Corporation Announces Second Quarter Fiscal 2010 Results
BEAVERTON,
OR -- (Marketwire - January 04, 2010) - Merix Corporation (NASDAQ: MERX) today
announced consolidated financial results for the second quarter of fiscal 2010
ended November 28, 2009.
Highlights
-- Sequential
quarterly revenue growth of 23% was evenly balanced
between
the Company's North America and Asia operating segments with 24%
and
22% growth, respectively
-- Growth
in the strategic Defense and Aerospace segment grew 26%
sequentially
to its highest level in Company history
-- Second
quarter book to bills of 1.11 in North America and 1.12
in
Asia
-- Gross
margins more than doubled to 12.7% of revenue
-- Net
income of $0.5 million represents an $8.7 million
sequential
quarterly improvement and the Company's first profitable quarter
since
February 2007
Financial
Results
The
Company reported net income of $0.5 million, or $0.02 per diluted share, on
revenue of $71.3 million for the second quarter of fiscal 2010, which compares
to a net loss of $6.1 million, or $0.29 per diluted share, on revenue of $76.9
million in the second quarter of fiscal 2009. Included in the fiscal 2010 second
quarter income was $1.5 million of special items related to income tax benefits
and the reversal of a customs penalty accrual, partially offset by professional
fees primarily relating to the recently announced merger with Viasystems Group,
Inc.
Commenting
on the recent second quarter performance, Michael D. Burger, President and Chief
Executive Officer, said, "We are extremely pleased with our second quarter
financial performance. The increased order activity we reported last quarter
extended throughout the second quarter, resulting in 23% sequential quarter
revenue growth and a strong book to bill of 1.12. Our results also benefited
from exceptional factory performance and continued cost management, resulting in
over 40% of our sequential quarterly revenue increase flowing through to the
bottom line."
Looking
ahead Mr. Burger commented, "December demand traditionally trends downward due
to the Christmas and New Year's holidays; however, despite these seasonal
factors, we have continued to see very good bookings during the month of
December. Visibility is still somewhat limited, but we remain optimistic about
third quarter North America and Asia demand due to our increased backlog coupled
with extended lead times. Production volumes in both North America and Asia will
be affected by limited holiday down-times during our third
quarter."
Merix'
overall second quarter gross margins averaged 12.7% of revenue compared to 7.8%
and 6.1% in the second quarter of fiscal 2009 and first quarter of fiscal 2010,
respectively. The dramatic improvement in both North America and Asia gross
margins is primarily due to improved factory utilization resulting from
increased revenue levels combined with the cost structure and efficiency
improvements made during the last twelve months.
Operating
expenses totaled $9.7 million in both the first and second quarters of fiscal
2010. Exclusive of non-recurring items, primarily associated with our pending
merger with Viasystems Group, Inc. and restructuring actions, operating expenses
totaled $8.1 million in the second quarter of fiscal 2010 compared to $8.0
million in the first quarter of fiscal 2010, respectively.
The
Company's balance sheet is healthy. Working capital metrics are excellent with
count back DSO improving three days to 62 days, inventory turns were nearly 15
times per year and DPO increased three days to 61 days. The Company also reduced
its bank borrowings by $5 million during the quarters. Liquidity, which the
Company defines as cash on hand plus amounts available to be borrowed under its
two bank credit facilities, remained relatively unchanged at approximately $60
million.
Earlier
today, the Company announced the signing of a binding agreement to sell its idle
Hong Kong property. The sale is contingent upon approval by the Hong Kong
Science and Technology Park and the buyer completing required financing. Upon
closing, the Company expects to receive approximately $9.5 million in net
proceeds from the sale and it is anticipated to close in the spring of
2010.
Conference Call and Webcast
Information
Merix
will conduct a conference call and live webcast Monday, January 4, 2010 at 2:00
p.m. PT. Management will discuss second quarter fiscal 2010 financial results,
provide a qualitative discussion regarding our business outlook and comment
further on the strategic direction of the Company. To access the webcast, log on
to www.merix.com.
An online
replay of the webcast will be available at 4:00 p.m. PT on January 4, 2010 and a
telephone replay will be available from 4:00 p.m. PT on January 4, 2010 until
11:59 pm PT on Monday, January 11, 2010 by calling (320) 365-3844, access code
139863.
About
Merix
Merix is
a leading manufacturer of technologically advanced, multilayer, rigid printed
circuit boards for use in sophisticated electronic equipment. Merix provides
high-performance materials, quick-turn prototype, pre-production and volume
production services to its customers. Principal markets served by Merix include
communications and networking, computing and peripherals, test, industrial and
medical, defense and aerospace, and automotive end markets in the electronics
industry. Additional corporate information is available on the internet at
www.merix.com.
Forward-Looking
Statements
This
release contains "forward-looking statements" within the meaning of the
Securities Litigation Reform Act of 1995 relating to the Company's business
operations and prospects, including statements related to estimates of financial
results for future reporting periods that are made pursuant to the safe harbor
provisions of the federal securities laws. These forward-looking statements,
which may be identified by the inclusion of words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," "goals,"
"remains optimistic" and other similar expressions, are based on current
expectations, estimates, assumptions and projections that are subject to change.
Actual results may differ materially from the forward-looking statements. Many
factors, including the following, could cause actual results to differ
materially from the forward-looking statements: our ability to control or pass
through increases in the cost of raw materials and supplies; anticipated changes
in customer order levels, product mix and inventory build-up; lower than
expected or delayed sales; continued availability of our line of credit facility
or sources of additional capital; the ability to successfully restructure Merix
Oregon; fluctuations in demand for products and services of the Company,
including quick-turn and premium services; foreign currency risk; the
introduction of new products or technologies by competitors; the ability to
avoid unanticipated costs, including costs relating to product quality issues
and customer warranty claims; ability to hire, train and retain necessary labor
to produce our products; pricing and other competitive pressures in the industry
from domestic and global competitors; all other risks inherent in foreign
operations such as increased regulatory complexity and compliance cost and
greater political and economic instability; our ability to fully utilize our
assets and control costs; our ability to retain or attract employees with
sufficient know-how to conduct our manufacturing processes and maintain or
increase our production output and quality; and other risks listed from time to
time in the Company's filings with the Securities and Exchange Commission or
otherwise disclosed by the Company, including those set forth in the Company's
first quarter report filed on Form 10-Q for the period ended August 29, 2009,
Annual Report on Form 10-K for the year ended May 30, 2009 and amended Form S-4
filed December 29, 2009. Merix Corporation does not undertake to update any such
factors or to publicly announce developments or events relating to the matters
described herein.
MERIX CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except earnings per share data)
(Unaudited)
Fiscal
quarter ended Six months
ended
------------------------------- --------------------
Nov.
28, Aug. 29, Nov. 29, Nov.
28, Nov. 29,
2009 2009 2008 2009 2008
--------- --------- --------- --------- ---------
Net
sales:
North
America $ 32,735 $ 26,297 $ 36,151 $ 59,032 $ 81,068
Asia 38,563 31,500 40,749 70,063 86,459
--------- --------- --------- --------- ---------
Total
net
sales 71,298 57,797 76,900 129,095 167,527
Cost of
sales:
North
America 29,411 27,068 34,667 56,479 74,420
Asia 32,805 27,215 36,198 60,020 76,798
--------- --------- --------- --------- ---------
Total
cost of
sales 62,216 54,283 70,865 116,499 151,218
--------- --------- --------- --------- ---------
Gross
profit:
North
America 3,324 (771) 1,484 2,553 6,648
Asia 5,758 4,285 4,551 10,043 9,661
--------- --------- --------- --------- ---------
Total
gross
proft 9,082 3,514 6,035 12,596 16,309
--------- --------- --------- --------- ---------
Gross
margin:
North
America 10.2% -2.9% 4.1% 4.3% 8.2%
Asia 14.9% 13.6% 11.2% 14.3% 11.2%
--------- --------- --------- --------- ---------
Total
gross
margin 12.7% 6.1% 7.8% 9.8% 9.7%
--------- --------- --------- --------- ---------
Operating
expenses:
Engineering 343 261 697 604 1,260
Selling,
general
and
administrative 8,865 7,966 7,989 16,831 17,691
Amortization
of
intangible
assets 469 469 520 938 1,040
Impairment
and
severance
charges - 956 1,089 956 562
--------- --------- --------- --------- ---------
Total
operating
expenses 9,677 9,652 10,295 19,329 20,553
--------- --------- --------- --------- ---------
Operating
income
(loss) (595) (6,138) (4,260) (6,733) (4,244)
Other
income
(expense),
net 476 (1,088) (1,029) (612) (2,218)
--------- --------- --------- --------- ---------
Loss before
income
taxes (119) (7,226) (5,289) (7,345) (6,462)
Provision
for
(benefit
from)
income
taxes (1,014) 909 693 (105) 1,421
--------- --------- --------- --------- ---------
Net income
(loss) 895 (8,135) (5,982) (7,240) (7,883)
Net
income
attributable
to
non-controlling
interests 431 99 106 530 352
--------- --------- --------- --------- ---------
Net income
(loss)
attributable
to
Merix
common
shareholders $ 464 $ (8,234)
$ (6,088) $ (7,770) $ (8,235)
=========
========= ========= ========= =========
Diluted net
income
(loss)
per
share $ 0.02 $ (0.38)
$ (0.29) $ (0.36)
$ (0.39)
=========
========= ========= ========= =========
Diluted
shares used
in per
share
calculations 22,296 21,614 20,945 21,621 20,867
=========
========= ========= ========= =========
MERIX
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands)
(unaudited)
(unaudited) Per FY 2009
Revised
(1) 10-K
November May
30, May 30,
28,
2009 2009 2009
-----------
----------- -----------
Assets:
Cash and
short-term
investments $ 10,472
$ 16,141 $ 17,571
Accounts
receivable,
net 53,523 43,290 43,285
Inventories,
net 17,203 14,593 14,367
Assets held
for
sale 112 3 3
Deferred
income
taxes 265 160 160
Prepaid and
other current
assets 9,703 5,437 4,896
-----------
----------- -----------
Total
current
assets 91,278 79,624 80,282
Property,
plant and equipment,
net 85,283 95,170 95,883
Goodwill 11,392 11,392 11,392
Intangible
assets,
net 5,890 6,828 6,884
Deferred
income
taxes 1,656 521 612
Assets held
for
sale 1,146 1,146 1,146
Other
assets 4,062 4,470 4,471
-----------
----------- -----------
Total
assets $ 200,707
$ 199,151 $ 200,670
===========
=========== ===========
Liabilities
and Shareholders' Equity:
Accounts
payable $ 41,866
$ 33,371 $ 33,263
Accrued
liabilities 12,521 13,088 14,715
-----------
----------- -----------
Total
current
liabilities 54,387 46,459 47,978
Long-term
debt 78,000 78,000 78,000
Other
long-term
liabilities 4,771 4,374 4,234
-----------
----------- -----------
Total
liabilities 137,158 128,833 130,212
-----------
----------- -----------
Non-controlling
interests 4,140 3,985 3,935
Shareholders'
equity attributable to
Merix
common
shareholders 59,409 66,333 66,523
-----------
----------- -----------
Total
shareholders'
equity 63,549 70,318 70,458
-----------
----------- -----------
Total
liabilities and shareholders'
equity $ 200,707
$ 199,151 $ 200,670
===========
=========== ===========
(1) As
revised to reflect elimination of one-month reporting lag for Asia
subsidiary.
MERIX
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(in
thousands)
(Unaudited)
Fiscal
quarter
ended Six
months ended
------------------ ------------------
Nov.
28, Nov. 29, Nov. 28, Nov. 29,
2009 2008 2009 2008
-------- -------- -------- --------
Cash flows
from operating
activities:
Net
income
(loss) $ 895 $
(5,982) $ (7,240) $ (7,883)
Net
adjustments to reconcile
loss
to net cash provided
by
operating activitities:
Depreciation
and
amortization 5,520 5,668 11,353 11,125
Other
non-cash
items (2,983) 1,062 (1,875) 1,060
Changes
in working
capital (8,294) 3,208 (6,481) 8,786
-------- -------- -------- --------
Net
cash provided by
operating
activities (4,862) 3,956 (4,243) 13,088
Cash flows
from investing
activities:
Purchases
of property, plant and
equipment (647) (5,423) (1,069) (14,844)
Proceeds
from disposal of
property,
plant and
equipment 5 44 28 599
-------- -------- -------- --------
Net
cash used in investing
activities (642) (5,379) (1,041) (14,245)
Cash flows
from financing
activities:
Borrowings
on long-term notes
payable 8,700 - 10,200 -
Net
borrowings on revolving line
of
credit (13,700) 6,983 (10,200) 6,983
Other
financing activities,
net (377) (15) (385) (71)
-------- -------- -------- --------
Net
cash used in financing
activities (5,377) 6,968 (385) 6,912
-------- -------- -------- --------
Net change in
cash and cash
equivalents (10,881) 5,545 (5,669) 5,755
Cash and cash
equivalents
Beginning
of
period 21,353 5,938 16,141 5,728
-------- -------- -------- --------
End
of
period $
10,472 $ 11,483 $ 10,472 $ 11,483
======== ======== ======== ========
SUPPLEMENTAL
INFORMATION
NET
SALES STATISTICS
(in
thousands)
(Unaudited)
Three
months ended
-------------------------------------------------
Nov.
28, 2009 Aug. 29, 2009 Nov. 29,
2008
--------------- --------------- ---------------
Net Sales by
End
Markets:
Communications
&
Networking $ 24,427 34%
$ 19,529 41%
$ 29,664 39%
Automotive 15,334 21% 12,773 19% 17,449 23%
Computing
&
Peripherals 6,096 9% 4,039 8% 5,984 8%
Test,
Industrial and
Medical 11,104 16% 8,274 12% 9,366 12%
Defense
&
Aerospace 9,007 13% 7,157 10% 7,299 9%
Other 5,330 7% 6,025 10% 7,138 9%
--------- ---- --------- ---- --------- ----
$ 71,298 100%
$ 57,797 100%
$ 76,900 100%
=========
==== ========= ==== ========= ====
Net Sales by
Type:
Quick-Turn
& Premium $ 13,403 19%
$ 11,496 20%
$ 13,158 17%
Full
Lead
Time 57,895 81% 46,301 80% 63,742 83%
--------- ---- --------- ---- --------- ----
$ 71,298 100%
$ 57,797 100%
$ 76,900 100%
=========
==== ========= ==== ========= ====
Top 5
Customers (as % of
net
sales) 31% 34% 36%
=========
=========
=========
Six
months ended
--------------------------------
Nov.
28, 2009 Nov. 29, 2008
--------------- ---------------
Net Sales by
End
Markets:
Communications
&
Networking $ 43,956 34%
$ 68,440 42%
Automotive 28,107 22% 36,862 20%
Computing
&
Peripherals 10,135 8% 12,569 9%
Test,
Industrial and
Medical 19,378 15% 19,785 11%
Defense
&
Aerospace 16,164 12% 14,522 7%
Other 11,355 9% 15,349 11%
--------- ---- --------- ----
$
129,095 100% $ 167,527 100%
=========
==== ========= ====
Net Sales by
Type:
Quick-Turn
& Premium $ 24,899 19%
$ 31,137 19%
Full
Lead
Time 104,196 81% 136,390 81%
--------- ---- --------- ----
$
129,095 100% $ 167,527 100%
=========
==== ========= ====
Top 5
Customers (as % of
net
sales) 32% 38%
=========
=========
Current
Period Change in
Average
Pricing Six
months
Compared
to: Three
months
ended ended
------------------------------ --------------
Aug.
29, 2009 Nov. 29, 2008 Nov. 29,
2008
-------------- -------------- --------------
North
America 3% 3% 0%
Asia 2% 2% 3%
-------------- -------------- --------------
Consolidated 3% 0% -2%
============== ============== ==============
Current
Period Change in
Unit
Volumes Six
months
Compared
to: Three
months
ended ended
------------------------------ --------------
Aug.
29, 2009 Nov. 29, 2008 Nov. 29,
2008
-------------- -------------- --------------
North
America 21% -12% -27%
Asia 20% -7% -21%
-------------- -------------- --------------
Consolidated 20% -7% -21%
============== ============== ==============
SUPPLEMENTAL
INFORMATION
Non-GAAP
Net Loss and
Cash,
Borrowings and Credit Availability
(in
thousands)
(Unaudited)
Three
months ended Six months
ended
---------------------------- ------------------
Nov.
28, Aug. 29, Nov. 29, Nov. 28, Nov.
29,
Non-GAAP Net
Loss: 2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
Net income
(loss)
attributable
to Merix
shareholders
(GAAP) $ 464 $
(8,234) $ (6,088) $ (7,770) $ (8,235)
Adjustments
to net income
(loss):
Employee
severance and
other
restructuring - 314 387 314 427
(Gain)/loss
on
disposal
of surplus
assets - 642 702 642 135
Alternative
minimum
tax
refund - tax law
change (580) - - (580) -
Reversal
of deferred
tax
valuation
allowance (1,240) - - (1,240) -
VAT
penalty -
contingent
liability
reversal (1,522) - - (1,522) -
Non-controlling
interest
in
adjustments 260 - - 260 -
Securities
litigation
and
merger
transaction
professional
fees 1,580 690 - 2,270 -
Non-GAAP
net loss,
excluding
unusual -------- -------- -------- -------- --------
items $
(1,038) $ (6,588) $ (4,999) $ (7,626) $ (7,673)
======== ======== ======== ======== ========
Cash,
Borrowings and Nov. 28, Aug.
29, Nov. 29,
Credit
Availability: 2009 2009 2008
-------- -------- --------
Cash $
10,472 $ 21,353 $ 11,483
Borrowing
base 57,413 49,867 49,927
Outstanding
borrowings (8,000) (13,000) (6,983)
-------- -------- --------
Net
Cash &
Available
Credit $ 59,885 $ 58,220 $
54,427
======== ======== ========
Merix
Investor Relations Contact:
Allen
Muhich
Vice
President, Finance
503.716.3700
Important
Merger Information and Additional Information
This
document does not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval. In connection with
the proposed transaction, Viasystems and Merix will file relevant materials with
the Securities and Exchange Commission (the
“SEC”). Viasystems has filed, and the SEC has declared effective, a
Registration Statement on Form S-4 that includes a proxy statement of Merix and
which also constitutes a prospectus of Viasystems. Merix will mail
the proxy statement/prospectus to its shareholders.
Investors are urged to read the
definitive proxy statement/prospectus regarding the proposed transaction because
it contains important information.
The definitive proxy
statement/prospectus and other documents that have or will be filed by
Viasystems and Merix with the SEC will be available free of charge at the SEC’s
website, www.sec.gov, or by directing a request when such a filing is made to
Merix Corporation, 15725 SW Greystone Court, Suite 200, Beaverton Oregon 97006,
Attention: Investor Relations or by directing a request when such a filing is
made to Viasystems Group, Inc., 101 South Hanley Road, Suite 400, St. Louis,
Missouri 63105, Attention: Investor Relations.
Participants in
Solicitation
Viasystems,
Merix, their respective directors and certain of their executive officers may be
considered participants in the solicitation of proxies in connection with the
proposed transaction. Information about the directors and executive
officers of Merix is set forth in Merix’s definitive proxy statement, which was
filed with the SEC on August 26, 2009. Information about the
directors and executive officers of Viasystems is set forth in the Form 10-K of
Viasystems, Inc., which was filed with the SEC on March 30,
2009. Investors may obtain additional information regarding the
interests of such participants by reading the definitive proxy
statement/prospectus Merix filed with the SEC on January 4, 2010.
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