TTM Technologies Inc. (TTMI, Financial) filed Quarterly Report for the period ended 2012-06-25.
Ttm Technologies, Inc. has a market cap of $769.9 million; its shares were traded at around $9.43 with a P/E ratio of 10 and P/S ratio of 0.5.
While our customers include both OEMs and EMS providers, we measure customers based on OEM companies as they are the ultimate end customers. Sales to our 10 largest customers accounted for 44% and 47% of our net sales in the quarters ended June 25, 2012 and June 27, 2011, respectively. Sales to our 10 largest customers accounted for 46% and 47% of our net sales in the two quarters ended June 25, 2012 and June 27, 2011, respectively. We sell to OEMs both directly and indirectly through EMS companies.
Selling and marketing expenses decreased $0.3 million, or 3.2%, from $9.3 million for the quarter ended June 27, 2011 to $9.0 million for the quarter ended June 25, 2012, primarily due to a decrease in commission expense. As a percentage of net sales, selling and marketing expenses were 2.5% for the quarter ended June 27, 2011 as compared to 2.8% for the quarter ended June 25, 2012. Additionally, selling and marketing expenses decreased $0.8 million, or 4.3%, from $18.4 million for the two quarters ended June 27, 2011 to $17.6 million for the two quarters ended June 25, 2012, also primarily due to a decrease in commission expense. As a percentage of net sales, selling and marketing expenses were 2.6% for the two quarters ended June 27, 2011 as compared to 2.8% for the two quarters ended June 25, 2012. The increase in selling and marketing expense as a percentage of net sales for the quarter and two quarters ended June 25, 2012 is due to lower net sales and the fixed portion of selling expense, while commission expense remained consistent as a percentage of net sales.
During the quarter and two quarters ended June 27, 2011, we recorded an impairment charge in the amount of $48.1 million to reduce the carrying value of certain long-lived assets in the Asia Pacific operating segment. The impairment charge is comprised of $39.8 million related to manufacturing equipment held for use at a plant acquired by Meadville in 2007 for which we had previously reduced the carrying value of certain of these assets during our purchase price allocation completed in 2010 related to the acquisition of the PCB Subsidiaries. Weaker than expected operating performance at this manufacturing plant in the first six months of 2011 resulting from a downturn in the profitability of the products produced at this manufacturing plant and a reduction in expected future demand for the specific products produced resulted in a triggering event during the quarter ended June 27, 2011. Based on the undiscounted cash flows for this plant, an impairment of the manufacturing assets was indicated. Our asset grouping for the impairment test was the manufacturing plant as the manufacturing equipment at this plant is specific to the products produced with separately identifiable cash flows. In addition, the manufacturing equipment at this plant cannot be used at our other manufacturing sites. The fair value of these manufacturing assets was determined using a discounted cash flow model over their remaining useful life with the impairment being the difference between the carrying value and the fair value of the asset group. The impairment charge also includes $8.3 million related to manufacturing equipment that, due to the change in market conditions noted above, has become or is expected to become technologically obsolete. The fair value of these assets was determined using third party quotes or other estimates of salvage value and the assets carrying value was written down to salvage value. The new carrying value of the assets held for sale or disposal is approximately $1.0 million, which is included in machinery and equipment in property, plant and equipment in the accompanying consolidated condensed balance sheet.
The provision for income taxes decreased $4.5 million from $8.5 million for the quarter ended June 27, 2011 to $4.0 million for the quarter ended June 25, 2012 and by $11.1 million from $19.8 million for the two quarters ended June 27, 2011 to $8.7 million for the two quarters ended June 25, 2012, primarily due to less pre-tax income, exclusive of an impairment charge in the quarter ended June 27, 2011, for which a tax benefit was not recorded. Our effective tax rate was 34.7% for the quarter ended June 25, 2012 and 71.9% for the quarter ended June 27, 2011 and 30.3% and 69.1% for the two quarters ended June 25, 2012 and June 27, 2011, respectively. The Companys effective tax rate changed due to the impact of an impairment charge in the quarter ended June 27, 2011, for which a tax benefit was not recorded. Our effective tax rate is primarily impacted by the U.S. federal income tax rate, apportioned state income tax rates, tax rates in China and Hong Kong, generation of other credits and deductions available to us, and certain non-deductible items. Certain foreign losses generated are not more than likely to be realizable, and thus no income tax benefit has been recognized on these losses. Additionally, as of June 25, 2012 and December 31, 2011, we had net deferred income tax assets of approximately $11.6 million and $14.0 million, respectively. Based on our forecast for future taxable earnings, we believe it is more likely than not that we will utilize the deferred income tax assets in future periods.
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Ttm Technologies, Inc. has a market cap of $769.9 million; its shares were traded at around $9.43 with a P/E ratio of 10 and P/S ratio of 0.5.
Highlight of Business Operations:
In January 2012, we temporarily closed a significant facility, Dongguan Shengyi Electronics Ltd. (SYE), located in Dongguan, China, for repairs and upgrades. A majority of SYEs production and a significant portion of its work force have been temporarily transferred to our other facilities located in South China since this closure. Net sales in our Asia Pacific operating segment in the second and two quarters ended June 25, 2012 were reduced by approximately $2.8 million and approximately $5.3 million, respectively, as a result of this temporary closure. The SYE facility is expected to reopen during the third quarter of 2012.While our customers include both OEMs and EMS providers, we measure customers based on OEM companies as they are the ultimate end customers. Sales to our 10 largest customers accounted for 44% and 47% of our net sales in the quarters ended June 25, 2012 and June 27, 2011, respectively. Sales to our 10 largest customers accounted for 46% and 47% of our net sales in the two quarters ended June 25, 2012 and June 27, 2011, respectively. We sell to OEMs both directly and indirectly through EMS companies.
Selling and marketing expenses decreased $0.3 million, or 3.2%, from $9.3 million for the quarter ended June 27, 2011 to $9.0 million for the quarter ended June 25, 2012, primarily due to a decrease in commission expense. As a percentage of net sales, selling and marketing expenses were 2.5% for the quarter ended June 27, 2011 as compared to 2.8% for the quarter ended June 25, 2012. Additionally, selling and marketing expenses decreased $0.8 million, or 4.3%, from $18.4 million for the two quarters ended June 27, 2011 to $17.6 million for the two quarters ended June 25, 2012, also primarily due to a decrease in commission expense. As a percentage of net sales, selling and marketing expenses were 2.6% for the two quarters ended June 27, 2011 as compared to 2.8% for the two quarters ended June 25, 2012. The increase in selling and marketing expense as a percentage of net sales for the quarter and two quarters ended June 25, 2012 is due to lower net sales and the fixed portion of selling expense, while commission expense remained consistent as a percentage of net sales.
During the quarter and two quarters ended June 27, 2011, we recorded an impairment charge in the amount of $48.1 million to reduce the carrying value of certain long-lived assets in the Asia Pacific operating segment. The impairment charge is comprised of $39.8 million related to manufacturing equipment held for use at a plant acquired by Meadville in 2007 for which we had previously reduced the carrying value of certain of these assets during our purchase price allocation completed in 2010 related to the acquisition of the PCB Subsidiaries. Weaker than expected operating performance at this manufacturing plant in the first six months of 2011 resulting from a downturn in the profitability of the products produced at this manufacturing plant and a reduction in expected future demand for the specific products produced resulted in a triggering event during the quarter ended June 27, 2011. Based on the undiscounted cash flows for this plant, an impairment of the manufacturing assets was indicated. Our asset grouping for the impairment test was the manufacturing plant as the manufacturing equipment at this plant is specific to the products produced with separately identifiable cash flows. In addition, the manufacturing equipment at this plant cannot be used at our other manufacturing sites. The fair value of these manufacturing assets was determined using a discounted cash flow model over their remaining useful life with the impairment being the difference between the carrying value and the fair value of the asset group. The impairment charge also includes $8.3 million related to manufacturing equipment that, due to the change in market conditions noted above, has become or is expected to become technologically obsolete. The fair value of these assets was determined using third party quotes or other estimates of salvage value and the assets carrying value was written down to salvage value. The new carrying value of the assets held for sale or disposal is approximately $1.0 million, which is included in machinery and equipment in property, plant and equipment in the accompanying consolidated condensed balance sheet.
The provision for income taxes decreased $4.5 million from $8.5 million for the quarter ended June 27, 2011 to $4.0 million for the quarter ended June 25, 2012 and by $11.1 million from $19.8 million for the two quarters ended June 27, 2011 to $8.7 million for the two quarters ended June 25, 2012, primarily due to less pre-tax income, exclusive of an impairment charge in the quarter ended June 27, 2011, for which a tax benefit was not recorded. Our effective tax rate was 34.7% for the quarter ended June 25, 2012 and 71.9% for the quarter ended June 27, 2011 and 30.3% and 69.1% for the two quarters ended June 25, 2012 and June 27, 2011, respectively. The Companys effective tax rate changed due to the impact of an impairment charge in the quarter ended June 27, 2011, for which a tax benefit was not recorded. Our effective tax rate is primarily impacted by the U.S. federal income tax rate, apportioned state income tax rates, tax rates in China and Hong Kong, generation of other credits and deductions available to us, and certain non-deductible items. Certain foreign losses generated are not more than likely to be realizable, and thus no income tax benefit has been recognized on these losses. Additionally, as of June 25, 2012 and December 31, 2011, we had net deferred income tax assets of approximately $11.6 million and $14.0 million, respectively. Based on our forecast for future taxable earnings, we believe it is more likely than not that we will utilize the deferred income tax assets in future periods.
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