TTM Technologies Inc (TTMI) 2003 Q4 法說會逐字稿

Good afternoon and welcome ladies and gentlemen to the TTM Technologies Fourth Quarter 2003 Conference Call.

At this time, I would like inform you that this conference is being recorded and that all participants are in a listen-only mode.

At the request of the company we will open the conference up for questions and answers after the presentation.

I will now turn the conference over to Ms. Stacey Peterson Peterson, Chief Financial Officer at TTM.

Please go ahead Ms. Peterson.

Good afternoon and thanks for joining us for our fourth quarter conference call.

As we stated in our news release, we reported earnings per share of 11 cents for the quarter.

Revenues increase 20% sequentially to $54.3m that enables us good results for the full year with earning per share of 18 cents on revenues of $180.3m.

Kent will tell you more after I read the following statements.

During the course of this call we will make forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include but are not limited to, fluctuations in quarterly and annually operating results, the volatility and cyclicality of the various industries that the company serves and other risks described in TTM’s most recent registration statements on Form S-3.

The company assumes no obligation to update the information provided in this conference call.

Now let me turn the call over to our CEO, Kent Alder.

Thanks Stacey Peterson.

Our strong results for the fourth quarter and for the full year are the result of several key factors.

First, we continue to see demand improve in all end markets.

Second, we continue to gain share in this expanding market.

Third, we remain disciplined in our cost control and finally, we have strong operating leverage which enables us to translate very solid top line growth into even better bottom-line performance.

For the first time, since the market peaked in late 2000, we are experiencing improvement in pricing.

There is also evidence of a return to ramp to value business, reflecting an increase in new product development and introduction activities by our customers.

As for our success on the revenue line, we are continuing to gain market share by capturing new programs as well as expanding existing ones with current customers and we continue to win new customers.

During the fourth quarter, we added 42 new accounts.

We are continuing to realize business from cross selling successes, created by the combination with ACI and overall cross selling between our three specialized and integrated manufacturing facilities.

Overall, we believe there are more opportunities ahead of us to gain new business and capture market share.

In the fourth quarter, our production continue to reflect a high value added mixed with layer count statistics essentially unchanged from third quarter levels.

Products with 12 layers or more accounted for 62% of revenues, 20 layers or more accounted for 32% of revenues and our average account was 14.4.

Quick turn represented 27% of revenues up from 25% in the third quarter, to be clear, let me remind you that we define quick turn as delivery time at 10 days or less which captured R&D, prototype, ramp to volume work and unexpected short term demand among our customers.

TTM is a true, quick turn operation, with the tooling capacity to handle 45-50 new jobs a day.

We also deliver a large percentage of compressed lead times working with lead times of 11-20 days.

We get a premium for this type of work also, especially in a strengthening market as we have today.

Work with lead times of 4 weeks or less which includes quick turn and premium work, accounts for approximately 60% of total revenues.

As for customer concentration, sales through our five largest OEM’s constituted 51% of revenues in the fourth quarter of 2003 flat with the third quarter.

Our top five customers in alphabetical order were Cisco, Hewlett Packard, IBM, Motorola and Sung.

Before I turn the call back to Stacey, let me address and area that has become meaningful as market conditions improve and that is capacity.

TTM is currently operating at 80% of capacity overall.

By year end 2004 with our current CapEx financial year we can increase our full capacity revenue rate to $280-$290m at today’s mix and prices.

The next phase of our capacity expansion beyond that budgeted for 2004 would enable us to increase annual capacity levels to $420m in sales at a cost of approximately $23m-$25m.

We envision this phase of expansion taken place in stages over the next few years but as demand and market conditions warrant, we could accelerate the expansion and increase capacity to $425m level within 12-18 months.

So you can see we have the ability to significantly expand capacity in phases over the next few years as dictated by market conditions.

Now Stacey will fill you in on some details of the quarter and discuss the near term outlook.

Thanks Ken.

Let me provide some details of our fourth quarter performance starting with the top line.

Comparing the fourth quarter of 2003 with the third, revenue increased 20% to $54.3m.

Volume as measured by average panels per day was up 14%.

On a sequential basis, the average panel price was up 7% over the average price per layer increased 4%.

In fourth quarter 2003, gross profit increased 50% to $14.2m.

Gross margins expanded to 26.1% in the fourth quarter of 2003 comparing very favorably with 12.4% of the year ago period and 20.9% in the third quarter.

Gross margin benefited from better labor and fixed cost absorption as well as continued tight cost control, but still it could have been better.

In the fourth quarter margins that at our Redmond were below the corporate average.

With the healthy recovery of TTM demand we have made certain upfront investments at Redmond.

We’ve upgraded the technology and the labor and expanded capacity in order to meet customer demand for higher technical work.

While this is good for customers and good for TTM, the upfront investment is temporarily pressuring margins at Redmond.

Over the next few quarters we expect margins to stand (inaudible).

With our strong top line growth, we were able to leverage sales and marketing in general and administrative expenses across a larger sales base.

Sales and marketing expense declined a 5.5% of revenues from 7.8% in the year ago period and 6% in the third quarter of 2003.

General and administrative expense was 6.2% of revenue compared to 6% of revenue compared to 6% in the third quarter of 2003 and 8% in the year ago period.

G&A expense in the current quarter included higher bonus accrued and an increase in the bad debt reserve which is the function of rapidly rising sales.

These factors resulted in earnings per share of 11% for the fourth quarter.

We took a small restructuring charge of $446,000 in the fourth quarter to write down the Burlington assets which is being held for sale.

And we realized an extraordinary gain of $411,000 for a favorable purchase accounting adjustment related to ACI.

As we said before, and you can see from our fourth quarter performance, we have excellent operating leverage.

Even in our current higher capacity implementation rate we still estimate incremental margins in the mid 40% range including no change in mix or prices from current levels.

Our balance sheet strengthened even further in the fourth quarter and for the year.

We ended the year with cash and short term investments of $31.7m and a debt of $7.8m. translating into a net cash position of $23.9m.

That represents an increase from net cash of $8.9m at year end 2002 and $21.3m at the end of the third quarter.

Before I move on to our first quarter outlook let me run through some important statistics for fourth quarter.

Depreciation was $2m, cash flow from operations was $3.8m, net capital expenditures were $1.8m which brought us to $6.6m for the full year and as a result from cash flow which we defined as cash flow from operations (inaudible) net capital expenditures with $2m in the third quarter or fourth quarter.

Looking ahead to the first quarter of 2004 our guidance for revenues of $55-57m and we are estimating gap earnings per share of 12-14 cents.

Typically due to the seasonal slow down in our quick turn business in the first quarter of the year, revenues and earnings declined sequentially from the fourth quarter to the first, however, due to strong market conditions and expected market share gains we are guiding up to the first quarter of 2004.

Implicit for our guidance in the first quarter of 2004, we anticipate further growth margin improvement in the range of 26-28% and sales and marketing that should remain at about 5.5% of revenue, in addition we expect G&A expense of about $3.4m.

With that let me open the call for your questions.

Thank you.

The question and answer session will begin at this time.

If you are using a speaker phone please pick up the hand set before pressing any numbers.

Should you have a question please press * 1 on your push button telephone.

If you wish to withdraw you question please press *2.

Your question will be taken in the order it is received.

Please standby for your first question.

Our first question comes from Keith Dunn with RBC Capital Markets.

Please state your question.

Congratulations.

It still amazes me how when some other companies are on the road they don’t recognize you as a competitor.

Great job.

I want to ask you a few questions one, you talk about ASP’s being up 7% on the panel and 4% on the layer.

What’s the thought process in the first quarter versus the fourth quarter ‘cause I imagine we’re not seeing all the ASP gains that you would anticipate over the next several quarters?

Keith I think your question is what kind of price increase would we expect in the first quarter?

Yes

Okay.

We’ve move into our forecast roughly of 4% to 5% price increase.

And is that in the first quarter?

Yes it’s in the first quarter

versus the fourth quarter correct?

versus the fourth quarter that’s correct.

Okay.

And as we look at the end markets that you did, can you give us a little color on there?

It looks like computer peripherals has come back a little bit from what I expected and of course networking has been strong that we’ve heard throughout the industries, can you talk a little about end markets?

Yes sure Keith, we’re seeing a strength kind of across the board in all aspects of our business but the leading segments are in the internet infrastructure, the computer peripherals has been strong for us in the fourth quarter, usually that is strong in the fourth quarter, I don’t know that that will continue into the first quarter but the telecom and networking computing storage areas have always been very strong for us.

And my last question for right now, can you quantify at all … I’m glad to see that you’re paying bonuses again you guys certainly earned it but can you quantify at all what maybe the bonuses and the bad debt reserves were in the quarter?

Yes, kind of combined, on a combined basis it’s probably in the G&A line item roughly, I’m going to give you just a rough estimate 7 or $800,000.

And can you give us a feel of what that might look like in the first quarter?

Yes … I think a better way to look at that Keith is why don’t I give you a guidance on G&A for the first quarter, would that help?

Yes sure.

Yes what I would expect and remember how we break down our statement that G&A and this is without that quarterly amortization of intangibles of about $300,000.

I would expect it to be about $3.1m for the quarter.

So $3.1 plus the $300,000 that how you got the $3.4?

That’s right.

Right, thanks very much.

The next question comes from David McGregor with Longville Research.

Please state your question.

Yes good afternoon, nice quarter.

On the raw materials, I wonder if you could just talk a little bit about laminate price hikes and what you are hearing from your suppliers and also to what extent might you enjoy some contract protection on this?

Yes David.

We haven’t had any official price increases come to us yet and there have been some discussions that that would take place if you look at what we’re doing with our cost side, we continue to work very hard to keep that in line and we still are negotiating some lower prices on some of our materials and would anticipate that there could some small increases on the rest of our materials when you add it all together and put the pluses and the minuses together we don’t think that there will be any significant price increases in our material costs in the next quarter or quarter 2.

Is there anything that we should be aware of in terms of labor costs in ’04 versus ’03?

No, I mean, we’re hoping to make sure that our people, our employees are adequately paid for the excellent job that they’re doing but all of any anticipated increases and so forth are built into our projections.

That’s right and David the only thing just to make sure it’s clear and keep Keith was kind of getting to this question also, we do have incentive compensation programs and if we hit certain operating performance targets and as well as financial targets we will have those pay then but as Kent mentioned, it’s already built into the estimates that we’ve provided.

Okay great.

Second question, just on pricing, can you talk about the difference between what you are able to realize on better quick turn multiples versus perhaps just better base pricing?

Are you trying to get to quantification of what the mix improvement did for us?

Exactly.

We typically don’t break that our separately but what I can give you is one way to look at adjusting our mix at least for high technology is look at the price on a per layer basis, went up about 4% and then if you break out our standard versus our quick turn, our standard price went up about 4% whereas our quick turn price went down slightly 1 or 2%.

That’s great thanks very much.

Our next question comes from Thomas Dink (ph) with JP Morgan, please state your question.

Hi guys, well just a couple of quick questions for you.

The impact that you saw in Redmond, that’s you having to hire some more labor and a little bit of the tooling that you had to do there and so forth is, do you expect that to be fully absorbed as you get a little bit of higher volumes into that facility this next quarter?

And maybe if you could I just want to quantify you know, on the margin lines or what the impact was there for us and than I have a follow up.

You know, I will not be able to quantify for you on the margin line cause we don’t really disclose separate devices.

But we feel very confident about the prospects for Redmond, we’re getting a great customer mix, continue to see pretty, very strong growth there.

We just made some upfront investment that we should start to see, even within the quarter that starts to materialize.

I wouldn’t say that we were just a full gross margin we expect in the first quarter with over a couple of quarters.

And then talking about the order rates and what you guys saw there for the quarter.

We’ve heard from a few other companies not necessarily in the circuit board industry but other companies in the component industry about rising backlogs there out sort of greater than 90 days and customers looking at now putting further place holders as they’re worrying a little more about suppliers, suppliers getting a little tight and obviously you guys are running about 80% utilization on the installed capacity that you have got right now.

Can, maybe you can give us a little bit of you know, insight there as to what you’re seeing from your customers in terms of longer out orders and ---our pricing ---is pricing holding on those longer out orders, as customers we are a little more worried about the supply side.

Yes sure.

Our backlog is up again this quarter.

Our lead times have gone up again around we are running at about 10 to 12 weeks in Chippewa Falls.

We’re working very closely with all of our customers, the OEMs as well as contract manufacturers to make sure we are able to meet their needs as much as we can with these increased demands that we’re seeing.

So we are working hard to make sure we can try keep our lead time within reason but there is so much demand out there that our lead times are continuing to go out.

With regards to pricing, a mean we always wanted to give our customers the fair value that they can get but we have market conditions like we have you know, it’s the opportunity is there to provide a fair value at a little higher price to our customers so we’re able to do that.

And we’re seeing our prices increase across all segments of our business.

Okay thank you very much.

Our next question comes from Jim Savage with Wells Fargo please state your question.

Yeah with Chippewa Falls, I assume at this point you’re pretty much full with the lead times now stretching, is that correct?

Yeah we’re running about 90% still at Chippewa Falls which is pushing us pretty good.

We’ve added some equipment there, we have some AOIs and exposure units and so forth to continue to expand our capacity but we are running in a high utilization rate in Chippewa Falls.

Are you going to be in a position where your customers have at this point qualified Redmond to be able to transfer some of the production over there to reduce the lead times or to keep them stretching further as having a demand continues to increase?

Yeah we have some of our tier 1 customers visit Redmond and approve Redmond and that seems to be a longer process than we hoped for but we are able to do that ---have that cross selling take place and we anticipate the cross selling between Chippewa Falls and Redmond will continue to increase as we go forward.

There’s still a lot of demand that we have on our Chippewa Falls facility and while that’s creating opportunities for Redmond, we still have a lot of demands so it’s--- we’re not able to relieve the pressure valve as much as we would like.

And my understanding is that some of your Chippewa Falls customers have some new programs that are slated to ramp is that going to create any problems in terms of your ability to meet that demand?

Well I think here Jim we’re continuing to expand our capacity and we have done in all of our facilities the real need to expand our capacity is more acute in Chippewa Falls and so we’re looking at going beyond some of incremental expansions that we’re doing to try to get more capacity in the Chippewa Falls quicker.

Now having said that we’re aware that some of the old programs are phasing out new ones phasing in and we’re looking at that and making certain that we have capacity ahead of those changes so we can handle those needs.

So I think you’re hitting on an area that we are working very diligently on and that is more capacity faster at our Chippewa Falls facility.

And we actually ---Kent’s right about the capacity at the Chippewa Falls but back to your Redmond point.

In the forth quarter we actually had a couple of customer qualifications which we got and actually (inaudible) and we’re really proud to be able to actually get that plant qualified and start shipping some product and so there’s a good opportunity for Redmond to ramp.

Okay I assume that 42 new accounts and most of those are quick turn accounts?

Well generally that’s the case but most of those are quick turn accounts.

Okay.

I was also sort of surprised to hear that quick turn pricing was down a little bit even though quick turn seems to be recovering in general.

Is that just a mix of the quick turn and it’s not as much as the real short lead time or ?

That’s right Jim, because we had, one of the things we talked about on the call was premium work 2.

We saw a lot of, you know, you’ll see this when you have some ramping .

You’ve got some good products and it’s not in the 1, 2, 3 day turns it will be like in a 5- 10 day turn.

So you’re right it’s the mix of quick turn that has had that price soft because the underlined market is pretty strong.

So on an apple to apples basis a three day quick turn pricing is up?

I don’t have that exact statistic in front of me, but my intuition would be yes.

Flat to up.

Jim one other to add there, is to not forget is when you look at our quick turn we are a little bit seasonal around the end of the year and end of January so sometimes that puts a little bit of pressure on our pricing.

Ok.

One last thing is overall did you have did you exit with the deposit book to bill?

Yes we did

You did, ok.

[Technical Difficulties] [Inaudible]

…. the more capacity even though we’re at 1.05 we could have had that number higher but we need to find a place or a home for a lot of the work that’s coming to us.

So at this point there are some constraints that are preventing you near term at least maybe not later in the year, but near term from being able to do a little bit better than you’re already forecasted.

Especially in our Chippewa Falls(ph) facility we can grow that facility faster than we’re currently growing that facility.

based on demand?

Yes

Ok

Based on demand

Thank you

The net question come from Mat Shearon with Thomas Weisel Partners, please state your question.

Yes thanks, you talked about premium work representing abut 50% of revenues can you give us a comparison what it was at the last couple of quarters before that?

Yeah, that’s kind of a new a new measurement for us.

We’ve always measure the 10 days and less and published that at 27%, so that’s up 2% from 25 and our 60% which is 4 weeks or les is how we’ve measured that.

I don’t …

(inaudible) It roughly constant with the third quarter, it was up slightly as we saw a bunch of work in that category go up, so we typically have pretty compressed lead time work with our facilities.

I think that’s a new measurement that we’re going to talk about just to give you another way to look at our company and evaluate us.

Helps you think about pricing a little bit better.

Sure, great and then regarding [Technical Difficulties] [Inaudible] Could you just say you talk about Chippewa Falls lead times and capacity, could you tell us what the Redman is?

Redman really didn’t change for the quarter, it’s about 4-5 weeks and then in Santa Ana, our quick turn facility, were running at about 3 weeks and of course it is a quick turn facility so we do we can turn jobs in as little as 24 hours.

And then just I know that obviously you have good visibility into March but just looking into June given the sequential sales growth in March in the low single digits verses 10% up in September and 19% in December are you expecting to see accelerated growth based on what your customers are telling you, you know later in the year as the cycle progresses?

Yeah, I mean as we look at all the ways we can evaluate where our industry is going we see, we do not see any signs of any change in demand throughout the rest of this year so I think as we move forward into the second quarter we feel very positive about the direction of the second quarter.

Now we only forecast the quarter out.

So hopefully that answers your question that we feel positive about the second quarter at this point.

Ok very good thank you.

The net question comes from Rob Cristo with Brandpoint Capital please state your question.

Hi guys congratulations on nice quarter.

I think you talked in the past about working on a lower margin product project for one of your large customers is that still going to be in the numbers in Q1or we have worked or did you work through that this quarter?

It’s going to be partially in, but it should be out by the end of Q1.

Ok so that will help margins too I guess

It should yes

Ok great thanks

The next question comes from Michael Walker with First Boston, please state your question.

Thanks a lot, good afternoon.

Question on sort of target margin model I think you guys have been out there before saying that you think that an appropriate longer term margin model somewhere in the 30% range on gross margin and you know the upper teens to low 20s on operating margins you know given that looks like for March you’re staring at a 28% type of growth in your upper, mid upper teens and operating do you think that’s still realistic or do you think you can kind of move higher than that margin level?

I think that with price improvement in mix shift yes we can definitely move higher than that model with that model when we talked to that model at recent conferences and you know we set our recent 8-K filing that basically assumed no price or mixed shift.

So if you get price and mix you can move in greater than those numbers.

Ok another question on pricing then you got the 800lb grill on kind of high-end domestic PCB is the same, still operating a 55% utilization of the PCB business and you’ve got Merick’s bringing on a lot of capacity here pretty soon you know, how long can that given those two facts how long do you think it’s realistic to assume pricing continues to rise or when capacity kind of comes on line a little bit, do we see a pause?

You know from where we sit right now even with Samina (ph) running at 50% level I think they have taken the opportunity to boost prices even though the running at 50% and its to some degree the way we were working very closely with our customers I think we’re providing our customers with a very attractive value proposition and we would anticipate being able to hold our pricing and sill capture market share and hopefully as we go forward the conditions will allow us to improve our pricing.

We have opportunity on the margin level [Technical Difficulties] [Inaudible] And then with the capacity ramp that we have to instigate in Chippewa Falls, I think there’s still a lot of upside in our margins.

Okay and then just one last question on that share gain, who’s the share gain coming from?

Well I---the share gain that we’re looking at it comes from a lot of our tier one type customers, but as we look at all the new programs we have coming to us and increase in programs, there’s a lot of share gain across the board that if I could really talk about the tier ones where -- we can get very specific but we’re gaining market share I think that’s pretty much across the board.

Yes all in market.

And just one final question then on Opex (ph) again just in terms of dollars, are you approaching I know there’s a few extra expenses here and there on Opex and that kind of thing but are you approaching a dollar level total Opex where you can kind of stay relatively flattish or at least flattish on the SG&A even though you’re raising revenues?

Yes we should other than incentive comp which is very much tied to our operating income performance and performance matrix---operating performance matrix and addition, and you know just some little bad debt expense that you see are obviously receivables with rapid sales growth.

You’re going to see some minor expense associated with that but other than that [Technical Difficulties] [inaudible]… that we need to get in place to comply with that.

Is that spread over a couple quarters or is that all in one shot?

You know what it should be probably over the entire year because as you know in compliance with Serbaneo-Oxley, our auditors do, we have a 1231 year end and a lot of their work would be towards the end of the year and a lot of our up front preparation which is already been underway happens in the first part of the year.

I would say it’s pretty even throughout the year when you balance those two factors.

Great thank you.

One other factor that I wanted to mentioned when we talked about pricing is I go back and look at all the capacity that has come off line over the last couple of years and we talked about adding some competitors adding capacity.

I think the supply and demand is still going to be on the side of enabling us to achieve reasonable prices and price increases.

Thanks a lot.

Your next question comes again from Keith Dunn with RBC Capital Markets please state your question.

Yes hi Keith, just a few follow up questions first of all the tax rate went up a little bit, should we be using 39%, 39.5% this year?

No actually you should be using we’ve been test planning opportunities in going forward, right now our view for 2004 would be about 38%.

And also the miscellaneous income expenses, let’s start out with cash flow in ’04 can you give us a sense of what your CapEx budget is in ’04?

And what you might see in cash flow for ’04?

Yes we don’t---I don’t have a full year projection for cash flow that we put out publicly, but I can tell you in terms of CapEx we talked about that in the $9m range.

Okay and so maybe you can give us about the cash flow, give us a little color on that miscellaneous line in total does that hold under the operating income line?

Does that turn to a positive 3-400,000 for the year or what does it look like for the whole year?

You know what Keith unfortunately I’m not following, what miscellaneous line item are you talking about?

Everything between pre-tax income and income from operations so you have some interest income..

Oh because of financing costs (inaudible)

Exactly.

I would expect our quarterly basis it’s all driven by interest rates but I would expect probably about $50,000 to $75,000 quarterly expense.

Okay and last I want to come back to the utilization a little bit I think I heard that you were running about 80% capacity right now, so if I just took the fourth quarter sales rate multiply it four divide by 80 it implies that you’ve got capacity now and that the 265/ 270 range and it sounded like by year end you could increase capacity 10% above that 280 to 290 am I thinking of that correctly?

That’s how we thought of it yes.

Yes absolutely.

And all that capacity would be is that all coming in Wisconsin with some of the bobbing and weaving you’re doing or is it coming in other places too?

Well that is coming in other places but our focus is going to be on Chippewa Falls and how we can get that capacity up.

Right because we’ve already talked about some of the technology enhancement and capacity expansion that we’ve made to accommodate the demand we see that’s going to come to Redman and then Santa Ana is already in great shape we made capacity expansion here throughout the downturn and it should provide (inaudible).

And that’s what I wanted to follow up I want to say at one I heard that your goal with Wisconsin would have 10% more capacity at the end of March verses the end of 2000, is that accurate and how fast can you ramp up the rest is it a six months to nine months process or three months to six months process?

Keith I didn’t catch the original 10% from when?

December ’03 to the end of March ’04, I mean how quick can you get Wisconsin ramps?

That’s we’re looking at that very closely we could do some things right now that would move the capacity up reasonably fast, but we’re also looking at a longer term plan and doing capacity such that we can actually improve our margins, make sure we have the flow efficient and we’re running a very top notch efficient operation there.

So we have a couple of plans that we’re looking at right now and over the short term here we anticipate pulling the trigger on some more rapid, rapidly expanding capacity plans Chippewa Falls.

Might we hear by the next conference call certainly on what you’re thinking about next 50% to get you to 420, we might get a little schedule timing and things like that you know next conference call, that time frame.

Yes that’s correct Keith.

Okay thanks very much great job.

Your next question comes again from Jim Savage with Well Fargo.

Please state your question.

Yes I have a couple more as well, 10% customers for the quarter and the year and if you could give us what they totaled.

We had – there were only two customers greater than 10% Cisco and IBM.

And of course our top – let’s see our top five customers were 51%, top ten 61% top twenty-five, 75%.

Okay Cisco and IBM for the year and for the quarter or just for the quarter?

That’s for the quarter and for the year --.

That’s for the quarter for the year it would be roughly the same.

Sun (ph) was not in the 10% for the year?

I don’t think for the year.

I don’t believe so, I don’t have that right in front of me but I don’t believe there will be a 10% customer for the year.

We had I mean Sun was pretty flat for us in the last part of the last quarter maybe down slightly.

But if you look at the growth we had in out other customer base fairly significant.

So I think the fact that Sun is not there is a reflection of growth in market share capture with other customers.

That’s right

Okay the other question is – I mean this just is the reporting question many other companies we see report an adjusted EPS number which is essentially an EBIDA number tax affected.

Did you – have you done a calculation as to the impact of that – of what that would be on your earnings.

If you added back the amortization restructuring charges any other exceptional charges or gains.

With out it would be at 11 cents with out the restructuring charges (technical difficulty) (inaudible) we had an extraordinary item which brought about a penny back.

So on and all when you just look at it apples to apples on an operations basis it’s about 11 cents.

Did you say EBITDA?

Not EBITDA – yes EBIT earnings before interest taxes and amortization.

And do that on a per share basis?

Yes and do that on a per share basis that’s – I know that’s how a lot of other companies have been doing it.

Only if it’s non-GAPP but of course I can give it to you, what you do with that $300,000 back in the quarter.

And tax affective.

And tax effective that’s exactly right.

Okay great, thank you.

The next question comes again from David McGregor with Longville Research.

Please state your question.

Yes you talked about increasing market share, I’m interested in hearing your thoughts on you know what is your market share, what is the total available market that you’re competing in as well?

There’s a lot of talk about higher layer count segment of the market or advanced technology segment of the market but could you quantify that for us and again talk about what you think your share might be.

That is a good question and we need to do a little more research on that before I would be able to give you a firm number of our market share in the high technology quick turn segment.

You know I think what’s tough is most of the information on the industry out there right now is dated it’s – some of it goes back to 2002 which would have been about $5.6b total.

That’s for the US.

That’s for the US so we’re comparing that market right now you know estimates I’ve seen are probably in the 7 a little over 7 range for 2003 but none of that have been finalized.

Typically that’s not broken down in the US data that’s not broken down by high tech versus quick turn and then standard you know kind of on the standard type work.

One way to take a look at it would be try to compare our revenues to the major competitors.

And that’s how we try to come up with the share.

See though for high tech it would be Merrick and we know we bill ourselves, there are a few other hand full of other competitors and then in quick turn it would be mostly DDI, ourselves and the Englewood’s facility of Tyco.

Okay thanks a lot.

Once again ladies and gentlemen if you do have a question please press star one on your push button telephone at this time.

Our next question comes from Jim McGreden (ph) with Delsfield Hamburg.

Please state your question.

Hi just to hopefully finish off on this capacity issue to get to the $290m in capacity in 2004 is that the $9m in CapEx that you indicated or does the $9m get you to some thing less than the 280?

No the $9m and for 2004 is or CapEx for 2004 and included in that $9m is expansion equipment that will take us to the 280/ 290.

But there is also maintenance equipment in there a few pieces of new test technology type pieces of equipment.

So it’s not all expansion.

But if you look at our CapEx for 2004 it’s $9m and included in that is enough expansion equipment to take us to the 280, 290 capacity rate.

That’s the question thank you.

As a final reminder ladies and gentlemen if you do have a question please press star one on the push button telephone at this time.

If there are no further questions I would turn the question back to Mr. Adler to conclude.

Okay I would just certainly like to thank every body for your attendance today, your interest in TTM.

We are pretty excited about our accomplishment and even more excited about the opportunities that we have going forward.

So thank you very much and we’ll talk to you next quarter.

Ladies and gentlemen this concludes our conference for today.

Thank you all for participating and have a nice day.