##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended March 31, 2011

OR



| ̈ | 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)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 06-1576013                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1220 N. 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.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act). (check one):





|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

As of April 28, 2011, DDi Corp. had 20,282,596 shares of common stock, par value $0.001 per share, outstanding.









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##### Table of Contents

DDi Corp.

FORM 10-Q for the Quarterly Period Ended March 
31, 2011

TABLE OF CONTENTS



|                               |  |                                                                                                    |    |          |    | 
|------------------------------ |  | -------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|                               |  |                                                                                                    |    | Page No. |   
|PART I  FINANCIAL INFORMATION |  |                                                                                                    |    |         
|                               |  |                                                                                                   
|Item 1.                        |  | Financial Statements (Unaudited):                                                                  |    |          |    | 
|                               |  |                                                                                                   
|                               |  | Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010                   |    |          | 1  | 
|                               |  |                                                                                                   
|                               |  | Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2011 and
2010     |    |          | 2  | 
|                               |  |                                                                                                   
|                               |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and
2010 |    |          | 3  | 
|                               |  |                                                                                                   
|                               |  | Notes to Condensed Consolidated Financial Statements                                               |    |          | 4  | 
|                               |  |                                                                                                   
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations              |    |          | 11 | 
|                               |  |                                                                                                   
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                         |    |          | 15 | 
|                               |  |                                                                                                   
|Item 4.                        |  | Controls and Procedures                                                                            |    |          | 16 | 
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                    |    |         
|                               |  |                                                                                                   
|Item 1.                        |  | Legal Proceedings                                                                                  |    |          | 17 | 
|                               |  |                                                                                                   
|Item 1A.                       |  | Risk Factors                                                                                       |    |          | 17 | 
|                               |  |                                                                                                   
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                        |    |          | 17 | 
|                               |  |                                                                                                   
|Item 3.                        |  | Defaults Upon Senior Securities                                                                    |    |          | 17 | 
|                               |  |                                                                                                   
|Item 4.                        |  | Removed and Reserved                                                                               |    |          | 17 | 
|                               |  |                                                                                                   
|Item 5.                        |  | Other Information                                                                                  |    |          | 17 | 
|                               |  |                                                                                                   
|Item 6.                        |  | Exhibits                                                                                           |    |          | 17 | 
|                               | 
|Signatures                     |  |                                                                                                    | 19 |         



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

DDi CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)



|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                                                                                             |  | March 31,2011 |          |   | December 31,2010 |  
|ASSETS                                                                                                                                                                                                       |  |               |          |   |                  |   |          |  
|Current assets:                                                                                                                                                                                              |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                                                                                                    |  | $             | 22,046   |   |                  | $ | 28,347   |  
|Accounts receivable, net                                                                                                                                                                                     |  |               | 43,964   |   |                  |   | 40,821   |  
|Inventories, net                                                                                                                                                                                             |  |               | 23,846   |   |                  |   | 20,970   |  
|Prepaid expenses and other current assets                                                                                                                                                                    |  |               | 2,594    |   |                  |   | 1,889    |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current assets                                                                                                                                                                                         |  |               | 92,450   |   |                  |   | 92,027   |  
|Property, plant and equipment, net                                                                                                                                                                           |  |               | 43,277   |   |                  |   | 42,605   |  
|Intangible assets, net                                                                                                                                                                                       |  |               | 424      |   |                  |   | 614      |  
|Goodwill                                                                                                                                                                                                     |  |               | 3,664    |   |                  |   | 3,664    |  
|Other assets                                                                                                                                                                                                 |  |               | 1,023    |   |                  |   | 954      |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total assets                                                                                                                                                                                                 |  | $             | 140,838  |   |                  | $ | 139,864  |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                         |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                                                                                                                                         |  |               |          |   |                  |   |          |  
|Current maturities of long-term debt                                                                                                                                                                         |  | $             | 1,626    |   |                  | $ | 1,751    |  
|Accounts payable                                                                                                                                                                                             |  |               | 24,785   |   |                  |   | 25,137   |  
|Accrued expenses and other current liabilities                                                                                                                                                               |  |               | 11,543   |   |                  |   | 13,802   |  
|Income taxes payable                                                                                                                                                                                         |  |               | 283      |   |                  |   | 311      |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                                                                                                                                    |  |               | 38,237   |   |                  |   | 41,001   |  
|Long-term debt                                                                                                                                                                                               |  |               | 9,539    |   |                  |   | 9,704    |  
|Other long-term liabilities                                                                                                                                                                                  |  |               | 474      |   |                  |   | 527      |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total liabilities                                                                                                                                                                                            |  |               | 48,250   |   |                  |   | 51,232   |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Commitments and contingencies (Note 13)                                                                                                                                                                      |  |               |          |   |                  |   |          |  
|Stockholders equity:                                                                                                                                                                                        |  |               |          |   |                  |   |          |  
|Common stock  $0.001 par value, 190,000 shares authorized, 23,230 shares issued and 20,283 shares outstanding at
March 31, 2011 and 23,129 shares issued and 20,182 shares outstanding at December 31, 2010 |  |               | 23       |   |                  |   | 23       |  
|Additional paid-in-capital                                                                                                                                                                                   |  |               | 243,699  |   |                  |   | 245,181  |  
|Treasury stock, at cost  2,947 shares held in treasury at March 31, 2011 and December 31, 2010                                                                                                              |  |               | (16,323  | ) |                  |   | (16,323  | )
|Accumulated other comprehensive income                                                                                                                                                                       |  |               | 1,496    |   |                  |   | 1,063    |  
|Accumulated deficit                                                                                                                                                                                          |  |               | (136,307 | ) |                  |   | (141,312 | )
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total stockholders equity                                                                                                                                                                                   |  |               | 92,588   |   |                  |   | 88,632   |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                                                                                                                   |  | $             | 140,838  |   |                  | $ | 139,864  |  
|                                                                                                                                                                                                             |  |               |          |   |                  |   |          |  

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



1



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DDi CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)



|                                                        |  |                              |        |   |      |   |        |  
|------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                        |  | Three Months Ended March 31, |       
|                                                        |  | 2011                         |        |   | 2010 |  
|Net sales                                               |  | $                            | 66,459 |   |      | $ | 64,665 |  
|Cost of goods sold                                      |  |                              | 52,307 |   |      |   | 50,679 |  
|                                                        |  |                              |        |   |      |   |        |  
|Gross profit                                            |  |                              | 14,152 |   |      |   | 13,986 |  
|Operating expenses:                                     |  |                              |        |   |      |   |        |  
|Sales and marketing                                     |  |                              | 4,638  |   |      |   | 4,507  |  
|General and administrative                              |  |                              | 3,959  |   |      |   | 4,423  |  
|Amortization of intangible assets                       |  |                              | 190    |   |      |   | 190    |  
|                                                        |  |                              |        |   |      |   |        |  
|Operating income                                        |  |                              | 5,365  |   |      |   | 4,866  |  
|Interest expense                                        |  |                              | 387    |   |      |   | 459    |  
|Interest income                                         |  |                              | (5     | ) |      |   | (17    | )
|Other expense (income), net                             |  |                              | (86    | ) |      |   | 216    |  
|                                                        |  |                              |        |   |      |   |        |  
|Income before income tax expense                        |  |                              | 5,069  |   |      |   | 4,208  |  
|Income tax expense                                      |  |                              | 64     |   |      |   | 409    |  
|                                                        |  |                              |        |   |      |   |        |  
|Net income                                              |  | $                            | 5,005  |   |      | $ | 3,799  |  
|                                                        |  |                              |        |   |      |   |        |  
|Net income per share:                                   |  |                              |        |   |      |   |        |  
|Basic                                                   |  | $                            | 0.25   |   |      | $ | 0.19   |  
|Diluted                                                 |  | $                            | 0.24   |   |      | $ | 0.19   |  
|Dividend declared per share                             |  | $                            | 0.10   |   |      | $ |       |  
|Weighted-average shares used in per share computations: |  |                              |        |   |      |   |        |  
|Basic                                                   |  |                              | 20,226 |   |      |   | 19,824 |  
|Diluted                                                 |  |                              | 21,190 |   |      |   | 19,971 |  

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



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DDi CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



|                                                                              |  |                              |        |   |      |   |        |  
|----------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                              |  | Three Months Ended March 31, |       
|                                                                              |  | 2011                         |        |   | 2010 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |  |                              |        |   |      |   |        |  
|Net income                                                                    |  | $                            | 5,005  |   |      | $ | 3,799  |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |                              |        |   |      |   |        |  
|Depreciation                                                                  |  |                              | 2,139  |   |      |   | 2,200  |  
|Amortization of intangible assets                                             |  |                              | 190    |   |      |   | 190    |  
|Amortization of debt issuance costs                                           |  |                              | 61     |   |      |   |       |  
|Amortization of deferred lease liability                                      |  |                              | (110   | ) |      |   | (115   | )
|Stock-based compensation                                                      |  |                              | 269    |   |      |   | 348    |  
|Other                                                                         |  |                              | (37    | ) |      |   | 23     |  
|Changes in operating assets and liabilities:                                  |  |                              |        |   |      |   |        |  
|Accounts receivable                                                           |  |                              | (2,752 | ) |      |   | (9,903 | )
|Inventories                                                                   |  |                              | (2,699 | ) |      |   | (2,080 | )
|Prepaid expenses and other assets                                             |  |                              | (818   | ) |      |   | 163    |  
|Accounts payable                                                              |  |                              | (544   | ) |      |   | 8,383  |  
|Accrued expenses and other liabilities                                        |  |                              | (2,224 | ) |      |   | (4,496 | )
|Income taxes payable                                                          |  |                              | (77    | ) |      |   | 724    |  
|                                                                              |  |                              |        |   |      |   |        |  
|Net cash used in operating activities                                         |  |                              | (1,597 | ) |      |   | (764   | )
|                                                                              |  |                              |        |   |      |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |                              |        |   |      |   |        |  
|Purchases of property and equipment                                           |  |                              | (2,359 | ) |      |   | (1,286 | )
|                                                                              |  |                              |        |   |      |   |        |  
|Net cash used in investing activities                                         |  |                              | (2,359 | ) |      |   | (1,286 | )
|                                                                              |  |                              |        |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |  |                              |        |   |      |   |        |  
|Principal payments on long-term debt                                          |  |                              | (507   | ) |      |   | (515   | )
|Payments of debt issuance costs                                               |  |                              |       |   |      |   | (78    | )
|Repayment of revolving credit facility                                        |  |                              |       |   |      |   | (4,290 | )
|Proceeds from exercise of stock options                                       |  |                              | 308    |   |      |   |       |  
|Cash dividend payments to common shareholders                                 |  |                              | (2,028 | ) |      |   |       |  
|                                                                              |  |                              |        |   |      |   |        |  
|Net cash used in financing activities                                         |  |                              | (2,227 | ) |      |   | (4,883 | )
|                                                                              |  |                              |        |   |      |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                  |  |                              | (118   | ) |      |   | (288   | )
|                                                                              |  |                              |        |   |      |   |        |  
|Net decrease in cash and cash equivalents                                     |  |                              | (6,301 | ) |      |   | (7,221 | )
|Cash and cash equivalents, beginning of period                                |  |                              | 28,347 |   |      |   | 19,392 |  
|                                                                              |  |                              |        |   |      |   |        |  
|Cash and cash equivalents, end of period                                      |  | $                            | 22,046 |   |      | $ | 12,171 |  
|                                                                              |  |                              |        |   |      |   |        |  

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



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DDi Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of DDi Corp. and its wholly-owned subsidiaries. DDi Corp. and its subsidiaries are referred to as the Company or
DDi. All intercompany transactions have been eliminated in consolidation.

In the opinion of management, the
accompanying unaudited condensed consolidated financial statements and notes thereto contain all adjustments necessary for a fair presentation of the financial position of the Company as of March 31, 2011 and the results of its operations and
cash flows for the three months ended March 31, 2011 and 2010, and such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of results of
operations to be expected for the full year.

The Company has prepared these financial statements pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such
regulations, although the Company believes the disclosures provided are adequate to prevent the information presented from being misleading. The condensed consolidated balance sheet data as of December 31, 2010 was derived from audited
financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (U.S. GAAP). This report on Form 10-Q for the quarter ended March 31, 2011 should be
read in conjunction with the audited financial statements presented in DDis Annual Report on Form 10-K for the year ended December 31, 2010.

All financial data are presented in US Dollars.

Description of Business

DDi is a leading provider of time-critical, technologically-advanced electronic interconnect design, engineering and
manufacturing services. The Company specializes in engineering and fabricating complex multi-layer PCBs on a quick-turn basis, with lead times as short as 24 hours. DDi has over 1,000 customers in various market segments including communications and
computing, military and aerospace, industrial electronics, instrumentation, medical and high-durability commercial markets. The Companys engineering capabilities and manufacturing facilities located in the United States and Canada, together
with its suppliers in Asia, enable it to respond to time-critical orders and technology challenges for its customers. DDi operates primarily in one geographical area, North America.

On December 31, 2009, the Company completed the acquisition of Coretec Inc. (Coretec), a Canadian-based PCB manufacturer
whose shares previously were publicly traded on the Toronto Stock Exchange.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) 2010-29, Business Combinations (Topic 805). This Update requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period and specifically requires the
same information for the comparative prior period. We do not expect the adoption of this ASU to have a material impact on our financial statements.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures(Topic 820)  Improving Disclosures about Fair Value Measurements.ASU 2010-06
amends the fair value disclosure guidance to include new disclosures and changes to clarify existing disclosure requirements. These amended standards require disclosures about inputs and valuation techniques used to measure fair value as well as
disclosures about significant transfers, beginning in the first quarter of 2010. Additionally, these amended standards require presentation of disaggregated activity within the reconciliation for fair value measurements using significant
unobservable inputs (Level 3), beginning in the first quarter of 2011. The adoption of these new standards did not materially impact the Companys consolidated financial statements.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or
application to specific industries and are not expected to have a material impact on the Companys consolidated financial position, results of operations or cash flows.



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DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



Management does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE 2. INVENTORIES

Inventories are stated at the lower of cost (determined on a first-in, first-out or average cost basis) or market and
consisted of the following (in thousands):



|                |  |                |        |  |                   |   |        | 
|--------------- |  | -------------- | ------ |  | ----------------- | - | ------ | 
|                |  | March 31, 2011 |        |  | December 31, 2010 |  
|Raw materials   |  | $              | 10,524 |  |                   | $ | 9,216  | 
|Work-in-process |  |                | 8,269  |  |                   |   | 7,093  | 
|Finished goods  |  |                | 5,053  |  |                   |   | 4,661  | 
|                |  |                |        |  |                   |   |        | 
|Total           |  | $              | 23,846 |  |                   | $ | 20,970 | 
|                |  |                |        |  |                   |   |        | 

NOTE 3. REVOLVING CREDIT FACILITY

On September 23, 2010, the Company entered into a Credit Agreement (the Credit Agreement) with JPMorgan Chase Bank, N.A., as Administrative Agent and U.S. Lender, and JPMorgan Chase Bank,
N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Lender (the Lender). The Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $25.0 million, with a Canadian sub-limit of $10
million. Pursuant to its terms and subject to the conditions set forth therein, the aggregate principal amount of the facility may be increased from $25 to $40 million. The maturity date of the facility is September 23, 2013. Availability under
the Credit Agreement is based on various borrowing base tests, including the Companys eligible accounts receivable and inventories. As of March 31, 2011, the Company had no borrowings outstanding under the Credit Agreement and
availability under the facility was above the applicable measurement levels.

On March 14, 2011, the Company entered into
an amendment (the March 2011 Credit Amendment) to the Credit Agreement dated September 23, 2010. The March 2011 Credit Amendment amends the Credit Agreement to (i) reduce the margin from 3.25% to 2.50% that is added to
published interest rates to determine the applicable interest rates for borrowing and (ii) increase the amount of dividends that the Company can pay without obtaining the consent of the Lender from $8 million in a rolling twelve-month period
(and $25 million over the term of the Credit Agreement) to $12 million ($40 million over the term of the Credit Agreement).

NOTE 4.
LONG-TERM DEBT

Key Bank

The Company has a term loan with Key Bank secured by the Companys building located in North Jackson, Ohio. The loan has a principal balance of approximately $1.0 million at March 31, 2011,
requires monthly payments of approximately $0.02 million plus accrued interest, and bears interest at LIBOR plus 1.5% (1.76% at March 31, 2011). The note matures in April 2015.

Business Development Bank of Canada

There are four existing loans with Business Development Bank of Canada (the BDC)  a term loan, an infrastructure loan, an equipment loan and a building loan. The BDC loans are secured by
the land and building of the Companys Sheppard Avenue facility located in Toronto, Ontario, and the loan balance is guaranteed by the Company, a requirement of the BDC. The BDC loans require the Company to maintain an available funds coverage
ratio of 1.5. As of March 31, 2011, the Company is in compliance with all required covenants.

The outstanding BDC term
loan has a principal balance of approximately $0.4 million as of March 31, 2011. The loan requires monthly principal payments of approximately $0.05 million over the loan term and bears interest, payable monthly, at BDCs floating base
rate less 1.5% (3.50% at March 31, 2011). The loan matures in December 2011.



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DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



The infrastructure loan was provided to finance the completion of the Companys
Sheppard Avenue facility, located in Toronto, Ontario, for expanding infrastructure. The infrastructure loan has a principal balance of approximately $4.8 million as of March 31, 2011, requires monthly principal payments of approximately $0.02
million, and accrues interest at BDCs floating base rate (5.0% at March 31, 2011). The loan matures in October 2028.

The equipment loan has a principal balance of approximately $2.0 million as of March 31, 2011, requires monthly principal payments
of approximately $0.04 million, and accrues interest at the 1-month floating base rate plus 0.6% (4.35% at March 31, 2011). The loan matures in October 2015.

The building loan has a principal balance of approximately $0.2 million as of March 31, 2011, requires monthly principal payments of approximately $0.02 million, and accrues interest at BDCs
floating base rate plus 0.25% (5.25% at March 31, 2011). The loan matures in March 2012.

Zions Bank Mortgage

The Company has a mortgage with Zions Bank with a principal balance of approximately $1.5 million as of March 31,
2011, secured by the land and building of the Companys Cuyahoga Falls, Ohio facility. The mortgage requires monthly principal and interest payments of approximately $0.01 million, accrues interest at the Federal Home Loan Bank rate plus 2%
(6.92% at March 31, 2011), and matures during 2032.

GE Real Estate Mortgage

The Company has a mortgage with GE Real Estate, with a principal balance of $1.3 million as of March 31, 2011, secured by the land
and building of the Companys Littleton, Colorado facility. The mortgage requires monthly interest and principal payments of approximately $0.01 million, accrues interest at a fixed rate of 7.55% per annum, and matures during 2032.

NOTE 5. PRODUCT WARRANTY

The Company accrues warranty expense, which is included in cost of goods sold, at the time revenue is recognized for estimated future warranty obligations related to defective PCBs at the time of
shipment, based upon the relationship between historical sales volumes and anticipated costs. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims and the estimated cost of
repair. The Company assesses the adequacy of the warranty accrual each quarter. To date, actual warranty claims and costs have been in line with the Companys estimates. The warranty accrual is included in accrued expenses and other current
liabilities.

The changes in the Companys warranty accrual were as follows (in thousands):



|                                    |  |                              |        |   |      |   |        |  
|----------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                    |  | Three Months Ended March 31, |       
|                                    |  | 2011                         |        |   | 2010 |  
|Beginning balance                   |  | $                            | 1,167  |   |      | $ | 1,100  |  
|Warranties issued during the period |  |                              | 2,250  |   |      |   | 1,412  |  
|Warranty expenditures               |  |                              | (2,126 | ) |      |   | (1,339 | )
|                                    |  |                              |        |   |      |   |        |  
|Ending balance                      |  | $                            | 1,291  |   |      | $ | 1,173  |  
|                                    |  |                              |        |   |      |   |        |  

NOTE 6. INCOME TAXES

The Company applies the provisions of FASB Accounting Standards Codification (ASC) 740, Income Taxes, which established standards of financial accounting and reporting for
income taxes that result from an entitys activities during the current and preceding years. The Company has $0.4 million of total gross unrecognized tax benefits at March 31, 2011 and December 31, 2010. If recognized in future
periods there would be a favorable effect of $0.3 million to the effective tax rate. Management anticipates a decrease of approximately $0.06 million in the tax contingency reserve during the remainder of 2011 due to statute expirations. The Company
files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and Canada. The Company has substantially concluded all U.S. federal income tax matters for years through 2004. Canadian income tax matters have been examined
through 2008. State jurisdictions that remain subject to examination range from 2003 to 2009.

The Companys effective
income tax rate differs from the U.S. federal statutory tax rate of 35% primarily as a result of the mix of earnings between tax jurisdictions, research and development credits, state income taxes and its continuous evaluation of the realization of
its deferred tax assets and uncertain tax positions. The reduced income tax rate in 2011 was



6



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##### Table of Contents

DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



primarily the result of reserved net operating loss carryforwards and tax credits available to offset profitable operating results in 2011.

NOTE 7. STOCK-BASED COMPENSATION

Stock Options

In order to determine the fair value of stock
options, the Company uses the Black-Scholes option pricing model and apply the single-option valuation approach to the stock option valuation. In order to determine the fair value of restricted stock awards and restricted stock units the Company
uses the closing market price of DDi common stock on the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for time-based vesting awards of stock options, restricted
stock awards and restricted stock units. Certain of the stock options may vest on an accelerated basis.

The Black-Scholes
option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model requires the input of highly subjective assumptions, including the expected stock
price volatility, risk-free interest rates, dividend rate, and expected term.

There were 15,000 grants of stock option awards
during the three months ended March 31, 2011 and 462,000 grants of stock option awards during the three months ended March 31, 2010. As of March 31, 2011, the total compensation cost related to non-vested stock options not yet
recognized was $0.6 million, net of estimated forfeitures. This cost will be amortized on a straight-line basis over the remaining weighted-average period of approximately 1.8 years.

The following table summarizes the Companys stock option activity under all the plans for the three months ended March 31,
2011:



|                                         |  |                                  |       |   |                                          |   |       |                                                    |  |  |                                        |  |  |   |        | 
|---------------------------------------- |  | -------------------------------- | ----- | - | ---------------------------------------- | - | ----- | -------------------------------------------------- |  |  | -------------------------------------- |  |  | - | ------ | 
|                                         |  | OptionsOutstanding(in thousands) |       |   | Weighted AverageExercise
Priceper Option |   |       | Weighted AverageRemaining ContractualLife in Years |  |  | AggregateIntrinsic Value(in thousands) | 
|Balance as of December 31, 2010          |  |                                  | 2,467 |   |                                          | $ | 7.87  |                                                    |  |  | 6.4                                    |  |  | $ | 12,483 | 
|Granted                                  |  |                                  | 15    |   |                                          | $ | 9.60  |                                                    |  |  |                                        |  |  |   |        | 
|Exercised                                |  |                                  | (170  | ) |                                          | $ | 6.38  |                                                    |  |  |                                        |  |  | $ | 702    | 
|Forfeited                                |  |                                  | (1    | ) |                                          | $ | 45.91 |                                                    |  |  |                                        |  |  |   |        | 
|                                         |  |                                  |       |   |                                          |   |       |                                                    |  |  |                                        |  |  |   |        | 
|Balance as of March 31, 2011             |  |                                  | 2,311 |   |                                          | $ | 7.98  |                                                    |  |  | 6.3                                    |  |  | $ | 9,028  | 
|                                         |  |                                  |       |   |                                          |   |       |                                                    |  |  |                                        |  |  |   |        | 
|Options exercisable as of March 31, 2011 |  |                                  | 1,840 |   |                                          | $ | 8.45  |                                                    |  |  | 5.6                                    |  |  | $ | 6,921  | 
|                                         |  |                                  |       |   |                                          |   |       |                                                    |  |  |                                        |  |  |   |        | 

The aggregate intrinsic value represents the difference between the exercise price of the
underlying awards and the quoted price of DDis common stock for those awards that have an exercise price below the quoted price at March 31, 2011.

Restricted Stock

There were no grants of restricted stock awards
during the three months ended March 31, 2011 and 25,000 grants of restricted stock awards during the three months ended March 31, 2010. As of March 31, 2011, the total compensation cost related to non-vested restricted stock awards
not yet recognized was $0.3 million, net of estimated forfeitures. This cost will be amortized on a straight-line basis over the remaining weighted-average period of approximately 0.8 years.

A summary of the status of the Companys non-vested restricted shares as of March 31, 2011 and changes during the three months
ended March 31, 2011 is presented below:



|                              |  |                                            |     |     |                                      |   |      | 
|----------------------------- |  | ------------------------------------------ | --- | --- | ------------------------------------ | - | ---- | 
|                              |  | Non-vested SharesOutstanding(in thousands) |     |     | Weighted AverageGrant-DateFair Value |  
|Non-vested at January 1, 2011 |  |                                            | 145 |     |                                      | $ | 3.96 | 
|Granted                       |  |                                            | 1   | (a) |                                      | $ | 3.92 | 
|Vested                        |  |                                            | (8  | )   |                                      | $ | 4.48 | 
|Forfeited                     |  |                                            |    |     |                                      |   |     | 
|                              |  |                                            |     |     |                                      |   |      | 
|Non-vested at March 31, 2011  |  |                                            | 137 |     |                                      | $ | 3.92 | 
|                              |  |                                            |     |     |                                      |   |      | 



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##### Table of Contents

DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



|(a) | Under the terms of the DDi 2005 Stock Incentive Plan (the Plan), the number of shares subject to outstanding Restricted Stock Units (RSUs) are
adjusted upon the payment of cash dividends. As a result of the dividend declaration on February 17, 2011, the number of shares subject to outstanding RSUs increased by 1,307 shares.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock Compensation Expense

The following table sets forth expense related to stock-based compensation (in thousands):



|                                    |  |                              |     |  |      |   |     | 
|----------------------------------- |  | ---------------------------- | --- |  | ---- | - | --- | 
|                                    |  | Three Months Ended March 31, |    
|                                    |  | 2011                         |     |  | 2010 |  
|Non-cash compensation expense:      |  |                              |     |  |      |   |     | 
|Cost of goods sold                  |  | $                            | 78  |  |      | $ | 125 | 
|Sales and marketing expenses        |  |                              | 37  |  |      |   | 84  | 
|General and administrative expenses |  |                              | 154 |  |      |   | 139 | 
|                                    |  |                              |     |  |      |   |     | 
|Total non-cash compensation expense |  | $                            | 269 |  |      | $ | 348 | 
|                                    |  |                              |     |  |      |   |     | 

NOTE 8. SEGMENT REPORTING

Based on evaluation of the Companys financial information, management believes that the Company operates in one reportable segment related to the design, development, manufacture and test of complex
PCBs. Revenues are attributed to the country in which the customer buying the product is located.

The following table
summarizes net sales by geographic area (in thousands):



|                 |  |                              |        |  |      |   |        | 
|---------------- |  | ---------------------------- | ------ |  | ---- | - | ------ | 
|                 |  | Three Months Ended March 31, |       
|                 |  | 2011                         |        |  | 2010 |  
|Net sales:       |  |                              |        |  |      |   |        | 
|North America(1) |  | $                            | 60,639 |  |      | $ | 56,502 | 
|Asia             |  |                              | 4,700  |  |      |   | 6,666  | 
|Other            |  |                              | 1,120  |  |      |   | 1,497  | 
|                 |  |                              |        |  |      |   |        | 
|Total            |  | $                            | 66,459 |  |      | $ | 64,665 | 
|                 |  |                              |        |  |      |   |        | 



| | (1) | The majority of sales in North America are to customers located in the United States.
| | --- | -------------------------------------------------------------------------------------

NOTE 9. NET INCOME PER SHARE

Basic net income per share is computed by
dividing the net income for the period by the weighted-average number of common shares outstanding during the period, net of shares of common stock held in treasury. Diluted net income per share is computed by dividing the net income for the period
by the weighted-average number of common and common equivalent shares outstanding during the period, if dilutive. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the
treasury stock method, which includes consideration of share-based compensation.

The following table sets forth the
calculation of basic and diluted net income per share of common stock (in thousands, except per share amounts):



|                                                              |  |                              |        |  |      |   |        | 
|------------------------------------------------------------- |  | ---------------------------- | ------ |  | ---- | - | ------ | 
|                                                              |  | Three Months Ended March 31, |       
|                                                              |  | 2011                         |        |  | 2010 |  
|Weighted-average shares of common stock outstanding  basic   |  |                              | 20,226 |  |      |   | 19,824 | 
|Weighted-average common stock equivalents                     |  |                              | 964    |  |      |   | 147    | 
|                                                              |  |                              |        |  |      |   |        | 
|Weighted-average shares of common stock outstanding  diluted |  |                              | 21,190 |  |      |   | 19,971 | 
|                                                              |  |                              |        |  |      |   |        | 
|Net income                                                    |  | $                            | 5,005  |  |      | $ | 3,799  | 
|Net income per share  basic                                  |  | $                            | 0.25   |  |      | $ | 0.19   | 
|Net income per share  diluted                                |  | $                            | 0.24   |  |      | $ | 0.19   | 





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##### Table of Contents

DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



For the three months ended March 31, 2011 and 2010, common shares issuable upon
exercise of outstanding stock options and vesting of restricted stock of 1,493,407 and 2,747,730, respectively, were excluded from the diluted net income per common share calculation as their impact would have been anti-dilutive.

NOTE 10. DIVIDENDS

The
Company has paid quarterly cash dividends since the second quarter of 2010. On February 17, 2011, the board of directors declared a cash dividend of $0.10 per share, payable on March 30, 2011 (the Payment Date) to stockholders
of record as of March 15, 2011 (the Record Date).

DDi Corp. is a Delaware corporation. Delaware code allows
a corporation to declare and pay dividends out of the corporations surplus, which is defined as total assets minus total liabilities minus par value of issued stock. DDi had a surplus as defined by Delaware code of $93 million as of
March 31, 2011. When the Company records a dividend, the charge is recorded to additional paid-in capital as opposed to retained earnings since the Company has an accumulated deficit.

NOTE 11. COMPREHENSIVE INCOME

Comprehensive income includes unrealized
translation gains and losses that have previously been excluded from net income and reflected instead in stockholders equity. The following table summarizes the Companys comprehensive income (in thousands):



|                                         |  |                              |       |  |      |   |       | 
|---------------------------------------- |  | ---------------------------- | ----- |  | ---- | - | ----- | 
|                                         |  | Three Months Ended March 31, |      
|                                         |  | 2011                         |       |  | 2010 |  
|Net income                               |  | $                            | 5,005 |  |      | $ | 3,799 | 
|Other comprehensive income:              |  |                              |       |  |      |   |       | 
|Foreign currency translation adjustments |  |                              | 433   |  |      |   | 644   | 
|                                         |  |                              |       |  |      |   |       | 
|Comprehensive income                     |  | $                            | 5,438 |  |      | $ | 4,443 | 
|                                         |  |                              |       |  |      |   |       | 

NOTE 12. FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company began applying fair value measurements to assets and liabilities reported in its financial statements at fair value on a recurring basis as required by FASB ASC
820,  Fair Value Measurements and Disclosures. This topic establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:



|         |  |                                                                                                                                                                                                                                                                                                                      
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1: |  | Quoted market prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                          
|         | 
|Level 2: |  | Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|         | 
|Level 3: |  | Unobservable inputs that are not corroborated by market data.                                                                                                                                                                                                                                                        

A financial assets or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The estimated fair values
of the Companys financial instruments, which include cash and cash equivalents, accounts receivable, revolving credit facility, accounts payable, accrued liabilities and income taxes payable, approximate their carrying values due to their
short maturities. These items are classified as either Level 1 or Level 2 inputs.

Cash equivalents consist of the
Companys excess cash invested in highly liquid money market accounts. These amounts are reflected within cash and cash equivalents on the condensed consolidated balance sheet at a net value of 1:1 for each dollar invested. The cost and fair
value of the Companys cash equivalents was $22.0 million as of March 31, 2011 and was based on quoted market prices in active markets for identical assets, a Level 1 input.

To calculate the estimated fair value of the Companys variable and fixed rate notes payable and mortgage debt as of March 31,
2011, the Company estimated that in the current market the Companys cost of borrowing on similar debt would, on average, be approximately 6.05% based on its current debt rating and an analysis of current market rates. Using this



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##### Table of Contents

DDi Corp.

Notes to Condensed Consolidated Financial Statements(Continued)

(Unaudited)



estimated interest rate and a discount rate of 8.0% (Level 2 and 3 inputs), the Company estimated the fair value of its debt to be approximately $0.2 million higher than its carrying value of
$11.2 million.

NOTE 13. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time the Company is involved in litigation
and government proceedings incidental to its business. These proceedings are in various procedural stages. The Company believes as of the date of this report that provisions or accruals made for any potential losses, to the extent
estimable, are adequate and that any liabilities or costs arising out of these proceedings are not likely to have a materially adverse effect on its condensed consolidated financial statements. The outcome of any of these proceedings, however, is
inherently uncertain, and if unfavorable outcomes were to occur, there is a possibility that they would, individually or in the aggregate, have a materially adverse effect on the Companys condensed consolidated financial statements.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

The following is a discussion of the financial condition and results of operations for our fiscal quarter ended March 31, 2011. As used herein,
the Company, we, us, or our means DDi Corp. and its wholly-owned subsidiaries. This discussion and analysis should be read in conjunction with Managements Discussion and Analysis of Financial
Condition and Results of Operations set forth in DDi Corp.s Annual Report on Form 10-K for the year ended December 31, 2010 (the Form 10-K).

Some of the statements in this section contain forward-looking statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events, which involve risks
and uncertainties. All statements other than statements of historical facts included in this section 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. In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, intend, forecast, anticipate, believe, estimate, predict, potential,
continue or the negative of these terms or other comparable terminology. The forward-looking statements contained in this section involve known and unknown risks, uncertainties and situations that may cause our or our industrys actual results,
level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. Factors that might cause actual events or results to differ
materially from those indicated by these forward-looking statements may include the matters listed under Risk Factors in Item 1A in our Form 10-K including, but not limited to, changes in general economic conditions in the markets
in which we may compete and fluctuations in demand in the electronics industry; increased competition; increased costs; our ability to retain key members of management; our ability to address changes to environmental laws and regulations; potential
impacts of natural disasters in the electronics industry and the companys supply chain; risks associated with acquisitions; 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 U. S. Securities and Exchange Commission (SEC).

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.

Our Company

We are a leading provider of time-critical,
technologically-advanced printed circuit board (PCB) engineering and manufacturing services. We specialize in engineering and fabricating complex multi-layer PCBs on a quick-turn basis, with lead times as short as 24 hours, and in
manufacturing products with high levels of complexity and reliability with low-to-moderate production volumes. We have over 1,000 PCB customers in various market segments including communications, computing, military/aerospace, industrial
electronics, instrumentation, medical and high-durability commercial markets. Our customers include both original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) providers. With such a broad
customer base and approximately 60 new PCB designs tooled per day, we have accumulated significant process and engineering expertise. Our core strength is developing innovative, high-performance solutions for customers during the engineering, test
and launch phases of new electronic product development and supporting long-term requirements for low-to-moderate production volumes, such as those required by the military/aerospace market. Our entire organization is focused on rapidly and reliably
filling complex customer orders and building long-term customer relationships. Our engineering capabilities and seven manufacturing facilities located in the United States and Canada, together with our suppliers in Asia, enable us to respond to
time-critical orders and technology challenges for our customers.

Industry Overview

Printed circuit boards are a fundamental component of virtually all electronic equipment. A PCB is comprised of layers of laminate and
copper and contains patterns of electrical circuitry to connect electronic components. The level of PCB complexity is determined by several characteristics, including interconnect and circuit density, size, layer count, material type and
functionality. High-end commercial and military/aerospace equipment manufacturers require complex PCBs fabricated with higher layer counts, greater interconnect and circuit density and advanced materials, and demand highly complex and sophisticated
manufacturing capabilities. By contrast, other PCBs, such as those used in non-wireless consumer electronic products, are generally less complex and have less sophisticated manufacturing requirements.



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##### Table of Contents

Results of Operations  Summary

During the fourth quarter of 2010, we experienced a sequential decline in net sales following five consecutive quarters of sequential
growth in net sales, due to lower commercial demand and fewer manufacturing days associated with the holiday season. We experienced a rebound in customer demand in the first quarter of 2011 over the fourth quarter of 2010 as orders sequentially
increased by 18% to $72.2 million driving a 1.09 book to bill ratio. This sequential increase in orders was primarily driven by stronger demand in the industrial electronics and the government, military and aerospace segments. While the strength of
the economic recovery is uncertain and we continue to execute on our strategy, we believe our technical capabilities, our sales distribution network and our extensive customer base situate the company for continued success in 2011.

Results of Operations for the Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010

The following tables set forth select data from our Condensed Consolidated Statements of Income (in thousands):



|                                          |  |                              |        |   |      |   |        |          |  |   |          |  |  |  |     |  
|----------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -------- |  | - | -------- |  |  |  | --- | -
|                                          |  | Three Months Ended March 31, |        |   |      |   |        |          | 
|                                          |  | 2011                         |        |   | 2010 |   |        | $ Change |  |   | % Change | 
|Net sales                                 |  | $                            | 66,459 |   |      | $ | 64,665 |          |  | $ | 1,794    |  |  |  | 2.8 | %
|Cost of goods sold                        |  |                              | 52,307 |   |      |   | 50,679 |          |  |   | 1,628    |  |  |  | 3.2 | %
|                                          |  |                              |        |   |      |   |        |          |  |   |          |  |  |  |     |  
|Gross profit                              |  |                              | 14,152 |   |      |   | 13,986 |          |  |   | 166      |  |  |  | 1.2 | %
|Gross profit as a percentage of net sales |  |                              | 21.3   | % |      |   | 21.6   | %        |  |   |          |  |  |  |     |  

Net Sales

Net sales are derived from the engineering and manufacture of complex, technologically-advanced multi-layer PCBs.

Net sales increased $1.8 million to $66.5 million for the first quarter of 2011, from $64.7 million for the same period in 2010. This slight increase in net sales is primarily driven by increased sales to
the industrial electronics, instrumentation and medical segment and the government, military and aerospace segment partially offset by lower sales to the consumer electronics and communications segments.

Gross Profit

Gross profit for the first quarter of 2011 was $14.2 million, or 21.3% of net sales, compared to $14.0 million, or 21.6% of net sales, for the same period in 2010. Gross margin in the first quarter of
2011 was slightly lower than the same period of the prior year, which included approximately $0.4 million of severance costs associated with the Coretec acquisition. The decrease in gross profit was primarily due to higher headcount and temporary
labor costs. In addition, first quarter 2011 gross margin was slightly pressured by rising material costs which have been driven by record prices for certain commodities. Increases in material costs could impact our gross profit going forward if we
are unable to fully pass through the increases to our customers.

Non-cash Compensation Expense



|                                    |  |                              |     |  |      |   |     | 
|----------------------------------- |  | ---------------------------- | --- |  | ---- | - | --- | 
|                                    |  | Three Months Ended March 31, |    
|                                    |  | 2011                         |     |  | 2010 |  
|Non-cash compensation expense:      |  |                              |     |  |      |   |     | 
|Cost of goods sold                  |  | $                            | 78  |  |      | $ | 125 | 
|Sales and marketing expenses        |  |                              | 37  |  |      |   | 84  | 
|General and administrative expenses |  |                              | 154 |  |      |   | 139 | 
|                                    |  |                              |     |  |      |   |     | 
|Total non-cash compensation expense |  | $                            | 269 |  |      | $ | 348 | 
|                                    |  |                              |     |  |      |   |     | 

Non-cash compensation expense related to stock awards was recorded in accordance with the fair value
recognition provisions of FASB ASC 718, Compensation  Stock Based Compensation.



12



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##### Table of Contents

Sales and Marketing Expenses



|                             |  |                              |       |   |      |   |       |          |  |   |          |  |  |  |     |  
|---------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | -------- |  | - | -------- |  |  |  | --- | -
|                             |  | Three Months Ended March 31, |       |   |      |   |       |          | 
|                             |  | 2011                         |       |   | 2010 |   |       | $ Change |  |   | % Change | 
|Sales and marketing expenses |  | $                            | 4,638 |   |      | $ | 4,507 |          |  | $ | 131      |  |  |  | 2.9 | %
|Percentage of net sales      |  |                              | 7.0   | % |      |   | 7.0   | %        |  |   |          |  |  |  |     |  

Sales and marketing expenses increased slightly on an absolute dollar basis by $0.1 million, to
$4.6 million, or 7% of net sales, for the first quarter of 2011, from $4.5 million, or 7% of net sales, for the first quarter of 2010.

General and Administrative Expenses



|                                    |  |                              |       |   |      |   |       |          |  |   |          |   |  |  |       |   
|----------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | -------- |  | - | -------- | - |  |  | ----- | --
|                                    |  | Three Months Ended March 31, |       |   |      |   |       |          | 
|                                    |  | 2011                         |       |   | 2010 |   |       | $ Change |  |   | % Change |  
|General and administrative expenses |  | $                            | 3,959 |   |      | $ | 4,423 |          |  | $ | (464     | ) |  |  | (10.5 | %)
|Percentage of net sales             |  |                              | 6.0   | % |      |   | 6.8   | %        |  |   |          |   |  |  |       |   

General and administrative expenses decreased on an absolute dollar basis by $0.5 million to $4.0
million, or 6.0% of net sales, for the first quarter of 2011, from $4.4 million, or 6.8% of net sales, for the first quarter of 2010. The decrease in general and administrative expenses of $0.5 million is primarily due to $0.4 million of incremental
professional fees incurred in connection with the Coretec acquisition during the first quarter of 2010.

Amortization of
Intangibles

Amortization of intangible assets relates to customer relationships identified in connection with the
purchase of Sovereign Circuits Inc. in the fourth quarter of 2006. These intangible assets are being amortized using the straight-line method over an estimated useful life of five years resulting in $0.2 million of amortization expense per
quarter for the remaining acquisition-related customer relationships through October 2011.

Interest Expense

Interest expense consists of amortization of debt issuance costs, interest expense associated with long-term deferred
leases, and interest on seven asset-backed term loans. Interest expense decreased to $0.4 million for the first quarter of 2011 compared to $0.5 million for the same period in 2010. The decrease in interest expense is primarily due to lower
principal balances outstanding during the three months ended March 31, 2011, compared to the same period in 2010.

Net Other Income (Expense)

Net other income consists of foreign exchange transaction gains or losses related to our Canadian operations and other miscellaneous non-operating items. For the first quarter of 2011, net other income
was $0.1 million compared to net other expense of $0.2 million in the first quarter of 2010.

Income Tax Expense

The Company recorded income tax expense for the first quarter of 2011 of $0.1 million or 1.2% of pre-tax income,
compared to income tax expense of $0.4 million, or 9.7% of pre-tax income, for the same period in 2010. The decrease in income tax expense during the first quarter of 2011 was primarily due to higher than historical Canadian income tax expense in
the first quarter of 2010. Our effective income tax rate differs from the U.S. federal statutory tax rate of 35% primarily as a result of the mix of earnings between tax jurisdictions, research and development credits, state income taxes and our
continuous evaluation of the realization of our deferred tax assets and uncertain tax positions, and the impact of the recognition of the tax benefit of net operating loss carryforwards to the extent of current earnings.

Liquidity and Capital Resources



|                                                      |  |                        |         |  |                  |   |         | 
|----------------------------------------------------- |  | ---------------------- | ------- |  | ---------------- | - | ------- | 
|                                                      |  | March 31,    2011      |         |  | December 31,2010 |  
|                                                      |  | (Dollars in thousands) |        
|Working capital                                       |  | $                      | 54,213  |  |                  | $ | 51,026  | 
|Current ratio (current assets to current liabilities) |  |                        | 2.4:1.0 |  |                  |   | 2.2:1.0 | 
|Cash and cash equivalents                             |  | $                      | 22,046  |  |                  | $ | 28,347  | 
|Long-term debt, including current portion             |  | $                      | 11,165  |  |                  | $ | 11,455  | 



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Our principal sources of liquidity to fund ongoing operations have been existing cash on
hand and cash generated from operations.

As of March 31, 2011, we had total cash and cash equivalents of $22.0 million.
Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. We maintain cash and cash equivalents at certain financial institutions in excess of amounts insured by federal
agencies. However, management does not believe this concentration subjects the Company to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We frequently monitor the third-party depository
institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds.

The increase in our working capital and related improvement to our current ratio at March 31, 2011 from December 31, 2010 was primarily due to an increase in our current assets. This
increase was primarily due to higher accounts receivable and to a lesser extent higher inventory balances offset by a decrease in cash and cash equivalents. The increase in accounts receivable was primarily due to increased sales levels during the
quarter as well as an increase in our days sales outstanding which was primarily driven by a higher disproportionate share of the revenues occurring in the back half of the quarter.

The decrease in our cash and cash equivalents of $6.3 million from December 31, 2010 was primarily due to working capital uses of
cash totaling $9.1 million, cash dividends of $2.0 million, and capital expenditures of $2.4 million.

We believe that our
current cash balance, in combination with net cash expected to be generated from operations and available borrowing under our revolving line of credit, will fund ongoing operations for at least the next twelve months.

Revolving Credit Facilities

JPMorgan Chase Credit Agreement. On September 23, 2010, the Company entered into a Credit Agreement (the Credit Agreement) with JPMorgan Chase Bank, N.A., as Administrative Agent
and U.S. Lender, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Lender (the Lender).

The Credit Agreement provides for a revolving credit in an aggregate principal amount of $25 million, with a Canadian sub-limit of $10 million. The revolving credit agreement has an accordion provision
that allows the Company to increase the size to $40 million under certain circumstances. As of March 31, 2011, we had no borrowings outstanding under the Credit Agreement.

On March 14, 2011, The Company entered into an amendment (the March 2011 Credit Amendment) to the Credit Agreement dated
September 23, 2010. The March 2011 Credit Amendment amends the Credit Agreement to (i) reduce the margin from 3.25% to 2.50% that is added to published interest rates to determine the applicable interest rates for borrowing and
(ii) increase the amount of dividends that the Company can pay without obtaining the consent of the Lender from $8 million in a rolling twelve-month period (and $25 million over the term of the Credit Agreement) to $12 million ($40 million over
the term of the Credit Agreement).

Consolidated Cash Flows

The following table summarizes our statements of cash flows for the three months ended March 31, 2011 and 2010 (in thousands):



|                                          |  |                              |        |   |      |   |        |  
|----------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                          |  | Three Months Ended March 31, |       
|                                          |  | 2011                         |        |   | 2010 |  
|Net cash used in:                         |  |                              |        |   |      |   |        |  
|Operating activities                      |  | $                            | (1,597 | ) |      | $ | (764   | )
|Investing activities                      |  |                              | (2,359 | ) |      |   | (1,286 | )
|Financing activities                      |  |                              | (2,227 | ) |      |   | (4,883 | )
|Effect of exchange rates on cash          |  |                              | (118   | ) |      |   | (288   | )
|                                          |  |                              |        |   |      |   |        |  
|Net decrease in cash and cash equivalents |  | $                            | (6,301 | ) |      | $ | (7,221 | )
|                                          |  |                              |        |   |      |   |        |  

Net cash used in operating activities represents net income adjusted for non-cash charges and working
capital changes. The $0.8 million increase in net cash used by operating activities for the three months ended March 31, 2011 compared to the same period in 2010 was primarily due to increases in accounts receivable and inventories, reflecting
our expanded revenue and production levels in the first quarter of 2010, as well as decreases in accounts payable and accrued expenses as a result of the timing of certain payments.



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Net cash used in investing activities for the three months ended March 31, 2011
increased by $1.1 million compared to the same period in 2010 due to an increased investment in capital assets.

The $2.7
million decrease in net cash used in financing activities for the three months ended March 31, 2011 compared to the same period in 2010 was primarily due to the $4.3 million pay off in the first quarter of 2010 of the borrowings from the credit
facility assumed upon the acquisition of Coretec. This decrease was partially offset by the $2.0 million cash dividend payment to common shareholders in the first quarter of 2011.

Critical Accounting Policies and Use of Estimates

The condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America which require us to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies which we believe
could have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 24 to 26 in Item 7, Managements Discussion and Analysis of Financial Condition and Results of
Operations, of the Companys Annual Report on Form 10-K. We believe that at March 31, 2011 there had been no material changes to this information.

Recent Accounting Pronouncements

In December 2010, the Financial
Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-29, Business Combinations (Topic 805). This Update requires a public entity to disclose pro forma information for business
combinations that occurred in the current reporting period and specifically requires the same information for the comparative prior period. We do not expect the adoption of this ASU to have a material impact on our financial statements.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures(Topic 820)  Improving
Disclosures about Fair Value Measurements.ASU 2010-06 amends the fair value disclosure guidance to include new disclosures and changes to clarify existing disclosure requirements. These amended standards require disclosures about inputs
and valuation techniques used to measure fair value as well as disclosures about significant transfers, beginning in the first quarter of 2010. Additionally, these amended standards require presentation of disaggregated activity within the
reconciliation for fair value measurements using significant unobservable inputs (Level 3), beginning in the first quarter of 2011. The adoption of these new standards did not materially impact the Companys consolidated financial statements.

There were various other updates recently issued, most of which represented technical corrections to the accounting
literature or application to specific industries and are not expected to have a material impact on the Companys consolidated financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a
material effect on the accompanying financial statements.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

Interest Rate Risk

Variable Rate Debt

We have variable-rate debt including notes payable and mortgages previously used to finance the purchase of certain real estate holdings,
infrastructure or plant and equipment, as well as our Credit Agreement (on March 31, 2011, we have not yet drawn on our Credit Agreement). The interest rates on our variable rate debt are tied to various floating base rates as defined or to
LIBOR. These debt obligations, therefore, expose us to variability in interest payments due to changes in these rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases.
However, we do not believe such exposure is material to our consolidated financial position or liquidity.

At March 31,
2011, we had $9.8 million outstanding under such agreements at interest rates ranging from 1.76% to 6.92% per annum.



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Fixed Rate Debt

The fair market value of our one long-term fixed interest rate mortgage is subject to interest rate risk. Generally, the fair market value
of fixed interest rate debt will increase as interest rates fall because we could refinance for a lower rate. Conversely, the fair value of fixed interest rate debt will decrease as interest rates rise. The interest rate changes affect the fair
market value but do not impact earnings or cash flows. Based on the outstanding amount of the debt, future movement of the interest rate would not have a material effect on the fair value of the fixed rate debt.

Foreign Currency Exchange Risk

A portion of the sales and expenses of our Canadian operations are transacted in Canadian dollars, which is deemed to be the functional currency for our Canadian entity. Thus, assets and liabilities are
translated to U.S. dollars at period-end exchange rates in effect. Sales and expenses are translated to U.S. dollars using an average monthly exchange rate. Translation adjustments are included in accumulated other comprehensive income in
stockholders equity, except for translation adjustments related to an intercompany note denominated in Canadian dollars between our U.S. entity and our Canadian entity. Settlement of the note is planned in the foreseeable future; therefore,
currency adjustments are included in determining net income for the period in accordance with FASB ASC 830, Foreign Currency Matters, and could have a material impact on results of operations and cash flows in the event of
significant currency fluctuations. Gains and losses on foreign currency transactions are included in operations. We have foreign currency translation risk equal to our net investment in those operations. We do not use forward exchange contracts to
hedge exposures to foreign currency denominated transactions and do not utilize any other derivative financial instruments for trading or speculative purposes.



|Item 4. | Controls and Procedures.
|------- | ------------------------

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures (as
defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) are effective to ensure that all information required to be disclosed by us in the reports filed or submitted by us under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (the SEC), and include controls and procedures designed to ensure
that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, and allow timely decisions regarding required
disclosure.

Changes in Internal Controls

No change in our internal control over financial reporting occurred during the quarter ended March 31, 2011 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Reference is made to our Annual Report on Form 10-K for the period ended December 31, 2010 (the Form 10-K) for a summary
of our previously reported legal proceedings. Since the date of the Form 10-K, there have been no material developments in previously reported legal proceedings.



|Item 1A. | Risk Factors
|-------- | ------------

Other than
the risk factors enumerated below, as of the date of this filing, there have been no material changes to the Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange
Commission on February 22, 2011.

Natural disasters in certain regions could adversely affect the global
electronics supply chain which, in turn, could have a negative impact on our business, the cost of and demand for our products and our results of operations.

The occurrence of natural disasters in certain regions, such as the recent earthquake and tsunami in Japan, could have a negative impact on our supply chain, our ability to deliver products to our
customers and on the cost of and demand for our products. We may also encounter reduced demand for our printed circuit boards in the event customers are unable to obtain adequate supplies of other components due to the events in Japan. We are
rigorously assessing our potential exposure but uncertainties exist such that the extent and duration of these supply constraints cannot be currently determined. As a result, our business, results of operations or financial condition could be
materially adversely affected by these events.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Removed and Reserved
|------- | --------------------



|Item 5. | Other Information
|------- | -----------------

On
April 27, 2011, the Company entered into an employment agreement with J. Michael Dodson, the Companys Chief Financial Officer (the Employment Agreement). The Employment Agreements amends and restates in its entirety the
Companys existing employment letter with Mr. Dodson, and was adopted to memorialize in a single document the existing terms of Mr. Dodsons employment, as previously disclosed. The foregoing description of the Employment
Agreement is qualified in its entirety by reference to the Employment Agreement, which are attached as Exhibits 10.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.



|Item 6. | Exhibits
|------- | --------

The exhibits
listed below are hereby filed with the SEC as part of this Quarterly Report on Form 10-Q. Certain of the following exhibits have been previously filed with the SEC pursuant to the requirements of the Securities Act or the Exchange Act. Such exhibits
are identified in the chart to the right of the Exhibit and are incorporated herein by reference.



|        |  |                                                                                                                                                                                                                                                                                                                        |  |               |  |                           |  |              |  |         |  |           
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------------------- |  | ------------ |  | ------- |  | ----------
|        |  |                                                                                                                                                                                                                                                                                                                        |  |               |  | Incorporated by
Reference
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                            |  | FiledHerewith |  | Form                      |  | PeriodEnding |  | Exhibit |  | FilingDate
|3.1     |  | Amended and Restated Certificate of Incorporation of DDi Corp.                                                                                                                                                                                                                                                         |  |               |  | 8-K                       |  |              |  | 3.1     |  | 12/13/2003
|        |  |                                                                                                                                                                                                                                                                                                                        |  |               |  |                          
|3.2     |  | Amended and Restated Bylaws of DDi Corp.                                                                                                                                                                                                                                                                               |  |               |  | 8-K                       |  | 3/10/2011    |  | 3.2     |  | 3/15/2011 
|        |  |                                                                                                                                                                                                                                                                                                                        |  |               |  |                          
|10.1    |  | First Amendment to Credit Agreement by and between DDi Corp., DDi Global Corp., DDi Sales Corp., DDi North Jackson Corp., DDi Milpitas Corp., DDi Denver Corp., and DDi Cleveland
Corp., DDi Toronto Corp., the other Loan Parties thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as |  |               |  |                           |  |              |  |         |  |           



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|        |  |                                                                                                                                            |  |               |  |                           |  |              |  |         |  |           
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- |  | ------------------------- |  | ------------ |  | ------- |  | ----------
|        |  |                                                                                                                                            |  |               |  | Incorporated by
Reference
|Exhibit |  | Description                                                                                                                                |  | FiledHerewith |  | Form                      |  | PeriodEnding |  | Exhibit |  | FilingDate
|        |  |                                                                                                                                            |  |               |  |                          
|        |  | Administrative Agent and U.S. Lender, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Lender. |  |               |  | 8-K                       |  | 3/10/2011    |  | 99.1    |  | 3/15/2011 
|        |  |                                                                                                                                            |  |               |  |                          
|10.2    |  | Employment Agreement dated April 27, 2011 between DDi Corp. and J. Michael Dodson                                                          |  | X             |  |                           |  |              |  |         |  |           
|        |  |                                                                                                                                            |  |               |  |                          
|31.1    |  | Certification of Chief Executive Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act                              |  | X             |  |                           |  |              |  |         |  |           
|        |  |                                                                                                                                            |  |               |  |                          
|31.2    |  | Certification of Chief Financial Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act                              |  | X             |  |                           |  |              |  |         |  |           
|        |  |                                                                                                                                            |  |               |  |                          
|32.1    |  | Certification of Chief Executive Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                           |  | X             |  |                           |  |              |  |         |  |           
|        |  |                                                                                                                                            |  |               |  |                          
|32.2    |  | Certification of Chief Financial Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                           |  | X             |  |                           |  |              |  |         |  |           



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, DDi Corp. has duly caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.



|                     |  |                                      
|-------------------- |  | -------------------------------------
|                     |  | DDi Corp.                            
|                     | 
|Date: April 28, 2011 |  | /S/    MIKEL H.
WILLIAMS             
|                     |  | Mikel H. Williams                    
|                     |  | President and Chief Executive Officer
|                     |  | (Principal Executive Officer)        
|                     | 
|Date: April 28, 2011 |  | /S/    J. MICHAEL
DODSON             
|                     |  | J. Michael Dodson                    
|                     |  | Chief Financial Officer              
|                     |  | (Principal Financial Officer)        
|                     | 
|Date: April 28, 2011 |  | /S/    COLEMAN C.
BARNER             
|                     |  | Coleman C. Barner                    
|                     |  | Chief Accounting Officer             
|                     |  | (Principal Accounting Officer)       



19