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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

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



For the quarterly period ended September 30, 2004



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



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DDi CORP.

(Exact name of registrant as specified in its charter)



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



1220 Simon Circle

Anaheim, California 92806

(Address of principal executive offices) (Zip code)



(714) 688-7200

(Registrants telephone number, including area code)



Not Applicable

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



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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:    x  Yes ̈No



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



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



As of November 5, 2004, DDi Corp. had 25,463,119 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 September 30, 2004



TABLE OF CONTENTS



|          |  |                                                                                                                                                                             |  |         
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|          |  |                                                                                                                                                                            
|          |  |                                                                                                                                                                             |  | Page No.
|PART I    |  | FINANCIAL INFORMATION                                                                                                                                                       |  |         
|          |  |                                                                                                                                                                            
|Item 1.   |  | Financial Statements                                                                                                                                                        |  | 4       
|          |  |                                                                                                                                                                            
|          |  | Condensed Consolidated Balance Sheets as of September 30, 2004 (Reorganized DDi Corp.) and December 31, 2003 (Reorganized DDi Corp.) (unaudited)                            |  | 4       
|          |  |                                                                                                                                                                            
|          |  | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.) (unaudited) |  | 5       
|          |  |                                                                                                                                                                            
|          |  | Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.) (unaudited)   |  | 6       
|          |  |                                                                                                                                                                            
|          |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 (Reorganized DDi Corp.) and 2003 (Predecessor DDi Corp.) (unaudited)           |  | 7       
|          |  |                                                                                                                                                                            
|          |  | Notes to Condensed Consolidated Financial Statements                                                                                                                        |  | 8       
|          |  |                                                                                                                                                                            
|Item 2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                       |  | 18      
|          |  |                                                                                                                                                                            
|Item 3.   |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                  |  | 30      
|          |  |                                                                                                                                                                            
|Item 4.   |  | Controls and Procedures                                                                                                                                                     |  | 31      
|          |  |                                                                                                                                                                            
|PART II   |  | OTHER INFORMATION                                                                                                                                                           |  |         
|          |  |                                                                                                                                                                            
|Item 1.   |  | Legal Proceedings                                                                                                                                                           |  | 32      
|          |  |                                                                                                                                                                            
|Item 5.   |  | Other Information                                                                                                                                                           |  | 32      
|          |  |                                                                                                                                                                            
|Item 6.   |  | Exhibits                                                                                                                                                                    |  | 32      
|          |  |                                                                                                                                                                            
|Signature |  |                                                                                                                                                                             |  | 33      



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FORWARD-LOOKING STATEMENTS



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



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



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



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



| |  | our ability to sustain historical margins as the industry develops;
| | - | -------------------------------------------------------------------



| |  | increased competition;
| | - | ----------------------



| |  | increased costs;
| | - | ----------------



| |  | our ability to retain key members of management;
| | - | ------------------------------------------------



| |  | our ability to satisfactorily address the adverse liquidity position related to DDi Europe;
| | - | -------------------------------------------------------------------------------------------



| |  | adverse state, federal or foreign legislation or regulation or adverse determinations by regulators; and
| | - | --------------------------------------------------------------------------------------------------------



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



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



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PART I  FINANCIAL INFORMATION



Item 1. Financial Statements.



DDi CORP.



Condensed Consolidated
Balance Sheets

(In thousands, except share and per share data)

(Unaudited)



|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                                  |  | Reorganized DDi Corp. |        
|                                                                                                                                                                                  |  | September 30,2004     |         |   | December 31,2003 |  
|Assets                                                                                                                                                                            |  |                       |         |   |                  |   |         |  
|                                                                                                                                                                                  |  |                      
|Current assets:                                                                                                                                                                   |  |                       |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                                                         |  | $                     | 7,894   |   |                  | $ | 11,202  |  
|Cash, cash equivalents and marketable securities - restricted                                                                                                                     |  |                       |        |   |                  |   | 7,500   |  
|Accounts receivable, net                                                                                                                                                          |  |                       | 48,431  |   |                  |   | 39,140  |  
|Inventories                                                                                                                                                                       |  |                       | 29,727  |   |                  |   | 26,292  |  
|Prepaid expenses and other                                                                                                                                                        |  |                       | 4,013   |   |                  |   | 2,707   |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total current assets                                                                                                                                                              |  |                       | 90,065  |   |                  |   | 86,841  |  
|Property, plant and equipment, net                                                                                                                                                |  |                       | 65,924  |   |                  |   | 74,918  |  
|Debt issuance costs, net                                                                                                                                                          |  |                       | 1,969   |   |                  |   |        |  
|Goodwill                                                                                                                                                                          |  |                       | 99,356  |   |                  |   | 105,452 |  
|Other intangibles, net                                                                                                                                                            |  |                       | 19,158  |   |                  |   | 23,376  |  
|Other                                                                                                                                                                             |  |                       | 715     |   |                  |   | 816     |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total assets                                                                                                                                                                      |  | $                     | 277,187 |   |                  | $ | 291,403 |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Liabilities, Mandatorily Redeemable Preferred Stock and Stockholders Equity                                                                                                      |  |                       |         |   |                  |   |         |  
|                                                                                                                                                                                  |  |                      
|Current liabilities:                                                                                                                                                              |  |                       |         |   |                  |   |         |  
|Current maturities of long-term debt and capital lease obligations                                                                                                                |  | $                     | 4,203   |   |                  | $ | 1,439   |  
|Revolving credit facilities                                                                                                                                                       |  |                       | 13,101  |   |                  |   | 11,809  |  
|Accounts payable                                                                                                                                                                  |  |                       | 34,040  |   |                  |   | 28,687  |  
|Accrued expenses and other liabilities                                                                                                                                            |  |                       | 23,576  |   |                  |   | 26,338  |  
|Income taxes payable                                                                                                                                                              |  |                       | 1,377   |   |                  |   | 998     |  
|Note payable                                                                                                                                                                      |  |                       |        |   |                  |   | 500     |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                                         |  |                       | 76,297  |   |                  |   | 69,771  |  
|Long-term debt and capital lease obligations                                                                                                                                      |  |                       | 41,472  |   |                  |   | 114,799 |  
|Deferred income tax liability                                                                                                                                                     |  |                       | 187     |   |                  |   | 533     |  
|Notes payable and other                                                                                                                                                           |  |                       | 13,866  |   |                  |   | 12,798  |  
|Series A mandatorily redeemable preferred stock                                                                                                                                   |  |                       | 2,768   |   |                  |   | 2,066   |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total liabilities                                                                                                                                                                 |  |                       | 134,590 |   |                  |   | 199,967 |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Series B mandatorily redeemable preferred stock                                                                                                                                   |  |                       | 58,441  |   |                  |   |        |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Stockholders equity:                                                                                                                                                             |  |                       |         |   |                  |   |         |  
|Common stock - $0.001 par value, 75,000,000 shares authorized, 25,463,119 and 23,749,926 shares issued and outstanding at September 30, 2004
and December 31, 2003, respectively. |  |                       | 26      |   |                  |   | 24      |  
|Additional paid-in-capital                                                                                                                                                        |  |                       | 151,328 |   |                  |   | 138,661 |  
|Deferred compensation                                                                                                                                                             |  |                       | (14,688 | ) |                  |   | (32,454 | )
|Accumulated other comprehensive income (loss)                                                                                                                                     |  |                       | 235     |   |                  |   | (152    | )
|Stockholder receivables                                                                                                                                                           |  |                       | (648    | ) |                  |   | (635    | )
|Accumulated deficit                                                                                                                                                               |  |                       | (52,097 | ) |                  |   | (14,008 | )
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total stockholders equity                                                                                                                                                        |  |                       | 84,156  |   |                  |   | 91,436  |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  
|Total liabilities, mandatorily redeemable preferred stock and stockholders equity                                                                                                |  | $                     | 277,187 |   |                  | $ | 291,403 |  
|                                                                                                                                                                                  |  |                       |         |   |                  |   |         |  



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



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DDi CORP.



Condensed Consolidated
Statements of Operations

(In thousands, except share and per share data)

(Unaudited)



|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|----------------------------------------------------------------- |  | ------------------------------------ | ---------- | - |  |  | ------------------------------------ | - | ---------- | ----------------------------------- |  | - | ---------- | - | ----------------------------------- |  |  | - | ---------- | -
|                                                                  |  | Reorganized DDi Corp.                |            |   |  |  | Predecessor DDi Corp.                |   |            | Reorganized DDi Corp.               |  |   |            |   | Predecessor DDi Corp.               | 
|                                                                  |  | Three months endedSeptember 30, 2004 |            |   |  |  | Three months endedSeptember 30, 2003 |   |            | Nine months endedSeptember 30, 2004 |  |   |            |   | Nine months endedSeptember 30, 2003 | 
|                                                                  |  |                                      |            |   |  | 
|Net sales                                                         |  | $                                    | 72,247     |   |  |  |                                      | $ | 59,445     |                                     |  | $ | 220,143    |   |                                     |  |  | $ | 177,329    |  
|Cost of goods sold:                                               |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Cost of goods sold                                                |  |                                      | 63,121     |   |  |  |                                      |   | 52,864     |                                     |  |   | 181,977    |   |                                     |  |  |   | 162,588    |  
|Non-cash stock based compensation and amortization of intangibles |  |                                      | 2,580      |   |  |  |                                      |   |           |                                     |  |   | 11,644     |   |                                     |  |  |   |           |  
|Restructuring-related inventory impairment                        |  |                                      |           |   |  |  |                                      |   |           |                                     |  |   | 499        |   |                                     |  |  |   | 1,736      |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Total cost of goods sold                                          |  |                                      | 65,701     |   |  |  |                                      |   | 52,864     |                                     |  |   | 194,120    |   |                                     |  |  |   | 164,324    |  
|                                                                  |  |                                      |            |   |  | 
|Gross profit                                                      |  |                                      | 6,546      |   |  |  |                                      |   | 6,581      |                                     |  |   | 26,023     |   |                                     |  |  |   | 13,005     |  
|                                                                  |  |                                      |            |   |  | 
|Operating expenses:                                               |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Sales and marketing:                                              |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Non-cash stock based compensation                                 |  |                                      | 638        |   |  |  |                                      |   |           |                                     |  |   | 2,497      |   |                                     |  |  |   |           |  
|Sales and marketing expenses                                      |  |                                      | 4,471      |   |  |  |                                      |   | 4,233      |                                     |  |   | 13,725     |   |                                     |  |  |   | 13,634     |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Total sales and marketing                                         |  |                                      | 5,109      |   |  |  |                                      |   | 4,233      |                                     |  |   | 16,222     |   |                                     |  |  |   | 13,634     |  
|                                                                  |  |                                      |            |   |  | 
|General and administration:                                       |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Non-cash stock based compensation                                 |  |                                      | 760        |   |  |  |                                      |   |           |                                     |  |   | 3,431      |   |                                     |  |  |   |           |  
|General and administrative expenses                               |  |                                      | 5,759      |   |  |  |                                      |   | 4,180      |                                     |  |   | 15,039     |   |                                     |  |  |   | 12,539     |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Total general and administration                                  |  |                                      | 6,519      |   |  |  |                                      |   | 4,180      |                                     |  |   | 18,470     |   |                                     |  |  |   | 12,539     |  
|                                                                  |  |                                      |            |   |  | 
|Amortization of intangibles                                       |  |                                      | 1,150      |   |  |  |                                      |   |           |                                     |  |   | 3,450      |   |                                     |  |  |   |           |  
|Goodwill impairment                                               |  |                                      | 7,252      |   |  |  |                                      |   | 427        |                                     |  |   | 7,252      |   |                                     |  |  |   | 2,427      |  
|Restructuring and other related charges                           |  |                                      | 273        |   |  |  |                                      |   | (800       | )                                   |  |   | 5,143      |   |                                     |  |  |   | 2,995      |  
|Reorganization charges                                            |  |                                      |           |   |  |  |                                      |   | 2,257      |                                     |  |   | 1,158      |   |                                     |  |  |   | 8,285      |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Operating loss                                                    |  |                                      | (13,757    | ) |  |  |                                      |   | (3,716     | )                                   |  |   | (25,672    | ) |                                     |  |  |   | (26,875    | )
|Loss on interest rate swap termination                            |  |                                      |           |   |  |  |                                      |   |           |                                     |  |   |           |   |                                     |  |  |   | 5,621      |  
|Interest expense (net) and other expense (net)                    |  |                                      | 2,740      |   |  |  |                                      |   | 4,427      |                                     |  |   | 11,098     |   |                                     |  |  |   | 16,688     |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Loss before reorganization proceeding expenses and income taxes   |  |                                      | (16,497    | ) |  |  |                                      |   | (8,143     | )                                   |  |   | (36,770    | ) |                                     |  |  |   | (49,184    | )
|Reorganization proceeding expenses                                |  |                                      |           |   |  |  |                                      |   | 4,299      |                                     |  |   |           |   |                                     |  |  |   | 4,299      |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Loss before income taxes                                          |  |                                      | (16,497    | ) |  |  |                                      |   | (12,442    | )                                   |  |   | (36,770    | ) |                                     |  |  |   | (53,483    | )
|Income tax (expense) benefit                                      |  |                                      | (310       | ) |  |  |                                      |   | 267        |                                     |  |   | (1,319     | ) |                                     |  |  |   | 1,343      |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Net loss                                                          |  |                                      | (16,807    | ) |  |  |                                      |   | (12,175    | )                                   |  |   | (38,089    | ) |                                     |  |  |   | (52,140    | )
|Less: Series B preferred stock dividends and accretion            |  |                                      | (1,332     | ) |  |  |                                      |   |           |                                     |  |   | (2,702     | ) |                                     |  |  |   |           |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Net loss allocable to common stock                                |  | $                                    | (18,139    | ) |  |  |                                      | $ | (12,175    | )                                   |  | $ | (40,791    | ) |                                     |  |  | $ | (52,140    | )
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Net loss per share - basic and diluted                            |  | $                                    | (0.71      | ) |  |  |                                      | $ | (0.25      | )                                   |  | $ | (1.62      | ) |                                     |  |  | $ | (1.06      | )
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Weighted average shares used to compute loss per share:           |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  
|Basic and diluted                                                 |  |                                      | 25,463,119 |   |  |  |                                      |   | 49,526,136 |                                     |  |   | 25,221,087 |   |                                     |  |  |   | 49,319,330 |  
|                                                                  |  |                                      |            |   |  |  |                                      |   |            |                                     |  |   |            |   |                                     |  |  |   |            |  



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



5



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##### Table of Contents

DDi CORP.



Condensed Consolidated
Statements of Comprehensive Loss

(In thousands)

(Unaudited)



|                                                                                    |  |                                       |         |   |  |  |                                       |   |         |                                      |  |   |         |   |                                      |  |  |   |         |  
|----------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - |  |  | ------------------------------------- | - | ------- | ------------------------------------ |  | - | ------- | - | ------------------------------------ |  |  | - | ------- | -
|                                                                                    |  | Reorganized DDi. Corp.                |         |   |  |  | Predecessor DDi Corp.                 |   |         | Reorganized DDi. Corp.               |  |   |         |   | Predecessor DDi Corp.                | 
|                                                                                    |  | Three months ended September 30, 2004 |         |   |  |  | Three months ended September 30, 2003 |   |         | Nine months ended September 30, 2004 |  |   |         |   | Nine months ended September 30, 2003 | 
|Net loss                                                                            |  | $                                     | (16,807 | ) |  |  |                                       | $ | (12,175 | )                                    |  | $ | (38,089 | ) |                                      |  |  | $ | (52,140 | )
|Other comprehensive loss:                                                           |  |                                       |         |   |  |  |                                       |   |         |                                      |  |   |         |   |                                      |  |  |   |         |  
|Foreign currency translation adjustments                                            |  |                                       | 171     |   |  |  |                                       |   | 99      |                                      |  |   | 387     |   |                                      |  |  |   | 511     |  
|Unrealized net loss for the period on interest rate swaps, net of income tax effect |  |                                       |        |   |  |  |                                       |   |        |                                      |  |   |        |   |                                      |  |  |   | (165    | )
|Reclassification adjustment for loss on interest rate swap included in net loss     |  |                                       |        |   |  |  |                                       |   |        |                                      |  |   |        |   |                                      |  |  |   | 5,621   |  
|Unrealized holding loss on marketable securities - available for sale               |  |                                       |        |   |  |  |                                       |   | (8      | )                                    |  |   |        |   |                                      |  |  |   | (4      | )
|                                                                                    |  |                                       |         |   |  |  |                                       |   |         |                                      |  |   |         |   |                                      |  |  |   |         |  
|Comprehensive loss                                                                  |  | $                                     | (16,636 | ) |  |  |                                       | $ | (12,084 | )                                    |  | $ | (37,702 | ) |                                      |  |  | $ | (46,177 | )
|                                                                                    |  |                                       |         |   |  |  |                                       |   |         |                                      |  |   |         |   |                                      |  |  |   |         |  



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



6



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##### Table of Contents

DDi CORP.



Condensed Consolidated
Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|----------------------------------------------------------------------- |  | ------------------------------------ | ------- | - |  |  | ------------------------------------ | - | ------- | -
|                                                                        |  | Reorganized DDi Corp.                |         |   |  |  | Predecessor DDi Corp.                |  
|                                                                        |  | Nine months ended September 30, 2004 |         |   |  |  | Nine months ended September 30, 2003 |  
|Cash flows from operating activities:                                   |  |                                      |         |   |  |  |                                      |   |         |  
|Net loss                                                                |  | $                                    | (38,089 | ) |  |  |                                      | $ | (52,140 | )
|                                                                        |  |                                      |        
|Adjustments to reconcile net loss to cash used in operating activities: |  |                                      |         |   |  |  |                                      |   |         |  
|Depreciation                                                            |  |                                      | 11,443  |   |  |  |                                      |   | 14,122  |  
|Amortization of debt issuance costs and discount                        |  |                                      | 1,290   |   |  |  |                                      |   | 2,180   |  
|Amortization of intangible assets                                       |  |                                      | 4,218   |   |  |  |                                      |   |        |  
|Non-cash stock based compensation                                       |  |                                      | 16,796  |   |  |  |                                      |   |        |  
|Amortization of deferred swap income                                    |  |                                      |        |   |  |  |                                      |   | 5,118   |  
|Non-cash and accrued restructuring and other related charges            |  |                                      | 4,151   |   |  |  |                                      |   | 6,081   |  
|Loss on sale of fixed assets                                            |  |                                      | 166     |   |  |  |                                      |   | 62      |  
|Goodwill impairment                                                     |  |                                      | 7,252   |   |  |  |                                      |   | 2,427   |  
|Series A preferred stock accrued dividends                              |  |                                      | 1,813   |   |  |  |                                      |   |        |  
|Series A preferred stock accretion                                      |  |                                      | 702     |   |  |  |                                      |   |        |  
|Interest income on stockholder receivables                              |  |                                      | (13     | ) |  |  |                                      |   | (13     | )
|Deferred income taxes                                                   |  |                                      | (351    | ) |  |  |                                      |   | (1,297  | )
|Restructuring related inventory impairment                              |  |                                      | 499     |   |  |  |                                      |   |        |  
|Change in operating assets and liabilities:                             |  |                                      |         |   |  |  |                                      |   |         |  
|(Increase) decrease in accounts receivable                              |  |                                      | (9,155  | ) |  |  |                                      |   | 2,859   |  
|(Increase) decrease in prepaid expenses and other                       |  |                                      | (1,173  | ) |  |  |                                      |   | 435     |  
|(Increase) decrease in inventory                                        |  |                                      | (3,755  | ) |  |  |                                      |   | 2,024   |  
|Increase (decrease) in accounts payable                                 |  |                                      | 5,096   |   |  |  |                                      |   | (1,449  | )
|Increase (decrease) in accrued expenses and other                       |  |                                      | (4,415  | ) |  |  |                                      |   | 2,102   |  
|Increase in income tax payable                                          |  |                                      | 820     |   |  |  |                                      |   | 261     |  
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Net cash used in operating activities                                   |  |                                      | (2,705  | ) |  |  |                                      |   | (17,228 | )
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Cash flows from investing activities:                                   |  |                                      |         |   |  |  |                                      |   |         |  
|Purchases of property, plant and equipment                              |  |                                      | (6,189  | ) |  |  |                                      |   | (4,346  | )
|Proceeds from sale of fixed assets                                      |  |                                      | 1,514   |   |  |  |                                      |   | 81      |  
|Purchases of marketable securities  available for sale                 |  |                                      |        |   |  |  |                                      |   | (63     | )
|Proceeds from sale of marketable securities  available for sale        |  |                                      |        |   |  |  |                                      |   | 175     |  
|Proceeds from the release of restricted cash                            |  |                                      | 7,500   |   |  |  |                                      |   | 1,892   |  
|Cash outflows related to acquisition earn out                           |  |                                      | (1,275  | ) |  |  |                                      |   | (750    | )
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Net cash provided by (used in) investing activities                     |  |                                      | 1,550   |   |  |  |                                      |   | (3,011  | )
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Cash flows from financing activities:                                   |  |                                      |         |   |  |  |                                      |   |         |  
|Principal payments on capital leases                                    |  |                                      | (1,318  | ) |  |  |                                      |   | (1,966  | )
|Principal payments on debt                                              |  |                                      | (74,507 | ) |  |  |                                      |   | (3,808  | )
|Net borrowings on Europe Facilities Agreement                           |  |                                      | 4,029   |   |  |  |                                      |   | 5,247   |  
|Payment of debt issuance costs                                          |  |                                      | (2,318  | ) |  |  |                                      |   | (1,286  | )
|Payments on other notes payable                                         |  |                                      | (500    | ) |  |  |                                      |   |        |  
|Proceeds from issuance of Series B preferred stock                      |  |                                      | 61,000  |   |  |  |                                      |   |        |  
|Proceeds from issuance of common stock                                  |  |                                      | 15,980  |   |  |  |                                      |   |        |  
|Costs incurred in connection with the issuance of common stock          |  |                                      | (1,356  | ) |  |  |                                      |   |        |  
|Costs incurred in connection with issuance of Series B preferred stock  |  |                                      | (3,344  | ) |  |  |                                      |   |        |  
|Issuance of common stock through Employee Stock Purchase Plan           |  |                                      |        |   |  |  |                                      |   | 23      |  
|Proceeds from exercise of stock options                                 |  |                                      | 382     |   |  |  |                                      |   |        |  
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Net cash used in financing activities                                   |  |                                      | (1,952  | ) |  |  |                                      |   | (1,790  | )
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Effect of exchange rate changes on cash                                 |  |                                      | (201    | ) |  |  |                                      |   | (132    | )
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Net decrease in cash and cash equivalents                               |  |                                      | (3,308  | ) |  |  |                                      |   | (22,161 | )
|                                                                        |  |                                      |        
|Cash and cash equivalents, beginning of year                            |  |                                      | 11,202  |   |  |  |                                      |   | 28,934  |  
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  
|Cash and cash equivalents, end of period                                |  | $                                    | 7,894   |   |  |  |                                      | $ | 6,773   |  
|                                                                        |  |                                      |         |   |  |  |                                      |   |         |  



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



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DDi CORP.



Notes to the Condensed
Consolidated Financial Statements



September 30, 2004



NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS



Basis of Presentation



The unaudited condensed consolidated financial statements for DDi Corp. include the accounts of its wholly owned subsidiaries, DDi
Intermediate Holdings Corp. (Intermediate) and DDi Europe Limited (DDi Europe f/k/a MCM Electronics Limited (MCM)) and the direct and indirect subsidiaries of Intermediate (including DDi Capital Corp. or DDi
Capital and Dynamic Details Incorporated or Dynamic Details). Collectively, DDi Corp. and its subsidiaries are referred to as the Company.



In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary
(consisting only of normal recurring adjustments) to present fairly the financial position of DDi Corp. and its subsidiaries as of September 30, 2004, the results of operations for the three and nine months ended September 30, 2004 and 2003 and cash
flows for the nine months ended September 30, 2004 and 2003. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.



These financial statements have been prepared by the Company 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. This report on Form 10-Q for the quarter ended September 30, 2004 should be read in conjunction with the
audited financial statements presented in DDi Corp.s Annual Report on Form 10-K for the year ended December 31, 2003.



Description of Business



The Company is a leading provider of time-critical, technologically advanced, electronics manufacturing services. Headquartered in Anaheim, California, the Company offers fabrication and assembly services to customers
on a global basis, from its facilities located across North America and in England.



Fresh Start Accounting



In connection with DDi Corp.s
emergence from bankruptcy, the Company adopted fresh-start accounting principles prescribed by the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code effective November 30, 2003. Under fresh start accounting, a new reporting entity, known as Reorganized DDi Corp. or the Successor Company, is deemed to be created, and the
recorded amounts of assets and liabilities are adjusted to reflect their fair value. Accordingly, the operating results and cash flows of the Successor Company and the Predecessor Company have been separately disclosed. For the purposes of these
financial statements, references to Predecessor DDi Corp. or the Predecessor Company are references to the Company for periods prior to December 1, 2003 and references to the Successor Company are references to
the Company for periods subsequent to November 30, 2003. The Successor Companys financial statements are not comparable to the Predecessor Companys financial statements. Although December 2, 2003, was the date the bankruptcy court
approved the Companys plan of reorganization and December 12, 2003, was the effective date of the plan of reorganization (and the date of the Companys emergence from bankruptcy), for financial reporting convenience purposes, the Company
accounted for the consummation of the plan of reorganization as of November 30, 2003. The impact of this was not material to these financial statements. There were no material unsatisfied conditions to the plan of reorganization as of December 2,
2003.



DDi Europe Operations



As of September 30, 2004, DDi Europe had substantially drawn on the total amount of funds
practically available under the DDi Europe revolving credit facility. Substantially all of the assets of DDi Europe are pledged as security under the DDi Europe facilities agreement. Due to restrictions set forth in the Dynamic Details revolving
credit facility and the DDi Capital senior accreting notes, the Company is not able to make additional cash contributions to address the working capital needs of DDi Europe without the consent of our North American lenders and the Senior Accreting
Noteholders. After considering its alternatives, the Board of Directors of DDi Corp. has concluded that the valuation of DDi Europe does not justify the Company to make further investment. Accordingly, to the extend that DDi Europe is unable to
generate cash sufficient to fund its operations or restructure its credit facility with its lender, DDi Europe must seek alternative funding sources (including, but not limited to, seeking funds from the lender in excess of the £7.4 million
working capital credit limit practically imposed by the lender) and/or take steps to restructure its operations. If its lender, in an attempt to protect its collateral, makes a demand for payment and DDi Europe does not have sufficient funds on hand
to make the payment, the lender would have the right to exercise its remedies under the DDi Europe credit facility, including the right to have a receiver appointed for DDi Europe or to commence insolvency proceedings. In that event, based upon the
current valuation, there would not likely be sufficient funds to satisfy the obligations under the Series A preferred stock (which look solely to DDi Europe value) or provide any funds to the Company. Such action by the lender could have an adverse
effect upon the value of the Companys common stock as well as upon our customers and vendors willingness to do business with the Companys UK-based operations. There is no guarantee that DDi Europe will be able to generate
cash sufficient to fund its operations or to seek other forms of capital or debt. DDi Europe comprises $75.1 million (34%) in net sales, $6.3 million (24%) in gross profit and $18.7 million (50%.) in net loss of DDi Corps consolidated
statement of operations for the nine months ended September 30, 2004. In addition, DDi Europe comprises $34.7 million (39%) in total in total current assets, $61.7 million (22%) in total assets and $71.9 million (53%) in total liabilities of DDi
Corps consolidated balance sheet as of September 30, 2004.



Recently
Issued Accounting Standards



In April 2004, the Emerging Issues Task Force
(EITF) issued EITF 03-6, Participating Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per Share.EITF 03-6 addresses a number of questions regarding the computation of earning per share by companies
that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of the company when, and if, it declares dividends on its common stock. The issue also provides further guidance in
applying the two-class method of calculating earnings per share, clarifying what constitutes a participating security and how to apply the two-class method of computing earnings per share once it is determined that a security is participating,
including how to allocate undistributed earnings to such a security. EITF 03-6 is effective for fiscal periods beginning after March 31, 2004 and is required to be retroactively applied. There was no impact from the adoption of EITF 03-6 on the
Companys earnings per share for the periods presented as the Company has incurred net operating losses during the three and nine months ended September 30, 2004 and September 30, 2003, respectively, therefore the effect would be anti-dilutive.



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##### Table of Contents

DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



In September 2004, the Emerging Issues Task Force finalized its consensus on EITF Issue No. 04-8, The Effect of
Contingently Convertible Debt on Diluted Earnings Per Share (EITF 04-8). EITF 04-8 addresses when the dilutive effect of contingently convertible debt with a market price trigger should be included in diluted earnings per share (EPS). Under
EITF 04-8, the market price contingency should be ignored and these securities should be treated as non-contingent, convertible securities and always included in the diluted EPS computation. EITF 04-8 requires these securities be included in diluted
EPS using either the if-converted method or the net share settlement method, depending on the conversion terms of the security. EITF 04-8 is effective for all periods ending after December 15, 2004 and is to be applied by retrospectively restating
previously reported EPS. Adoption of EITF 04-8 would not have an impact on reported EPS for any of the periods presented.



NOTE 2. INVENTORIES



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



|                |  |                       |        |                   |   |       
|--------------- |  | --------------------- | ------ | ----------------- | - | ------
|                |  | Reorganized DDi Corp.
|                |  | September 30, 2004    |        | December 31, 2003
|Raw materials   |  | $                     | 13,131 |                   | $ | 12,254
|Work-in-process |  |                       | 9,495  |                   |   | 8,931 
|Finished goods  |  |                       | 7,101  |                   |   | 5,107 
|                |  |                       |        |                   |   |       
|Total           |  | $                     | 29,727 |                   | $ | 26,292
|                |  |                       |        |                   |   |       



NOTE 3. REVOLVING CREDIT
FACILITIES, LONG TERM DEBT, AND CAPITAL LEASES



Long-term debt and capital
lease obligations consist of the following (in thousands):



|                                                                                                                                                                                                                                        |  |                       |         |   |                   |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                                                                        |  | Reorganized DDi Corp. |        
|                                                                                                                                                                                                                                        |  | September 30, 2004    |         |   | December 31, 2003 |  
|Senior Credit Facility, net of unamortized discount of $895 at December 31, 2003                                                                                                                                                        |  | $                     |        |   |                   | $ | 70,799  |  
|16% Capital Senior Accreting Notes, face amount of $18,394 at September 30, 2004 and $17,656 at December 30, 2003, respectively, net of
unamortized discount of $208 and $229 at September 30, 2004 and December 31, 2003, respectively |  |                       | 18,186  |   |                   |   | 17,427  |  
|DDi Europe Facilities Agreement (a)                                                                                                                                                                                                     |  |                       | 25,643  |   |                   |   | 25,344  |  
|DDi Europe Working Capital Facility (a)                                                                                                                                                                                                 |  |                       | 13,101  |   |                   |   | 11,809  |  
|Capital lease obligations                                                                                                                                                                                                               |  |                       | 1,846   |   |                   |   | 2,668   |  
|                                                                                                                                                                                                                                        |  |                       |         |   |                   |   |         |  
|Total                                                                                                                                                                                                                                   |  |                       | 58,776  |   |                   |   | 128,047 |  
|Less: Current maturities of long-term debt                                                                                                                                                                                              |  |                       | (4,203  | ) |                   |   | (1,439  | )
|Less: DDi Europe Working Capital Facility                                                                                                                                                                                               |  |                       | (13,101 | ) |                   |   | (11,809 | )
|                                                                                                                                                                                                                                        |  |                       |         |   |                   |   |         |  
|Total non-current liabilities                                                                                                                                                                                                           |  | $                     | 41,472  |   |                   | $ | 114,799 |  
|                                                                                                                                                                                                                                        |  |                       |         |   |                   |   |         |  

---

|(a) | Interest rates are LIBOR-based. The effective interest rate as of September 30, 2004, was 6.55%.
|--- | ------------------------------------------------------------------------------------------------



Senior Credit Facility



In January 2004, the Company was required to use a portion of the proceeds ($4.5 million) from its private placement of common stock (see Note 15) to pay down a portion
of the outstanding principal under the Dynamic Details Senior Credit Facility. On March 30, 2004, the Company repaid in full the outstanding balance of the Dynamic Details Senior Credit Facility and the related accrued



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



interest and fees using proceeds from the private placement of its Series B-1 and Series B-2 preferred stock (see
Note 6) and cash on hand of $14.9 million, including cash previously classified as restricted as of December 31, 2003. In connection with the full repayment and termination of the Dynamic Details Senior Credit Facility, the warrants previously
issued to the lenders under the Dynamic Details Senior Credit Facility were terminated resulting in interest expense of $0.9 million during the quarter ended March 31, 2004.



Revolving Credit Facility



On March 30, 2004, immediately after the Dynamic Details Senior Credit Facility was paid off, Dynamic Details and the Companys other North American
subsidiaries entered into an asset based revolving credit facility with a commitment up to $40 million through March 30, 2007, depending upon the value of the asset base. During the second quarter of 2004, the asset base on the revolving credit
facility was expanded to include the Companys Canadian operations. As of September 30, 2004, the Company was able to borrow up to $18.1 million against the revolving credit facility of which no amounts were drawn as of that date. The facility
bears interest at LIBOR plus 4% on LIBOR loans and prime plus 3% for index rate loans. Interest will be determined by Dynamic Details adjusted EBITDA numbers, and will range from LIBOR plus 3 to 4% on LIBOR loans or prime plus 2 to 3% for
index rate loans. The effective interest rate at September 30, 2004 was 7.75%. The revolving credit facility has covenants that place a limit on the level of capital expenditures and a minimum fixed charge ratio. The Company was in compliance with
these covenants as of September 30, 2004. The Company incurred debt issuance costs of $2.3 million in connection with obtaining this revolving credit facility and will amortize such costs into interest expense using the straight-line method (which
approximates the effective interest method) over the facility period. As of September 30, 2004, a total of $0.4 million of debt issuance costs has been amortized.



Capital Senior Accreting Notes



On December 12, 2003, DDi Capital issued $17.7 million in senior accreting notes pursuant to its plan of reorganization. Pursuant to the terms of its indenture, interest
is payable on the senior accreting notes by issuance of additional senior accreting notes at an annual rate of 16% or, at DDi Capitals election, in cash at an annual rate of 14% to be paid on a quarterly basis. Because of the decrease in DDi
Capitals leverage ratio, on June 1, 2004, DDi Capital was required to elect to pay interest due on all subsequent interest payments in cash starting June 15, 2004. Interest is calculated on the accreted principal balance as of March 14, 2004,
the most recent scheduled interest payment date per the note indenture, of $18.4 million. As of September 15, 2004, DDi Capital paid $1.3 million in interest in cash to the holders of the senior accreting notes. The notes mature on January 1, 2009
and are redeemable by DDi Capital upon a change of control or upon sale of stock or property or other assets other than in the ordinary course of business; or, at the option of DDi Capital, in whole at any time, in each case, at a redemption price
that is greater than the accreted value of the notes, plus accrued and unpaid interest, if any, to the redemption date. The notes have covenants customary for securities of this type. The covenants restrict the Company from incurring additional
indebtedness and from making certain payments, including dividend payments to its stockholders. As of September 30, 2004, the Company was in compliance with these covenants. Each holder of the senior accreting notes also received a warrant to
purchase pro rata shares of 762,876 shares of the Companys common stock. In connection with the completion of a private placement of common stock in January 2004 (see Note 15), the amount of warrants issued was adjusted, pursuant to the
anti-dilution provisions of the warrants, to purchase an aggregate of 807,090 shares. The Company recorded the warrants at an aggregate fair value of $0.2 million at November 30, 2003 and is using the effective interest rate method to accrete the
debt value to face value at maturity through interest expense. For the three and nine months ended September 30, 2004, total warrant accretion was $8,000 and $20,000, respectively. These warrants are held in an escrow account until December 12, 2005
and are exercisable at an initial exercise price of $0.001 per share from December 13, 2005 through July 31, 2008. The warrants will be terminated if, on or before December 12, 2005, DDi Capital pays all of its indebtedness to the holders of the
senior accreting notes.



DDi Europe Facilities Agreement



DDi Europe has a separate debt facility made up of £14.3 million ($25.7 million) in
term loans and a working capital facility having a maximum borrowing limit of £10.0 million ($18.0 million) for its European operations as of September 30, 2004. Any amounts drawn under the working capital facility are payable upon demand by
the lender. The term loan has a maturity date of December 30, 2007. Based upon current and expected market conditions for the DDi Europe operations, the European lender had stated its desire that DDi Europe not draw down more than £7.4 million
($13.3 million) of the working capital facility. In January 2004, the Company completed a private placement of its common stock (see Note 15), of which $4.0 million (approximately £2.4 million) was used to reduce the drawn balance of this
working capital facility. As of September 30, 2004, an aggregate of £7.3 million ($13.1 million) was outstanding under this working capital facility. To the extent that DDi Europe is unable to generate cash sufficient to fund its operations,
DDi Europe must seek alternative funding sources or take steps to restructure its operations.



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



Note Payable



DDi Corp. issued a note payable of $0.5 million to its independent financial advisor in consideration of their fees related to the consummation of the plan of
reorganization. The note was repaid in January 2004 in connection with proceeds received from a private placement of common stock (see Note 15).



NOTE 4. EARNINGS PER SHARE



Basic and diluted earnings per share Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, requires DDi
Corp. to report both basic net income (loss) per share, which is based on the weighted average number of common shares outstanding and diluted net income (loss) per share, which is based on the weighted average number of common shares outstanding
and dilutive potential common shares outstanding.



For the three and nine
months ended September 30, 2004, potentially dilutive shares from the exercise of stock options and warrants and the issuance of Series B-1 and B-2 Convertible Preferred Stock were not included in diluted earnings per share because to do so would be
anti-dilutive. For the three and nine months ended September 30, 2003, potentially dilutive shares from the exercise of stock options, warrants and the conversion of the convertible subordinated debt were not included in diluted earnings per share
because to do so would be anti-dilutive. The number of potentially dilutive shares of common stock for the three months ended September 30, 2004 and 2003 were 2,729,229 (Reorganized DDi Corp.) and 12,616,856 (Predecessor DDi Corp.), respectively,
and for the nine months ended September 30, 2004 and 2003, were 2,526,284 (Reorganized DDi Corp.) and 12,823,662 (Predecessor DDi Corp.), respectively.



NOTE 5. SERIES A MANDATORILY REDEEMABLE PREFERRED STOCK



In connection with the plan of reorganization, the Companys certificate of incorporation and bylaws were amended and restated. The Company has authorized 5,000,000
shares of Preferred Stock at $0.001 par value per share. On December 12, 2003, the Company filed a Certificate of Designation designating 1,000,000 shares of Preferred Stock as Series A Preferred Stock (the Series A Preferred) and issued
such shares to the Companys former Convertible Subordinated Noteholders. The Series A Preferred has an annual dividend of 15% and an aggregate liquidation preference of $15 million with a mandatory cash redemption date of January 31, 2009. The
Series A Preferred will only be paid to the extent there is value, as defined in the Certificate of Determination, in DDi Europe beyond what is owed on the DDi Europe Facility Agreement. As of November 30, 2003, the Company recorded a liability in
accordance with SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, related to the Series A Preferred at its estimated fair value of $2 million. This estimated fair value was
based on the valuation of an independent third party. The Company is accreting the Series A Preferred to the amount expected to be paid at maturity using the effective interest method. Total accretion for the three and nine months ended September
30, 2004 was $0.3 million and $0.7 million, respectively; with such amount being reflected as interest expense. Total accrued dividends (also recorded as interest expense) were $0.6 million and $1.7 million for the three and nine months ended
September 30, 2004; respectively, and are included in Notes payable and other in the accompanying balance sheet. The Series A Preferred must be redeemed by the Company on the later of January 31, 2009 or the date on which all obligations
under the DDi Europe Facilities Agreement have been paid in full. The Series A Preferred is subject to redemption at the option of the holders upon certain changes in control. The holders of the Series A Preferred will vote as a class and have the
right to direct Reorganized DDi to elect four directors to the board of directors of DDi Europe. The holders of the Series A Preferred are also entitled to 1/100 of one vote for each share of Series A Preferred held.



NOTE 6. SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK



On March 30, 2004, the Company completed a private placement of 147,679 shares of Series B-1
Preferred Stock and 1,139,238 shares of Series B-2 Convertible Preferred Stock (collectively, the Series B Preferred) to certain institutional investors at a price of $47.40 per share for an aggregate sales price of $61.0 million before
placement fees and offering expenses. Each share of the Series B Preferred is initially convertible into four shares of common stock at any time at a conversion price of $11.85 per share, subject to certain anti-dilution adjustments. In general, the
Series B Preferred vote together with the common shares based on the number of shares into which the Series B Preferred could convert on the day that the Series B Preferred was issued. In addition, the Series B Preferred is entitled to elect a
member of the Companys Board of Directors in the event the Company fails to redeem the Series B Preferred when required. The Series B Preferred bears dividends at the rate of 6% per annum, payable quarterly commencing March 31, 2005 and is
subject to mandatory redemption in five years. In addition, the holders of the Series B Preferred have the option to



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



require the Company to redeem the shares in three equal installments in 18 months, 24 months and 30 months from
issuance or earlier upon a change of control, certain events of default or other specified occurrences. The Company also has the right to redeem the Series B Preferred if Reorganized DDi Corp.s common stock trades above $20.75 for 30
consecutive trading days. The redemption price equals cost plus accrued dividends, except in the case of certain defaults where there are premiums to the redemption cost. On May 26, 2004, the Companys shareholders approved a proposal to allow
the Company to have the option to make dividend and redemption payments using Reorganized DDi Corp.s common stock. The Company recorded the redemption value of the Series B Preferred, $61.0 million net of issuance costs of $3.3 million, in the
mezzanine section of the balance sheet as of March 31, 2004 in accordance with SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. The Company will amortize the $3.3 million
of related debt issuance costs using the effective interest method based on the Series B Preferred holders redemption option to require the Company to redeem the shares in three equal installments in 18 months, 24 months and 30 months from
issuance. As of September 30, 2004, a total of $0.9 million of debt issuance costs has been amortized.



On March 30, 2004, the Company repaid in full the outstanding balance of the Dynamic Details Senior Credit Facility and related accrued interest and fees using proceeds of $54.8 million from the private placement of
the Series B Preferred (see Note 3).



NOTE 7. STOCK OPTIONS



In connection with the Companys emergence from Chapter 11
bankruptcy, on December 19, 2003, Reorganized DDi Corp. adopted the DDi Corp. 2003 Directors Equity Incentive plan (the 2003 Directors Plan) for non-employee directors of the Company. DDi has reserved an aggregate of 600,000 shares of
common stock of Reorganized DDi Corp. for issuance under the 2003 Directors Plan. The directors of the Company approved the grant of options to purchase 500,000 shares of common stock of the Company to the Companys five non-employee directors
(each receiving a grant of 100,000 options) at $5 per share on December 19, 2003 subject to the approval of the Directors Plan by the shareholders of the Company. On May 26, 2004, the shareholders approved the Directors Plan and, accordingly,
the grant of these shares. The vesting on these shares is 40% immediately upon approval of grant by shareholders and 20% each year thereafter on December 19th of each year from 2004 through 2006. The Company is recording compensation expense related
to these options.



The Company uses the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to account for employee stock options and other stock-based compensation. Under this method, compensation expense is recognized when the exercise price
of the Companys employee stock options is less than the market price of the underlying stock on the date of the grant. During the three and nine months ended September 30, 2004, the Company recorded compensation expense related to stock
options granted of $4.0 million and $16.8 million, respectively.



In December
2002, the FASB issued SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean Amendment to SFAS No. 123. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. The Company has adopted the disclosure only provisions of SFAS No. 123 and, accordingly, the implementation of SFAS No. 148 has not had an effect on the Companys
consolidated financial position or results of operations.



The Company
determined its pro forma results below using the alternate fair value method as prescribed by SFAS No. 123. Under the fair value based method of accounting for stock-based employee compensation, the fair value of each option grant is estimated at
the date of grant using the Black-Scholes option pricing model and recognized over the vesting period, generally four years. Pricing model assumptions included an expected term of four years, a risk-free interest rate, dividend yield, and volatility
assumptions consistent with the expected term and particular grant date. Had compensation cost for all stock-based compensation plans been determined consistent with SFAS No. 123, DDi Corp.s net loss and net loss per share would have been as
follows (amounts in millions, except per share data):



|                                                   |  |                                      |       |   |  |  |                                       |   |       |                                      |  |   |       |   |                                      |  |  |   |       |  
|-------------------------------------------------- |  | ------------------------------------ | ----- | - |  |  | ------------------------------------- | - | ----- | ------------------------------------ |  | - | ----- | - | ------------------------------------ |  |  | - | ----- | -
|                                                   |  | Reorganized DDi Corp.                |       |   |  |  | Predecessor DDi Corp.                 |   |       | Reorganized DDi Corp.                |  |   |       |   | Predecessor DDi Corp.                | 
|                                                   |  | Three months endedSeptember 30, 2004 |       |   |  |  | Three months ended September 30, 2003 |   |       | Nine months ended September 30, 2004 |  |   |       |   | Nine months ended September 30, 2003 | 
|Net loss allocable to common stock:                |  |                                      |       |   |  |  |                                       |   |       |                                      |  |   |       |   |                                      |  |  |   |       |  
|As Reported  basic and diluted                    |  | $                                    | (18.1 | ) |  |  |                                       | $ | (12.2 | )                                    |  | $ | (40.8 | ) |                                      |  |  | $ | (52.1 | )
|Less: non-cash compensation expenses under FAS 123 |  |                                      | (4.4  | ) |  |  |                                       |   | (5.8  | )                                    |  |   | (20.9 | ) |                                      |  |  |   | (5.8  | )
|Add: non-cash compensation expenses under APB 25   |  |                                      | 4.0   |   |  |  |                                       |   |      |                                      |  |   | 16.8  |   |                                      |  |  |   |      |  
|                                                   |  |                                      |       |   |  |  |                                       |   |       |                                      |  |   |       |   |                                      |  |  |   |       |  
|Pro Forma                                          |  |                                      | (18.5 | ) |  |  |                                       | $ | (18.0 | )                                    |  |   | (44.9 | ) |                                      |  |  | $ | (57.9 | )
|Net loss per share - basic and diluted:            |  |                                      |       |   |  |  |                                       |   |       |                                      |  |   |       |   |                                      |  |  |   |       |  
|As Reported                                        |  | $                                    | (0.71 | ) |  |  |                                       | $ | (0.25 | )                                    |  | $ | (1.62 | ) |                                      |  |  | $ | (1.06 | )
|Pro Forma                                          |  | $                                    | (0.73 | ) |  |  |                                       | $ | (0.35 | )                                    |  | $ | (1.78 | ) |                                      |  |  | $ | (1.17 | )



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



NOTE 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS



The Companys certificate of incorporation provides that it will indemnify its
directors and officers to the fullest extent permitted by Delaware General Corporation Law. The Company has obtained liability insurance for its directors and officers with respect to liability arising out of their capacity or status as directors
and officers against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding. Currently, several of the Companys current and
former officers and directors are named defendants in a securities class action lawsuit. At this time, management believes that the Company will not incur significant costs associated with these matters.



NOTE 9. ACQUISITION OF KAMTRONICS LIMITED



On October 24, 2002, DDi Europe completed the acquisition of Kamtronics Limited
(Kamtronics), a market leader in sourcing printed circuit boards for European customers, based in Calne, England, for approximately $4.2 million plus contingent consideration based on earnings in each of the two years following the date
of acquisition. The total purchase price has been allocated to underlying assets acquired and liabilities assumed based upon their respective fair market value at the date of acquisition. In the first quarter of 2004, DDi Europe amended the original
sales agreement and replaced it with a settlement amount plus related interest to be paid by June 30, 2006 in place of the contingent consideration. As of March 31, 2004, additional consideration of $1.4 million was accrued and capitalized as
additional purchase price to goodwill.



NOTE 10. SEGMENT REPORTING



SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also
established standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and
incur expenses whose separate financial information is available and is evaluated regularly by the Companys chief operating decision makers, or decision making group, to perform resource allocations and performance assessments.



The Companys chief operating decision maker is the Chief Executive Officer. Based on
the evaluation of the Companys financial information, management believes that the Company operates in one reportable segment which designs, develops, manufactures, assembles and tests complex printed circuit boards, back panels and related
electronic products. The Company operates in two geographical areas, domestic (U.S.A.) and international. Revenues are attributed to the country to which the product is sold. Revenues by product and service are not reported as it is impracticable to
do so.



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



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



|           |  |                                       |        |  |  |                                       |   |                                      |  |   |         |                                      |  |  |   |        
|---------- |  | ------------------------------------- | ------ |  |  | ------------------------------------- | - | ------------------------------------ |  | - | ------- | ------------------------------------ |  |  | - | -------
|           |  | Reorganized DDi Corp.                 |        |  |  | Predecessor DDi Corp.                 |   | Reorganized DDi Corp.                |  |   |         | Predecessor DDi Corp.               
|           |  | Three Months Ended September 30, 2004 |        |  |  | Three Months Ended September 30, 2003 |   | Nine Months Ended September 30, 2004 |  |   |         | Nine Months Ended September 30, 2003
|Net sales: |  |                                       |        |  |  |                                       |   |                                      |  |   |         |                                      |  |  |   |        
|Domestic   |  | $                                     | 42,382 |  |  |                                       | $ | 33,329                               |  | $ | 132,668 |                                      |  |  | $ | 104,419
|Europe (a) |  |                                       | 25,589 |  |  |                                       |   | 22,787                               |  |   | 76,366  |                                      |  |  |   | 64,246 
|Other      |  |                                       | 4,276  |  |  |                                       |   | 3,329                                |  |   | 11,109  |                                      |  |  |   | 8,664  
|           |  |                                       |        |  |  |                                       |   |                                      |  |   |         |                                      |  |  |   |        
|Total      |  | $                                     | 72,247 |  |  |                                       | $ | 59,445                               |  | $ | 220,143 |                                      |  |  | $ | 177,329
|           |  |                                       |        |  |  |                                       |   |                                      |  |   |         |                                      |  |  |   |        

---

|(a) | Sales to the United Kingdom represent the majority of the sales to Europe.
|--- | --------------------------------------------------------------------------



The following table summarizes long-lived assets by geographic area (in thousands):



|                   |  |                       |         |                   |   |        
|------------------ |  | --------------------- | ------- | ----------------- | - | -------
|                   |  | Reorganized DDi Corp.
|                   |  | September 30, 2004    |         | December 31, 2003
|Long-lived assets: |  |                       |         |                   |   |        
|Domestic           |  | $                     | 156,834 |                   | $ | 167,419
|International      |  |                       | 30,288  |                   |   | 37,143 
|                   |  |                       |         |                   |   |        
|Total              |  | $                     | 187,122 |                   | $ | 204,562
|                   |  |                       |         |                   |   |        



NOTE 11. GOODWILL AND INTANGIBLES



The Company operates in one reportable segment (see Note 10). The Company
separately monitors the financial performance of its North American and European operations. Further, each of these operations generally serves a distinct customer base. Based upon these facts, the Company considers the North American and European
operations its reporting units for the assignment of goodwill. The Companys European operations consist of entities acquired in conjunction with the MCM Electronics purchase transaction in 2000, the Thomas Walter purchase transaction in 2001
and the Kamtronics purchase transaction in 2002.



As part of fresh start
accounting, an allocation of the reorganization value resulted in goodwill of $105.4 million and identified intangible assets totaling $24.9 million. This balance of identified intangible assets consists of $23.0 million relating to the customer
relationships in North America and the remaining $1.9 million relates to the backlog in North America. Amortization related to customer relationships in North America for the three months and nine months ended September 30, 2004, was $1.1 million
and $3.5 million, respectively. Amortization related to backlog in North America for the nine months ended September 30, 2004, was $0.8 million and was reported as a component of cost of goods sold.



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



In March 2004, the Company amended the contingent consideration relating to the acquisition of Kamtronics (see Note
9) and replaced it with a settlement amount plus related interest to be paid by June 30, 2006. As of March 31, 2004, additional consideration of $1.4 million was accrued and capitalized as additional purchase price to goodwill.



A business valuation for DDi Europe was conducted by an independent third party using public
Company comparables, transactional comparables and discounted cash flow analyses in October 2004. Due to business valuation that indicated the book value of goodwill was in excess of its fair value at September 30, 2004, the Company calculated and
recorded a goodwill impairment charge of $7.3 million, which represents 100% impairment of DDi Europe goodwill.



The changes in the carrying amount of goodwill for the nine months ended September 30, 2004, are as follows:



|                                               |  |                                      |         |  
|---------------------------------------------- |  | ------------------------------------ | ------- | -
|                                               |  | Reorganized DDi Corp                 |        
|                                               |  | Nine months ended September 30, 2004 |        
|Beginning balance                              |  | $                                    | 105,452 |  
|Goodwill increase, primarily due to Kamtronics |  |                                      | 1,183   |  
|Goodwill impairment, related to DDi Europe     |  |                                      | (7,279  | )
|                                               |  |                                      |         |  
|Ending balance                                 |  | $                                    | 99,356  |  
|                                               |  |                                      |         |  



NOTE 12. RESTRUCTURING AND OTHER
RELATED CHARGES



In the first quarter of 2003, Predecessor DDi Corp.
recorded charges totaling $0.5 million, which were classified as Restructuring and other related charges. Such charges primarily represent revision of estimates from previously recorded restructuring charges and consist of $0.2 million
in accrued restructuring expenses and $0.3 million in severance and other exit costs. The accrued restructuring expenses of $0.2 million were related to other exit costs.



In the second quarter of 2003, Predecessor DDi Corp. recorded charges totaling $5.0 million relating to the sale of the Companys
Dallas-based electronics enclosure operations and managements plan to down-size its Anaheim, California and Virginia facilities. Such charges consisted of $1.7 million relating to impairment of inventory which were reflected as a component of
cost of goods sold, $1.0 million relating to impairment of net property, plant and equipment primarily related to the Dallas-based electronics enclosure operations the Company sold, $0.3 million in estimated facilities closure costs, $0.1 million in
other exit costs, $0.6 million in severance charges and $1.3 million in accrued restructuring expenses.



Restructuring and other related charges recorded in the third quarter of 2003 totaled ($0.8) million for DDi Corp. Such charges consist of a non-cash credit of $0.8 million resulting principally from a
reduction in estimated net lease exit costs recorded as part of its operational restructuring initiatives undertaken in 2002.



In the first quarter of 2004, the Company closed its operations in Tolworth, England. In connection therewith, DDi Corp. recorded charges totaling $4.4 million which were
classified as Restructuring and other related charges and Restructuring-related inventory impairment. The charges represented an inventory impairment of $0.5 million recorded as cost of goods sold, $2.1 million relating to
impairment of net property, plant and equipment primarily related to Tolworths operations, $0.4 million credit relating to the reduction of capital lease obligations, $0.6 million in severance and other exit costs, $0.2 million in estimated
facilities closure costs, and $1.4 million in accrued expenses for the quarter. As of March 31, 2004, the accrued restructuring expenses of $1.4 million consist of $0.2 million related to severance and other exit costs as well as $1.2 million
related to costs associated with readying facilities for disposition, primarily an estimate of the cost to exit a facility lease.



Restructuring and other related charges recorded in the second quarter of 2004 totaled $0.9 million. Such charges consist of $0.6 million relating to
impairment of net property, plant and equipment primarily related to the closure of the Tolworth operations in Europe, $0.1 million in severance costs, $0.1 million in estimated facilities closure costs and $0.1 million in other exit costs.



Restructuring and other related charges recorded in the third
quarter of 2004 totaled $0.3 million. Such charges consist of $0.3 million in severance costs, ($0.3) million in estimated facilities closure costs due to revision of prior estimates and $0.3 million adjustment of prior period estimated professional
fees relating to restructuring costs.



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



Total accrued restructuring expenses at September 30, 2004 were $1.9 million. These accrued restructuring expenses
represent $0.2 million in severance and related expenses, $1.6 million in estimated facilities closure costs, and $0.1 million in other exit costs. The Company expects to pay these accrued amounts through 2005.



NOTE 13. REORGANIZATION EXPENSES



During the fourth quarter of 2002, Predecessor DDi Corp. initiated plans to restructure debt
and retain employees. These efforts resulted in reorganization charges of $3.3 million for the quarter ended March 31, 2003. Of these amounts, $2.0 million is related to professional fees and $1.3 million is related to personnel retention costs
under the Dynamic Details Key Employee Retention Program (KERP).



In the second quarter of 2003, the Company recorded reorganization charges of $2.7 million. Of these amounts, $1.9 million was related to professional fees and $0.8 million is related to personnel retention costs under the KERP.



In the third quarter of 2003, the Company recorded reorganization charges of $2.3 million.
Of these amounts, $1.6 million was related to professional fees and other costs associated with the reorganization. The charges also included $0.7 million relating to personnel retention costs under the Dynamic Details KERP and was included in
accrued expenses at September 30, 2003.



Reorganization charges in the first
quarter of 2004 were $0.9 million relating to professional fees and other costs associated with the reorganization of Reorganized DDi Corp.s debt structure.



In the second quarter of 2004, the Company recorded reorganization charges of $0.2 million. These amounts were primarily related
professional fees and costs associated with the KERP.



In the third quarter of
2004, the Company did not record any reorganization charges.



NOTE 14.
COMPREHENSIVE LOSS



SFAS No. 130, Reporting Comprehensive
Income, establishes requirements for reporting and disclosure of comprehensive income (loss) and its components. Comprehensive loss includes unrealized holding gains and losses and other items that have previously been excluded from net loss
and reflected instead in stockholders equity. Comprehensive loss consists of net loss plus the effect of foreign currency translation adjustments, unrealized holding loss on marketable securities classified as available-for-sale and unrealized
net gains on interest rate swaps and related unrealized net tax impact.



NOTE 15. PRIVATE PLACEMENT



On January 21, 2004, the Company
completed a private placement of 1,000,000 shares of common stock to institutional investors for gross proceeds of $15,980,000, before placement fees and offering expenses of $1.5 million. The shares of common stock were priced at $15.98 per share,
which represented a 6% discount against the trading price of DDi Corp.s common stock as of January 9, 2004. The Company was required to use a portion of the proceeds, $4.5 million, to pay down the then outstanding Dynamic Details Senior Credit
Facility. In addition, the Company used certain of the proceeds to pay in full the note payable to the Companys independent financial adviser plus accrued interest, $0.5 million, and to pay down $4.0 million of the DDi Europe working capital
facility. Each of these payments was made in January 2004. In connection with the completion of this private placement, the amount of warrants issued to the holders of the Senior Accreting Notes was adjusted, pursuant to the anti-dilution provisions
of the warrants. (see Note 3).



NOTE 16. TEXAS LAND SALE



During March 2004, the Company sold land and building related to its Garland, Texas location
for $2.0 million cash. Of that amount, $0.5 million is required to be deposited into an escrow account for 5 years for environmental remediation. The Company incurred closing costs of $0.1 million resulting in net proceeds of $1.4 million. The
Company was required to use $0.9 million of the net proceeds to pay down the Dynamic Details Senior Credit Facility.



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DDi CORP.



Notes to the Condensed Consolidated Financial Statements



September 30, 2004



NOTE 17. SUBSEQUENT EVENTS



On October 8, 2004, the Company announced that it has taken further steps to lower the cost structure of manufacturing operations. The
Company plans to transfer a portion of its customer orders from its Milpitas manufacturing facility to DDi facilities in Toronto and Virginia which have lower production costs. This action by the Company will result in a workforce reduction of up to
175 employees at the Companys Milpitas manufacturing facility, partially offset by the expected addition of a small number employees across DDis other facilities.



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##### Table of Contents

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



Overview



DDi Corp. provides technologically advanced, time-critical electronics design, development and manufacturing services to original equipment manufacturers and other electronics manufacturing service providers.
Operating through our primary operating subsidiaries, Dynamic Details, Incorporated (Dynamic Details) and DDi Europe Limited (DDi Europe), we target customers that have new product development programs demanding the rapid
application of advanced technology and design.



As used herein, the
Company, we, us, or our means DDi Corp. and its wholly owned subsidiaries, including DDi Capital Corp. (DDi Capital), Dynamic Details and DDi Europe.



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, 2003.



Fresh-Start Accounting



In connection with the Companys emergence from bankruptcy, we have adopted fresh-start accounting principles prescribed by the American Institute of
Certified Public Accountants Statement of Position 90-7 (SOP 90-7), Financial Reporting by Entities in Reorganization Under the Bankruptcy Code effective November 30, 2003. Under fresh-start accounting, a new reporting
entity, known as the Reorganized Company, is deemed to be created, and the recorded amounts of assets and liabilities are adjusted to reflect their fair value. Accordingly, the consolidated financial statements for the Reorganized
Company for the period subsequent to November 30, 2003 will reflect the Companys emergence from Chapter 11 and have been prepared utilizing the principles of fresh start reporting contained in SOP 90-7. As a result, the reported historical
financial statements of the Company for periods prior to December 1, 2003, are not comparable to those of the Reorganized Company.



Recent Accounting Pronouncements



In April 2004, the Emerging Issues Task Force (EITF) issued EITF 03-6, Participating Securities and the Two-Class Method Under FASB Statement No. 128,
Earnings Per Share.EITF 03-6 addresses a number of questions regarding the computation of earning per share by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and
earning of the company when, and if, it declares dividends on its common stock. The issue also provides further guidance in applying the two-class method of calculating earning per share, clarifying what constitutes a participating security and how
to apply the two-class method of computing earnings per share once it is determined that a security is participating, including how to allocate undistributed earnings to such a security. EITF 03-6 is effective for fiscal periods beginning after
March 31, 2004, which is the Companys second quarter, and is require to be retroactively applied. There was no impact from the adoption of EITF 03-6 on the Companys earnings per share for the periods presented as the Company has incurred
net operating losses during the three and nine months ended September 30, 2004 and September 30, 2003, respectively, therefore the effect would be anti-dilutive.



In September 2004, the Emerging Issues Task Force finalized its consensus on EITF Issue No. 04-8, The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share (EITF 04-8). EITF 04-8 addresses when the dilutive effect of contingently convertible debt with a market price trigger should be included in diluted earnings per share (EPS). Under EITF 04-8, the
market price contingency should be ignored and these securities should be treated as non-contingent, convertible securities and always included in the diluted EPS computation. EITF 04-8 requires these securities be included in diluted EPS using
either the if-converted method or the net share settlement method, depending on the conversion terms of the security. EITF 04-8 is effective for all periods ending after December 15, 2004 and is to be applied by retrospectively restating previously
reported EPS. Adoption of EITF 04-8 would not have an impact on reported EPS for any of the periods presented.



Results of Operations



Three
Months Ended September 30, 2004 Compared to the Three Months Ended September 30, 2003



Net Sales



Net sales increased $12.8
million (22%) to $72.2 million for the three months ended September 30, 2004, from $59.4 million for the same period in 2003. The increase in net sales was due to strengthening in demand, a focus on higher technology products and increases in
pricing. Higher pricing is the result of shorter delivery requirements, higher layer counts and other high-technology features.



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Overall, revenue mix remained consistent with proportional growth in both PCB operations and assembly services.
Geographically, the mix was also fairly constant with Europe contributing approximately one-third of net sales for the third consecutive quarter.



On a sequential basis, however, net sales decreased by 4%, from $75.5 million reported for the second quarter 2004. The decrease in net sales from the second quarter was
due to weakness in the North American PCB market. Average pricing for quick-turn orders (those with lead-times of 10 days or less) was relatively flat, but unit demand fell, as compared to the second quarter 2004. For longer-lead orders, average
pricing and unit volume both declined. On average, pricing declined 7% from the second quarter 2004.



Communication and networking was 44% of net sales in the third quarter of 2004 compared with 38% in the third quarter of 2003. The increase in net sales in the communication and networking markets was due primarily to
increased activity in wireless applications, both infrastructure and handsets. Medical, test and industrial was 22% of net sales in the third quarter of 2004, compared with 20% for the same period of 2003. High end computing was 15% of net sales,
compared with 17% for the third quarter of 2003. Military and aerospace was 11% of net sales for the third quarter of 2004, as compared to 18% for the same period last year. The decrease in net sales in the military and aerospace markets was due
primarily to the completion of defense projects in the third quarter of 2003.



Gross Profit



Gross profit for the three months ended
September 30, 2004 was $6.5 million (9% of net sales) as compared to $6.6 million (11% of net sales) for the third quarter 2003. Excluding non-cash stock based compensation charges and amortization of intangibles totaling $2.6 million, the gross
profit increased $2.5 million. The increase is due to higher level of net sales.



On a sequential basis, third quarter 2004 gross profit, excluding non-cash stock based compensation charges and amortization of intangibles, of $9.1 million, or 13% of net sales, decreased from $15.4 million, or 20% of net sales, in the
second quarter due to the decrease in net sales and relatively higher cost structure. In October 2004, the Company announced that it has taken further steps to lower the cost structure of its manufacturing operations. The Company is transferring a
portion of its customer orders from one North American facility to other North American facilities with lower production costs. This action by the Company will result in a net workforce reduction of up to 175 employees. As a result of this workforce
reduction, the Company expects a cash restructuring charge of approximately $1 million to be incurred in the fourth quarter of 2004.



Sales and Marketing Expenses



Sales and marketing expenses increased $0.9 million (21%) to $5.1 million for the three months ended September 30, 2004, from $4.2 million for the same period in 2003.
The increase resulted from the $0.6 million non-cash compensation sales and marketing charges and the increase in net sales recorded in the three months ended September 30, 2004.



General and Administration Expenses



General and administration expenses increased $2.3 million (56%) to $6.5 million for the three months ended September 30, 2004, from $4.2 million for the same period in
2003. The increase was primarily due to the $0.8 million non-cash compensation general and administration charges recorded during the three months ended September 30, 2004, the $1.1 million increase in professional fees and costs attributable to the
Sarbanes-Oxley Section 404 certification project.



Goodwill Impairment



Goodwill impairment was $7.3 million for the three months ended September 30,
2004, compared to $0.4 million for the same period in 2003. The impairment charge for 2004 was incurred because DDi Europes book value of goodwill was in excess of its fair value. This was determined by a business valuation based on public
company comparables, transactional comparables and discounted cash flow analyses conducted by an independent third party.



Restructuring and Other Related Charges



Restructuring and related charges were $0.3 million for the three months ended September 30, 2004, compared to ($0.8) million for the same period in 2003. Such charges
represent $0.3 million in severance costs, $0.3 million in other exit costs and ($0.3) million related to revision of prior estimates relating to readying facilities for closure. In the third quarter of 2003, Predecessor DDi Corp. recorded charges
totaling ($0.8) million. Such charges represent a non-cash credit of $0.8 million resulting principally from a reduction in estimated net lease exit costs recorded as part of operational restructuring initiatives undertaken in 2002.



Reorganization Expenses



There were no reorganization expenses in the third quarter of 2004. Reorganization charges for the third quarter of 2003 were $2.3 million.
Such charges represent $1.6 million of costs relating to professional fees incurred in connection with our efforts to effect a plan of reorganization to deleverage our capital structure and $0.7 million of costs relating to our Key Employee
Retention Program.



Net Interest Expense



Net interest expense for the third quarter 2004 decreased to $2.7 million, from $4.4 million
for the corresponding period in 2003. The decrease in net interest expense is due principally to the termination of the Companys 5.25% and 6.25% Convertible Subordinated Notes in December 2003 and the repayment of the Dynamic Details Senior
Credit Facility in March 2004, partially offset by Series A preferred stock dividends.



Income Taxes



Net tax expense for the third quarter 2004 was
$0.3 million as compared to income tax benefit of $0.3 million for the same period in 2003. Income tax expense in the third quarter of 2004 was net of changes in valuation allowances applied to both U.S. and European deferred tax assets that would
otherwise have been recorded for the quarter. Such allowances were based upon managements expectation that the deferred tax assets would not likely be realized.



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##### Table of Contents

Nine Months Ended September 30, 2004 Compared to the Nine Months Ended September 30, 2003



Net Sales



Net sales increased $42.8 million (24%) to $220.1 million for the nine months ended September 30, 2004, from $177.3 million for the same
period in 2003. The increase in net sales was due to strengthening in demand experienced, a focus on higher technology products and increases in pricing. Higher pricing is the result of shorter delivery requirements, higher layer counts and other
high-technology features.



Gross Profit



Gross profit for the nine months ended September 30, 2004 was $26.0 million (12% of net
sales) as compared to $13.0 million (7% of net sales) for the same period in 2003. Gross profit for the nine months ended September 30, 2004 increased due to the increases in pricing resulting principally from increased demand, our shift of focus to
higher technology products and our ability to better leverage our operating resources. Gross profit included non-cash stock based compensation charges and amortization of intangibles totaling $11.6 million for the nine months ended September 30,
2004 and restructuring related inventory impairment of $0.5 million and $1.7 million for the nine months ended September 30, 2004 and 2003, respectively.



Sales and Marketing Expenses



Sales and marketing expenses increased $2.6 million (19%) to $16.2 million for the nine months ended September 30, 2004, from $13.6 million for the same period in 2003.
The increase resulted from the $2.5 million non-cash sales and marketing charges recorded throughout 2004.



General and Administration Expenses



General and administration expenses increased $6.0 million (47%) to $18.5 million for the nine months ended September 30, 2004, from $12.5 million for the same period in 2003. The increase was primarily due to $3.4 million non-cash
compensation charges recorded during the nine months ended September 30, 2004 and $1.7 million increase in professional fees and costs attributable to the Sarbanes-Oxley Section 404 certification project.



Goodwill Impairment



Goodwill impairment was $7.3 million for the nine months ended September 30, 2004, compared to $2.4 million for the same period in 2003. The
impairment charge for 2004 was incurred because DDi Europes book value of goodwill was in excess of its fair value. This was determined by a business valuation based on public company comparables, transactional comparables and discounted cash
flow analyses conducted by an independent third party.



Restructuring and
Other Related Charges



Restructuring and related charges were $5.6 million
for the nine months ended September 30, 2004, compared to $3.0 million for the same period in 2003. Restructuring charges for the nine months ended September 30, 2004 relate primarily to the closure of the Tolworth operations in Europe and consisted
of (a) $2.7 million of impairment of net property, plant and equipment; (b) $1.3 million of severance and other exit costs; (c) $0.1 million of facilities closure costs; and (d) $1.4 million in accrued charges, (e) $0.5 million inventory impairment,
all offset by a $0.4 million credit resulting from a reduction in capital lease obligations in the first quarter of 2004. Restructuring charges for the nine months ended September 30, 2003 represent the costs associated with the sale of certain
assets of the Companys Dallas-based electronic enclosure operations and the down-sizing of its Virginia and Anaheim, California workforces.



Reorganization Expenses



Reorganization charges for the nine months ended September 30, 2004 were $1.2 million. Such charges represent $1.1 million of costs relating to professional fees incurred in connection with our efforts to effect a
plan of reorganization to deleverage our capital structure and $0.1 million of costs relating to our Key Employee Retention Plan. Reorganization charges for the nine months ended September 30, 2003 were $8.3 million. These charges represented $5.5
million of costs relating to professional fees incurred in connection with efforts to effect a plan of reorganization to deleverage the Companys capital structure and $2.8 million of costs relating to our Key Employee Retention Program.



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Net Interest Expense



Net interest expense for the nine months ended September 30, 2004 decreased to $11.1 million, from $16.7 million for the corresponding period in 2003. The decrease in net
interest expense is due principally to the termination of the Companys 5.25% and 6.25% Convertible Subordinated Notes in December 2003, the repayment of the Dynamic Details Senior Credit Facility and the termination of the swap interest
agreement related to the Dynamic Details Senior Credit Facility in April 2003.



Income Taxes



Net tax expense for the nine months ended
September 30, 2004 was $1.3 million as compared to income tax benefit of $1.3 million for the same period in 2003. Income tax expense in the nine months ended September 30, 2004 was net of changes in valuation allowances applied to both U.S. and
European deferred tax assets that would otherwise have been recorded for the quarter. Such allowances were based upon managements expectation that the deferred tax assets would not likely be realized.



Liquidity and Capital Resources



General



North American Operations



Our principal sources of liquidity to fund ongoing operations have been existing cash and cash equivalents. We believe that our cash on hand, including cash generated by
operations in the third quarter of 2004 and cash proceeds from our private placements in January and March 2004 as well as the Dynamic Details asset based revolving credit facility (expanded in second quarter of 2004 to include Canadian operations)
will be sufficient to meet our anticipated needs to maintain operations, working capital, capital expenditures and debt service requirements and other commitments as they mature for at least the next twelve months for our North American operations.



European Operations



DDi Europe remains constrained with respect to liquidity. During the second and third
quarters of 2004, DDi Europe has experienced an increased demand for working capital. DDi Europe has a separate debt facility with a European lender which consists of £14.3 million (U.S. $25.7 million) in terms loans and a working capital
facility which has a maximum borrowing limit of £10.0 million (U.S. $18.0 million). Any amounts drawn on the working capital facility are payable upon demand by the lender. In addition to the maximum borrowing limit, the European lender has
stated its desire that DDi Europe not draw down more than £7.4 million (U.S. $13.3 million) on the working capital facility, based upon current and expected market conditions. As of October 31, 2004, DDi Europe had drawn substantially all of
the available amounts under the term loan portion of the credit facility and £7.2 million (U.S. $13.1million) on the working capital facility. The lender is fully secured by the assets of DDi Europe, including the stock of its operating
subsidiaries.



In addition to DDi Europes above-referenced borrowing
constraints under its credit facility, DDi Corp. also has constraints in its ability to provide funds to DDi Europe. We are restricted from using funds from borrowings under our North American revolving credit facility to provide funds to DDi Europe
and we are restricted under the indenture relating to the DDi Capital Senior Accreting Notes from using cash from North American operations to provide funds to DDi Europe, unless we obtain the consent of our North American lender and the holders of
the Senior Accreting Notes, respectively. During the nine month period ended September 30, 2004, DDi Corp. contributed $4.8 million (£2.7 million) to DDi Europe to reduce its outstanding borrowings under the European working capital facility.
Of that amount, $4.0 million was derived from our offering of shares of our common stock and the remainder was derived from cash on hand at DDi Corp.



Recently, we have retained an investment banking firm to perform a valuation of DDi Europe. The Board of Directors also has sought the advice from another investment
banking firm in connection with exploring alternatives. After considering its alternatives, the Board of Directors of DDi Corp. has concluded that the valuation of DDi Europe does not justify our making further investment in DDi Europe. Accordingly,
to the extent that DDi Europe is unable to generate cash sufficient to fund its operations or restructure its credit facility with its lender, DDi Europe must seek alternative funding sources or take steps to restructure its operations. If its
lender



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in an attempt to protect its collateral makes a demand for payment and DDi Europe does not have sufficient funds on hand
to make the payment, the lender would have the right to exercise its remedies under the DDi Europe credit facility, including the right to have a receiver appointed for DDi Europe or to commence insolvency proceedings. In that event, based upon the
current valuation, there would not likely be sufficient funds to satisfy the obligations under the Series A preferred stock (which look solely to DDi Europe value) or provide any funds to us. We believe that such action by the lender could have an
adverse effect upon the value of the Companys common stock as well as upon our customers and vendors willingness to do business with our UK-based operations. We continue to work with the European lender to address the short and
long term liquidity needs of DDi Europe, although there are no assurance that such discussions will be successful. See also Factors That May Affect Future Results for further discussion of the risks associated with this matter.



DDi Europe comprises $75.1 million (34%) in net sales, $6.3 million (24%) in
gross profit and $18.7 million (50%) of net loss of DDi Corps consolidated income statement for the nine months ended September 30, 2004. In addition, DDi Europe comprises $34.7 million (39%) in total current assets, $61.7 million (22%) in
total assets and $71.9 million (53%) in total liabilities of DDi Corps consolidated balance sheet as of September 30, 2004.



Consolidated Cash Flows



Net cash used in operating activities for the nine months ended September 30, 2004 was $2.7 million, compared to $17.2 million for the nine months ended September 30, 2003. The decrease in net cash used in operating
activities is due to growth in sales and gross profit.



Net cash provided by
investing activities for the nine months ended September 30, 2004 was $1.6 million compared to $3.0 million cash used for the nine months ended September 30, 2003. The increase in cash provided by investing activities is due to the lifting of the
restriction of cash and cash equivalents resulting from the repayment of the Senior Credit Facility and an increase in proceeds from sales of fixed assets due to the sale of land and building in Garland, Texas during the quarter ended March 31, 2004
offset by the increase in capital expenditures.



Net cash used in financing
activities for the nine months ended September 30, 2004 was $2.0 million compared to $1.8 million for the nine months ended September 30, 2003. The increase in cash used in financing activities is due primarily to more payment of debt issuance costs
in 2004.



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Capital Expenditures



Capital expenditures for the nine months ended September 30, 2004 were $6.2 million compared to $4.3 million for the nine months ended September 30, 2003. Capital
expenditures increased because the Company required more investment in property, plant and equipment in 2004 primarily associated with technology-related improvements.



Capital Raising Transactions in the nine months ended September 30, 2004



On January 21, 2004, we issued 1,000,000 shares of our common stock to two institutional
investors in a private placement for a total gross proceeds of $15,980,000. Immediately after the closing of that transaction, we used $4.5 million of the proceeds to pay down the Dynamic Details Senior Credit Facility, $4.0 million of the proceeds
to pay down the DDi Europe revolving credit facility and $0.8 million of the proceeds to pay our placement agent and advisor. The remaining proceeds have been, and will continue to be, used for general corporate purposes.



On March 30, 2004, we issued 147,679 shares of Series B-1 Preferred Stock and 1,139,238
shares of Series B-2 Preferred Stock to certain institutional investors in a private placement at a price of $47.40 per share for an aggregate sales price of $61 million before placement fees and offering expenses (collectively, the Series B
Preferred). Each share of the Series B Preferred is initially convertible into four shares of our common stock at any time at a conversion price of $11.85 per share, subject to certain anti-dilution and other customary adjustments. Immediately
after the closing of this transaction, on March 30, 2004, we repaid in full the outstanding balance of the Dynamic Details Senior Credit Facility and related accrued interest and fees thereon using proceeds of $54.8 million from the private
placement of the Series B Preferred and $14.0 million cash on hand, including $7.5 million in restricted cash which was in an account deposited with the lender of such senior credit facility.



The Series B Preferred bear dividends at the rate of 6% per annum, payable quarterly, in cash
or in common stock, commencing March 31, 2005 and is subject to mandatory redemption in five years. All accrued dividends on the Series B-1 and Series B-2 Preferred Stock must be paid before any dividends are declared or paid on shares of common
stock. In addition, the holders of the Series B Preferred have the option to require us to redeem the shares in three equal installments in 18 months, 24 months and 30 months from issuance or earlier upon a change of control, certain events of
default or other specified occurrences. We also have the right to redeem the Series B Preferred if our common stock trades above $20.75 for 30 consecutive trading days. The redemption price is at cost plus accrued dividends, except in the case of
certain defaults where there are premiums to the redemption cost. On May 26, 2004, the Companys shareholders approved the motion to allow us to have the option to make dividend and redemption payments using our common stock provided that we
may use no more than 10 million shares of common stock in aggregate for such redemption payments.



Current Indebtedness of the Company



$40 million Revolving Credit Facility



On March 30, 2004,
immediately after the Dynamic Details Senior Credit Facility was paid off, Dynamic Details and the Companys other North American subsidiaries entered into an asset based revolving credit facility with a commitment up to $40 million
through March 30, 2007, depending upon the value of the asset base. During the second quarter of 2004, the asset base on the revolving credit facility was expanded to include the Companys Canadian operations. As of September 30, 2004, the
Company was able to borrow up to $18.1 million against the revolving credit facility of which no amounts were drawn as of that date. The facility bears interest at LIBOR plus 4% on LIBOR loans and prime plus 3% for index rate loans. Pricing will be
determined by Dynamic Details adjusted EBITDA numbers, and will range from LIBOR plus 3 to 4% on LIBOR loans or prime plus 2 to 3% for index rate loans. The effective interest rate at September 30, 2004 was 7.75%. The revolving credit facility
has covenants that place a limit on the level of capital expenditures and a minimum fixed charge ratio. The Company was in compliance with these covenants as of September 30, 2004. The Company incurred debt issuance costs of $2.3 million in
connection with obtaining this revolving credit facility and will amortize such costs into interest expense using the straight-line method (which approximates the effective interest method) over the facility period. As of September 30, 2004, a total
of $0.4 million of debt issuance costs had been amortized.



DDi Europe
Facilities Agreement



DDi Europe has a separate debt facility made up of
£14.3 million ($25.7 million) in term loans and a working capital facility having a maximum borrowing limit of £10.0 million ($18.0 million) for its European operations as of September 30, 2004. Any amounts drawn under the working
capital facility are payable upon demand by the lender. The term loan has a maturity date of December 30, 2007. Based upon current and expected market conditions for the DDi Europe operations, the European lender had stated its desire



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that DDi Europe not draw down more than £7.4 million ($13.3 million) of the working capital facility. In January
2004, the Company completed a private placement of its common stock (see Note 15), of which $4.0 million (approximately £2.4 million) was used to reduce the drawn balance of this working capital facility. As of September 30, 2004, an aggregate
of £7.3 million ($13.1 million) was outstanding under this working capital facility. The Company continues to work with the its lender to address the near and long-term liquidity needs of its European business.



DDi Capital Accreting Notes



On December 12, 2003, DDi Capital issued $17.7 million in senior accreting notes pursuant to
its plan of reorganization. Pursuant to the terms of its indenture, interest is payable on the senior accreting notes by issuance of additional senior accreting notes at an annual rate of 16% or, at DDi Capitals election, in cash at an annual
rate of 14% to be paid on a quarterly basis. Because of the decrease in DDi Capitals leverage ratio, on June 1, 2004, DDi Capital was required to elect to pay interest due on all subsequent interest payments in cash starting June 15, 2004.
Interest is calculated on the accreted principal balance as of March 14, 2004, the most recent scheduled interest payment date per the note indenture, of $18.4 million. As of September 15, 2004, DDi Capital paid $1.3 million in interest in cash to
the holders of the senior accreting notes. The notes mature on January 1, 2009 and are redeemable by DDi Capital upon a change of control or upon sale of stock or property or other assets except through ordinary course of business; or, at the option
of DDi Capital, in whole at any time, in each case, at a redemption price that is greater than the accreted value of the notes, plus accrued and unpaid interest, if any, to the redemption date. The notes have covenants customary for securities of
this type. The covenants restrict the Company from incurring additional indebtedness and from making certain payments, including dividend payments to its stockholders. As of September 30, 2004, the Company was in compliance with these covenants.
Each holder of the senior accreting notes also received a warrant to purchase pro rata shares of 762,876 shares of the Companys common stock. In connection with the completion of a private placement of common stock in January 2004 (see Note
15), the amount of warrants issued was adjusted, pursuant to the anti-dilution provisions of the warrants, to purchase an aggregate of 807,090 shares. The Company recorded the warrants at an aggregate fair value of $0.2 million at November 30, 2003
and is using the effective interest rate method to accrete the debt value to face value at maturity through interest expense. For the three and nine months ended September 30, 2004, total accretion was $8,000 and $20,000, respectively. These
warrants are held in an escrow account until December 12, 2005 and are exercisable at an initial exercise price of $0.001 per share from December 13, 2005 through July 31, 2008. The warrants will be terminated if, on or before December 12, 2005, DDi
Capital pays all of its indebtedness to the holders of the senior accreting notes.



Series A Mandatorily Redeemable Preferred Stock



In connection
with the plan of reorganization, the DDi Corp. issued 1,000,000 shares of its Series A Preferred Stock to its former convertible subordinated noteholders. The Series A Preferred has an annual dividend of 15% and an aggregate liquidation preference
of $15 million with a mandatory redemption date of the later of January 31, 2009 or the date that all obligations under the DDi Europe Facility Agreement are paid in full. All accrued dividends on the Series A Preferred Stock must be paid before any
DDi Europe assets may be used to pay dividends on shares of our common stock. The Series A Preferred will only be paid to the extent there is value, as defined in the related certificate of determination, in DDi Europe beyond what is owed on the DDi
Europe Facility Agreement.



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Contractual Cash Obligations and Commercial Commitments



The following table shows our contractual cash obligations and commercial commitments as of
September 30, 2004:



Payments Due by Period

(in millions)



|                                                    |  |                                              |      |                          |      |      |      |   |      |  |            |      |       |   |     |  |   |       |  |   |      
|--------------------------------------------------- |  | -------------------------------------------- | ---- | ------------------------ | ---- | ---- | ---- | - | ---- |  | ---------- | ---- | ----- | - | --- |  | - | ----- |  | - | -----
|                                                    |  | For the Nine Months Ending December 31, 2004 |      | Year Ending December 31,
|Commitments                                         |  |                                              | 2005 |                          | 2006 |      | 2007 |   | 2008 |  | Thereafter |      | Total
|Long-Term Debt (a)                                  |  | $                                            |     |                          | $    | 3.6  |      | $ | 10.8 |  | $          | 11.2 |       | $ |    |  | $ | 18.2  |  | $ | 43.8 
|Series A mandatorily redeemable preferred stock (b) |  | $                                            |     |                          |      |     |      |   |     |  |            |     |       |   |    |  |   | 15.0  |  |   | 15.0 
|Series B mandatorily redeemable preferred stock (b) |  | $                                            |     |                          |      |     |      |   |     |  |            |     |       |   |    |  |   | 61.0  |  |   | 61.0 
|Capital Lease Obligations                           |  | $                                            | 0.4  |                          |      | 1.3  |      |   | 0.2  |  |            |     |       |   |    |  |   |      |  |   | 1.9  
|Operating Leases                                    |  |                                              | 2.2  |                          |      | 8.7  |      |   | 7.4  |  |            | 6.2  |       |   | 5.3 |  |   | 8.4   |  |   | 38.2 
|                                                    |  |                                              |      |                          |      |      |      |   |      |  |            |      |       |   |     |  |   |       |  |   |      
|Total Commitments                                   |  | $                                            | 2.6  |                          | $    | 13.6 |      | $ | 18.4 |  | $          | 17.4 |       | $ | 5.3 |  | $ | 102.6 |  | $ | 159.9
|                                                    |  |                                              |      |                          |      |      |      |   |      |  |            |      |       |   |     |  |   |       |  |   |      

---

|(a) | Amounts include DDi Europe Facilities Agreement and DDi Capital Accreting Notes.
|--- | --------------------------------------------------------------------------------

|(b) | Amounts payable are due to mandatory redemption feature of the respective preferred stock instrument.
|--- | -----------------------------------------------------------------------------------------------------



Factors That May Affect Future Results



We have had a history of losses and our return to profitability is not assured.



We incurred net losses of approximately $288.1 million and $85.1 million during the fiscal years ended December 31, 2002 and December 31,
2001, respectively. We sought protection under Chapter 11 of the U.S. Bankruptcy Code in August 2003. On December 12, 2003, we emerged from Chapter 11 protection pursuant to our plan of reorganization, under which our equity ownership and capital
structure was significantly altered and for new independent directors were elected to our seven-member board. Our return to profitability is not assured and we cannot assure you that we will grow or achieve profitability in the near future, or at
all.



The terms of our lending arrangements may restrict our financial
and operational flexibility.



The terms of our indebtedness under our
Dynamic Details asset-based revolver restrict, among other things, our ability to incur additional indebtedness, pay dividends or make certain other restricted payments, consummate certain asset sales, enter into certain transactions with
affiliates, merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets. DDi Capital and Dynamic Details are also required to maintain specified financial ratios
and satisfy certain financial condition tests. Our subsidiaries ability to meet those financial ratios and tests can be affected by events beyond our subsidiaries control, and there can be no assurance that they will meet those tests.



DDi Europe may not be able to restructure its operations to generate cash or
otherwise arrange for additional funds sufficient to fund its operations, in which case its lender may be compelled to exercise its remedies to protect its collateral, including the appointment of a receiver or the commencement of an insolvency
proceeding.



As of October 31, 2004, DDi Europe had substantially drawn on the
total amount of funds practically available under the DDi Europe Revolving Credit Facility. Substantially all of the assets of DDi Europe are pledged as security under the DDi Europe facilities agreement. Due to restrictions set forth in the Dynamic
Details Revolving Credit Facility and the Indenture with the Senior Accreting Noteholders, we are not able to make additional cash contributions to address the working capital needs of DDi Europe without the consent of our North American lenders and
the Senior Accreting Noteholders. After considering its alternatives, the Board of Directors of DDi Corp. has concluded that the valuation of DDi Europe does not justify our making further investment. Accordingly, to the extent that DDi Europe is
unable to generate cash sufficient to fund its operations or restructure its credit facility with its lender, DDi Europe must seek alternative funding sources (including, but not limited to, seeking funds from the lender in excess of the £7.4
million working capital credit limit practically imposed by the lender) and/or taking steps to restructure its operations. If its lender, in an attempt to protect its collateral, makes a demand for payment and DDi Europe does not have sufficient
funds on hand to make the



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payment, the lender would have the right to exercise its remedies under the DDi Europe credit facility, including the
right to have a receiver appointed for DDi Europe or to commence insolvency proceedings. In that event, based upon the current valuation, there would not likely be sufficient funds to satisfy the obligations under the Series A preferred stock (which
look solely to DDi Europe value) or provide any funds to us. Such action by the lender could have an adverse effect upon the value of the Companys common stock as well as upon our customers and vendors willingness to do business
with our UK-based operations. There is no guarantee that DDi Europe will be able to generate cash sufficient to fund its operations or to seek other forms of capital or debt.



DDi Europe comprises $75.1 million (34%) in net sales, $6.3 million (24%) in gross profit and $18.7 million (50%) in net loss of DDi
Corps consolidated income statement for the nine months ended September 30, 2004. In addition, DDi Europe comprises $34.7 million (39%) in total current assets, $61.7 million (22%) in total assets and $71.9 million (53%) in total liabilities
of DDi Corps consolidated balance sheet as of September 30, 2004.



We may need additional capital in the future and it may not be available on acceptable terms, or at all.



Looking ahead at long-term needs, we may need to raise additional funds for the following purposes:



| |  | to fund our operations beyond September 30, 2005;
| | - | -------------------------------------------------



| |  | to fund working capital requirements for future growth that we may experience;
| | - | ------------------------------------------------------------------------------



| |  | to enhance or expand the range of services we offer;
| | - | ----------------------------------------------------



| |  | to increase our sales and marketing activities; or
| | - | --------------------------------------------------



| |  | to respond to competitive pressures or perceived opportunities, such as investment, acquisition and international expansion activities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



If such funds are not available when required or on acceptable terms, our business and
financial results could suffer.



If the demand for our customers
products decline, demand for our products will be similarly affected. Such decline will also adversely affect the price that we are able to charge for our products. Such declines in demand will adversely affected our revenues, gross margins and
operating performance.



Our customers that purchase printed circuit board
engineering and manufacturing services from us are subject to their own business cycles. Some of these cycles show predictability from year to year. However, other cycles, are unpredictable in commencement, depth and duration. A downturn, or any
other event leading to additional excess capacity will negatively impact our pricing, revenues, gross margins and operating performance. We cannot accurately predict the continued demand for our customers products and the demands of our
customers for our products and services. As a result of this uncertainty, our past operating results, earnings and cash flows may not be indicative of our future operating results, earnings and cash flows.



Unless we are able to respond to technological change at least as quickly as our
competitors, our services could be rendered obsolete, which would reduce our revenue and operating margins.



The market for our services is characterized by rapidly changing technology and continuing process development. The future success of our business will depend in large
part upon our ability to maintain and enhance our technological capabilities, to develop and market services that meet evolving customer needs and to successfully anticipate or respond to technological changes on a cost-effective and timely basis.
We are more leveraged than some of our principal competitors, and therefore may not have the financial flexibility to respond to technological changes as quickly as these competitors.



In addition, the printed circuit board engineering and manufacturing services industry could in the future encounter competition from new or
revised technologies that render existing technology less competitive or obsolete or that reduce the demand for our services. We cannot assure you that we will effectively respond to the technological requirements of the changing market. To the
extent we determine that new technologies and equipment are required to remain competitive, the development, acquisition and implementation of such technologies and equipment may require us to make significant capital investments. We cannot assure
you that we will be able to obtain capital for these purposes in the future or that any investments in new technologies will result in commercially viable technological processes.



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We may experience significant fluctuation in our revenue because we sell primarily on a purchase order basis,
rather than pursuant to long-term contracts.



Our operating results
fluctuate because we sell on a purchase-order basis rather than pursuant to long-term contracts, and we expect these fluctuations to continue in the future. We are therefore sensitive to variability in demand by our customers. Because we time our
expenditures in anticipation of future sales, our operating results may be less than we estimate if the timing and volume of customer orders do not match our expectations. Furthermore, we may not be able to capture all potential revenue in a given
period if our customers demand for quick-turn services exceeds our capacity during that period. Because of these factors, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future
performance. Because a significant portion of our operating expenses are fixed, even a small revenue shortfall can have a disproportionate effect on our operating results. It is possible that, in future periods, our results may be below the
expectations of public market analysts and investors. This could cause the market price of our common stock to decline.



We rely on a core group of significant customers for a substantial portion of our net sales, and a reduction in demand, or an inability to pay, from this core group
could adversely affect our total revenue.



Although we have a large
number of customers, net sales to our largest customer accounted for approximately 6% of our net sales for the nine months ended September 30, 2004. Net sales to our ten largest customers accounted for approximately 29% of our net sales during the
same period. We may depend upon a core group of customers for a material percentage of our net sales in the future. Substantially all of our sales are made on the basis of purchase orders rather than long-term agreements. We cannot assure you that
significant customers will order services from us in the future or that they will not reduce or delay the amount of services ordered. Any reduction or delay in orders could negatively impact our revenues. In addition, we generate significant
accounts receivable in connection with providing services to our customers. If one or more of our significant customers were to become insolvent or otherwise were unable to pay us for the services provided, our results of operations would be
adversely affected.



If we experience excess capacity due to variability
in customer demand, our gross margins may decline.



We maintain our
production facilities at less than full capacity to retain our ability to respond to additional quick-turn orders. However, if these orders are not received, we could experience losses due to excess capacity. Whenever we experience excess capacity,
our sales revenue may be insufficient to fully cover our fixed overhead expenses and our gross margins will decline. Conversely, we may not be able to capture all potential revenue in a given period if our customers demands for quick-turn
services exceed our capacity during that period.



We are subject to
intense competition, and our business may be adversely affected by these competitive pressures.



The printed circuit board industry is highly fragmented and characterized by intense competition. We principally compete with independent and captive manufacturers of complex quick-turn and longer-lead printed circuit
boards. Our principal competitors include other established public companies, smaller private companies and integrated subsidiaries of more broadly based volume producers that also manufacture multi-layer printed circuit boards and other electronic
assemblies. Some of our principal competitors are less highly-leveraged than us and may have greater financial and operating flexibility. For us to be competitive in the quick-turn sector, we must maintain a large customer base, a large staff of
sales and marketing personnel, considerable engineering resources and proper tooling and equipment to permit fast turnaround of small lots on a daily basis.



If Asian based production capabilities increase in sophistication, we may lose market share and our gross margins may be adversely affected by increased pricing
pressure.



Price competition from printed circuit board manufacturers
based in Asia and other locations with lower production costs may play an increasing role in the printed circuit board markets in which we compete. While printed circuit board manufacturers in these locations have historically competed primarily in
markets for less technologically advanced products, they are expanding their manufacturing capabilities to produce higher layer count, higher technology printed circuit boards. In the future, competitors in Asia may be able to effectively compete in
our higher technology markets, which may force us to lower our prices, reducing our gross margins or decreasing our net sales.



We rely on suppliers for the timely delivery of raw materials used in manufacturing our printed circuit boards, and an increase in industry demand or the presence
of a shortage for these raw materials may increase the price of these raw materials and reduce our gross margins.



To manufacture our printed circuit boards, we use raw materials such as laminated layers of fiberglass, copper foil and chemical solutions, which we generally order from
our suppliers on a purchase order basis. We use just-in-time procurement practices to maintain raw materials inventory at low levels and do not have guaranteed supply contracts with our suppliers. Although we have preferred suppliers for most of our
raw materials, the materials we use are generally readily available in the open market, and



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numerous other potential suppliers exist. However, from time to time manufacturers of products that also use these raw
materials increase their demand for these materials and, as a result, the prices of these materials increase. During these periods of increased demand, our gross margins may decrease as we have to pay more for our raw materials. If a raw material
supplier fails to satisfy our product quality standards, it could harm our customer relationships. Suppliers may from time to time extend lead times, limit supplies or increase prices due to capacity constraints or other factors, which could harm
our ability to deliver our products on a timely basis.



In addition,
uncertainty during our recapitalization process and losses experienced by certain of our unsecured creditors may have adversely affected our relationships with our suppliers. If suppliers become increasingly concerned about our financial condition,
they may demand faster payments or refuse to extend normal trade credit, both of which could further adversely affect our cash flow and our results of operations. We may not be successful in obtaining alternative suppliers if the need arises, and
this would adversely affect our results of operations.



Defects in our
products could result in financial or other damages to our customers, which could result in reduced demand for our services and liability claims against us.



Defects in the products we manufacture, whether caused by a design, manufacturing or materials failure or error, may result in delayed
shipments, customer dissatisfaction, or a reduction in or cancellation of purchase orders. If these defects occur either in large quantities or too frequently, our business reputation may be impaired. Defects in our products could result in
financial or other damages to our customers. Our sales arrangements generally contain provisions designed to limit our exposure to product liability and related claims, but existing or future laws or unfavorable judicial decisions could negate these
limitation of liability provisions. Product liability claims made against us, even if unsuccessful, would be time consuming and costly to defend. Although we maintain a warranty reserve, this reserve may not be sufficient to cover our warranty or
other expenses that could arise as a result of defects in our products.



If we are unable to protect our intellectual property or infringe or are alleged to infringe others intellectual property, our operating results may be adversely affected.



We primarily rely on trade secret laws and restrictions on disclosure to protect our
intellectual property rights. We cannot be certain that the steps we have taken to protect our intellectual property rights will prevent unauthorized use of our technology. Our inability to protect our intellectual property rights could diminish or
eliminate the competitive advantages that we derive from our proprietary technology.



We may become involved in litigation in the future to protect our intellectual property or because others may allege that we infringe on their intellectual property. These claims and any resulting litigation could subject us to significant
liability for damages and invalidate our proprietary rights. In addition, these lawsuits, regardless of their merits, would likely be time consuming and expensive to resolve and would divert managements time and attention. Any potential
intellectual property litigation alleging our infringement of a third-partys intellectual property also could force us or our customers to:



| | stop producing products that use the intellectual property in question;
|- | -----------------------------------------------------------------------



| | obtain an intellectual property license to sell the relevant technology at an additional cost, which license may not be available on reasonable terms, or at all; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | redesign those products or services that use the technology in question.
|- | ------------------------------------------------------------------------



The costs to us resulting from having to take any of these actions could be substantial and our operating results could be adversely affected.



Complying with applicable environmental laws requires significant resources and if we
fail to comply, we could be subject to substantial liability.



Our
operations are regulated under a number of federal, state, local and foreign environmental and safety laws and regulations that govern, among other things, the discharge of hazardous materials into the air and water, as well as the handling, storage
and disposal of such materials. These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act, as well as analogous
state and foreign laws. Compliance with these environmental laws is a major consideration for us because we use in our manufacturing process materials classified as hazardous such as ammoniacal etching solutions, copper and nickel. Our efforts to
comply with applicable environmental laws require an ongoing and significant commitment of our resources. Over the years, environmental laws have



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become, and may in the future become, more stringent, imposing greater compliance costs on us. In addition, because we
are a generator of hazardous wastes and our sites may become contaminated, we may be subject to potential financial liability for costs associated with an investigation and any remediation of such sites. Even if we fully comply with applicable
environmental laws and are not directly at fault for the contamination, we may still be liable. The wastes we generate include spent ammoniacal etching solutions, solder stripping solutions and hydrochloric acid solution containing palladium, waste
water which contains heavy metals, acids, cleaners and conditioners; and filter cake from equipment used for on-site waste treatment.



Violations of environmental laws could subject us to revocation of the environmental permits we require to operate our business. Any such revocations could require us to
cease or limit production at one or more of our facilities, thereby negatively impacting revenues and potentially causing the market price of our common stock to decline. Additionally, if we are liable for any violation of environmental laws, we
could be required to undertake expensive remedial actions and be subject to additional penalties.



Two of our officers and directors are named defendants in a securities class action lawsuit, which could divert management attention and result in substantial indemnification costs.



Certain of our current and former officers and directors have been named as defendants in a
securities class action lawsuit. Under Delaware law, our charter documents, and certain indemnification agreements we entered into with our executive officers and directors, we must indemnify our current and former officers and directors to the
fullest extent permitted by law. The indemnification covers any expenses and/or liabilities reasonably incurred in connection with the investigation, defense, settlement or appeal of legal proceedings. The obligation to provide indemnification does
not apply if the officer or director is found to be liable for fraudulent or criminal conduct. For the period in which the claims were asserted, we had in place director and officers liability insurance policies. We are unable to estimate what
our indemnification liability in these matters may be. If our directors and officers liability insurance policies do not adequately cover our expenses related to this class action lawsuit, we may be required to pay judgments or
settlements and incur expenses in aggregate amounts that could have a material adverse effect on our financial condition, cash flows or results of operations. In addition, this lawsuit could divert management attention from our day-to-day
operations, which could have a material adverse effect on our business.



We are subject to risks arising from our international sales and supply chain which could adversely affect our revenue and operating results.



We generate a significant portion of our revenue from non-U.S. sales, and a significant portion of the raw materials and components we use
to produce our products are provided by international suppliers. As a result of our international operations and supply chain, we are affected by economic and political conditions in foreign countries, including:



| | the imposition of government controls;
|- | --------------------------------------



| | export license requirements;
|- | ----------------------------



| | political and economic instability;
|- | -----------------------------------



| | trade restrictions;
|- | -------------------



| | changes in tariffs and duties;
|- | ------------------------------



| | labor unrest and difficulties in staffing;
|- | ------------------------------------------



| | coordinating communications among and managing international operations;
|- | ------------------------------------------------------------------------



| | fluctuations in currency exchange rates;
|- | ----------------------------------------



| | earnings expatriation restrictions;
|- | -----------------------------------



| | misappropriation of intellectual property; and
|- | ----------------------------------------------



| | constraints on our ability to maintain or increase prices.
|- | ----------------------------------------------------------



Any of these factors could adversely impact our ability to secure our raw materials or our ability to sell our products internationally. This could reduce our revenue and
adversely impact our operating results.



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We depend on our key personnel and may have difficulty attracting and retaining skilled employees.



Our future success will depend to a significant degree upon the
continued contributions of our key management, marketing, technical, financial, accounting and operational personnel, including Bruce D. McMaster, our President and Chief Executive Officer. None of our key employees has entered into an employment
agreement or other similar arrangement, with the exception of a non-solicitation agreement between Bruce D. McMaster and us. The loss of the services of one or more key employees could have a material adverse effect on our results of operations. We
also believe that our future success will depend in large part upon our ability to attract and retain additional highly skilled managerial and technical resources. Competition for such personnel is intense. There can be no assurance that we will be
successful in attracting and retaining such personnel. In addition, recent and potential future facility shutdowns and workforce reductions may have a negative impact on employee recruiting and retention.



Our manufacturing processes depend on the collective industry experience of our
employees. If these employees were to leave and take this knowledge with them, our manufacturing processes may suffer, and we may not be able to compete effectively.



Other than our trade secret protection, we rely on the collective experience of our employees to ensure that we continuously evaluate and
adopt new technologies in our industry. If a significant number of employees involved in our manufacturing processes were to leave our employment and we are not able to replace these people with new employees with comparable experience, our
manufacturing processes may suffer as we may be unable to keep up with innovations in the industry. As a result, we may not be able to continue to compete effectively.



The trading price of our common stock may be subject to wide fluctuations and volatility.



The market price of our common stock could be subject to wide fluctuations in response to
numerous factors, many of which are beyond our control. These factors include, among other things, actual or anticipated variations in our operating results and cash flow, the nature and content of our earnings releases and our competitors
earnings releases, announcements of technological innovations that impact our services, customers, competitors or markets, changes in financial estimates by securities analysts, business conditions in our markets and the general state of the
securities markets and the market for similar stocks, changes in capital markets that affect the perceived availability of capital to companies in our industries, governmental legislation or regulation, currency and exchange rate fluctuations, as
well as general economic and market conditions, such as recessions.



In
addition, limited trading volume of our common stock could affect the trading price by magnifying the effect of larger purchase or sale orders and could increase the trading price volatility in general. No prediction can be made as to future trading
volumes of our common stock.



Item 3. Quantitative and Qualitative Disclosures About Market Risk.



Interest Rate Risk



The Dynamic Details
revolving credit facility and DDi Europe Facilities Agreement bear interest at floating rates and the Senior Accreting Notes bear interest at fixed rates.



The Dynamic Details revolving credit facility bears interest at LIBOR plus 4% on LIBOR loans and prime plus 3% for index rate loans. Pricing
will be determined by Dynamic Details adjusted EBITDA numbers, and will range from LIBOR plus 3 to 4% on LIBOR loans or prime plus 2 to 3% for index rate loans. The effective interest rate at September 30, 2004 was 7.75%. The DDi Europe
Facilities Agreement bears interest based on three-month U.K. LIBOR plus a margin of 1.50%. Based upon our anticipated utilization of the DDi Europe revolving credit facility through the period ending March 31, 2005, a 10% change in interest rates
is not expected to materially affect the interest expense to be incurred on this facility during such period. As of September 30, 2004, nine-month U.K. LIBOR was 5.05%. If nine-month U.K. LIBOR increased by 10% to 5.56%, interest expense related to
the term loan facility would increase approximately $0.1 million. The overall effective interest rate for the term loan facilities, as of September 30, 2004, was 6.55%.



All other financial instruments of the Company bear fixed rates of interest.



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Foreign Currency Exchange Risk



Sales and expenses and financial results of DDi Europe and of our Canadian operations are
denominated in British pounds and Canadian dollars, respectively. We have foreign currency translation risk equal to our net investment in those operations; however, since nearly all of our sales are denominated in local currency or in U.S. dollars,
we have relatively little exposure to foreign currency transaction risk with respect to sales made. Based upon annualizing the most recent quarters results, the effect of an immediate 10% change in exchange rates would have an annual net
impact on our operating results of approximately ($0.4) million. 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 13(a)-15(e) under the Securities Act of 1934, as amended) are effective to ensure that all information required to be disclosed by the Company in the reports filed or submitted by it under the Securities and Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated
and communicated to the Companys management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate and allow timely decisions regarding required disclosure.



Changes in Internal Controls.In connection with the above-referenced
evaluation, no change in the Companys internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Companys internal control
over financial reporting.



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PART II  OTHER INFORMATION



Item 1. Legal Proceedings



In October and
November 2003, several class action complaints were filed against certain of our current and former officers and directors in the United States District Court for the Central District of California on behalf of purchasers of our common stock,
alleging violations of the Securities Exchange Act of 1934 (Exchange Act). In December 2003, a related class action complaint was filed in the Central District of California alleging similar claims against similar parties, but also
adding causes of action under the Securities Act of 1933 (Securities Act) in connection with the Companys February 2001 secondary offering. The latter complaint also named as defendants a private investment firm and the
underwriters of the secondary offering.



On December 16, 2003, a federal
district court judge consolidated the Central District of California actions into a single action, In re DDi Corp. Securities Litigation, Case No. CV 03-7063 MMM (SHx). On May 21, 2004, the Court appointed as Lead Plaintiffs Paul Poppe, LeRoy
Schneider, and Rand Skolmick. On July 26, 2004, Lead Plaintiffs filed a consolidated amended complaint on behalf of all persons or entities who purchased Company common stock between December 19, 2000 and April 29, 2002, including those who acquired
Company common stock pursuant to, or traceable to, its February 14, 2001 secondary offering. The consolidated amended complaint seeks unspecified damages and alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act and
Sections 10(b) and 20(a) of the Exchange Act by, among other things, misrepresenting and/or failing to disclose material facts about the Companys reported and projected financial results during the class period, including reported and
projected financial results in connection with the registration statement and prospectus for the secondary offering. Neither the Company nor any of it subsidiaries were named as a defendant in this consolidated amended complaint.



Pursuant to a June 13, 2004 scheduling order, the defendants responded to the consolidated
amended complaint on September 9, 2004 with a motion to dismiss. The plaintiffs filed their opposition on October 25, 2004. The defendants will file the reply in support of the motion to dismiss on or before November 24, 2004. The hearing is
scheduled for January 10, 2005. The Company and the defendants believe the claims are without merit and the action will be defended vigorously. However, there can be no assurance that the defendants will succeed in defending or settling this action.
The Company cannot ensure that the action will not have a material adverse effect on its business, financial condition, cash flows and results of operations.



Item 5. Other Information



On
September 1, 2004 we adopted a Severance Plan for Key Employees Effective December 19, 2004 (the 2004 Severance Plan). Under the 2004 Severance Plan, our senior executives and key employees (Participants), including each of
our executive officers, may be entitled to receive a severance payment in the event the Participants employment is terminated by us without cause or the Participant voluntarily terminates his or her employment for good reason, as defined in
the Severance Plan, before December 19, 2006. Under the Severance Plan, the size of severance payment that would be due to an executive upon termination ranges from 6 months salary to 24 months salary, depending on the Participants position
with us. Under the Severance Plan, Bruce McMaster, our Chief Executive Officer, would be entitled to 24 months salary under the Severance Plan and each of our other executive officers would be entitled to 12 months salary. The Severance Plan also
provides that we will pay or reimburse COBRA premiums made by a Participant who timely elects to receive COBRA coverage for health insurance under our group health insurance plan, for the period of time commencing with the Participants
termination date and ending with the earlier of (a) the last day of the applicable severance term for which the Participant is entitled to receive a severance payment, and (b) the date upon which the Participant becomes eligible to participate in
the health insurance plan of a subsequent employer without limitation for pre-existing conditions.



Item 6. Exhibits



|(a) | Exhibits.
|--- | ---------



|            |  |                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                      
|            | 
|10.1        |  | DDi Corp. Severance Plan for Key Employees Effective December 19, 2004                                           
|            | 
|31.1        |  | Certification of Chief Executive Officer of DDi Corp., pursuant to Rule 13a-14 of the Securities Exchange Act.   
|            | 
|31.2        |  | Certification of Chief Financial Officer of DDi Corp., pursuant to Rule 13a-14 of the Securities Exchange Act.   
|            | 
|32.1        |  | Certification of Chief Executive Officer of DDi Corp., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of Chief Financial Officer of DDi Corp., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURE



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.



|                        |  |           |  |                                                                                                                    
|----------------------- |  | --------- |  | -------------------------------------------------------------------------------------------------------------------
|Date: November 11, 2004 |  | DDi CORP.
|                        |  |          
|                        |  | By:       |  | /s/ Joseph Gisch                                                                                                   
|                        |  |           |  | Joseph Gisch                                                                                                       
|                        |  |           |  | Senior Vice President, Chief Financial Officer and Treasurer (Authorized Signatory and Principal Financial Officer)



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